vol :3, issue:1 issn-2277-5676 insight management...

INSIGHT MANAGEMENT REVIEW

OCTOBER2013

PATUCK GALA COLLEGE OF COMMERCE &

MANAGEMENT

Vol :3, Issue:1 ISSN-2277-5676

Affiated to University of Mumbai

NAAC Accredited

Inter Collegiate Case Study Workshop – December 19, 2013

Awards won in Inter Collegiate Cultural Competitions, December 2013 – March 2014

Industrial Visit, January 19-24, 2014 Annual Day Celebrations, January 16, 2014

Volume : 4 Issue : 1

ISSN : 2277- 5676

The Editorial Team of Insight, the Annual Management Journal of Patuck-Gala College of

Commerce & Management welcomes its readers to an assortment of academic research papers.

The objective of this issue is purely diffusion of knowledge and intellect to its readers. With

each issue, the team has endeavored to improve the Journal and enhance its effectiveness

especially among the academic fraternity.

We express our sincere gratitude to Dr. Sumita Shankar, Senior Faculty at NSS College

Mumbai, for peer reviewing the research papers and enabling us make this Journal more

credible. Dr. Sumita S. has an MBA and a Ph. D. in the area of Banking Services. She possesses

around 8 years of Corporate experience and in addition has been in the field of Academics for

the past 14 years. She has a rich research background. She is a guide to many M. Phil. students

and has also been granted research aids by UGC for research projects. She is also an author to

textbooks and research papers which has been accepted, presented and published at many

national and international conferences.

Editorial Team

Dr. (Mrs.) Meeta Pathade - Chief Editor

Ms. Renita Vazirani - Editor

Ms. Monisha D’costa - Faculty Member

Disclaimer

The views expressed in the Journal are purely personal judgement of the authors and do not reflect the views of this institute or the institute with which they are associated. Send your Feedback to : The Editor Insight Management review Patuck-Gala College of Commerce & Management Patuck Campus, Vakola Bridge, Rustomba Patuck Marg, Santacruz (East), Mumbai – 400 055

Email : [email protected]

4th

Volume

All efforts are made to ensure that the published information is correct. The College is not

responsible for any errors caused due to oversight or otherwise.

mailto:[email protected]

FROM THE EDITOR’s DESK

It gives me immense pleasure to bring to you ‘INSIGHT- Management Review’, a Research Journal that is now into its fourth volume and with each passing year, has been scaling new heights into the world of academics and research. Research, as we all know is the backbone and foundation of almost everything in today’s age. From technology, to media, to society, to medicine, to finance, you name it and research is the ground work of it all. In this edition, we proudly present to you, findings of highly expert individuals who through their papers would like to leave you with a deeper understanding of a vast number of issues. A number of topics pertaining to the 21st century have been touched upon in this volume, thus adding a kaleidoscopic effect to the Journal. The journal hosts a whole lot of topics like Marketing, Leadership, Trade, Finance, Employer-Employee Relationship, and Micro-Cities which throw light on different perspectives. We hope the journal serves as an eye opener and it makes for an enjoyable literary journey! Happy Reading to all!

TABLE OF CONTENTS

Sr.

No. Title of the Paper Author

Page

Number

1

A Study on the Influence of Various

Marketing Factors on the Habitual

Buying Behaviour of Male Youth in

Mumbai with Special Reference to

Branded Garments

Dr. Madhu Nair &

Poonam Kakkad

1

2

Service Quality Perceptions : A Gap

Analysis Between Employees and

Customers in Financial Sector

Mushtaq A. Darzi &

Mehraju Din Bhat 15

3

An Analytical study of Innovative

Solutions in Marketing Strategies for

Sustainable Development with

Reference to Mumbai Market

Dr. Sangeeta N.Pawar 27

4 Leading Through Your Skills as a

Coaching Leader

Dr. James Jacob

32

5 Analysing Competencies for Small

Scale Industries in the WTO Regime Dr. Sushil Kumar Singh 39

6 Talent Management the Employees

perspective Saloni Arora 48

7 Micro Cities

Naved Jafry 58

8 ROA Performance of Private Sector

Banks During the year 2007 to 2011 Tasfiya Shaikh 73

INSIGHT MANAGEMENT REVIEW NOVEMBER 2013

1

A STUDY ON THE INFLUENCE OF VARIOUS MARKETING FACTORS

ON THE HABITUAL BUYING BEHAVIOUR OF MALE YOUTH IN

MUMBAI WITH SPECIAL REFERENCE TO BRANDED GARMENTS

Dr. Madhu Nair Ms. Poonam Kakkad

Dean Assistant Professor

Faculty of Commerce Nirmala Memorial

University of Mumbai & Foundation College

Principal of Nirmala Memorial Foundation College

Abstract

Habitual behaviour represents the repeat purchase made by customers based on

habits or routines that are developed in order to simplify the decision making

process. Habitual buying behaviour is seen in consumers when they make routine

purchases of the same product on a regular basis.

This paper throws light on the various factors which influence the habitual buying

behaviour of the consumers while buying branded clothes. The study tries to reflect

the influence of various marketing factors such as brand awareness, quality, price,

channel convenience on the buyers buying behaviour. This study will help

companies to select effective models for targeting customers with an aim to retain

them. The methodology being adopted would be predominantly collection of data

from primary and secondary sources.

Keywords: Buying Behavior, Branding, Brand Awareness, Branded Jeans

Introduction

Consumers make many buying decisions every day. Most large companies do their

research on consumer buying decisions in great detail to answer questions about

what consumers buy, where they buy, how and how much they buy, when they buy,

and why they buy. Marketers can study actual consumer purchases to find out what

they buy, where, and how much. But learning about the whys of consumer buying

behaviour is not so easy—the answers are often locked deep within the consumer's

head.

The central question for marketers is: How do consumers respond to various

marketing efforts the company might use? The company that really understands

how consumers will respond to different product features, prices, and advertising

appeals has a great advantage over its competitors. Due to fierce competition

exacerbated by the rising costs of attracting new customers most firms endeavour to

retain existing customers.


2

Since all companies depend on repeat business, there is a growing need for greater

understanding of the factor determining customer‘s loyalty. In case of repeat

purchase of low involvement products, the consumers have neither the time, the

resource nor the motivation to engage in a complex decision making process. So

they usually engage in the process of habitual buying.

Many studies tend to regard product choice as a very intricate problem solving

process and there has been scant research examining the effect of brand awareness

on buying decisions. It has been observed in many low involvement situations that

consumers do not have the time, resources, or the motivation to engage in such an

extended problem solving process. They are used to being the passive receipt of

product information, who needs to spend minimal time and efforts to determine

brand choice. They use the simple method of buying well known brands for

commonly repeated purchase products.

Objectives of the study

1. To understand the concept of habitual buying behaviour of the consumers.

2. To examine the most influential marketing factor on the habitual buying

behaviour of male youth for branded apparels.

Hypothesis

In the light of the above mentioned objectives the researcher has framed the

hypothesis.

1. Branded apparels (jeans) are highly preferred by male youth in Mumbai.

2. Brand awareness/ Brand visibility is the most significant marketing factor

that influences the habitual buying behaviour towards branded garments.

3. Male youth usually opt for broadcast media for collecting information on

branded apparels.

4. Youth from earning category just do not prefer one variable that is brand

popularity for first time purchase of a particular brand.

5. In habitual buying of branded jeans male youth are not brand loyal.

Research Methodology of the study

Sources of data collection

Efforts are been made to focus on the objectives undertaken, through collection of

both primary and secondary data. Primary data has been collected from the male

youth with the help of a structured questionnaire. Personal interviews were also

held to understand the influence of various marketing factors on the habitual buying

behaviour of male youth in Mumbai with special reference to branded garments.

Sample unit of the study

Out of the universe of consumers, male youth of Mumbai city are the sample unit of

the study.


3

Sample size

Using convenient sampling technique a sample size of 100 male youth is taken into

consideration.

Data analysis

The application of statistical tools and techniques for the data collected by means of

questionnaire has been classified, tabulated analysed and summarised with the help

of statistical tool Chi – Square test.

Scope of the study

In this competitive era the marketer must be aware of consumer‘s needs and wants

and what does a consumer expect from the company. The marketer must have this

information or customer data base if he wants to survive in this cut throat

competitive market.

This study will help the researcher to understand the influence of various marketing

factors such as brand awareness, quality, price, channel convenience of the buyers

buying behaviour. This study will help companies to select effective models for

targeting customers with an aim to retain them.

Concept of habitual buying behaviour

There are different types of buying behaviour of consumers for buying high or low

involvement products.

1. Complex buying Behaviour

2. Dissonance-Reducing Buying Behaviour

3. Habitual Buying Behaviour

4. Variety-Seeking Buying Behaviour

Habitual Buying Behaviour

Habitual buying Behaviour occurs under conditions of low consumer involvement

and little significant brand difference. For example, take salt. Consumers have little

involvement in this product category—they simply go to the store and reach for a

brand. If they keep reaching for the same brand, it is out of habit rather than strong

brand loyalty. Consumers appear to have low involvement with most low-cost,

frequently purchased products.

In such cases, consumer Behaviour does not pass through the usual belief-attitude-

Behaviour sequence. Consumers do not search extensively for information about

the brands, evaluate brand characteristics, and make weighty decisions about which

brands to buy. Instead, they passively receive information as they watch television

or read magazines. Ad repetition creates brand familiarity rather than brand

conviction. Consumers do not form strong attitudes toward a brand; they select the

brand because it is familiar. Because they are not highly involved with the product,

consumers may not evaluate the choice even after purchase.


4

Thus, the buying process involves brand beliefs formed by passive learning,

followed by purchase Behaviour, which may or may not be followed by evaluation.

Because buyers are not highly committed to any brands, marketers of low-

involvement products with few brand differences often use price and sales

promotions to stimulate product trial. In advertising for a low-involvement product,

ad copy should stress only a few key points. Visual symbols and imagery are

important because they can be remembered easily and associated with the brand. Ad

campaigns should include high repetition of short-duration messages.

Television is usually more effective than print media because it is a low-

involvement medium suitable for passive learning. Advertising planning should be

based on Classical Conditioning Theory, in which buyers learn to identify a certain

product by a symbol repeatedly attached to it.

Marketers can try to convert low-involvement products into higher-involvement

ones by linking them to some involving issue. Procter & Gamble does this when it

links Crest toothpaste to avoiding cavities. At best, these strategies can raise

consumer involvement from a low to a moderate level. However, they are not likely

to propel the consumer into highly involved buying Behaviour.

General profile of youth

In India youth is considered to be from the age group of 15 to 35 years. It is

recognized that since all the persons within this group are unlikely to be one

homogenous group, but rather a conglomeration of sub- groups with differing

social roles and requirements, the age group may therefore be divided into two

broad sub groups.viz. 15- 19 years and 20-35 years. The young belonging to the age

group of 13- 19 years is a major part of the adolescent age group, and will be

regarded as a separate constituency.

The number of youth in the age group of 15-35 years as per the 1991 Census was

estimated at about 34 crores, and about 38 crores in 1997, which is anticipated to

increase to about 51 crores by the year 2016. The percentage of youth in the total

population, which according to the 1996 Census projections , is estimated to about

37 percent in 1997, is also likely to increase to about 40 percent by the year 2016.

Most consumer companies target this segment as they are very market savvy when

it comes to brands. They are viewed as ―a generation with very high buying power‖.

Youth are considered as the invaluable assets of every company as they are growing

in market share. ‗Youth‘, the word itself is a symbol of charisma and enthusiasm.

The youth are known as the thrill seeking group, always open for fresh experiments.

This market is influenced by a number of factors, which govern their buying

behavior. These influencers are social factors (like friends, relatives and family),

personal factors (like life style, age and sex) cultural factors (like religion, social


5

class etc), economic factors (like family income, spending habits etc) and

psychological factors (like attitude, perception etc).

The Indian apparel industry is largely driven by the young population who want a

varied assortment of apparels in their wardrobes. This industry has got huge

opportunity in the development of India, provided we tap it in the right form and

spirit. The understanding of market dynamics is crucial for the success in this

industry.

Going by the characteristics of the youth market, there are four main parameters

which are sensitive for manufacturers of readymade garments. These factors are

contemporary designs, price, quality and quantity. They act as influencers at the

time of buying branded garments.

This paper throws light on the various factors, precisely marketing factors which

influence the habitual buying behaviour of youth consumers while buying branded

clothes. The study tries to reflect the influence of various marketing factors such as

brand awareness, quality, price, channel convenience of the buyers buying

behaviour.

Limitations of the study

There are following the constraints of the study:

1. The time of the study was short due to which many facts have been left

untouched.

2. The area under study is Mumbai only. But to do a complete research a wide area

is needed, so the area is also a constraint of the study.

3. Due to time, geographic and financial constraint a sample size of only 100 male

youth has been considered for the study.

4. In the Indian market, there are so many brands in different apparel segments

which include

Corporate wear

Ethnic wear

Sports wear

Casual wear

In order to have a study the researcher has concentrated on casual wear precisely

branded jeans.


6

Data Analysis and Interpretation

Table-1

Occupation

Particulars Actual number of respondents

Student 50

Business 5

Profession 5

Job 40

Total 100

Chart-1

Table-2

Chart-2

55%

5% 5%

40%

0%

10%

20%

30%

40%

50%

60%

Student Business Profession Job

Occupation

50% 50%

0%

10%

20%

30%

40%

50%

60%

Earning Non- Earning

Income

Income

Particulars Actual number of respondents

Earning 50

Non- Earning 50

Total 100


7

Table-3

Chart-3

Hypothesis Testing

Ho : Branded apparels are least preferred by male youth in Mumbai

H1: Branded apparels are highly preferred by male youth in Mumbai

Degrees of freedom= 2-1=1

Thus for degrees of freedom 1 and 5 percent level of significance the tabular value

from chi square distribution table is 3.84.

Class Observed O Expected E O-E (O-E)^2 (O-E)^2/E

1 90 50 40 1600 32

2 10 50 -40 1600 32

64

As the chi square satistics 64 exceeds the tabular value 3.84 , hence the null

hypothesis is rejected and alternate hypothesis is accepted.

Thus branded apparels are highly preferred by male youth in Mumbai.

90%

10%

0%

20%

40%

60%

80%

100%

Yes No

Perference for Branded Jeans

Preference for Branded Jeans

Response Actual number of respondents

Yes 90

No 10

Total 100


8

Table-4

Chart-4

Motives for Buying Branded Jeans

Table-5

26%

50%

4%

20%

80%

10%4% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Comfort Fashion Status Peer Pressure

Non Earning

Earning

Motives for Buying Branded Jeans

Response Non-Earning Earning

Comfort 13 40

Fashion 25 5

Status 2 2

Peer Pressure 10 3

Total 50 50

Source of information about existing brands


Broadcast Media 47

Print Media 15

Word of mouth publicity

by friends & relatives

38

Total 100


9

Chart-5

Hypothesis Testing

Ho: Males usually go for print media for collecting information on branded apparels

HI: Males usually opt for broadcast media for collecting information on branded

apparels.



from chi square distribution table is 5.99

E=100/3=33.33


1 47 33.33 13.67 186.78 5.60

2 15 33.33 -18.33 336.11 10.08

3 38 33.33 4.67 21.78 0.65

16.34

As the chi square statistics 16.34 exceeds the tabular value 5.99, hence the null


Thus, males usually opt for broadcast media for collecting information on branded

apparels.

Table-6

47%

15%

38%

0%

10%

20%

30%

40%

50%

Broadcast Media Print Media Mouth Pubicity by Friends & relative

Source of information about existing brands

Most significant determinant that influences buying decision for the

first time purchase of branded jeans

Response Actual number of earning respondents

Easy availability 2

Price 5

Quality (product features) 35

Brand popularity 8

Total 50


10

Chart-6

Hypothesis testing

Ho: Youth from earning category prefer brand popularity for first time purchase of

a particular brand.

HI: Youth from earning category just do not prefer brand popularity for first time

purchase of a particular brand.




E=50/4=12.5


1 2 12.5 -10.50 110.25 8.82

2 5 12.5 -7.50 56.25 4.50

3 35 12.5 22.50 506.25 40.50

4 8 12.5 -4.50 20.25 1.62

55.44



Thus, youth from earning category just do not prefer brand popularity for first time

purchase of a particular brand.

Table-7

4%10%

70%

16%

0%

20%

40%

60%

80%

Easy availability Price Quality Brand popularity

Significant determinant influencing first time purchase

Most significant determinant that influence your decision on

repeat purchase of branded jeans


Brand awareness/ Brand visibility 47

Quality 35


11

Chart-7

Hypothesis testing

Ho: As compared to other marketing factors brand awareness/ product visibility is

not the most significant factor that influences the habitual buying behaviour towards

branded garments

HI: Brand awareness/ product visibility is the most significant marketing factor that

influences the habitual buying behaviour towards branded garments.




E=100/5=20


1 47 20 27.00 729.00 36.45

2 35 20 15.00 225.00 11.25

3 8 20 -12.00 144.00 7.20

4 5 20 -15.00 225.00 11.25

5 5 20 -15.00 225.00 11.25

77.40


hypothesis is rejected and alternate hypothesis is accepted. Thus, brand awareness/

product visibility is the most significant marketing factor that influences the

habitual buying behaviour towards branded garments.

Table-8

47%

35%

8% 5% 5%

0%

10%

20%

30%

40%

50%

Brand awareness/

Brand visibility

Quality Price Brand popularity

Easy availability

Significant determinant influencing repeat purchase

Price 8

Brand popularity 5

Easy availability 5

Total 100

Brand loyalty in use of branded garments



12

Chart-8

Hypothesis testing

Ho: In habitual buying for branded jeans male youth are brand loyal.

HI: In habitual buying for branded jeans male youth are not brand loyal.


Thus, for degrees of freedom 1 and 5 percent level of significance the tabular value


E=100/2=50


1 20 50 -30.00 900.00 18.00

2 80 50 30.00 900.00 18.00

36.00


hypothesis is rejected and alternate hypothesis is accepted

Thus, in habitual buying for branded jeans male youth are not brand loyal.

Table-9

20%

80%

0%

20%

40%

60%

80%

100%

Yes No

Brand loyalty

Yes 20

No 80

Total 100

Reasons for brand switch

Response Actual number of

respondents

Desire to try new brands 65

Poor quality of existing brand 4

Competitive price 5

Effective promotions of other brands 4

Easy availability of other brands in the

market

22

Total 100


13

Chart-9

Findings

The survey reflects that majority of male youth are brand conscious and prefer

wearing branded jeans. Majority of the male youth who are non-earning and fall

in the age group of 15 to 21 buy branded garments for fashion and on the other

hand youth who are earning and fall in the age group of 22 to 35 states they

prefer branded jeans as it provides comfort to them. 47 percent of the youth learn

about the branded apparels through broadcast media.

The most significant marketing determinant that influences the decision of the

youths for first time purchase of any particular brand is the quality of the

garment.

The most important marketing determinant that influences repeat purchase of

youth males is brand awareness/brand visibility.

As branded garments (jeans) are low involvement products, for the repeat

purchase of these products the male youth are generally not loyal to the brand.

The desire to try new brands is the major cause for their brand switch.

Conclusions and Recommendations

Hoyer and Brown (1990) designed a controlled experiment to probe the role of

brand awareness in the process of consumer choice for the purchase of (peanut

butter) low involvement product, whose results revealed that brand awareness was a

dominant factor in both initial and repeat purchase decisions, even when the quality

of the selected brand was inferior to that of the other brands.

There is a very less research addressing the relationship existing between brand

awareness and habitual behaviour for low involvement products. A reason could be

that brand awareness represents critical information adopted by consumers in

reaching their repeat purchase decision with regards to low involvement. From the

65%

4% 5% 4%

22%

0%10%20%30%40%50%60%70%

Desire to try new brands

Poor quality of existing

brand

Competitive price

Effective promotion of other brands

Easy availability of other brands in the market

Reasons for brand switch


14

survey that was conducted the conclusions that could be drawn is brand awareness

and brand visibility are the significant determinant of habitual buying along with

product quality, price and place. So apart from providing all product features,

companies should go for aggressive marketing and provide significant brand

visibility.

As price and fashion are also two important factors in the decision making process,

the advertisement may inculcate the same influence on the decision of target

groups. Because buyers (male youth) are not highly committed to any brands,

marketers of low-involvement products with few brand differences should use price

and sales promotions to stimulate product trial. In advertising for a low-

involvement product (branded garments), ad copy should stress only a few key

points. Visual symbols and imagery are important because they can be remembered

easily and associated with the brand.

Ad campaigns should include high repetition of short-duration messages. Television

is usually more effective than print media because it is a low-involvement medium

suitable for passive learning. Advertising planning should be based on the Classical

Conditioning Theory, in which buyers learn to identify a certain product by a

symbol repeatedly attached to it. These are certain recommendations the companies

should follow for marketing of the branded garments to the target audience.

References

Holden S J S (1993) ― Understanding Brand Awareness: Let Me Give You a

Clue‖, Advances in Consumer Research, Vol.20, pp.383-388

Hoyer W D and Brow S P (1990), ― Effect of Brand Awareness on Choice for a

Common, Repeat – Purchase Product‖, Journal of Consumer Research Vol. 17,

No.2 pp. 141-148

Eun Joo Park (2005), Building Strong Brands, Free Press, Boston MA.

Sita Mishra (2007), The ICFAI University Press, ―Determinants on Habitual

Buying Behaviour: A Study of Branded Apparels‖.

Prasana Rosaline Fernandez (2009) ―Impact of Branding on Gen Y‘s Choice of

Clothing‖, The Journal of the South East Asia Research Centre for

Communications and Humanities. Vol. 1 No. 1, 2009, pp.79-95.


15

SERVICE QUALITY PERCEPTIONS: A GAP ANALYSIS BETWEEN

EMPLOYEES AND CUSTOMERS IN FINANCIAL SECTOR Mushtaq A Darzi Mehraju Din Bhat

Professor Faculty

The Business School Entrepreneurship

University of Kashmir Development Institute

J & K Government

Abstract

Service quality is most important competitive advantage which leads

customers’ satisfaction and their loyalty. It insulates the firm in volatile

markets through assured future income. The study reveals that the perception

level of the employees of the financial service sector varies from their

customers on various dimensions of the SERVQUAL. Among various service

quality dimensions, the highest perceptual gap has been observed on the

responsive dimension and the lowest on the reliability dimension.

Keywords: Customer Satisfaction, Loyalty, Perceptual Gap, Employee Perception

Introduction

The service sector is a vital sector of all the modern economies of the world which

is growing with tremendous speed. This sector contributes maximum to their

economies and employs most of their labour. In India this sector is also reflecting

growth from last few decades. For sustaining and developing this sector and to

build a long-term competitive advantage in the present dynamic environment, firms

need to provide quality services, as quality offers a way of achieving success among

competing service firms, particularly where a number of firms offer nearly identical

services to the customers. Research reveals that quality in today‘s competitive

environment is an essential strategy for success and survival of the service firms.

Customers are satisfied only by superior quality services; resulting in their loyalty,

retention, favourable word-of-mouth reviews and other behavioural intentions

which influence total revenue and net profits of a firm. Therefore, it is quality

which differentiates services of a firm from its competitors and wins the customer‘s

favour and sustains them profitably in the market. However, for achieving the

satisfactory and quality service, the perceptual gap on the various dimensions of the

service quality between the employees and customers should be minimum.

Review of Literature


16

Lewis and Spyrakopoulos (2001), while studying service failures and service

recovery strategies in banks argued that service failures related to banking

procedures, employee behaviour and technical failures vary in importance to the

customer. Some of these service failures are more difficult to deal with

satisfactorily than others. In addition they argued that customers with long

relationship and higher deposits with their banks were more demanding with respect

to service recovery.

Nazir (2002), in a study of customer‘s satisfaction in banks observed that customers

give highest importance to the staff factor (attitude and knowledge of the staff) and

the second importance is given to the service factor. The other factors observed in

order of preference are routine, environment, interactive, situational and the

promotional factor of the service. He suggested that banks need to meet the

customer‘s choices and preferences as there is mismatch in the demand and supply

(i.e. what is wanted and what is offered to the customers) and plug the deficiencies

in the areas especially in the hi-tech environment where the competition has

become too stiff. Besides the attitude and knowledge of the staff need to be

improved and the atmosphere of the bank needs to be made better, appealing and

impressive in order to have satisfied customers.

Prabhakaran and Satya (2003) in a study of banks reported that customers give

much importance to the dependability and accuracy attributes of the reliability

dimension of service quality. In the responsive dimension importance is given to the

attributes of willingness of the staff to help the customer and personalized service.

In the empathy dimension of service quality customers give importance to the

understanding, caring and individual attention paid by the staff. In the assurance

dimension of service quality the customers give much importance to the attributes

of proper coordination and provision of service on time. In the tangibility dimension

of service quality the customers give highest importance to the convenience of the

location of the bank to the respondents and availability of the staff on call. These

factors lead customers to select the service provider. Besides they also observed a

fair degree of association between the reliability and responsiveness; reliability and

tangibility; empathy and responsiveness; empathy and tangibility and assurance and

reliability.

Sachdev and Verma (2004) while studying banks, insurance, fast food and beauty

salon services observed that customers in banking services give much importance to

the responsive and reliability dimension of service quality and the least importance

is given to the tangibility and empathy dimensions. Besides the service performance

in banks is below the adequate level in respect of reliability, responsiveness and

assurance dimensions of service quality while the performance is above the

adequate level on the tangible dimension. In the insurance services, the customers

give highest importance to the reliability and assurance dimension of service quality

while the performance on all dimensions of service quality follows the same pattern

to that of the banking services. However both banking and insurance services are


17

poor in the responsiveness dimension in delivering the service quality to the

customers.

Najjar and Bishu (2006) while studying the service quality in the banking industry

argued that reliability and responsiveness dimension are the most critical

dimensions of the service quality services and are directly related with the overall

quality of the service. The customers give much importance to these two

dimensions of service quality among the five dimensions of SERVQUAL -

tangibility, reliability, responsiveness, assurance and empathy.

Baumann et al (2007) while exploring the factors of customer loyalty among retail

banking customers argued that willingness to recommend is best predicted by an

affective attitude, overall satisfaction and empathy. Short-term behavioural

intentions of customers (to remain with their bank over the next six months) were

best predicted by overall satisfaction and responsiveness. While the long-term

behavioural intentions of customers (to remain with their bank from six months to

five years) were predicted by overall satisfaction, affective attitude and empathy.

Yieh et al, (2007) argued that satisfaction by the three dimensions of service

quality: tangibility, employees-customer-interaction and employee‘s empathy,

positively affects the customers trust level. In addition they found that customer

satisfaction and trust are all positively related to customer loyalty.

Scotti et al (2007), in their study observed that high performance work system is

linked to employee‘s perceptions of their ability to deliver high quality customer

service. Both the perceptions of customer orientation and employee perception of

customer service are directly linked to customer perceptions of high quality service.

Furthermore the perceived service quality is linked with customer satisfaction.

The research reflects that service quality has a positive impact on customer

satisfaction and on profitability of a service by way of influencing the favourable

behaviours of the customers. These favourable behaviours of customers are

spreading of positive word-of-mouth, loyalty, paying of premium prices and buying

more services which directly lead to an increase in revenue, market share and net

profits. However, the perceptions of the customers and employees/marketers of the

services firms on various dimensions should not vary significantly in delivering

quality services. These perceptual gaps need to be understood by the service firms

for making necessary improvement in their quality of service. The present study has

been carried with the objective to explore the gaps between the perception of the

customers and the employees/marketers in the financial sector.

Research Methodology

A sample of 665 customers and 302 employees has been selected through random

sampling technique from these two service sectors. The sample includes 348

customers from the banking sector and 317 customers from the insurance sector.

Besides, the sample consists of 150 employees from the banking sector and 152


18

employees from the insurance sector. Proper care has been taken in selecting the

sample so as it covers all the demographic features. The research instrument given

by Parasuraman, Zeithaml and Berry (1988) called SERVQUAL for measuring the

service quality and customer satisfaction has been used in this study. It comprises

of five main dimensions of service quality - Tangibility, Reliability,

Responsiveness, Assurance, and Empathy which in turn are composed of twenty

two factors upon which the service quality and customer satisfaction is measured.

The tangibility, responsiveness and assurance dimension consists of four factors

each; and the reliability and empathy dimension each consists of five factors.

Findings

Tables 1 and 2 analyze the perceptions of the employees of financial service sector

and their respective customers towards service quality. In case of tangibility

dimension, a significant perceptual gap of 0.99 is reported (Z = 19.57 and p<0.01).

This reveals that the employees of financial service sector perceive high quality

service provided on this dimension (M of 3.92 at SD of 0.72), in comparison to

their respective customers, who report low perceptions (M of 2.93 at SD of 0.72).

Moreover, CAPF factor of tangibility reports lowest difference in perceptions of

employees and their respective customers (P. Gap of 1.51), followed by the APF (P.

Gap of 1.11) and AMAS (P. Gap of 0.79). The least perceptual difference is

reported on NCS factor (P. Gap of 0.53). This elucidates that the employees of the

financial service sector lag much behind in understanding the customer‘s

aspirations. Their own views on appearance and availability of physical facilities

and on appeal of print material differ much from the views of their respective

customers. The difference in the perceptions of employees and their respective

customers is highest on availability of various physical facilities at financial service

firms.

Table 1: Perceptions of Officers and Customers towards Service Quality

Quality Factors Category Mean S.D S.E P.

Gap

Z

Test

APF Employees 4.09 1.01 0.058

1.11 15.57* Customers 2.98 1.07 0.042

CAPF Employees 4.06 1.11 0.064

1.51 19.56* Customers 2.55 1.15 0.044

NCS Employees 3.79 0.97 0.056

0.53 7.77* Customers 3.26 1.02 0.039

AMAS Employees 3.76 0.96 0.056

0.79 11.61* Customers 2.97 1.02 0.039

PSA Employees 3.87 0.97 0.056

0.90 13.02* Customers 2.97 1.04 0.040

SSS Employees 4.02 0.92 0.053

1.02 15.38* Customers 3.00 1.02 0.040

SST Employees 3.84 0.97 0.056

0.86 12.61* Customers 2.98 1.01 0.039

APS Employees 4.00 0.98 0.057

1.01 14.57* Customers 2.99 1.03 0.040

AKR Employees 4.01 0.97 0.056

0.29 4.28* Customers 3.72 1.05 0.041


19

ASR Employees 4.12 0.96 0.056

1.68 24.19* Customers 2.44 1.08 0.042

WSH Employees 3.92 0.95 0.055

0.74 10.59* Customers 3.18 1.13 0.044

QRR Employees 4.01 0.92 0.053

1.05 15.88* Customers 2.96 1.02 0.040

QDS Employees 4.11 0.96 0.055

0.98 14.31* Customers 3.13 1.06 0.041

TOS Employees 3.96 0.93 0.054

1.26 18.83* Customers 2.70 1.04 0.040

CBS Employees 3.87 0.92 0.053

0.82 12.46* Customers 3.05 1.02 0.040

JKS Employees 3.98 0.87 0.050

0.82 13.04* Customers 3.16 1.01 0.039

EIS Employees 4.17 0.82 0.047

0.58 9.42* Customers 3.59 1.05 0.041

IAP Employees 3.97 0.93 0.054

0.96 14.03* Customers 3.01 1.11 0.043

COH Employees 3.99 0.99 0.057

1.22 17.53* Customers 2.77 1.05 0.041

PAP Employees 3.99 0.91 0.053

0.86 12.93* Customers 3.13 1.06 0.041

UCN Employees 4.18 0.88 0.051

1.17 17.76* Customers 3.01 1.08 0.042

SCI Employees 4.14 0.93 0.054

1.13 17.10* Customers 3.01 0.99 0.039

*p<0.01, **p<0.05, ***p<0.10, Customers (N) =665, Employees (N) =302

Further, in case of reliability dimension, employees and their respective customers

significantly differ in their perceptions reporting a perceptual gap of 0.81(Z = 18.52

at p<0.01). The employees strongly believe that they provide good quality service

on this dimension (M of 3.94 at SD of 0.58), which differs from their respective

customers who report low quality perceptions (M of 3.12 at SD of 0.74). Pertaining

to various factors of reliability, the highest perceptual gap is reported on SSS (P.

Gap of 1.02), followed by APS (P. Gap of 1.01), PSA (P. Gap of 0.90) and SST (P.

Gap of0.86). The least perceptual gap is recorded on AKR factor (P. Gap of 0.29).

It suggests that the employees of the financial service sector make incorrect and

inflated assessments on service supply on its promised time, problem solving

ability, accuracy in providing the services and employees sincerity. The perceptual

difference on the accuracy in keeping records which is least between employees and

their respective customers, reflects more coherence of their views on this quality

factor.


20

Table 2: Perceptions of Employees and Customers on SERVQUAL

Quality Dimensions Category Mean S.D S.E P. Gap Z

Test

Tangibility

Employees 3.92 0.72 0.042

0.99

19.57* Customers 2.93 0.72 0.028

Reliability

Employees 3.94 0.58 0.034

0.81

18.52* Customers 3.13 0.74 0.029

Responsiveness

Employees 4.04 0.66 0.038

1.11

23.58* Customers 2.93 0.72 0.028

Assurance

Employees 4.00 0.57 0.033

0.87

20.43* Customers 3.13 0.70 0.027

Empathy

Employees 4.05 0.59 0.034

1.07

23.69* Customers 2.98 0.76 0.030

Overall Quality

Employees 3.99 0.40 0.023

0.97

29.59* Customers 3.02 0.59 0.023

*p<0.01, **p<0.05, ***p<0.10: Customers (N)=665, Employees (N)=302: TANGIBILITY = ∑ Appearance of Physical

Facilities (APF): Conditions and Availability of Physical Facilities (CAPF): Neat and Cleanliness of Staff (NCS): Appeal of Material Associated with the Service (AMAS): RELIABILITY = ∑ Problem Solving Ability of Staff (PSA): Staff‘s

Sincerity in serving (SSS): Service Supply in Time (SST): Accuracy in Providing the Service (APS): Accuracy in Keeping

Records (AKR): RESPONSIVENESS = ∑ Availability of Staff for Responding (ASR): Willingness of Staff to Help (WSH): Quickness of Response to Requests (QRR): Quickness in Delivering the Service (QDS): ASSURANCE = ∑

Trustworthiness of Staff) (TOS): Courteous Behaviour of Staff (CBS): Job Knowledge of Staff (JKS): Ease in Interaction

with Staff (EIS): EMPATHY = ∑ Individual Attention Paid (IAP): Convenience of Operating Hours (COH): Personal Attention Paid (PAP): Understanding Customers Needs (UCN): Sensitiveness to Customers Interests (SCI).

The difference between the perceptions of employees and their respective

customers regarding the quality delivered on the responsiveness dimension of

service quality is significant, reporting a perceptual gap value of 1.11( Z= 23.58

and a p=0.01). The employees hold high perceptions of quality on this dimension

(M of 4.04 at SD of 0.66). While as, the perceptions held by their respective

customers are very low (M of 2.92 at SD of 0.72). These inflated views of the

employees regarding quality on the responsiveness dimension puts service firms in

a wrong notion that they are providing quality service and satisfying customers.

Moreover, on ASR factor of responsiveness, highest perceptual difference is

reported (P. Gap of 1.68), followed by the QRR (P. Gap of 1.05) and QDS (P. Gap

of 0.98). The least perceptual gap is reported on WSH (P. Gap of 0.74). This

indicates that the customers comparatively perceive low willingness of employees

working in service sectors, weak problem solving abilities, slow pace in providing

services and sluggish response to customer‘s requests, in comparison to the

employees who contradict with their perception on these quality factors. The

variation in the perceptions of employees and customers regarding availability of


21

the staff is worse. Employees perceive high service on this factor scoring a mean of

4.12at SD of 0.96, while the perceptions of their respective customers are very low,

scoring a mean of 2.44 at SD of 1.08.

Further, in case of assurance dimension of service quality, a significant difference

in the perception of the employees and customers is reported (P. Gap of 0.87).

Customers report comparatively low perceptions of quality delivered on this

dimension (M of 3.12 and SD of 0.70) while, the official‘s report high perceptions

of service quality, obtaining a mean score of 4.00 at SD of 0.57. Moreover, highest

perceptual gap is reported on TOS factor of assurance (P. Gap of 1.26) followed by

CBS and JKS, both report a perceptual difference of (P. Gap of 0.82). The least

perceptual gap is reported on EIS factor (P. Gap of 0.56). This suggests employees

of the financial service sector inflate their views on employee‘s courteous

behaviour, interactive approach, job knowledge and trustworthiness. This

discrepancy between the perceptions of employees and customers is much wider on

TOS factors which need much attention. Therefore, it is important to have coherent

views of the quality delivered on the assurance dimension by both customers and

employees for developing healthy customer relationships and deliver services as per

the wishes and aspirations of the customers.

Pertaining to empathy dimension of service quality, a perceptual gap of 1.07 is

reported between the employees of the financial service sector and their respective

customers at (Z= 23.69 and p<0.01). This reveals that the perceptions of the

employees are high (M of 4.05 at SD of 0.59), while the perceptions of their

respective customers are comparatively low (M of 2.98 at SD of 0.76). Moreover,

among the factors of empathy, lowest perceptual gap between employees and their

respective customers is reported on COH factor (P. Gap of 1.22), followed by UCN

(P. Gap of 1.17), SCI (P. Gap of 1.13) and IAP (P. Gap of 0.96). The least

perceptual variation is reported on PAP (P. Gap of 0.86). This suggests that the

employees hold high perceptions on the personal and individual attention paid to

customers, sensitivity to customer‘s interests, understanding of customer‘s needs

and problems, and convenience of operating hours. Moreover, it further reveals a

significant high perceptual gap on the understanding of the customer‘s needs.

In case of overall perceptual gap on SERVQUAL, the table reveals that the highest

gap is reported on responsiveness (P. Gap of 1.11), followed by Empathy (P. Gap of

1.07), tangibility (P. Gap o 0.98) and assurance (P Gap of 0.87). The lowest gap is

reported on reliability dimension (P. Gap of 0.81). The gap between the perceptions

of the employees and their respective customers is significant on all five dimensions

of SERVQUAL at p<0.01. This implies that the financial service needs to be given

much attention to bring down the gaps on all five dimensions so that the service

firms will understand the actual service quality delivered and that being experienced

by the customers. Moreover, the overall perceptual gap in the service sector is 0.97

with Z value of 29.59 at 0.01 level of significance.


22

Tables 3 and 4 reveal the comparative perceptions of the officers and their

respective customers across banks and insurance organizations. The data reveals

that on the tangibility dimension, the gap between quality perceptions of customers

and employees in the banking sector is low, obtaining a gap score of 0.85 in

comparison to the insurance sector, scoring a gap of 1.13. This demonstrates that

the perceptions of the employees of the bank vary in terms of being far less from

their respective customers regarding the quality delivered on the tangibility

dimension, as compared to that of the employees of the insurance sector.

Furthermore, the gap in the score is significant in both service sectors, suggesting

that much attention is needed to bring down this perceptual gap. Moreover, in the

banking sector, a low perceptual gap is reported between the employees and their

respective customers on appearance and availability of physical facilities and

neatness and cleanliness of the staff in comparison to the insurance sector. While in

the insurance sector, a low perceptual gap is reported on the material associated

with services in comparison to the banking sector.

In case of the reliability dimension, banking sector report low perceptual gap (0.80)

between employees and their respective customers, in comparison to the insurance

sector reporting a perceptual gap of 0.83. This portrays that the employees of both

service sectors make a high assessment of the quality provided on reliability, while

their respective customers do not agree with their views. Besides, the variation in

the assessment is comparatively more in the insurance sector. Further, in the

banking sector low variations in the perception of employees and their respective

customers are reported on the problem solving ability of the staff, accuracy in

providing services and accuracy in keeping records of the customers, in comparison

to the insurance sector. While in the insurance sector low variations in perceptions

between employees and their respective customers is reported on sincerity of staff

in serving customers and timely supply of services to the customers in comparison

to the banking sector.

Table 3: Perceptions of Employees and Customers towards Service Quality across

Organizations

Qualit

y

Factor

s

Category

Banks (JKB) Insurance (LIC)

Me

an

S.D Percept

ual Gap

Z

Value

Mean S.D Percept

ual Gap

Z

Value

APF Employees 4.25 1.01

0.93 9.58* 3.92 0.98

1.31 13.32* Customers 3.31 1.00 2.61 1.03

CAPF Employees 3.94 1.13

1.19 10.79* 4.17 1.07

1.86 17.44* Customers 2.75 1.15 2.31 1.10

NCS Employees 3.71 0.91

0.41 4.49* 3.88 1.03

0.65 6.47* Customers 3.30 1.03 3.22 1.01

AMAS Employees 3.77 0.99

0.87 9.21* 3.75 0.94

0.69 7.11* Customers 2.89 0.96 3.06 1.07

PSA Employees 3.80 0.94

0.86 9.04* 3.93 1.01

0.93 9.36* Customers 2.94 1.06 3.00 1.01

SSS Employees 4.04 0.87

1.06 11.76* 3.99 0.98

0.98 10.03* Customers 2.98 1.04 3.01 1.01

SST Employees 3.87 0.97 0.88 9.15* 3.81 0.97 0.84 8.68*


23

Customers 2.99 1.03 2.97 0.97

APS Employees 3.87 1.01

0.92 9.29* 4.12 0.94

1.09 11.44* Customers 2.94 1.05 3.03 1.00

AKR Employees 4.28 0.88

0.28 3.17* 3.73 0.99

0.33 3.39* Customers 4.00 1.03 3.40 0.98

ASR Employees 3.98 0.97

1.77 18.18* 4.27 0.94

1.57 16.35* Customers 2.21 1.07 2.70 1.03

WSH Employees 4.07 0.93

1.14 12.03* 3.76 0.95

0.31 3.13* Customers 2.93 1.09 3.45 1.11

QRR Employees 4.15 0.88

1.20 13.32* 3.87 0.95

0.91 9.39* Customers 2.95 1.02 2.96 1.02

QDS Employees 3.98 0.95

0.82 8.55* 4.24 0.94

1.14 11.82* Customers 3.16 1.07 3.10 1.05

TOS Officers 4.08 0.93

1.48 15.58* 3.84 0.92

1.03 11.08* Customers 2.60 1.07 2.80 0.99

CBS Officers 3.94 0.87

0.90 9.95* 3.80 0.96

0.74 7.74* Customers 3.04 1.04 3.05 0.99

JKS Officers 4.07 0.85

0.91 10.52* 3.89 0.88

0.73 8.00* Customers 3.16 0.99 3.16 1.02

EIS Officers 4.23 0.78

0.53 6.17* 4.12 0.85

0.65 7.30* Customers 3.70 1.09 3.46 0.98

IAP Officers 4.04 0.95

1.18 12.22* 3.89 0.90

0.72 7.54* Customers 2.86 1.09 3.16 1.11

COH Officers 3.98 0.94

1.42 15.07* 4.00 1.04

1.01 9.87* Customers 2.56 1.02 2.99 1.03

PAP Officers 4.02 0.93

1.03 11.10* 3.96 0.89

0.67 7.10* Customers 2.99 1.01 3.28 1.10

UCN Officers 4.38 0.81

1.33 15.15* 3.97 0.91

1.01 10.59* Customers 3.06 1.08 2.96 1.08

SCI Officers 4.02 0.94

0.99 10.69* 4.26 0.91

1.27 13.63* Customers 3.03 1.00 2.98 0.99

*p<0.01, **p<0.05, ***p<0.10, JKB (Customers) =348, LIC (Customers) =317, JKB

(Employees) =150, LIC (Employees) =152

Table 4: Perceptions of Employees and Customers on SERVQUAL across Organizations

Quality

Dimensions

Ca

teg

ory

Banks(JKB) Insurance (LIC)

Mean S.D Gap

Score

Z

Value

Mean S.D Gap

Score

Z

Value

Tangibility

E 3.92 0.73

0.85

11.87*

3.93 0.72

1.13

16.20* C 3.06 0.75 2.79 0.66

Reliability

E 3.97 0.57

0.80

12.96*

3.92 0.59

0.83

13.31* C 3.17 0.76 3.08 0.71

Responsiveness

E 4.04 0.67

1.23

18.28*

4.04 0.64

0.98

15.00* C 2.81 0.74 3.05 0.69


24

Assurance

E 4.08 0.55

0.95

16.24*

3.91 0.58

0.79

12.86* C 3.12 0.70 3.12 0.70

Empathy

E 4.09 0.57

1.19

19.43*

4.01 0.61

0.94

14.20* C 2.90 0.74 3.07 0.77

*p<0.01, **p<0.05, ***p<0.10, JKB (Customers) =348, LIC (Customers) =317, JKB (Employees) =150, LIC (Employees)

=152, E= Employees: C= Customers: TANGIBILITY = ∑ Appearance of Physical Facilities (APF): Conditions and

Availability of Physical Facilities (CAPF): Neat and Cleanliness of Staff (NCS): Appeal of Material Associated with the Service (AMAS): RELIABILITY = ∑ Problem Solving Ability of Staff (PSA): Staff‘s Sincerity in serving (SSS): Service

Supply in Time (SST): Accuracy in Providing the Service (APS): Accuracy in Keeping Records (AKR): RESPONSIVENESS = ∑ Availability of Staff for Responding (ASR): Willingness of Staff to Help (WSH): Quickness of

Response to Requests (QRR): Quickness in Delivering the Service (QDS): ASSURANCE = ∑ Trustworthiness of Staff)

(TOS): Courteous Behaviour of Staff (CBS): Job Knowledge of Staff (JKS): Ease in Interaction with Staff (EIS): EMPATHY = ∑ Individual Attention Paid (IAP): Convenience of Operating Hours (COH): Personal Attention Paid (PAP):

Understanding Customers Needs (UCN): Sensitiveness to Customers Interests (SCI).

Pertaining to the responsiveness dimension (insurance sector), lowest perceptual

gap is reported between the employees and their respective customers, scoring a gap

of 0.98 in comparison to the banking sector, which scores a high perceptual gap

(1.23). This suggests that the variation in the assessment of the quality between the

employees and customers is comparatively less in the insurance sector. While as, in

banking sector the views of employees and customers differ much regarding quality

on the said dimension. Moreover, in the insurance sector low perceptual gap

between the employees and their respective customers is reported on availability of

staff for responding to customer‘s requests and their willingness to help customers,

in comparison to the banking sector. While the banking sector reports low

perceptual gap on the quickness in delivery service to the customers in comparison

to the insurance sector.

Further, in case of assurance dimension of service quality, insurance sector reports

low perceptual gap, obtaining a gap score of 0.79 followed by the banking sector,

scoring a perceptual gap of 0.95. This demonstrates that in the insurance sector, the

employees do not vary much with the view of their respective customers on the

quality delivered in the said dimension, as compared to the banking sector, where

the employees make high assessments of the quality delivered than the assessment

made by their respective customers. Moreover, less difference in perception of

employees and their respective customers is reported in the insurance sector in

comparison to the banking sector on trustworthiness of the employees, their

courteous behaviour and job knowledge.

In case of empathy dimension, the insurance sector reports comparatively low

perceptual gap (0.94), followed by the banking sector with a perceptual gap of 1.19.

This reveals that the employees and customers differ in their view and this

difference is much wider in the banking sector. Further in the insurance sector, low

difference between the perception of employees and customers is reported on the

convenience of the operating hours for availing the services, individual and the

personal attention paid by the employees towards the customer‘s requests and

problems, and understanding of the customer‘s needs and requirements in


25

comparison to the banking sector. While the banking sector reports a comparatively

low perceptual difference on employees‘ sensitivity towards customer‘s interests.

Conclusion

The perception of the employees of the financial service sector and their respective

customers vary significantly towards quality on all factors and overall dimensions

of service quality. The highest variation is reflected in the responsiveness

dimension, signifying the employees making more inflated assessments on their

willingness and promptness in providing services which varies from the assessment

made by their respective customers. The lowest variation between the quality

perception of employees of financial service sector and their respective customers is

reflected on the reliability dimension, demonstrating that the employees and their

respective customers are closer in their assessment of abilities of the employees in

performing promised services dependably and accurately.

The perceptions of employees and their respective customers towards service

quality on responsiveness, assurance and empathy dimensions show more variation

in the banking sector. The perceptions of employees and their respective customers

towards service quality on tangibility and reliability dimensions show more

variation in the insurance sector.

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Multiple Item Scale for Measuring Consumer Perceptions of Service

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26

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Issue 3 (May), pp.267-284.


27

AN ANALYTICAL STUDY OF INNOVATIVE SOLUTIONS IN

MARKETING STRATEGIES FOR SUSTAINABLE DEVELOPMENT

WITH REFERENCE TO MUMBAI MARKET Dr. Sangeeta N. Pawar

Associate Professor in Commerce

University of Mumbai

Abstract

The paper is an analytical study highlighting the lessons of excellence prevailing in

the business world. The holistic business management and marketing framework is

studied from the point of view of the companies identifying the new value

opportunities for renewing the marketing strategies, their value offering techniques,

and companies’ capabilities and infrastructure strength to deliver the new value

offering efficiently. The paper studies the reconfiguration procedure of the

companies adopted for changing their present organizational structure. The paper

proposes to set objectives based on methodological contents suggesting justifiable

solutions and conclusions which are falling in these levels as cited below. There

should be a dying desire to change perception of the marketing industry to solve the

strategic issues more in the interest of the society and its stakeholders. There must

be promotion of social interest and change in social and organizational attitudes.

Maintaining the quality of life by protecting the environment is virtually protecting

our own existence. The area of marketing is grown in scope and impact over a

period of time. The shift in customer power and its implications for a new paradigm

of marketing can outline the new strategic choices for companies; indicate

implications for societal marketing and forecasts the emerging customer advocacy

era of marketing. Marketing strategies are key drivers for improving on the

performance and profit mechanism of the companies whereas, the advertising and

promotional strategies affects revenue of the companies faster and in a sustained

manner. Marketing strategies merely are not only for generating growth in sales

revenue. Marketing has over the past few years come under considerable scrutiny

in terms of accountability of money spent and tangible returns in terms of

incremental sales and profit attribution to marketing tactics. The rule of three

signifies the element of business and market sustainability and the efforts set by the

companies to achieve the target. An aggressive marketing strategy to promote the

products and make profits is the only motto of the businessmen. The market place in

India has traces of globalization, proliferation, ethnology, affluence and solutions.

The consumer is more informed, value driven, more facilitated. Some new

marketing factors are domineering the marketing arena like aggregation,

globalization, cross border threats, media fragmentation, and information

overloading, outsourcing and strategic perspectives of outsourcing and extensive

services. The existence of the new formats of marketing strategies add on new

challenging strategies before the marketing industry to pursue R&D by building

IPR skills and virtualizing the products and processes like digital communication,

websites and online marketing. Systems and process strategies should possess


28

explicit marketing systems based on reliability and core value of the product or

service.

Keywords: Rule of Three, Sustainability, Marketing Strategies, Strategic Issues, Accountability

Introduction

A product or service portfolio needs regular reviewing, similarly aggressive sales

strategy for selling the products also requires regular reviewing. Availability and

accessibility for creating a distribution strategy is again equally important. By the

turn of this century, the electronics revolution is likely to touch a new height in

which the robot culture would gain a momentum inviting social evils as the Social

and technological developments are creating big turmoil in the nation as the

electronics revolution is transforming economic and social system. Though we find

today‘s society much better off than what they were in the past specially in terms of

material assets, since more people have their own houses, television, music system,

cameras, refrigerators, washing machines, scooters, cars etc than one or two

decades ago. Yet lot of people seems unhappy because of social dissension and

stress, increasing crime, generation gap, polarization of views etc. The automobile

industry promotes and markets the two wheelers and four wheelers as luxury,

comfort and as a must have or an important requirement of the consumers‘ life but

fail to limit the pollution created in the ecology. The cement manufacturing

industries, oil refineries, chemicals manufacturing industries, leather industries,

steel manufacturing companies and many such other enterprises largely affect the

environment by disturbing the ecological balance. The packaging revolution giving

utmost importance to plastic for packing of products, polythene carry bags, acrylic

PVC coated packing etc is creating nuisance in the environment. In the process of

social engineering number of factors is instrumental but the prominent ones relate

to consumer health, information dissemination and proper standards of advertising.

All four metro cities in India are getting highly polluted and populated. Small cities

like Pune, Nashik, Bhopal, and Agra, just to name few are also facing problems of

pollution. The society is becoming disorganized and indifferent to the nation‘s

goals. There is disintegration of traditional Indian families towards the pub and

disco culture, new shopping experiences like mall culture, pizza culture, eateries,

and digitalized electrons market are becoming first priorities of the young

generation. The bollywood films and theatrically dramatized TV commercials are

introducing western culture in kids, teenagers and youths in the nation. The social

marketing concept can be administered by the industries and organizations

determining the need, interest and wants of the target market and deliver desired

satisfaction more effectively than their competitors. Three has special significance

in a business. The rule of three can be leveraged so that the competitive markets can

have better evolution. The rule of three emphasizes - three large players in the

market who can survive and sustain their existence. Mid size companies die

eventually and can grow only when they are merged or acquired. Markets are a

collective behaviour of certain companies.


29

Objectives of the Study

1. To identify the market participants of urban market

2. To explain the perception and consumer behavior pattern of participants

towards market places

3. To examine the behavioral pattern of market participants in daily consumer

markets

Hypotheses

1. Consumers always visit nearest shops that offer required goods and services

2. The range of consumer increases with increase in specialization of shopping

centres

3. Higher middle class and the upper affluent class consumers shop at greater

distances away from their nearest shops

4. More the accessibility of the shopping centres, more is the participation of the

consumers


1. Qualitative Research Methods like depth interviews, e-surveys were used

2. A depth interview was carried out through face-to-face method and by a

telephone.

3. E-surveys method was used through list of respondents with accurate email

addresses, with use of computer and internet facilities in their day-to-day

use. As the method is cost and time saving and there is data accuracy

through automatic routing.

An Analysis of Urban consumers towards shopping

The innovative solutions of marketing with respect to sustainable development in

the city of Mumbai draw attention to the perception of space geographically. The

inherent spatial nature of consumer shopping activity where the consumer is likely

to shop directly affects the location and organization of the market system and vice

versa. The connection between the market environment and the consumer behaviour

is relative in nature. The study is linked to connect the market places and the

consumers. The physiological, social and economic factors are attached to the

perception of space and consumer behaviour. The present study was carried out

through primary data collected from 25 consumers in the age group of 20 to 45

years in the city of Mumbai. The urbanized consumer behavior pattern varies from

person to person depending upon the earning capacity, income in hand and

spending capacity as well as the social status, education and preferences. A

urbanized consumer faces problems like market places, shopping malls, shopping

centres getting crowded; hybrid nature of markets growing rapidly, prices of the

products getting inflated, price variations, piracy and duplication of products,

malpractices and misleading advertisements, lack of parking space, unplanned

expansion of markets, cheating consumers on the pretext of labeling products with

tag of free, discounts, offers, incentives etc.


30

1. The hypothesis that consumers always visit nearest shops in Mumbai is partially

true because only 40 percent have tendency to visit nearest shops, while about

more than 50 percent shop from main markets. About 40 percent consumers

shop from main market and rest prefer to shop in markets located between main

market and nearest market. The reason is there are many main and secondary

markets in Mumbai.

2. The range of consumer increases with increase in specialization of shopping

centres, applies only to higher income class.

3. Consumers patronize all levels of shopping centers because urban consumers

include lower, middle and high class consumers. High class consumers travel

long distances for shopping because they have their personal vehicles, they shop

in leisure, they shop for recreation and enjoyment and in general have tendency

to travel for shopping.

4. Shopping centres and Malls are increasing day by day in Mumbai attracting

large consumers from disperse locations

5. Income is the only controlling factor for selecting the shopping places and

market.

6. There is a multipurpose trip to the market applied by 50 percent of the

consumers. There is variation as the consumers shop while coming back home

from office, from social functions, on journey, during visit to relatives places or

as a routine exercise.

7. There is variation in shopping trips. 40 percent without vehicles do shopping of

monthly requirement once and other requirement as per need. 60 percent with

vehicles shop whenever they want. For daily consumables there is no fixed

programme of shopping. The shopping programme also varies with income.

8. Choice of the market relates more to consumer behaviour depending upon

person to person and their status, income, education, preferences and social life.

Conclusion

The success of marketing strategies and application of innovative solutions for

sustenance relates to satisfaction of the market place participants. The knowledge of

consumer behavior is vital for this. The behavioral pattern of market participants are

complex and therefore require interaction of several social, economic, physiological

and psychological factors. The behaviour of consumers is sorted through the

controlling factors like background of consumers, information sources, search of

market, perception towards the market and satisfaction with purchase.

References

Assael Henry, Consumer Behaviour and Marketing Action, 6th

Edition,

Thomson Learning, USA, 2001

Saxena H.M., Marketing Behaviour : A Regional Analysis, RBSA, Jaipur, 2003

Wanke Michaela (Edited), Social Psychology of Consumer Behaviour,

Psychology Press, New York, 2009

Sethi Mohini, Consumerism a growing concept, Phoenix Publishing House,

New Delhi, 1994


31

Chowdhary Nimit, Chowdhary Monica, Marketing of Services : The Indian

Experience, Macmillian , New Delhi, 2005

Nair R. Suja, Consumer Behaviour in Indian Perspective, Himalaya Publishing

House, Gurgaon, 2002.


32

LEADING THROUGH YOUR SKILLS AS A COACHING LEADER

Dr. James Jacob

Associate Professor

Department of Commerce

V. K. Krishna Menon College

Abstract Most leaders recognize the value of coaching and developing employees, when they

have their own challenges in meeting deadlines and getting the work done.

Coaching does not need to be formal, scheduled and preplanned. Most people have

probably heard the adage, “Give a man a fish and feed him for a day. Teach a man

to fish and you feed him for a lifetime”. By offering advice, we are essentially

offering our version of fish to our colleagues. By coaching instead, we will help

grow the capacity of our colleagues, so that they can determine their own best

actions to take. If we can coach individuals to come up with their own solutions that

they are committed to, this will ultimately be far more effective than a “better”

solution we offer that they are less committed to.

Key words: Coaching, Feedback, Mentoring, Counseling

Introduction Coaching is really about growing and developing other people. In order to grow and

develop, people need to think for them and make increasingly complex decisions in

ever-changing environments. Through coaching, we want to help our direct

reporters, peers, partners and bosses to solve problems on their own, with their

higher levels of sophistication, accuracy and productivity. That is the ideal world.

Most leaders recognize the value of coaching and developing employees, when they

have their own challenges in meeting deadlines and getting the work done.

Coaching does not need to be formal, scheduled and preplanned. In any moment,

when an employee approaches his manager asks, ―what do you think we should do

here?‖ a manager can turn that into a coaching dialogue by asking questions; ―what

do you think? What have you already thought about? Which one of those options

do you like? What would be the pros and cons? Now, we can guarantee that the

manager most likely has an option and could have offered it. In fact, that is what the

natural reflex probably is, given how most leaders have strengthened their ―advice-

giving muscles‖.

Objectives of the study

The objectives of the paper is to present the significance of coaching to be

undertaken by the managers or leaders in an organization in a sustained manner and

the skills to be developed and practiced for the growth of the leaders as a coach.


33

Meaning and definition Coaching is defined as ―Interactions that help the individuals being coached to

expand awareness, discover superior solutions, and make and implement better

decisions.

Coaching allows the individual who is being coached –the coachee- to grow as a

result of the process. While a coachee may grow after hearing a manager‘s advice

and receiving direction, it is believed that the coachee discovers his or her own

solutions when he or she face different situations in future and develop self

confidence. Coaching helps individuals discover answers within themselves and

help them feel more personally empowered. The coach is also dedicated to helping

to ensure the implementation and long-term follow-through of planned actions.

The very nature of coaching process, conversation or relationship is that it is

focused on change- growth and improvement. As a result, coaching is an agenda for

change. Coaching conversations should move the coachee forward, whether in

thought or in action, in relation to the coaching issues being discussed. Because

coaching contains an agenda for change, coaching conversations are different forms

the conversations that many of us have with our friends or associates, where the

focus is often on chatting or complaining.

Most people have probably heard the adage ―Give a man a fish and feed him for a

day. Teach a man to fish and you feed him for a lifetime‖. By offering advice, we

are essentially offering our version of fish to our colleagues. By coaching instead,

we will help grow the capacity of our colleagues, so that they can determine their

own best actions to take.

If we can coach individuals to come up with their own solutions that they are

committed to, this will ultimately be far more effective than a ―better‖ solution we

offer that they are less committed to. If we wanted to use a formula to demonstrate

the difference suggested by this approach, we could measure the gain as follows:

Quality of solution × Level of commitment = Benefit level

To make things easier, let us just say that the formula can be abbreviated to

Quality × Commitment = Benefit

Coaching is different from mentoring and counseling

Coaching is quite different from mentoring, where the mentor is usually a more

senior person who is attempting to guide the ―mentee‖ within the organization and

convey wisdom that could well be lost in the next few years. The mentee may seek

out a mentor base on the mentor‘s wisdom or experience, as the mentor has often

already traveled the path that the mentee is seeking to travel. There is often a

perceived hierarchy of power or information between the mentor and the mentee,

with the mentor being the older and wise. By contrast, coaching may occur between


34

a manager and his direct reporters (in both directions) and also between peers. A

coach does not necessarily need to have lived the experience of the coachee to be

effective in helping to guide the coachee to a better solution.

It is also common for people to mistake coaching for teaching. The difference is

that the teacher, by definition, possesses knowledge and information that the student

lacks. The primary activity is the transmission of that information. The relationship

between the teacher and the student is usually temporary and narrow, whereas that

of coaching is longer-lasting and broad. While coaching may contain elements of

teaching, it is far broader than merely conveying information.

Coaching is also mixed up with counseling, and there are two probable reasons for

that: First, coaching can focus on helping the individual to deal with difficult issues,

which may remind people of the focus of counseling. Second, counseling often

focuses on helping someone to change or reshape the behaviour and this can also be

objective of a good coaching discussion. However, counseling more commonly

involves people who are experiencing some dysfunctional behaviour or internal

turmoil. It is often focused on healing past wounds and looking for the origins of

dysfunctional behaviour. Coaching, by contrast, is designed to include virtually

everyone. Coaching takes a future focus, aiming to create a desired state and a

series of actions to help achieve the desired state. It is less focused on the past and

far more focused on moving forward into the future.

Significance of coaching in an organisation

Coaching seems like a new idea to many managers. One reason for that could well

be that societal values have changed dramatically and our leadership practices have

been trying to catch up. The internet has democratized information so that everyone

has access to everything but the most guarded, classified information. Globalization

has made diversity of backgrounds and styles a welcome practice and business

society. Management practices have evolved to a small degree, but they have not

kept pace with what has happened in society. Remarkably little has changed when it

comes to the basics of management. Well educated and very smart employees

would still be taking orders from bosses who were frequently less speedy in

technology than their direct reporters. Important decisions would still be made by

the senior executives, with only minor input from those below them. In meetings,

people would continue to look to the most senior person in the room, who would do

most of the talking, especially in the first half of the meeting. The strategy of the

organization would be determined by handful of executives. Competition between

departments would often detract from the overall effectiveness of the organization.

This has necessitated evolving coaching as a management style.

The challenges of improving as a coach

1. The need for self awareness


35

It is always advocated that coaches have some grasp of one‘s own beliefs,

biases, agendas and mental models which would be of enormous help in the

coaching process. Be aware of strong biases that you have. Take note of those

areas where it becomes obvious that your views diverge from those of others.

Be aware of powerful beliefs that strongly set you apart from many others in

your organization. As Peter Senge stated, ―The structures of which we are

unaware hold us prisoner‖. Most managers we know lead extremely busy lives.

They are caught up in a swirl of activity, much of it not of their making. In

today‘s organizational life, managers are often running to keep ahead of the

forces that are constantly pounding upon them. So much energy is expended in

this quest to keep ahead of so many other forces that many of the high value

activities are pushed aside.

2. Being fully present One area of growth for many coaches is the practice of being fully present with

the person who is being coached. It is easy to be with someone physically but

not have any genuine mental or emotional connection with him. What‘s really

unnerving about the fact is how quickly and accurately the other person senses

it. In a similar way, the person being coached senses whether or not you are

really paying attention. The coachee can sense that coach is thinking of other

things and not putting his or her full focus on this discussion. The best coaches

have learned to put away all the things on their desk that would distract them.

They have learned to take a deep breath and use their ―psychological eraser‖ to

clean the whiteboard in their mind so that nothing will distract them from this

important conversation. To be fully attuned to the ideas and the emotions

coming from the other person requires such focus.

3. Use assessment tools

Despite all the admonitions to ―know thyself‖ the simple truth is that most of us

do not. Indeed, the evidence is clear. While some say and believe that they

know both their strengths and their weaknesses, the harsh reality is that people

who actually do so are extremely rare. The value of obtaining objective

feedback regarding your coaching skills is very important. Having accurate,

objective feedback is an extremely helpful first step in the creation of a personal

plan of development to which you will be highly committed.

Zenger Folkman has created a specialized 360-degree feedback instrument that

focuses exclusively on coaching skills. It examines 14 competencies of

coaching, identified by studying the most highly effective leader coaches.

Having accurate data on your current behaviour in each of these areas allows

you to identify those in which you have reasonable strength and that lend

themselves to further development. It also enables you to see any major

deficiencies that would curtail your effectiveness going forward. Armed with

that information, you are now able to construct a personal plan of development


36

that will enable you to go forward to even greater heights. Following are the 14

coaching competencies:

Build a strong relationship

1. Personally supports the development of others

2. Generates trust

3. Builds relationships

4. Encourages collaboration

Communicates effectively

5. Listens actively

6. Asks powerful questions

7. Values diversity

8. Provides feedback

9. Welcomes feedback

Facilitates action and results

10. Helps others to set goals and performance expectations

11. Inspires others to change

12. Fosters innovation

Provides ongoing support

13. Gives recognition

14. Provides follow-up and accountability

Self assessment as a coach has limited value relative to that of a true 360-degree

assessment. Self assessments have modest validity because it is difficult, if not

impossible, to be objective when it comes to evaluating oneself.

4. 360-Degree Feedback

A coach can participate in a full-fledged multi-rater feedback process. In this

case, the coach can identify several people with whom he works, including the

boss, several peers and the people who report directly to him. To that a coach

can add your self-appraisal. The combination enables the coach to have a

comprehensive analysis of coaching skills. The process is quite simple. The

coach can frame a message which would be sent to all the people whom he

selects to participate in personal feedback process. The message tells them that

the coach would like them to provide feedback and that it will be completely

anonymous. The coach will not know exactly which people respond, and there

is no way for the coach to know how each respondent scored or written

comments that they provide. The coach after collecting the feedback from

different sections of the respondents can identify his strengths and weaknesses

and work on them to improve his or her coaching skills.

5. Getting Frequent Feedback from Those You Coach


37

The leaders use a brief questionnaire that could be used to collect information

from those they coach. But it is observed that leaders will not use this in every

coaching session that they conduct. It is extremely helpful to use a more formal

and objective process periodically to obtain information from those who are

being coached. This information is designed to allow the leaders to know

whether the person being coached, sees your coaching as relevant and useful. It

is noted that when leaders collect feedback from the coachees during business

coaching, it greatly increased their success.

6. Conducting postmortems on coaching conversations

Every coaching conversion affords an opportunity for reflection and

determining ways in which it could have been better. Recording the

conversation (with the permission of the person being coached) is an extremely

valuable exercise. It allows the leader to listen one more time to the dialogue

that occurred. The huge advantage of this review is that leader can devote 100

percent of his or her attention to listening what was said, without any pressure to

devise the next question or make an appropriate response to what was said. This

will help the leader to notice his or her effectiveness or ineffectiveness in

clarifying the purpose of the conversion, asking open-ended questions and

summarizing what they have heard. The leader can also assess his success at

avoiding the pitfalls and traps of giving advice and shifting the conversion to

focus on the subject of coaching.

Conclusion As a result of living in a multitude of roles and systems, individuals are constantly

pulled by various competing demands and expectations. Work is just one of these,

although it is a very important one. While managers or leaders have every right to

expect employees to fulfill their work commitments, understanding the larger

context will help them be more supportive. Leaders shall be willing to engage in a

coaching conversation when they see evidence that an empoloyee‘s performance is

declining.

It is relatively easy to reach a given skill level and stay there. Getting better requires

tenacious determination. Deliberate effort is necessary to break out of the rut and to

get better. The same holds true for the skill of coaching. Staying at the same skill

level is extremely easy. Getting better is the challenge.

References

Michael Abrashoff, (2002), ―It‘s your Ship: Management Technique From

the Best Damn Ship in the Navy‘, New York, Grand Central Publishing.

Philip Zimbardo, (2007), ‗The Lucifer Effect: Understanding how good

people turn evil‘, New York, Randon House.


38

Frederick Herzberg, (2003), ‗One more time: How do you motivate

employees‘, Boston, Harward Business Review.

John H. Zenger, (2010), ‗The Extraordinary Coach‘, New Delhi, Tata

McGraw Hill Education Private Limited.


39

ANALYSING COMPETENCIES FOR SMALL SCALE INDUSTRIES IN

THE WTO REGIME Dr. Sushil Kumar Singh

Assistant Professor,

Dept of Business Management,

Indira Gandhi National Tribal University, Amarkantak (M.P)

Abstract The WTO, which is going to affect every economic activity – both in terms of goods

and services have an enormous impact on the SSI sector, which consists of multi-

dimensional target groups which vary from small tiny units to highly qualified and

conversant technocrats having access to the intranet and other sort of facilities.

However, WTO Agreements and Negotiations have thrown challenges of different

types and the agony is that most of the small units are unaware of these agreements

and negotiations and do not know as to how they are going to affect them and how

they should deal with them. As is a known fact that majority of small units are

single family show, they do not have money, expertise and manpower to deal with

the situation. Even if they have in a few cases, they are not aware as to how to deal

with the situation, to whom to approach and how to approach. These have some far

reaching implications for SSI sector in India, specifically with regard to their

competitive ability and integration with the global markets. Most of the challenges

arise due to the unorganised nature of this sector, lack of data and information, use

of obsolete technology and poor infrastructure in the country. It has affected all

types of SSI units whether producing for the domestic market or for the

international market. The government has recently allowed 100 percent foreign

equity participation in small-scale industries. Thus, these large scale foreign

industries now have an opportunity to participate in small sector. These foreign

collaborators may bring not only capital but also the technology with them. This

technology is generally capital intensive, which may increase the productivity, but

on the employment front it is likely to have adverse effect. Moreover, government

has also permitted the small sector to import capital goods at a very nominal

import duty which has encouraged the use of capital-intensive technology in this

sector, as a result the growth in employment generation in small-scale sector has

been slowed down during the post-liberalization period.

Keywords: World Trade Organization, Globalization, GATTS, TRIPS, IPRs, TRIMS

Introduction The World Trade Organization (WTO) Agreements have some far reaching

implications for SSI sector in India, specifically with regard to their competitive

ability and integration with the global markets. Most of the problems arise due to

the unorganized nature of this sector, lack of data and information, use of low

technology sometimes obsolete technology and poor infrastructure in the country.

WTO has affected all types of SSI units whether producing for the domestic market


40

or for the international market. The SSI sector which produces over 6000 items is to

be aware of the patents of the products including even that of the technological

patents, trademarks, industrial designs, etc. Most (95 percent) of the SSI units are in

the nature of tiny micro enterprises and are not so strong. Many of them are one

man shows. Their capital base is poor and do not have access to the economies of

scale. Their bargaining power is low and do not have access to information and

modern management practices. They constitute most vulnerable segment of the SSI

sector. Hence, they need to be guided and supported since they are also employment

generator for the economy. The rest although (5 percent) of SSI units is in the

category of modern SSIs and has already established global links, they are also tiny

(micro) when compared to the SSI sector of developed countries. Thus, they have

only relative advantage and not absolute advantage and they also need to be guided

on WTO provisions and on the safeguards available to them.

It must also be understood that Indian small enterprises have certain inherent

strengths which helped them raise their share in total exports to 34 percent even in

the face of tough global competition. The sector possesses the advantage of

immovableness and flexibility. Their inventories are low and have weathered many

adverse situations successfully and boldly. The SSI sector also has advantages of

local raw materials and world class skill besides cheap labour which could be

harnessed to the advantage. At the same time, it is essential to note their

vulnerability in the context of emerging global environment resulting into: (i) loss

of protected environment, (ii) greater competition from imports, (iii) reduction in

conventional subsidy as these are required to be WTO friendly, (iv) widening

knowledge and technology gap as a result of revolutionary change in technology,

(v) quality and standard gap, (vi) inability to match the prescribed hygiene and

health standards prescribed under sanitary and phyto-sanitary standards (e.g. food,

animal, plant disease and other safety standards), (vii) increased export risk,

(viii)difficult environment regulations and costly prescriptions and (ix) lack of

awareness and information on WTO provisions.

The WTO, which is going to affect every economic activity – both in terms of

goods and services have an enormous impact on the SSI sector, which consists of

multidimensional target groups which vary from small tiny units to highly qualified

and conversant technocrats having access to the intranet and other sort of facilities.

However, WTO Agreements and Negotiations have thrown challenges of different

type and the agony is that most of the small units are unaware of these Agreements

and Negotiations and do not know as to how they are going to affect them and how

they should deal with them. As is a known fact that majority of small units are

single man show, they do not have money, expertise and manpower to deal with the

situation. Even if they have in a few cases, they are not aware as to how to deal with

the situation and whom & now to approach the right persons / authorities.

The WTO Agreements can be classified broadly in three components: (i) those

affecting Quantitative Restrictions (QRs) and the verification of products, e.g.,

GATT, Agreement on Agriculture (AOA), Agreement on Textiles and Clothing


41

(ATC) (ii) those which deal with Intellectual Properties Rights. e.g., TRIPS

(iii)those which deal with barriers to trade, standards, investments and subsidies,

e.g., TBT, SPS, ASCM, and TRIMS.

Article-XI of the GATT, 1994 prohibits restrictions other than duties, taxes, and

other charges with regards to trade. It recognizes only tariff as a legitimate

instrument of commercial policy for the regulation. Thus, QRs are prohibited as a

rule for both imports and exports. A country may impose QRs if it faces shortage of

food grains, for reasons of security and public health, or has an adverse balance of

payment position.

GATT is affecting SSI units as it has opened the gate for the import of high quality

products from developed countries and cheap products from the less developed

countries. They are facing domestic as well as international competition. Until and

unless SSI sector is able to face the inevitable competition, survival may be difficult

which requires major policy changes to boost technological and modernization

programs in the sector. Small units cannot work in isolation but they have to equip

themselves with knowledge of day to day trade environment changes, be it

technology, rules and regulation affecting domestic and international scenario.

Awareness and timely adherence to the changing scenario has to be a prime key of

success otherwise high competition due to openness of economy, redundancy of

reservation policy, application of bond rates, etc. may affect the growth and survival

of the SSI sector. As a result, SSI sector in India find themselves handicapped and

at a disadvantageous position. The provisions / Agreements of WTO which are

likely to affect SSI sector are as follows:

1 Quantitative Restrictions and Reservation Policy: India is already in the

process of phasing out QRs by bringing more and more items in the Open

General License (OGL) category. The anomaly being the continuance of

certain products in the reserved list for small industry, while being shifted to

the OGL category. Due to India losing case to USA in the Dispute

Settlement Body of WTO, physical controls (mainly licensing) had to be

removed by April 1, 2001. If QRs are removed, policy of reservation

becomes redundant. Most of the remaining items of the reservation list have

been out of the cover of protection latest by February 5,2008 and thus the

reservation policy have only a limited relevance that too with domestic large

scale units. Due to the total removal of QRs many of the SSI, especially in

the consumer goods sector, would find it difficult to survive; competitions

have intensified as more imported products find easy access into the Indian

market. Item reserved for the SSIs is not facing competitions from similar

products being imported freely except for a low tariff barrier from all over

the world and produced by the large scale global manufactures. When the

domestic market is fully open to competition from foreign goods, the

advantage of low labour cost which our SSIs claim to enjoy may not work

beyond a point. The domestic consumers prefer better quality to low cost

products. Low-end products are also facing international competition from


42

export-oriented developing countries. Even on the cost level, there may be

stiffer competition coming from low cost producers from the neighbouring

Less Developed Countries (LDCs), such as Nepal and Bangladesh, Sri

Lanka and China which are already offering tough competition.

Indian SSI sector have been adversely affected because: (i) pace of

technological upgradation is slow. The present credit policy is not in favour

of the SSIs as it is alleged that there has been costly credit to SSIs as

compared to non-SSI units (ii) industries suffer due to poor infrastructure

e.g., power, communication, water, etc. (iii) obsolete laws, rules, regulations

and harassment leading to diversion of time to compliance at the cost of

production (iv) lack of awareness among small scale entrepreneurs about

implications of WTO provisions (v) the data base on unorganized sector is

very poor (vi) most of the units do not work in groups or clusters and as

such are not able to have the advantage of common facilities (vii) lack of

International exposure (viii) most of the NGOs are very weak and thus

cannot help the SSI units to renegotiate tariff or prove dumping products or

conduct investigation work on behalf of SSI units or have their own legal

cell to take up the matters in the courts. All these might have serious

consequences for the small-scale sector. In view of removal of QRs, the SSI

sector faces stiff competition for which modernization and technology

upgradation must take place. Government should take effective steps

towards upgradation of technology and making credit available at

reasonable rates of interest. Marketing of SSI products also has to be

strengthened.

2 Tariff Reduction and Reduced Protection: SSI units have been provided

with some protection because they suffer from certain bottlenecks in use and

availability of inputs like credit and technology and have no access to

economies of scales. As QRs have to be removed, the protection level by

way of tariff also has to come down. Tariff levels have been already reduced

to a substantial extent over the last couple of years, but the international

perception is that India has the highest tariff levels. Reduced protection has

already resulted into reduced competitive strength of SSI units. Tariff

protection is bound to be scaled down significantly in the future. This brings

another challenge for SSI who are said to suffer from high cost of

inefficiency and lack of support facilities such as good infrastructure. If de-

reservation is inevitable, there must be some instrument to protect the SSI

products which are adversely affected. As such, any attempt by developed

countries to introduce concepts such as that bound rates should not exceed

existing applied rates or that all the bound rates should fit into a future pre-

determined slabs should be resisted.

3 Anti Dumping Practices: while the domestic market is going to be fully

exposed to external competition, the SSIs may have to be cautious against

possible dumping by their competitors from abroad, which may be difficult

to establish in many cases. It is also significant as the cost of anti dumping

investigations may be prohibitive for the SSI. On the other hand, anti


43

dumping charges by the importing countries may do serious damage to the

export prospects as well. The SSI is needed to understand the challenges

posed by the Agreement on Anti-Dumping Measures. There are certain

provisions (Special and Differential Provisions) that are intended to benefit

the developing countries, but may act against the SSI when it comes to trade

among the developing countries. Article 5.8 of the Agreement provides that

the volume of dumped import from a particular country is found to be less

than 3 percent of imports of the like products, unless countries which

individually account for less than 3 percent of the import of the like products

collectively account for more than 7 percent of the import. SSIs in India are

unable to defend or take counteractive measures primarily due to their

ignorance, weak NGOs, lack of necessary data and problem of accessibility

to information. Organizations like NSIC have to play a pivotal role in this

regard. Government assistance for fighting legal battles is also being

needed. There had been a lot of hue and cry that large-scale imports and

dumping of goods particularly from China and Taiwan are affecting the

domestic industry. The alleged dumped products include umbrellas,

calculators, pencils, stationery items, electronic products, toys, cycles,

shoes, clocks, locks, dry cells and batteries and steel measuring tapes etc. as

per representations given by the Industries Associations.

4 Subsidy and Countervailing Measures: All major subsidies such as Duty

Entitlement Pass Book (DEPB) Scheme, Export Promotion of Capital

Goods (EPCG) Scheme, Income Tax Benefits etc., are considered as

actionable subsidies. These are not prohibited subsidies and therefore, can

be continued by the government. However, the importing country can take

action (by way of imposing countervailing duty) if it feels that subsidized

imports are causing injury to their domestic industry. Indian industry should

learn to be competitive without the present set of subsidies. This is perhaps

the most serious challenge from SSI sector. Further, small enterprises should

understand what is permissible and what is not. Normally subsidies by

Government to small enterprises are non-actionable. The WTO presupposes

that an enterprise knows the implications of all provisions. In a country

where 95 percent of SSI enterprises are tiny units, this knowledge needs to

be transmitted.

5 Technical Barriers to Trade and Investment Based Definition: It may help

the small scale exporters to some extent but the Non Product Related

Process and Production Methods (NPRPPM) has been used against them

particularly in agriculture / food / pharmacy products. There is a fear that

packaging standards have inflated the production cost and non recognition

of local standards and environment of operation have an adverse effects on

exports. The SSI has to take note of growing Technical Barriers to Trade

(TBT) in view of high technical standards, set by developed countries.

These are emerging as major non-tariff barriers to access markets of the

developed countries. The arrangement on TBT provides for differential and

more favourable treatment to the developing country members. But this is

hardly respected by the developed countries. One of the basic problems of


44

our SSI is their technological weakness. Investment based on definition of

SSI unit has at times been found contrary to the objective of technology up-

gradation and or setting up of units with minimum technological standards.

The SSIs are likely to be deprived of market access not only in the case of

technology intensive items but even for many labour intensive items. Most

of the countries define their SSI in terms of employment or turnover and

thus when any dispute arises they have not treated an Indian SSI as a small

enterprise. There is need to examine the SSI definition and link to the

criterion of employment as it prevalent in most of the countries.

6 Trade Related Investment Measures: It has an impact on all the sectors

including small-scale sector including development and promotion of

ancillary units. In the domestic market, again there may be reasons to feel

concerned when the Agreements on Trade Related Investments Measures

(TRIMS) comes into force which prohibits five type of investment

conditions including tariff bound (Market Access Negotiation), QRs and

Multi Fibre etc. The Government may have to do away with the criteria of

local area content and dividend balancing. This may prove to be a big jolt to

development of sub-contracting and result in loss of domestic market for the

SSI. Impact may be severely felt in the emerging sectors of Indian industry

and especially in automobiles, consumer electronics, white goods, electrical

machinery, electrical appliances, etc. When the foreign / joint venture

companies would be free from the obligation of indigenization, there may be

little incentive for indigenous sourcing of components. The small enterprises

of India may have real problems if they are not competitive and do not go

for a major drive for technology up-gradation. An urgent thought to the

problem needs to carry out necessary policy changes and remedial measures

which are necessary to prevent its adverse effect.

7 Trade Related Intellectual Property Rights: The Agreement of TRIPS have

little direct implication on the SSI units, but those engaged in high-tech

industries such as electronics, pharmaceuticals, machine tools, bio-

technology etc., may face the problem of accessing appreciated technology

under the TRIPS regime. It is apprehended that both terms and conditions

and the cost of technology may be prohibitive. Main source of technology

for SSI reverse engineering is being difficult with stricter IPR regime and in

the new regime ignorance of law is being of no excuse as the burden of

proof is on infringer. While transfer of technology cases may increase, any

counterfeit trade will have to take effective deterrent action and care will

have to be exercised in choosing the names of companies or products.

Problems may come before SSIs who use protected designs as in the case of

garment industry. Employees, subcontractors, etc., might have to be

restrained from divulging confidential information.

It has immediate direct impact on agro-chemicals and food, pharma, patent

products, cannot be manufactured without license. This is a vital issue which

could lead to product obsoleteness of current products being patented on

expiration of period leading to total dependence on the patent holder.


45

8 Trade and Investment: In the event of multilateral Agreement on Investment

and its eventual enforcement, the SSIs are struggling in a completely

unprotected environment existing in the domestic market. Agreement on

Trade and Investment has been primarily about National Treatment and

Most Favoured Nation Treatment. Probably, in that environment SSIs of the

other Member Countries have needed to be given same treatment in India as

are given to our SSI and the implications may indeed be far reaching.

9 Government Procurement: While the support of the Government is very

important for the SSI sector, it is also true that Government procurement

often works against free trade. As such it is felt that this should be subject to

multi-lateral rules within the WTO frame work to ensure a level playing

field. India has not signed this Agreement so far. But US prohibits its

purchasing agencies buying from non member countries of the Agreement.

In India, the Government is a substantially large buyer as well as investor.

For the SSI sector, the government is a big support as far as market is

concerned. There are reservation policies and also price support mechanism

for purchase of products from the small-scale sector but as against product

reservation, these are non-statutory. If it is challenged, SSI sector that face

marketing problems will be adversely affected. In the event of multilateral

Agreement, the market constituted by Government may have to be opened

up to foreign competition and the system will have to be made more

transparent.

Conclusion With the emergence of WTO and its conditional ties which considered protection as

discriminatory or barrier to trade, many of the existing support systems in the place

for protection and promotion of SSI sector had been dismantled, as a result, SSI

units were to compete on their own and to find a place for themselves in domestic

as well as international market. It has to upgrade its technology, adopt modern

marketing and management practices and improve the quality of its products to be

efficient and competitive.

The removal of all Quantitative Restrictions (QRs) along with the gradual reduction

of tariff barriers had opened the Indian economy to global competition. However,

this had enabled availability of cheaper raw materials and improved market access

to overseas markets for SSIs. It is also a fact that the level of competition in the

domestic market has increased. Pressure on price and quality has been increasing

through the availability of cheaper and better products. SSIs needed to improve

product quality and reduce costs if they wanted to safeguard their markets.

Liberalization, Privatization and Globalization have created tremendous

opportunities for the growth of SSI sector, and it has created new challenges for this

sector as well. Building competitive strength, technology upgradation and quality

improvement are the vital issues, which need to be addressed so as to build

capabilities of the sector to withstand emerging competition and ensure sustained

growth in Indian economy.


46

References:

Agrawal, A.N.; ―Indian Economy: Problems of Development and Planning;‖

Wishwa Prakashan, New Delhi; 2006.

Ahmad, Q.K.; ―Problems and Prospects of Small and Micro Enterprises in

the Process of Economic Liberalization in South Asia‖; in R, Islam (ed)

Small and Micro Enterprises in a Period of Economic Liberalization

Opportunities and Challenges, New Delhi; ILO-SATT; 1996.

Banerjee, Nirmala, & Suri, K.B.; ―Role of Small Scale Industries in India‖;

Sage Publication India Pvt. Ltd., New Delhi; 1998.

Bedi, Suresh; ―Business Environment‖; Anurag Jain for Excel Books, New

Delhi; 2004.

Bhatia, B.S.; and Batra, G.S.; ―Entrepreneurship and Small Business

management‖; Deep and Deep Publications Pvt. Ltd. New Delhi.

Cherunilam, Francis; ―Business Environment‖ Fifteenth Edition; Himalaya

Publishing House, Mumbai; 2004.

Cherunilam, Francis; ―International Business‖ Third Edition; Prentice-Hall

of India Private Limited, New Delhi; 2004.

Datt, Ruddar & Sundaram, K.P.M.; ―Indian Economy‖; S. Chand &

Company Ltd., New Delhi; 2006.

Desai, Vasant; ―Management of Small-Scale Industries‖; Himalaya

Publishing House, Mumbai; 1999.

Desai, Vasant; ―Organisation and Management of Small-Scale Industries‖;

Himalaya Publishing House, Mumbai; 2005.

Dhar, P.N., & Lydall, H.F.; ―The Role of Small Enterprises in Indian

Economic Development‖; Asian Publishing House, New Delhi; 1961.

Drucker, Peter; ―Management Challenges for the 21st Century‖; Harper

Business, New York; 1999.

Giriappa, S.; ―Industrialization of Backward Areas‖; Pointer Publications,

Jaipur; 1993.

Govil, S.K.; ―Management of Small-Scale Business (Small Business

Management)‖; V.K. Publishing House, Bareilly (U.P.); 1997.

Hoffmann, W.G.; ―The Growth of Industrial Economics‖; Manchester

University Press, London; 1958.

Jain, P.C.; ―Economic Problems of India‖; Chaitanya Publishing House,

Allahabad, 1989.

K. Ashwathapa; ―Essentials of Business Environment‖; Seventh Edition;

Himalaya Publishing House, Mumbai; 2003.

Kapila, Uma; ―Indian Economy‖; Fourteenth Edition, Sinha Independence,

New Delhi; 2003.

Lahire Kaka; ―Small Scale Industries: Performance and Challenges‖; The

ICFAI University Press, Hyderabad; 2007.

Maharajan, V.S.; ―Economic Reforms and Liberalization‖; Deep and Deep

Publications Pvt. Ltd. New Delhi.


47

Malhotra, I.S. and Gupta, S.L.; ―Management of Small Scale Industries‖;

Galgotia Publishing Company, New Delhi; 2000.

Stigelitz, J.E.; ―Globalization and its Discontents‖; Allen Lane, London;

2000.

Government Publications / Reports

Annual Reports of Planning Commission, Government of India; New Delhi.

Annual Reports of Small Scale Industries; Ministry of MSME; Government

of India; New Delhi.

Comprehensive Policy Package for Small Scale Industries and Tiny Sector;

Dated 30th

and 31st August 2000; Ministry of Small Scale Industries and

Agro and Rural Industries; Government of India, New Delhi.

Economic Surveys; Ministry of Finance; Government of India; New Delhi.

Final Results: Third All India Census of Small Scale Industries 2001-2002;

Ministry of MSME; Government of India; New Delhi.

Five Years Plans; Planning Commission; Government of India; New Delhi.

Hand Book of Statistics on Indian Economy, Reserve Bank of India;

Government of India; New Delhi.

Laghu Udyog Samachars; DC (MSME) Ministry of MSME; Government of

India, New Delhi.

Micro, Small and Medium Enterprises in India: An Overview; Ministry of

MSME; Government of India; New Delhi.

Report of the Working Group on Micro and Small Scale Enterprises and

Agro and Rural Industries for Eleventh Five Year Plan (2007-2012);

Ministry of SSI & ARI Government of India; New Delhi.

Report on Currency and Finance; Reserve Bank of India; Government of

India, New Delhi.

SIDBI Reports on Small-Scale Industries Sector; Small Industries

Development Bank of India; Government of India.

SIDO‘s Half Century (1954-2004); Development Commissioner (MSME);

Ministry of MSME; Government of India, New Delhi.


48

TALENT MANAGEMENT: THE EMPLOYEES’ PERSPECTIVE

Ms. Saloni Arora

Visiting Faculty

SNDT University

Abstract

The research study is based on the hypothesis that “Effective talent managing

leads to satisfied employees retained for longer period and increases in turn the

employees and organizations productivity” The main objective of studying talent

management is to articulate the required talent in this competitive business world,

identifying their potentials, developing their talent and retaining them in the

organization and to analyze the employee perspective on talent management in

their organizations. The research type which is used is descriptive quantitative

explorative study, where the primary data obtained is through survey method in

which questionnaire as a tool was used. Secondary data was collected from books,

magazines and websites and other external sources. The sample selected from the

available data was random in nature, which included top and middle level

management and front line executives / managers of 10 manufacturing and 10

service industries (banks, hotels etc). Data was analyzed using the percentage

method.

According to the survey and interview after looking at various areas of managing

talent it has been observed that the entire industry whether it is private or public

sector or even the retail industry, the main focus for individual development

activities is on strengths and not on weaknesses. When it comes to recruiting, most

of the organizations recruit the employee on the basis of merit rather than talent. It

has also been found that companies take steps to motivate the talent of the

employee. It has also been observed that there is a drastic change in the personal

and organization development due to talent management process, although mostly

the process focuses on professional development than personal development. In

most of the sectors, employee retention is not due to job satisfaction but due to

perks and privileges that is provided by the organization. The organizations are not

ready to take high risk approach regarding promotion and development. In most of

the organizations, employees feel that they are considered as the talent of the

company.

Effective talent management does not mean only development of the employee in

their current situation but also getting ready for their future expected goals. It has

been found that stress level has increased due to working conditions in

organizations; hence, organizations should take proper steps with regards to

recreation of employees and reducing their stress levels at the workplace. Due to

stress level in the organization the employees are not able to balance work and

personal life. They are not able to spend quality time with their families. Therefore

for retention of effective talent, there should be a larger overall effort looking at


49

satisfaction, work life balance, de-stressing and development of the employees to be

undertaken by the organizations.

Keyword: Talent Management, Human Resource Management, Employee Potential,

Employee Retention

Introduction

It takes talent to spot talent! A tone deaf will never be able to appreciate the music

of maestros. Only a seasoned jeweler would know that all that glitters is not real!

And, only those who can recognize the worth of a diamond can value it, for others it

is just a stone! Talent is doing what others find difficult.

Talent management is identifying recruiting, hiring and developing people with

strong potential to succeed in an organization and the timeframe for implementing

this varies according to the size of the organization. Many organizations speak

about the importance of retaining their talent, but workplace analysts point out that

few organizations with a mature plan have implemented talent management which

addresses the entire cycle from hire to retire.

Talent management evidently not only affects companies, but also the fresh

graduates seeking employment. Students in the areas of Business and Economics

are the affected groups, since there is increased competition for the most talented

students within these fields. Hence, it also a matter of concern for different

Universities and Business Schools that offer education within the field.

Talent management is all about how to recruit the most outstanding people to meet

the business needs, how to maximize the potential of employees, how to put the

right people in the right position and finally how to keep the best people in the

company.

Talent management is a professional term that gained popularity in the late 1990s. It

refers to the process of developing and fostering new workers while on board,

developing and retaining current workers and attracting highly skilled workers of

other companies to come and work for your company.

According to Donald H Taylor, talent management means ―making capabilities

match commitments‖. Talent management is about getting the organization to its

destination- today and tomorrow.

The term talent management means different things to different people. To some it

is about management of high-worth individuals or ―the talented‖ while to others it is

about how talent is managed generally- i.e. on the assumption that all people have

talent which should be identified and liberated.


50

Talent management implies recognizing a person‘s inherent skills, traits, personality

and offering him a matching job. Every person has a unique talent that suits a

particular job profile or any other position will cause discomfort.

It is the job of the management, particularly the HR department, to place candidates

with prudence and caution. A wrong foot will result in further hiring, re-training,

and other wasteful activities.

No matter how inspiring the leaders are, they are only effective as a team. A team

output is healthy only if the members are in sync. To achieve such harmony, the key

ingredient is ―putting the right people in the right jobs.‖

Objectives of the Study

To articulate the requirement of talent management in this competitive

business world, by identifying employee potentials, developing their talent

and retaining them in the organization.

To analyze the employee perspective on talent management in the

organizations

Hypothesis –Effective talent managing leads to satisfied employees retained for

longer period and increase in the employees‘ productivity which will in turn result

in organization‘s productivity.


Research type: The research type used is descriptive quantitative explorative study.

Methods of data collection

The primary data which is obtained is through survey method where

questionnaire was used as tool

Secondary data was collected from books, magazines, websites and other

external sources.

Sample: The sample selected from the available data was selected randomly which

include top level management, middle level management and front line managers of

10 manufacturing and 10 service industries (banks, hotels, etc)

Sample size: The sample size for the study was 100. Through an interview 100

respondents were observed.

Statistical method: The method used for study was the percentage method.

Review of Secondary Data

The Talent Management Process Organizations are made up of people - people creating value through proven

business processes, innovation, customer service, sales, and many other important


51

activities. As an organization strives to meet its business goals, it must make sure

that it has a continuous and integrated process for recruiting, training, managing,

supporting, and compensating these people. The following shows the complete

process:

1. Workforce Planning: Integrated with the business plan, this process establishes

workforce plans, hiring plans, compensation budgets, and hiring targets for the

year.

2. Recruiting: Through an integrated process of recruiting, assessment,

evaluation, and hiring the business brings people into the organization.

3. On boarding: The organization must train and enable employees to become

productive and get integrated into the company more quickly.

4. Performance Management: By using the business plan, the organization

establishes processes to measure and manage employees. This is a complex

process in itself.

5. Training and Performance Support: this is a critically important function. Here

learning and development programs are provided to all levels of the

organization. This function itself is evolving into a continuous support function.

6. Succession Planning: As the organization evolves and changes, there is a

continuous need to move people into new positions. Succession planning, a

very important function, enables managers and individuals to identify the right

candidates for a position. This function also must be aligned with the business

plan to understand and meet requirements for key positions 3-5 years out.

7. Compensation and Benefits: Clearly this is an integral part of people

management. Here organizations try to tie the compensation plan directly to

performance management so that compensation, incentives, and benefits align

with business goals and business execution.

8. Critical Skills Gap Analysis: This is a process we identify as an important,

often overlooked function in many industries and organizations. While often

done on a project basis, it can be ―business-critical.‖ For example, today

industries like those of Utilities, Telecommunications and Energy are facing

large populations which are retiring.

The Current Emphasis on Talent Management

Organizations have been talking about the connection between great employees and

superior organizational performance for decades. So, why so much of emphasis on

talent management in the current times?

There are several drivers fueling this emphasis:

1. There is a demonstrated relationship between better talent and better Business

performance: In the last several years there has emerged a significant movement

to quantify the turns that can be expected when an organization invests in its

talent. The result is a body of ―proof‖ that paints a compelling picture of the

impact that talent can have on business performance.


52

2. Talent is a rapidly increasing source of value creation: More and more, the

financial value of the company depends upon the quality of talent. In fact,

Brookings Institution found that in 1982, 62 percent of an average company‘s

value could be attributed to its physical assets (including equipment and

facilities) and only 38 percent to intangible assets (patents, intellectual property,

brand, and, most of all, people). These percentages have nearly flip-flopped,

with 80 percent of value attributable to intangible assets and 20 percent to

tangible assets.

3. The context in which we do business is more complex and dynamic: Hyper-

competition makes it more difficult than ever to sustain a competitive advantage

for a long term. New products—and new business models—have shorter life

cycles, demanding constant innovation. Technology has enabled greater access

to information and is forcing organizations to move ahead at the speed of

business‖.

4. Employee expectations are changing: this is changing too, forcing organizations

to place a greater emphasis on talent management strategies and practices.

Employees today are:

o Increasingly interested in receiving more benefits.

o More loyal to their profession than to the organization.

o Less accommodating to traditional structures and authority.

o More concerned about work-life balance.

o Prepared to take ownership of their careers and development.

Responding to these myriad challenges makes it invariably difficult to capture

both the ―hearts‖ and ―minds‖ of today‘s workforce. The cultures we build are

crucial to attracting and retaining key talent.

5. Workforce demographics are evolving: The ―war for talent‖ has been well

documented; the demographic changes facing many western countries are real.

A ―Talent Crisis‖ is indeed upon us. To stay competitive into the next decade,

savvy organizations are becoming more proactive in nurturing and keeping the

right talent.

Organizations have realized that they can no longer rely on expensive recruiting

to backfill positions. They are now turning to more holistic talent management

strategies that save money, bring long-term benefits and minimize exposure to

risk. A new category of software known as Talent Management is emerging to

help organizations with their talent initiatives. Talent Management integrates

the needs of executives, management and employees into one system, and

unifies the information across applications such as Performance Management,

Learning Management, Career Development and Succession Planning. Experts

point to a gathering ―perfect storm‖ of unfortunate trends that are making talent

increasingly scarce.


53

Analysis of Primary data

0

10

20

30

40

50

60

70

80

90

100

Yes

No

Not Known


54

Results

1. According to the survey and interviews undertaken it has been found that the

entire industry whether it is private sector, public sector, retail industry, the

main focus for individual development activities is on strength. When it comes

to recruiting, most of the organizations recruit the employees on the basis of

merit rather than talent. It has been observed that team managers are always

ready to help their juniors rather than seniors.

2. From the survey it has been found that companies take steps to motivate the

talent of the employee. It has been found that there is a drastic change in their

personal and organization development due to talent management process but

mostly it is focused on professional development than personal development.

3. It has been observed that the level of stress has increased due to working

conditions in organization. In most of the sector employee retention is not due

to job satisfaction but due to perks and privileges that is provided by

organization. The organizations are not ready to take high risk approach

regarding promotion and development.

0

10

20

30

40

50

60

70

80

90

100

Yes

No

Not Known


55

4. The employees in most of the sectors are not satisfied with the time duration of

the training period, they need more training. In most of the sectors it has also

been observed that the talent is shared around the organization.

5. In most of the organization, employees feel that they are considered as the talent

of the company. Mostly it has been observed that most of the employees work

for money and growth. Effective talent management does not only mean

development of the employee in their current situation but also getting ready for

their future expected goal. It has been found that stress level has increased due

to working conditions in organizations, so companies should take proper steps

for their refreshment and to reduce stress level.

6. It has been observed through survey that they focus on strength for their

individual development rather than converting their weakness into their

strength. It has been found through research that satisfaction level of the

employees from their job is less. Due to stress level in the organizations the

employees are not able to give proper time and comfort level is less to their

family

Conclusion

For effective talent management system the following are some of the best

practices:

Best Practice #1: Start with the end in mind—your current and future business

needs.

Best Practice #2: Talent management is Job of senior leaders.

Best Practice #3: You must know what you‘re looking for—the role of success

profiles.

Best Practice #4: Build a systematic and integrated approach for all workforce

developmental activities.

The growing tendency of companies to integrate various HR initiatives

including hiring, training, performance management and retention around a

common framework is necessary for creating a more powerful approach.

Aligned talent systems can be used to validate and reinforce each

other. For example, performance appraisal data can be used to

validate the impact of a training program or selection system.

Integrated HR systems create synergies, leading to decreased

installation costs, greater efficiency and ultimately, higher impact.

For example, pre-hiring assessment data can be fed into an on-

boarding plan, allowing managers to target the most crucial

development activities for their new employees.


56

Finally, integrated systems lead to a reduction in the time devoted to

communication, training, and administration, as all employees and

leaders are using a single, common vocabulary for key roles or

positions.

.

Best Practice #5: Talent management is much more than succession management.

One major reason for thinking more expansively is the reality that value

creation does not come from senior leadership alone. The ability of an

organization to compete depends upon the performance of all its key talent.

A second reason why a more encompassing approach to managing talent is

essential has to do with the need to proactively manage career transitions.

Effective talent management requires not only developing people for their

current roles, but also getting them ready for their next transition.

Best Practice #6: Clear distinctions are made between potential, performance, and

readiness.

Best Practice #7: Look at the team mosaic

The following are characteristics of the team mosaic approach:

1. For key selection/promotion decisions, candidates are evaluated on their

own readiness for a targeted role (as defined by the success profile);

however, they also are evaluated on how their personalities and styles

will mesh with others on the business team.

2. For development purposes, entire talent pools, such as all senior

executives or all high-potential associates being considered for frontline

supervisory positions, are considered and evaluated together, making it

possible to spot organizational trends and trouble areas Accurate

assessment data—across all components of a success profile—for each

individual being considered is, of course, a prerequisite for looking at an

entire team or pool. This includes assessment data on future potential,

―personality‖ attributes, values, skills / knowledge, etc.

Best Practice #8: Turn your leaders into talent managers.

Best Practice #9: Talent management is all about putting the right people in the

right jobs.

The right match is critical

Not everything can be developed

Hiring for the right skills is more efficient than developing those skills


57

The Managers must be Talent Managers.

An effective solution is the ‗4-level engagement model‘. This is built upon

seven more principles of managing talent:

Celebrate individuality: Since each employee operates through a unique

filter, ask employees what motivates them, what their goals are, how they

like to be managed.

Set outcomes not instructions: Give clear objectives and steer employees

towards achieving them rather than issuing detailed directives.

Celebrate diversity: Accept that one-size-fits-all management never works.

Align the unique talents of your employees to organizational objectives then

step back and allow those talents to flourish.

Know what makes talent tick: Talented employees thrive on personal

growth, challenge, stimulation, variety, meaning, purpose, respect,

responsibility, autonomy and choice. Find out what matter drives most to

which employees. Ensure their work satisfies their personal career drivers.

Focus on your high performers: High performers deliver the most value for

the organization so encourage them to aim higher. Investigate the factors

that differentiate them from lower performers and build a star map for their

role.

Be a casting director: have you noticed that executives thrive in some roles

yet wither in others? Develop close relationships with your people so you

know which roles will play to their strengths and which will strangle them.

Be a coach, not a manager: coaching bridges the gap between

organizational goals espoused by leaders and the individual career

aspirations of your employees by aligning the two. A coaching manager sees

their role as building rapport, trust and common purpose. A coaching

manager delegates and stretches, giving employees challenging assignments

to build their skills.

References:

C.R. Kothari –Research Methodology

Marshall Goldsmith, Louis Carter, the Best Practice Institute, Best Practices

in Talent Management

William J. Rothwell, H. C. Kazanas, The Strategic Development of Talent

Web Resources:

www.talentmanagement101.com

www.citehr.com

www.bhapho.com

www.absolutehrsolutions.com

www.hrvillage.com

www.systematichr.com


58

MICRO CITIES

Naved Jafry

Entrepreneur

USA

Abstract

The world is increasingly becoming unequal, unstable, and unsustainable, and most

of that can now be witnessed in our cities. 50 percent of the world’s population now

lives in cities. Cities now account for 75 percent of the world’s energy consumption,

90 percent of the global population growth, 80 percent of all CO2 emissions, and

most of the world’s economic productivity. Every year seventy million people

migrate from rural areas to the slums and ghettos of the world’s cities. It is

estimated that nearly one billion people now live in these illegal and unregulated

townships. Most of these new residents end up in slums and shanty towns, where

they become part of the $1 trillion underground or informal economy, making slums

the second largest economy in the world. From the outsider’s perspective, crime,

disease, and a low standard of living ensue in these illegal and unplanned

townships, but there is more to the story. These new residents are actually escaping

crime, poverty, disease, and a backbreaking lifestyle of the rural economy.

Moreover these people are quickly catching up to the rest of the urban population.

One of several challenges for these host cities is that they cannot catch up fast

enough to develop adequate infrastructure and public services to maintain an

acceptable standard of living for all residents. The cities regulated free-market

economy is quickly becoming an unregulated flea market. Most local residents now

feel their traditional culture is overrun by the new immigrants to their cities,

creating serious social, environmental, and economical pressures.

In the event of these problematic social challenges or financial crisis, more optimal

models of city planning must be implemented. This paper explores a city’s policies

on legal systems, infrastructure, conducive health care programs, and productive

economic paths to address these problems. Together, these implementations could

facilitate a prosperous city charter, within or near the borders of an existing city.

By examining models of developed cities, a Micro City will implement only the

items that fulfill the needs of its residents and refrain from adding useless laws to

the new society. The Micro City concept requires sound policies that are

sustainable and attracts investors and firms who are willing to build the

infrastructure and absorb new residents into the area. Moreover, preventative

measures and improving the quality of health are becoming values for this new

living space. These proposals are measured for effectiveness and through its

deployment; the Micro City vision will be fulfilled. Ultimately, the creation of a

Micro City is the perfect idea for improving current conditions of preexisting cities

where the overall sustainability and well-being of the parties involved becomes a

priority.


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Keywords: Micro Cities, Slums, Living Conditions, Sustainable Development

The Creating Micro Cities instead of Slums

When living conditions become unfavorable in rural parts of the world, most people

consider opting for a new lifestyle. Unfavorable conditions may relate to economic,

social, political, or security considerations. Imagine that you are among those who

are impacted by these conditions but you do not have the necessary means to be

able to pack your belongings in hopes to search for a better future elsewhere. If

people had the option of leaving their situation permanently, they would take it in a

heartbeat, but voters in countries with favorable rules and living conditions will not

let them settle there unless the new residents can contribute something intellectually

and economically. According to Robert Neuwirth (2011), every year 70 million

people are moving into cities, primarily squatter or shadow cities (p. 59).

Figure 1 and 2: Shadow cities by Robert Neuwirth. He shares his experiences visiting a vast amount

of squatter areas and how majority of urban populations are living in slums. The second figure

illustrates the increased percentage comparison of a country’s urban population now living in slums

during 1990 and 2007.

Should individuals be forced to become squatters and just be another item on their

respective country‘s list of burdens? Neuwirth states that one billion people already

live in shanty towns and by 2050, a third of humanity will be living in these poor

conditions (p. 59). Being a squatter in itself requires exasperated effort since so-

called residents run the risk of having their illegal homes removed.


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(See Figure 3and 4(a)/4(b) show how villages like these are depopulating and moving to urban

centers and settling into slums like the one in Mumbai India. by Stewart Brand in 2006 TED talk).

Paul Romer, a renowned economics professor at New York University and former

professor at Stanford University, formulated an idea similar to Micro Cities called

Charter Cities. Just like Micro Cities, a charter city is a special reform zone, but on

a larger scale with inhabitants sourced both locally and internationally. The reforms

of Micro Cities involve considering the needs of the new settlement, as well as

supporting a set of rules that allow a modern market to thrive. By making

corporations accountable to the environment and the communities through the

power of their operating contracts, Micro Cities ensure that there is better

accountability all through the production, supply, and marketing chain, while

maintaining acceptable standards for security of life and property in the new city.

Just like Romer (2010) suggested, Micro Cities could allow cross-national

government partnerships to take place, as parent countries transfer existing rules to

new settlements as needed (p. 94). Residents of a Micro City will live and abide by

a new and more favorable set of rules, while still possessing local legitimacy.

Figure 5. Components of a Micro City. Rules and technologies fitting to the new city’s new ideas are

the major components of a successful Micro City. Inspired from Paul Rome’s concept of Charter

City 2012.

One of the initial decisions to be made when building a Micro City is a desired

location. In his 2011 TED Talk, Romer suggests that, ―The laws and rules of the

city have to be made to attract people into the city.‖ A Micro City operates under a

unique set of laws that is fitting to the lifestyle of the new settlement, but those laws

should not conflict with the parent country‘s constitutional, state, or local laws. The

new city is entitled to produce revenue in their method of choice, but a certain

percentage of that money is given back to the parent country. In order for such a


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situation to be successful, the parent country‘s government must cooperate with the

drafters of the Micro City.

Key items in the creation of a Micro City consist of laws and rules that must be

abided by in order to maintain structure within the society. Distinct roles in

participating countries include a host, source, and guarantor (―Charter cities,‖

2012). The host country provides the land, while a source country has the potential

residents that will move into the new city. The guarantor country ensures that the

charter will be enforced for as long as the city is sustained. Other factors that play a

crucial role in the creation of a city include implementation and creation of

necessary infrastructure and the welfare of citizens through health, security, and

financial well-being.

Society should be organized to serve and facilitate the growth and development of

four primary groups such as those who defend us (lawyers, police, military), those

who innovate (teachers, scientists, engineers, other intellectuals), those who trade

(individuals involved in small business companies and firms), and those who

support (blue-collar workers). The creation of a Micro City implements these

dimensions of society and makes certain that these groups can bring their ideas

together to create a city that fulfills its needs.

The Importance of Laws The uniqueness of Micro Cities lies in the interpretation and implementation of

efficient laws with strict penalties and consequences for businesses facilitating

corruption. Before we begin discussing the importance of laws in a Micro City, we

must understand where law originates. Lawrence F. Keller (2002) argues that,

―municipal charter can be seen as the blueprint for an effective government‖ (p. 55).

―Municipal‖ is another name for city, a term which originated from the Roman

Empire. The Romans believed that local laws could be implemented without

negatively affecting the Roman Empire; this is where the idea of a city was

conceived. The cities governed themselves but were required to remain within the

legal parameters of the Roman Empire. The laws created in a municipal were called

―municipal charters.‖ This laid the foundation for American law. Keller later states,

―Local governments in the U.S. are creatures of the state government; charters are

like laws made in the city; and cities can practice some home rule‖ (p. 57).

When a Micro City is built, the foundation of its laws originates from the country,

state, or city in which it is built. New laws may be made but must be ratified by a

charter commission. According to Wendy L. Hassett (2011), ―Charter review starts

with the appointment of a commission made of local residents who are tasked with

methodically and objectively reviewing the existing charter and various aspects of

local government operation‖ (p. 48). The primary positions within a commission

include a chairperson, legal expert, and resource person. There are also people in

charge of funding, public outreach, and ―the charge.‖ The chairperson is in charge

and maintains order in the commission. He or she is held accountable by the

mayor. The legal expert is the second in charge. When making a new law or


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revisions to the law, these individuals ensure that the changes are legal, moral, and

uphold the standards of the parent country. Without these people, turmoil can take

place before the Micro City is established. ―The resource person is not part of the

commission‖. This individual serves as a spokesperson between politicians and the

commission, and is the expert of a topic in question and makes the first presentation

to the commission. The individuals in finance balance the expenditures of the

commission. The funding personnel must ensure that the commission stays within

their means or they will not be able promote their idea. The public outreach and

―the charge‖ are the people who advertise the new law. They keep the law simple so

the public can comprehend the happenings of the city.

Figure 6 Robert Neuwirth shares his study on how respectable companies like Siemens paid $1.9

billion in bribes during a period between 2001 to 2007, making a case for better accountability

among governments and corporations for the benefit of all.

Laws are the foundation of any settlement, especially a country. Without laws, the

world would be in a state of anarchy. Ring, Bigley, D‘Aunno, and Khanna (2005)

make four arguments to address this issue: ―The extent to which government action

can foster industry creation and economic development, the impact of corrupt

governments on firm-level decision managing by management of multinational

enterprises, the concept of attractiveness of political markets and the impacts they

have on a firm-level strategies, and how deregulations can affect the governance

mechanisms of firm‖ (p. 308). Government is essential at both the federal and local

level. Therefore, it is imperative that a Micro City establishes a strong government

before it implements any laws. Although the government will never reach

perfection, it must function to the best of its ability in order for the Micro City to

become successful.

The government works hand-in-hand to enforce laws. In ―Police, prosecutors, and

judges,‖ Franklin M. Kremel (1958) states ―[t]he law, however, is ineffective

without enforcement‖ (p. 43). In other words, without law enforcement, the law

made by the government would have no meaning. Law enforcement is created to

deter people from breaking the rules. Security personnel must be non-corrupt and

well trained because if they cannot do their job, then the security force is ineffective

and unnecessary. They have to maintain a balance of how to enforce the law since

they want to win the ―support of the people‖ (p. 43). This would make their job

safer and less troublesome. Once the government and law enforcement are

established, the city can start accepting new residents.


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Creating effective laws gives residents the option to choose the lifestyle they prefer.

Administrative laws should be simple enough that they can be interpreted properly

by law enforcement and citizens. Alan Siegel (1983) one of the leading authorities

on branding and business communications, insists that tax forms, credit agreements,

healthcare legislations, and other laws are incomprehensibly long, and he strongly

suggests a sensible approach to simplifying legal paperwork. (p. 252). Regarding

trade laws, using corporation power through contracts keeps the global supply chain

honest as they have a moral obligation to society. They also deliver human rights as

corporations may take the place of failed governments. In general, laws should be

kept straightforward in order for citizens to trust and abide by them. Laws should

impact society as a whole to prevent citizens with hidden agendas from finding

loopholes in litigations with teachers, doctors, and other professionals.

Kee-Cheok Cheong (2010) discusses the effectiveness of aiding parent countries by

using charter cities: Aid can be broken down in four elements: changes must be

taken in a smaller scale to have a chance to succeed; rules must be transparent and

have incentives; the residence has the power of choice; and the government of the

developing country must have the power of choice. (p. 165)

Cheong uses Hong Kong as an example of a successful charter city. Hong Kong

was once ruled by a combination of the British and Chinese governments. Since

Hong Kong was mainly under British control, they did not adopt Chinese

governmental tactics. Instead, they utilized the United Kingdom‘s structure of

government. The laws and way of life in Hong Kong were mostly derived from the

British, which attracted residents from mainland China. By operating this way,

Hong Kong gradually became one of the richest cities ever created. A certain

percentage of their revenue was given back to mainland China. During the 1990‘s,

the government of Hong Kong switched gears when the city was turned over to

mainland China. Laws, policies, and holidays were changed when the Chinese

declared possession of Hong Kong. Some residents of Hong Kong opted to leave

because they initially sought refuge from the Chinese government. Turmoil was

present in the beginning, but Hong Kong was able to break free again and become

the city it is today.

A Micro City may be placed anywhere as long the parent nation‘s government

approves. Third world countries would be the best places for these cities to thrive,

such as the Philippines, India, and Thailand. Third world countries have a common

denominator; their governments are not strong. India is an example. Although

structure is present in India, the country has a major problem with corruption. Jon

Quah (2008) states that in 2007, nearly a quarter of the elected members of congress

were charged with crimes, including rape and murder to name a few (p. 244).

In order to alleviate this corruption issue, India can create several Micro Cities.

First, drafters will need to find land that is able to occupy at least 100,000 people.

This size allows the city to make a profit for the state. The space cannot be too large

because it will be more difficult to manage. As stated by Cheong, ―Changes must be


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taken on a smaller scale to have a chance to succeed‖ (p. 165). Implementing a

government provides structure within the city. Once a government is settled, laws

may be implemented; this is the foundation of the city. The charter commission

must be strong enough to implement the correct laws and rules in order for the city

to thrive. Hassett (2011) discusses the process involved with this tedious endeavor

and explains the position and responsibility of the commission (p. 48). Laws will

make or break a city. Once all items are agreed upon, the city can be built to

prosper.

Infrastructure and Environmental Planning Modern Micro Cities need to be compact, so they must grow vertically (Bhaskar,

2010). Since Micro Cities need to be built in a timely manner rather than evolving

over a period of time, there should be an extensive use of fast building materials

such as steel, glass, and pre-fabricated structure. Citizens should be able to design

their own communities before construction takes place while keeping cities

sustainable under required building codes. Dave Wanns and Dan Chiras (2003)

suggest that when designing a neighborhood, drafters must create a community with

zero carbon emission (p. 40). Instead of having private vehicles, more emphasis

should be placed on public transportation. Having a small-scale city allows

residences to be closer to work and school settings. By having a smaller city,

residents will be able to sustain their everyday lives without dramatically impacting

the ecosystem.

A major challenge that a Micro City faces is being able to have an efficient and

advanced infrastructure that brings both industry and people into the new area

(Bhaskar, 2010). Typically, people flock to places with job openings. However,

jobs are created by businesses only when there are rules favoring trade and security.

Being able to stabilize social infrastructure is equally crucial. Potential residents

will not move until the Micro City has reliable hospitals, health centers, schools for

their children, and other necessities. The success of a Micro City will depend on

the methods in which it is managed and promoted. This requires a strong

administrator who works like a city-CEO, similar to the job description of a mayor.

By implementing modern sustainable town planning, Micro Cities can become

benchmarks for other conventional cities. Micro Cities can reverse the flow of

migration as underdeveloped countries have been losing a significant portion of

their populations to mass immigration. Fan and Yakita (2010) argue that brain

drain hurts growth in these countries as intellectuals move across state lines in

search of better, well planned townships across the developed world (p. 1360). As

cities age, they become less attractive, property prices may plummet, stakeholders

lose, and voters may become delusional. A Micro City can reverse all of those

challenges through its modern, improved, affordable, and durable infrastructure that

stimulate growth and investments. These factors have significantly slowed the

external flow of key populations around the world.

Designing cities with the idea of sustainability should be implemented during policy

making. Sometimes the very difference between first and third world countries is


65

infrastructure. As infrastructure creates the space for growth and development,

innovators and founders of several sustainable organizations, such as Alex Steffen,

discuss how cities have the potential to save the future. Steffen (2012) sheds light

on sustainably designed, neighborhood-based green projects that will expand our

access to a higher standard of living, while reducing the time we spend in vehicles

(p. 2). He emphasizes the importance and urgency of reducing humanity‘s

ecological footprint as western consumer lifestyle spreads to developing countries.

Figure7and 8 demonstrates how newer technologies like foldable electric cars and bike share

programs could be used to make more compact and cleaner cities possible.

Implementing eco-friendly designs into Micro City planning would set great

examples for future city developments. Danish architect, Bjarke Ingels, is another

champion of eco-friendly designs. In his TED Talk (2009) he demonstrates that his

buildings not only look like nature, but also act like it. His buildings block winds,

collect solar energy, and create stunning views. Architects of his caliber usually

implement a hands-on, ground-up understanding of the needs of the building's

occupants and surroundings, while taking in considerations of the environment.

Advocates like Majora Carter (2009) demonstrate how environmental and social

activism can influence policy changes on present and future city planning (p. 204).

As a founder and executive director of the Sustainable South Bronx, Carter devotes

her life to environmental and economic justice for disenfranchised communities.

She redefines the field of environmental equality by leading several local economic

development movements across the United States. Carter brings several stories of

people who are saving their own communities while saving the planet, calling it

"hometown security.‖ Pioneers like Carter are key players in promoting and

including ideas of environmental sustainability in city planning through local

entrepreneurial and local governmental supervision.


66

Figure 9and 10 demonstrates an artist’s conception of how the same living space can be used for

multiple occasions to make urban living more compact, while reducing the carbon footprint and

benefiting the economy and ecology.

Overall, Micro Cities are here to stay. The demand from both external and internal

migration of more than 6 million people a month has posed a serious challenge to

city administrators all over the world. In looking at the bigger picture, Van Jones‘

ideas of a green collar economy, calls for a sustained rebuilding of infrastructure

and creating alternative energy sources, which would boost the economy through

increased employment and higher wages while decreasing our dependence on fossil

fuels (as cited in Morris, 2008, p. 73).

Figure 11 compares the effects of conventional and compact communities and how compact cities

and cars can be made possible in the near future.

The Health Aspect of a Micro City It is also important to understand the essence of healthcare because of the large role

it plays in the lives of those inhabiting the Micro City. Because of the alarming

growth rate, Micro Cities need an efficient healthcare model. Governmental

programs, such as Medicare, are not accessible to everyone. In this day and age,

one must meet a certain threshold in order to prove they qualify for health services.

This notion instills a sense of unfairness, ultimate dependency, and helplessness. In

a Micro City, residents will not have to experience this. This is why home-based

healthcare is a suitable alternative to traditional health care. Home-based health

gives individuals the power to control their health. This feeling is also important in

stabilizing one‘s morale in the patient‘s environment.

According to Christopher Searles (2011,), ―sickness does not carry a passport‖ (p.

139). Neglecting underserved populations increases the risk of contamination and

the spread of disease for all persons in the community. It is crucial that physicians


67

―take the Good Samaritan approach, no matter what the circumstances are;

compassion must rule legalism‖ (p. 139). In order for health care to reach

underserved populations, Micro Cities must review developed nations‘ records,

separate which items work in each healthcare system, implement the necessary

services that are fitting to the new settlement, and increase access.

Figure12 and 13 documents dangers to health and wellness if proper infrastructure for sanitation

and pollution control is not put in place from the beginning.

There are alternatives mentioned in the past that may not work. Universal health

care sounds ideal and fair to everyone, but rising costs make this approach seem

unrealistic. Reducing disease also sounds like a solution, but might be too time-

consuming and impractical.

Moreover, it is important to examine locations that can serve as a model for these

Micro Cities. In Japan, it is illegal to be obese. Japanese citizens take major

preventative actions to ensure the health of their population. Although Japan is a

country, it is essential to fit preventative laws into a city, specifically a Micro City.

Examining how health works on a larger scale, such as Japan, can foster a stronger

health system. Japan introduced the ―metabo law,‖ which implements the

prevention of obesity through certain health precautions. Their ―metabo law‖ is

cost-efficient by reducing other health risks related to obesity. Japan also ranks

highest in life expectancy (Yamataga et al., 2008). The use of safety screenings

prevents disease before it becomes worse. Preventive care is just as essential as

reversing the condition.

In ―Improving economic equality and health: The case of postwar Japan,‖

Bezruchka et al (2008) discuss how Japan overcame poverty after World War II and

became the country with the highest life expectancy in the world. This is a

noteworthy article because it identified the link between a country‘s mortality rate

and a country‘s income level (p. 589). They further state, ―changes in a society‘s

economic hierarchy can have profound health effects,‖ and ―Japan‘s example is

remarkable‖ (p. 593). These interesting Japanese values serve as an example of


68

measures to increase health and longevity. However, other successful cases unique

to their country should not be overlooked.

Other successful models include NxStage and Philips Healthcare (formerly Philips

medical systems). NxStage has created over 17,000 health care homes, all

providing cost-efficient rates and quality care (Nagpure and Prashant, 2008). A

Micro City values the importance of cost-efficiency and adequate levels of quality.

Home-based health care may not replace traditional health care, but may enhance it.

Clearly, an efficient health care system must be incorporated into the city to sustain

the population. This system will best support the population because health

services will be more sporadic, and in turn, there will be less reliance on hospitals.

Patients and those in need of these services will access healthcare when they need

it, and it will always be of high quality.

Christopher Searles (2011) further states, ―illnesses are not stopped by borders‖ (p.

146). Impoverished people are dealing with numerous barriers in their search for

medical care. Sadly, those barriers are man-made but can always be brought down

if someone is willing to do so. If those barriers are confronted by a Micro City, new

development will allow medical care to be delivered in ways that are fitting to

citizens‘ needs. Micro Cities will be able to demonstrate efficiency in healthcare to

the rest of the globe.

How the City Will Be Sustained

Figure 14 and15. Shadow cities by Robert Neuwirth. Neuwirth shows the informal economies in the

slums are now collectively the second largest economy in the world, and they are worth the

investment to develop them.

In building a Micro City, the new settlement must attract investors who are willing

to build the infrastructure, such as roads, power system, airports, and buildings.

Firms will need to be attracted as well since they have the power to hire people who

will move into the city in the first place. In Paul Romer‘s (2009) TED Talk, he

discusses that when employees are hired, their families will move to the city and

become permanent residents, have children, get an education, and enter the

workforce; this will result in an ongoing cycle.


69

Although developed nations provide financial means to a Micro City, they cannot

shoulder all financial burdens. Aid from developed countries alleviates financial

loads, but trade allows the new settlement to sustain itself and restore dignity to its

people. It is true that international firms collecting fees for their services may

possibly provide a large portion of the new settlement‘s infrastructure, but the city‘s

development authority must finance remaining public services. This includes

border security, police, firefighting, courts, and other necessary services. Usually

cities rely solely on income and property taxes to generate the funds needed for

these operations. On the other hand, Micro Cities employ a different approach.

The city may make long-term leases to private developers, causing rent to fluctuate

parallel to land value. The price of rent will increase as land value rises (Fuller &

Romer, 2010). Such a method would not only provide income for the city‘s

government, but it also gives the government an incentive to maintain the city.

Maintenance ensures that living and working conditions remain attractive since

revenues rely on the city‘s land value (Romer, 2009).

Figure 16 shows how the informal market is the largest market segment for Proctor & Gamble and

accounts for 20 % of all its revenues. Ref-: P&G public disclosure in its reporting documents.9

With climate change, skyrocketing energy costs, and a weak economy on people‘s

minds, Van Jones‘ (2008) recent book, The Green Collar Economy, addresses

ongoing issues of social inequality. He also discusses the environment and arrives

at large-scale solutions that focus on improving the "greenness" of individual

corporations. By examining case studies of prospective companies‘ green

initiatives and their effects on marketing and consumers, Jones demonstrates how

going green can be a win-win situation for both the bottom line and the

environment. Micro Cities provide the perfect opportunity to implement all

innovative designs, which could sustain the green collar economy.

Discussions

Micro Cities can aid in the growth of a country, but it is crucial that appropriate

laws are enacted and enforced in order to attract potential residents. Without

residents there will be no consumerism, which hinders the possibility of a booming

economy. More homes are needed to house the rapidly growing population. This

Micro City is not just a mere idea, it can saves lives and better the economy.

Through the approaches listed above, a fresh, efficient lifestyle can ensure

sustainability. When cities are governed by a good set of rules, ―They can be cities


70

where people are safe from crime, safe from disease and bad sanitation, [and] where

people have a chance to get a job‖ (Romer, 2009). The concept of a Micro City is

gradually gaining acceptance in India. If all goes well, India should have at least 30

private cities across the country by the end of this decade. This number could

increase, depending on the manner in which India‘s policy makers allow this

concept to germinate.

The concept of Micro Cities is a promising and symbolic movement of our time. It

is a new lifestyle with a transformed vision of the future, consisting of fitting laws

and regulations, a healthy environment and population, and the financial means to

sustain its existence. It is where the present and future well-being of humanity as

well as the environment is a promising one. This revolutionary idea has the

potential to impact communities around the world in profound ways. If the world is

committed to a behavioral change, it will not be long until we live in cities whose

residents experience high levels of satisfaction.

Figure 17, 18 and 19 Illustrates that if a commitment is placed to build these Micro Cities, a

transition can happen from the slums to the mega cities just as Dubai was transformed from the

desert to a super city through Oil. The slums of the world can use human energy to transform.

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equality and health: The care of postwar Japan. American Journal of Public

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73

ROA PERFORMANCE OF PRIVATE SECTOR BANKS DURING THE

YEAR 2007 TO 2011

Tasfiya Shaikh

Lecturer

Patuck-Gala College of Commerce & Management

Abstract

This paper empirically predicts the Return on Assets (ROA) performance of Private

sector banks in India during the year 2007 to 2011. A sample of 25 private sector

banks is taken for the study including both old private sector and new private sector

banks. Mean, index number, average, increase and decrease over previous year,

graph are used to study the impact of these determinants on the performance of the

banks. ROA is taken as the dependent variable, while other variables like spread

ratio, provision and contingencies, non-interest income, credit deposit ratio,

operating expense ratio, investment-deposit ratio, capital adequacy ratio and non

performing assets have been controlled in the study. The results reveal that spread,

credit-deposit ratio, non-performing assets, non-interest income and provision and

contingencies have the capacity of predicting the profitability (measured by

ROA) of private sector banks in India. The measured ROA reveals that the Indian

banking sector remained relatively healthy during the current economic crisis, and

the performance of the banks was not impacted negatively in a significant manner

Keywords: ROA, Profitability, Banking Sector, Private Sector Banks

Introduction

Private banks in India have a great history and started their service way back. All

those banks where greater parts of stake or equity are held by the private

shareholders and not by government are called ―Private Sector Banks‖. Private

sector banks have been functioning in India since the very beginning of the banking

system. Private banks in India have earned a great response for its skin tight service

and also known for bringing revolution for serving millions of customers. It offers

best offers for saving and also offers various schemes with maximum returns. It

offers its service 24 hours and made the job of fund transfer easier by offering new

banking service. Besides, a lot of ATM machines have been set up by such private

banks and have made the task of withdrawing liquid money easier.

In 1990s, RBI‘s liberalization policy came in picture and with this the government

gave licenses to a few private banks, which came to be known as new private sector

banks. There are two categories of private sector banks: ―old‖ and ―new‖. The

following table shows the list of old private and new private sector banks along

with year of establishment:

List of Old Private Sector Banks Year of establishment


74

1. Bank of Rankasthan

2. Catholic Syrian Bank

3. City Union Bank

4. Dhanlaxmi Bank

5. Federal Bank

6. ING Vysya Bank

7. Jammu and Kashmir Bank

8. Karnataka Bank

9. Karur Vysya Bank

10. Lakshmi Bank

11. Nainital Bank

12. Ratnakar Bank

13. SBI commercial And International Bank

14. South Indian Bank

15. Tamilnad Mercantile Bank Ltd

16. United Western Bank

1943

1920

1904

1927

1931

1930

1938

1924

1916

1926

1912

1943

1955

1905

1921

1936

List of New Private Sector Banks

1. Axis Bank

2. Bank of Punjab

3. Centurian Bank of Punjab

4. Development Credit Bank

5. HDFC Bank

6. ICICI Bank

7. Induslnd Bank

8. Kotak Mahindra Bank

9. Yes Bank

1994

1989

1994

1995

1994

1996

1994

1985

2005

However, the banks are now facing a number of challenges such as frequent

changes in technology required for modern banking, stringent prudential norms,

increasing competition, worrying level of Non-Performing Assets (NPAs), rising

customer expectations, increasing pressure on profitability, asset-liability

management, liquidity and credit risk management, rising operating expenditure,

shrinking spread and so on. Banking sector reforms have also brought the

profitability under pressure. RBI‘s effort to adopt international banking standards

further forced the banks to shift their focus to profitability for survival. Hence,

profitability has become the major area of concern for the management of the

banks.

Review of Literature:

The aim is to review the literature briefly and identify certain gaps in the earlier

literature and suggest the need for the present study.

1. Goyal and Kaur (2008) studied the performance of new private sector banks

in India. The study covers seven new private sector banks operating in India.

The period for evaluating the performance ranges from 2001 to 2007. The

study analyses the performance of the banks by using various Balance Sheet

and Profit and loss ratio.


75

2. Singh and Chaudhary (2009) studied all public, private and foreign sector

banks in India. The study shows the operating profit, investment, deposits

and advances by using simple multiple regression analysis. The period for

evaluating the performance from 2001 to 2007. This study found that

investments, deposits and advances affected profitability of private sector

and foreign sector banks only.

3. Manoj (2010) studied only old private sector banks especially in Kerala

region. The study shows the assets size, share of priority sector advances in

the total advances, operational efficiency by using multiple regression

analysis. This study found that positive non interest income and negative

investment in government securities.

4. Malhotra (2011), studies 20 public and 15 private sector commercial banks

in India. This study covers the period from 2005 to 2009 by using Panel data

regression Analysis. In this study, asset utilization, efficiency of total

income to capital employed, deposit concentration, loan concentration, asset

concentration, total deposit to owned funds, capital adequacy , interest

expanded, net interest income to total funds are used as a independent

variables. This study found that net interest margin has improved, cost of

intermediation is actually rising and banks are responding to the increased

costs with higher efficiency levels.

Need and Objectives of the Study:

1. The need of the hour is that the operational performance and productivity in

terms of profitability of private sector banks need to be evaluated against the

public sector banks and foreign sector banks.

2. The objective of the present study is to examine the ROA performance of

the private sector banks in India during 2007 to 2011.

Database and Methodology:

The study focuses on 25 private sector banks in India. Secondary data is used for

the present study.

1. RBI Bulletins

2. Annual report of RBI

3. RBI websites

4. The IUP Journal of Bank Management

5. Journal of Entrepreneurship Development

The determinants affecting the bank‘s profitability are studied for five period of

time from 2007 to 2011. These periods are relevant because they represent the post

recession period during which the banks in developed nations like US were affected

badly. Mean, index number, increase/ decrease over previous year, graph analysis

are used to analyze the impact of determinants of profitability on the performance

of private sector banks in India.

Dependent Variable:


76

Return on Assets is taken as the dependent variable as it reflects how well a

bank‘s management is using the bank‘s real investment resources to generate

profits. It is calculated as follows:

ROA = Net Income / Total Assets

Independent Variables:

1. Spread ratio: The difference between interest received and interest paid.

The higher the ratio, the more will be the profitability. The ratio is

calculated as follows:

Interest Received – interest paid / Total Assets * 100

2. Provision and contingencies: A portion of profits are kept for contingent

situations and expenditure, and thus have a direct bearing on the

profitability.

3. Non interest income: Income of a bank from its allied and non banking

activities. Banks should operate at a lower cost to increase profitability. This

is calculated as follows:

Non-interest income /Total assets

4. Credit –Deposit Ratio: The ratio bears a positive relationship with

profitability as it highlights the effective utilization of deposits which are the

major and cheapest source of revenue to the bank. However, a lower ratio

may indicate that the deposits are merely serving as a burden to the banking

business. This is calculated as follows:

Total Advances / Total Deposits

5. Operating expenses: the ratio has negative relationship with profitability

and a high OE ratio highlights operational inefficiency of a bank.

Operating Expenses/ Total Expenses

6. Investment –Deposit Ratio: The ratio highlights the efficiency of a bank to

invest its deposits and surplus cash so as to generate profits.

Investment / Deposits

7. Capital Adequacy Ratio: In the adoption of risk management strategies by

a bank, the ratio determines the cushion available to a bank against the

credit risk, operational risk and market risk.

8. Non-performing Asset (NPA) ratio: The ratio bears a negative relationship

with profitability as it indicates the credit risk of a bank.

Hypothesis of the Study:

Based on prior literature, the hypotheses related to the profitability indicators of

the private sector banks have been developed and tested.

H1: The higher the spread ratio, the more will be the profitability.

H2: Provision and contingencies have a negative relationship with

profitability.

H3: Non-interest income bears a positive relationship with profitability.

H4: Credit Deposit Ratio bears a positive relationship with profitability.

H5: Operating expenses ratio has a negative relationship with

profitability.

H6: Investment Deposit ratio bears a positive relationship with


77

profitability; the more the profitability investments, the more would

be the profitability.

H7: CAR bears a positive relationship with profitability.

H8: NPAs bear a negative relationship with profitability, they highlights

poor credit management of the banks.

Results and Discussions

1. Trend and Progress of Indicator of Private Sector Banks During 2007

to 2011

Table 1.1

Sr.

No.

List of Indicators Average Growth

in the

year

2011

over

2007

Increase /

Decrease

over previous

year

% change over

previous year

1 Interest Received 77366.8 189.31% 45682 All 4 years

show positive

change and 1

year shows

negative change

2 Interest Paid 49333.2 173.63% 35724 All 5 years

show positive

change

3 Provisions and

Contingencies

12377.4 199.38% 9420 All 3 years

show positive

change and 2

years show

negative change

4 Operating Expenses 21565.6 180.17% 12284 All 5 years

show positive

change

5 Capital 4540.2 115.95% 661 All 3 years

show positive

change and 2

show years

negative change

6 Total Assets 1052385.

4

187.57% 65277

0

All 5 years

show positive

change

7 NPAs 14891.8 194.52% 8733 All 5 years

show positive

change

8 Net Income 11535.6 273.79% 11243 All 5 years

show positive

change

9 Non Interest Income 1.47% 94.44% 0.06 All 3 years


78

show positive

change and 2

show years

negative change

10 Credit Deposit Ratio 77.29% 105.84% 4.39 All 4 years

show positive

change and 1

year shows

negative change

11 Investment Deposit

Ratio

41.38% 108.22% 3.2 All 4 years

show positive

change and 1

year shows

negative change

The above table 1.1 indicates that Interest Paid, Operating Expenses, Total Assets,

Non-Performing Assets and Net Income show positive results during five years.

Whereas, Interest received, Credit deposit ratio and Investment deposit ratio shows

a 4 year positive change and 1 year negative change. Provision and contingencies,

Capital, Non-interest Income shows a 3 year positive change and 2 year negative

change. All indicator show increase over previous year except in case of credit

deposit ratio which shows a decrease over the previous year. The growth of all

indicators show above 150 percent except in case of non-interest income has 96.44

percent which is less than 100 percent and on the other hand, net income of private

sector banks has shown 273.79 percent which has increased to a great extent. The

above table shows the impact of various indicators on profitability of private sector

banks during 2007 to 2011.

2. ROA performance of Private Sector Banks :

Table 1.2

Years Net Income

(` In Crore)

Total Assets

(` In Crore)

Return on Assets

(In %)

2007

2008

2009

2010

2011

6469

9521

10865

13111

17712

745406

940144

1027465

1150736

1398176

=0.86

=1.01

=1.05

=1.13

=1.26

Table 1.2 shows that the Return on Assets is continuously increasing but

only at a slight rate - from 0.86% in 2007 to 1.26% in 2011. Net income has

also highly increased from ` 6, 469 crores in 2007 to ` 17, 712 crores in

2011. Whereas, total assets have also increased drastically from ` 7, 45,406

crores in 2007 to ` 13, 98,176 crores in 2011. The above table shows that

there will be an increase in ROA of private sector banks which result in a

positive impact on profitability of private sector banks during 2007 to 2011.


79

The above table 1.2 is also shown in the form of a graph also which is

shown indicated below in graph 2.1:

ROA performance of private sector banks during 2007 to 2011

The above graph 2.1 shows the line which has slightly increased from 2007 to 2011.

It shows a positive change in growth of private sector banks.

3. Spread Ratio:

Table 1.3: Spread Ratio of Private Sector Banks

Year Interest

Received

(` In

Crore)

Interest Paid

(` In Crore)

Total Assets

(` In Crore)

Spread

Ratio

( In % )

2007

2008

2009

2010

2011

51,145

70,990

85,066

82,806

96,827

32,893

48,495

56,957

51,206

57,115

7,45,406

9,40,144

10,27,465

11,50,736

13,98,176

2.44%

2.39%

2.73%

2.74%

2.84%

The above Table 1.2 indicates the spread ratio which is calculated by following

formula:

Spread Ratio = IR – IP / TA * 100

Where, IR = Interest received

IP= Interest paid

TA= Total Assets

The above table 1.2 shows IR has increased in all except one year that is 2010

which shows a slight decrease as compared to the previous year. However, IR has

increased from ` 51,145 crores in 2007 to ` 96,827 crores in 2011. Similarly IP of

private sector banks has increased from ` 32, 893 crores in 2007 to ` 57, 115 crores

in 2011. Whereas, the TA has continuously increased from ` 7, 45,406 crores in

2007 to ` 13, 98,176 crores in 2011.

0.86 1.01 1.051.13

1.26

6 5 4 3 2

2007 2008 2009 2010 2011

Graph of ROA 2.1

Series 1 Series 3


80

The spread ratio is shown by following graph 2.2:

Spread ratio of private sector banks during 2007 to 2011

The above graph 2.2 indicates that the spread ratio of private sector banks

has decreased between 2007 to 2008 from 2.44 percent to 2.39 percent

respectively, however it has picked up to a great extent there on from 2008

to 2011 to greater extent.

4. Consolidated Result of Private Sector Banks :

Table 1.4

Ratio 2007 2008 2009 2010 2011

1. Non Interest Income 1.69 2.02 1.82 1.88 1.63

2. Credit deposit Ratio 75.14 76.80 78.13 76.86 79.53

3. Investment Deposit Ratio 38.89 41.27 41.62 43.04 42.09

The above table 1.4 shows the NII has increased and decreased and there is

no continuous progress during 2007 to 2011, Whereas CDR has increased

from 75.14 percent in 2007 to 79.53 percent in 2011 except in the year 2010

showing a decline upto 76.86 percent. IDR has also increased continuously

from 38.89 percent in 2007 to 43.045 percent in 2010 but in the year 2011 it

has decreased by 42.90 percent, which shows that private sector banks have

fail to justify their investment policies in the year 2011. The above table is

also explained by graphs 2.3, 2.4, 2.5:

2.44 2.392.73 2.74

2.84

5 6 4 3 2

2007 2008 2009 2010 2011

Graph of Spread Ratio 2.2

Series 1 Series 3


81

Non Interest Income of Private Sector Banks during 2007 to 2011

Credit Deposit Ratio of Private Sector Banks during 2007 to 2011

Investment Deposit Ratio of Private Sector Banks during 2007 to 2011

1.69

2.021.82

1.88

1.63

7 2 3 4 8

2007 2008 2009 2010 2011

2.3 Graph of NII

NII Series 3

75.1476.80

78.13

76.86

79.53

7 6 3 6 2

2007 2008 2009 2010 2011

2.4 Graph of CDR

CDR Series 3

38.8941.27

41.62

43.0442.09

7 6 5 2 3

2007 2008 2009 2010 2011

2.5 Graph IDR

IDR Series 3


82

Conclusion

The hypothesis developed for the present study is tested and the results are shown

in Table1.1 and table 1.2. On the basis of the results of the present study, it is

concluded that the variable NPA, non interest income, provision and contingencies,

have the capacity of predicting the profitability of private sector banks in India.

References:

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India: a multivariate Analysis‖ Delhi

Malhotra D. K. (2011), ―Evaluating the Performance of Commercial Banks

In India‖, Journal of Finance and Banking Research.

Bodla B S and Verma (2010), ―An Analysis of Efficiency of Private Sector

Banks in India‖, Journal of Bank Management.

Singh and Chaudhary (2009), ―Profitability Determinants of Banks in India‖

Journal of Global Business.

Altman E. I. (1968), ―Financial Ratios, Discriminant Analysis and the

Prediction of Corporate Banckruptcy‖, Journal of Fiance, Delhi.

Ahemd, Jynaluddin(2003), ― Banking Sector Reforms in India‖, Yojana.

Mohan, Rakesh (2004), ―Financial Sector Reforms in India: Policies and

Performances Analysis‖, RBI Bulletin.

Pathak, Bharati (2003), ―A Comparison of Financial performance of Private

Sector Banks‖ RBI Bulletin.

Chansarkar (1999), ―Public sector banks in the post reforms period: Market

Share‖, Indian Journal of Commerce.

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reforms in India: A study of technical efficiency of commercial banks

between pre and post reforms period‖, Asian Economic Review.

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