volume-vii, issue-i- jan-june, 2015

Volume-VII, Issue-I- Jan-June, 2015


CONTENTS Title Page #

RESEARCH ARTICLESOrganizational Culture and Work Engagement – A Relationship Study – Roohi Kursheed Khan. S & Rupa Gunaseelan 01

Poultry Waste Management: A System Dynamic Approach– Mohammad Shamsuddoha 09

Toward a Model for Managing the Sustainable Energy: A Remedy against aloof Culture of Wasting the Iraqi next generation's wealth - A field Study to the points of view of managers in (Oil, Electricity, Environment) sectors in Basra Province– Mohammed Hussein Manhal & Hani Fadhil Jumaah Al-Shawi 17

E-commerce Business Models in India – An Overview– Pardhasaradhi Madasu 27

Tracing Historical Development of Corporate Social Responsibility (CSR) Practices in India: A Retrospection and Future Action– Nanjunda 33

Effectiveness of HR Outsourcing – A Study With Reference to IT and Pharmacy Industry– D. Maheswara Reddy 39

MANAGEMENT GAMEThe Internal Environment: Resources, Capabilities, Competencies And Competitive Advatage– Pavan Patel 49

CASE STUDYBhoomi Farmco-Producer Organizations And Enhancing Stakeholder Experiences– Prasannakumar Ganji & V. Murugaiah 54

BOOK REVIEWGreat Leaders Grow: Becoming a Leader for Life– S.V.Ramanarao & Agna Fernandez 59

Copyright: Siva Sivani Institute of Management, Secunderabad, India. SuGyaan is a bi-annual publication of the Siva Sivani Institute of Management, NH-7, Kompally, Secunderabad- 500 014.All efforts are made to ensure correctness of the published information. However, Siva Sivani Institute of management is not responsible for any errors caused due to oversight or otherwise. The views expressed in this publication are purely personal judgments of the authors and do not reflect the views of Siva Sivani Institute of Management. All efforts are made to ensure that published information is free from copyright violations. However, authors are personally responsible for any copyright violation.


Editorial………….It gives me immense pleasure in presenting before you the issue Volume-VII - Issue-I - Jan-June, 2015 of Sugyaan - Management Journal of Siva Sivani Institute of Management. In its sixth year of existence Sugyaan has received a tremendous response from its readers and contributors. Our sincere gratitude to the readers, authors and reviewers for their support.

In our continuous effort to contribute to the cause of nation building by promoting quality research through thought provoking ideas in the form of research papers, articles, case studies and book reviews we, in the current issue of Sugyaan, have included five papers from different disciplines viz., Organizational Behavior, Poultry Management, Sustainable Energy, Corporate Social Responsibility followed by a book review.

The first paper titled “Organizational Culture and Work Engagement – A Relationship Study”, by Roohi Kursheed Khan. S & Rupa Gunaseelan, investigate the relationship between organizational culture and work engagement among IT professionals in Coimbatore City with the help of Structural Equation Modeling (SEM). The study concluded that there exists a strong positive correlation between organizational culture and work engagement.

The second paper titled “Poultry Waste Management: A System Dynamic Approach”, by Mohammad Shamsuddoha studied on the supply chain (reverse) applied to recycle livestock wastes into economically viable by-products. Using Vensim – a simulation model of the poultry supply chain under System Dynamics approach will be developed for a large poultry plant in Bangladesh where poultry wastes are modelled to turn into various by-products.

The third paper titled “Toward a Model for managing the Sustainable energy: A Remedy against aloof culture of wasting the Iraqi next generation's wealth - A field study to the points of view of managers in (Oil, Electricity, Environment) sectors in Basra province by Mohammed Hussein Manhal & Hani Fadhil Jumaah Al-Shawi examined the importance of sustainable energy in Iraq.

The fourth paper titled” E-Commerce Business Models in India – An Overview by Pardhasaradhi Madasu discussed various business models prevailing in the e-commerce industry with critical explanations on the working of the models from end user point of view.

The fifth paper titled “Tracing Historical Development of Corporate Social Responsibility (CSR) Practices in India: A Retrospection and Future Action by Nanjunda examined various models of CSR and discussed the action plan for future implementation of CSR in the corporate.

The sixth Paper titled “Effectiveness of HR Outsourcing – A Study with reference to IT and Pharma Industry”, by D.Maheswar Reddy addressed the effectiveness of HR outsourcing in the organization through satisfaction of the employees about the magnitude of HR outsourcing operations and concluded that there is a significant difference witnessed in the areas of satisfaction level of the employees’ welfare activities as well as comfort of employees about their level of freedom and level of involvement with the service provided by HR outsourcing provider between IT and Pharma companies.

The next is a management game from strategic management area titled as “The Internal Environment: Resources, Capabilities, Competencies and Competitive Advantage”, by Pavan Patel focused on optimal utilization of internal resources of the organization.

The next section is on Case Study titled “Bhoomi Farmco-Producer Organizations and Enhancing Stakeholder Experiences”, by Prasannakumar Ganji & V. Murugaiah, discussed a case study on an NGO promoting chemical free cotton cropping and cultivation through various social activities in the rural areas of Maharashtra.

Lastly, we have a book review, “Great Leaders Grow: Becoming a Leader for Life “by S.V.Ramana Rao and Agna Fernandez.

We hope you find this issue interesting and look forward to your feedback.

Volume-VII, Issue-I- Jan-June, 2015Volume-VII, Issue-I- Jan-June, 2015

Introduction:The IT industry has become one of the most popular sectors in the world. The growth of the sector has transformed the world to the next generation from a slow moving bureaucratic economy into a land of innovation. This technological revolution brings a lot of unexpected opportunities for countries. India, a developing country has found the information technology development as a competitive challenge and the growth has reached new heights.

In India the IT employees are required to be multi talented and need to develop their skills to excel in their field. The employees need to be engaged in their work so that they perform better and in an organized way.

In this paper, we focus on the IT professionals working in an IT company in Coimbatore City. The rationale for selecting the area, Coimbatore is becoming the fastest growing IT hub in the state after Chennai and the growth of these IT companies have reached its peak in recent years (Source: India today. In, dated 26.10.13). There are many

reasons which make an employee engaged in their work, but this paper mainly focuses on how the organization’s culture influences the employees to be engaged in their work.

Work Engagement is a new and emerging concept in the field of Human Resource Management. The term was first coined in 1990 by Kahn who was the first to theorize about work engagement.

Kahn described engaged employees as those who are fully physically, cognitively and emotionally connected with their work roles. In the words of Macey, Schneider, Barbera, & Young (2009) engagement is referred as the focus energy that is focused towards organizational goals.

An engaged employee works harder through increased levels of discretionary efforts.

1.1 Need for the study:According to the Global workforce study of 2012, the steps organizations have taken to improve engagement are beginning to fall short. In this study globally only 35% of the employees are only highly engaged in their jobs. This figure is no way

ORGANIZATIONAL CULTURE AND WORK ENGAGEMENT – A RELATIONSHIP STUDY

* Roohi Kursheed Khan. S ** Dr. Rupa Gunaseelan

* Doctoral Scholar, Bharathiar School of Mgmt. & Entrepreneur Development, Bharathiar University, Coimbatore – 641046, Email: [email protected], Ph.no: 9840952621. ** Professor, Bharathiar School of Mgmt. & Entrepreneur Development, Bharathiar University, Coimbatore – 641046, Email: [email protected], Ph.no: 9488166255

ABSTRACTThe aim of this study is to investigate the relationship between organizational culture and work engagement. Work engagement is shown to be powerfully linked to a range of business success outcomes. Although a large number of studies investigates the link between employees’ work engagement and organizational variables, there remains a dearth of scientific research on organizational culture and its impact on work engagement. Based on the organizational culture, literature and work engagement research, it was assumed that the relationship between organizational culture and work engagement would differ depending on the different dimensions of culture. In this paper the organizational culture and the work engagement levels were measured in an IT company in Coimbatore city among 179 IT professionals. Applying correlation analysis and the structural equation modeling using Amos software the hypothesized relationships was tested.. The findings of the study indicated that there is a strong positive correlation existing between organizational culture and work engagement. And the influence of the organization on an employee’s work engagement is also significantly higher. Thus, based on the results, there is reason to suggest that the relationship between organizational culture and work engagement is potentially possible.Keywords: Denison model of organizational culture, work engagement, dimensions, relationships, IT professionals, CorrelationJEL Classification Code: M14

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different in the IT industry also. The 21st century information/service economy has gained critical importance for their employee’s psychological connection with their work.

As engagement has numerous antecedents, the most popular one is the JD-R model which is widely accepted, but in this paper the organizational antecedents is considered which is organizational Culture. Many contributions are made using the job level resources and the personal resources. So the present study is the need of the hour as it focuses on the relationships of organizational culture and work engagement in IT sector as IT faces shortage of employees who are dedicated and retention is also a major issue of concern.

2. Review of Literature:2.1 Studies in Organizational Culture:Organizational culture is an arrangement of different attributes that express an organization and differentiates the firm from other one (Forehand and von Gilmer, 1964). Culture is the collective thinking of minds which create a difference between the members of one group from another (Hofstede 1980).

Organizational culture plays an important role and argues that cultures of the organization are based on cognitive systems which help to explain how employees think and make a decision (Pettigrew1979).

Effective organization cultures helps in improving business decisions. The survival of culture in an organization lies upon national and foreign culture differentiation in culture management. (Schein, 1990) The organizational culture is affected by attitudes, norms and beliefs that lead to a strong communication between employees.

Organizational culture has generally been interrelated to management. (Kotter and Heskett, 1992). The two essential factors that lead to effective culture management include structural stability and integration of a superior standard of organization culture. (Schein, 1995) Certain characteristics of organizational culture have been established in which set of norms, values and beliefs helps in perfect association between them. (Hodgetts and Luthans, 2003) At different level of organization culture different background, ethics and racial differences impact upon performance. The similar organization culture with different backgrounds has a common set of values and

beliefs to be affected by organizational systems. (Robbins & Sanghi, 2007) The attraction of organizational norms, values and beliefs have a strong effect upon performance and sustainability. (Stewart, 2010).

2.2 Studies on Work Engagement:Engagement in a workplace is defined as a positive, fulfilling, affective- motivational state of work – related wellbeing. Recently, many studies on work engagement have received significant attention from the scholars and the practitioners in this field. In the words of Shuck and Wollard (2010) work engagement is “an individual employee’s cognitive, emotional and behavioral state directed toward desired organizational outcomes.” Work engagement only helps an employee to be proactive in their jobs.

Engaged workers have high levels of energy and are more enthusiastic about their jobs and involve themselves deeply in their work (Macey & Schneider, 2008; May et al, 2003).

Engaged workers work more creatively and productively and are more willing to do an extra work (Bakker and Demerouti, 2008; Bakker et al.,2004).

Wollard and Shuck (2011) had identified 42 different antecedents of work engagement in a structured literature review, from those 21 organizational antecedents were identified among which supportive organizational culture plays an important role.

Based on this review, this study has a significant role in finding how the organizational culture of an organization helps an employee to be engaged in his work.

2.3 Studies on Organizational Culture and Work Engagement: Organizational culture has been investigated in a mixture of different settings in an effort to explore its many influences on organizational life. The relationships between organizational culture and organizational effectiveness have been difficult to establish (Schneider et al., 2013) but only a few studies have attempted to investigate and focus on the relationship of culture to the employee’s attitude and behavior (Odom, Boxx, & Dunn, 1990). According to Budiharjo (2013) Strong and relevant corporate culture leads the behaviors of members in a way towards reaching company goals which

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ultimately improves the performance of the company. Thus, strong culture will encourage the formation of positive achievement for the members and make them engaged.In the thesis published by Anja Korg (2014) indicated that the study on work engagement is needed for the hour where the relationship between the organizational level variable of culture was studied with work engagement. Based on the findings of the study it was revealed that the variables had a more complex relationship than assumed and only the clan culture had a positive relationship with engagement.The paper work of Susan Abraham (2013) studied the relationship between organizational culture and employee engagement in the tyre manufacturing and sales organization in Ernakulam district. The study identified that organizational behavior has an impact on the employee engagement. The study used the Denison model of organizational culture and results indicated the mission, shared values and organizational learning contribute to high levels of engagement and the study suggested that small group activities at the shop-floor can enhance engagement.In the words of McBain (2007), one of the important drivers of employee engagement is organizational culture. Lockwood (2007) in his work stated that in any work environment settings, culture was one factor affecting employee engagement. A supporting culture in a friendly work environment will really help to create employee engagement. Employees who get more compensation and benefits will feel more engaged to the organization. In addition the mission and vision of the organization, treatment from co-workers, supervisors, work policy and work balance will also support to create employee engagement.Thus, from these reviews we understand that organizational culture plays a vital role in engaging employees to work in their organizations effectively. Hence, to address this issue a study was undertaken to examine whether work engagement is related to organizational culture. The study started with the literature survey via various journals, magazines and the internet helped to comprehend various facets about the work engagement and organizational culture.Research MethodologyType: Descriptive Research

Method: Systematic Random Sampling

Instruments: Structured Questionnaire Denison Organizational Culture Scale (1990) and Utrecht Work Engagement Scale (UWES) (2002)

Sample size: 179 Questionnaires returned with complete data.

Tools used: Descriptive statistics, Pearson’s Correlation and Structural equation modeling.

Research Questions:1. Is there any significant relationship between

organizational culture and work engagement?

2. To check if the organizational culture influences work engagement?

Sample Characteristics:An IT company located in Coimbatore was selected for the study. The particular organization was selected as the author had a good relationship with the organization. This was important as co-operation of the company will play an important role in determining the accurate data from the company. Data was collected by the researcher on site from the professionals using a structured questionnaire. There were 401 programmers in the company and every 2nd programmer were selected and the questionnaire were distributed. Thus 200 programmers received the questionnaire and on scrutiny, it was found that few response sheets were unfilled and eliminated from the sampling units finally giving a number of 179 respondents as the final sample.

INSTRUMENTSORGANIZATIONAL CULTURE Organizational Culture was measured using the Denison Organizational Culture Scale (1990) instrument. The instrument uses a 5 point scale (Strongly Disagree- SDA; Disagree- DA; Neutral- N; Agree- A; Strongly Agree- SA). The scale has 4 dimensions which helps in understanding the organizational culture of the employees in which they perform their tasks. They are: Involvement: This dimension, rates the participation and initiative of all employees working in the organization. Consistency: This indicates the extent to which the values, beliefs and standards of behavior are acquired and shared among employees. Mission: This dimension sets out a clear sense of existence and direction of the organization to the employees. Adaptability: This dimension describes about an organization's ability to adapt to change and to the

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external environment. The scale had a Cronbach alpha for all items as 0.89.

WORK ENGAGEMENTWork Engagement was measured with the Schaufeli and Bakker’s Utrecht Work Engagement Scale (UWES). The instrument uses the 5 point scale (Strongly Disagree- SDA; Disagree- DA; Neutral- N; Agree- A; Strongly Agree- SA). The higher the score, the higher will be the individual’s level of work engagement. This scale measures the 3 dimensions of work engagement they are: Vigor refers to high levels of energy which is shown by an employee when working. Dedication refers to being strongly involved in one's work and experience a sense of significance, enthusiasm, inspiration, pride, and challenges. Absorption is marked by focus of work that makes the time pass by quickly and unwillingness to break away from work. The scale had Cronbach’s Alpha for all items as 0.80.

RESULTS:Population CharacteristicsThe population characteristics were the analysis of 179 respondents by frequency and percentage results were presented in table 1

Table 1: The number and percentage of teachers by demographics (N=170)

Demographic Details Responses

N %

Gender

Male 138 77.1

Female 41 22.9

Age

Below 30 61 34.1

31-40 57 31.8

41-50 37 20.7

Above 50 24 13.4

Education Level

Graduate 55 30.7

Postgraduate 124 69.3

Marital Status

Single 30 16.8

Married 145 81.0

Separated 4 2.2

Years of Experience

1-5 yrs 65 36.3

6-10 yrs 74 41.3

11-15 yrs 16 8.9

Above 15 yrs 24 13.4

Household Composition

Nuclear 134 74.9

Joint 45 25.1

Monthly Income

Below 10000 27 15.1

11000-20000 75 41.9

21000-30000 30 16.8

Above 30000 47 26.3

Designation

Top level 22 12.3

Middle level 95 53.1

Higher level 62 34.6

*Numbers and the total will be equal to 100 as the missing data was found and replaced* Source. Primary Data

Descriptive statistics were used to analyze the demographic profile of the programmers. 138 (77.1%) of the respondents were male and 41 (22.9%) of the them were female. The 61 (34.1%) of the respondents were in the age group of below 30 years. The classification of employees based on their educational background shows that 124 (69.3%) of them are postgraduates. Based on the marital status 145 employees (81.0%) of them were married. Nearly 74 (41.3%) of the employees were having experience between 6-10 years. 134 (74.9%) of the employees were from nuclear families. The majority of the employees 75 (41.9%) of them was earning between 11000-20000. The designation of the employees was categorized into 3 categories, Top level, Middle level, and Lower level. The employees in the middle level scored the highest score of (53.1%) for 95 of them.

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Research Question 1To have an idea on whether there is any significant relationship between organizational culture and work engagement the Pearson’s correlation coefficient was calculated.

Table 2 Showing the correlation between Organizational culture and Work Engagement

Variables Correlation Coefficient

Sig. (2- tailed)

Organizational Culture Work Engagement

0.539** .000

**Correlation is significant at the 0.01 level (2-tailed).

The correlation coefficient between the two variables is 0.539; this is significant at 0.00 level. The null hypothesis that there is no relationship between work engagement and organizational culture is rejected. The direction of the relationship is indicated by the sign and the strength of the relationship is represented by the absolute size of the co-efficient i.e. how close it is to +1 or -1. Here the co-efficient is +0.539 this indicates that there is a high positive relationship between the two variables. Work engagement was measured using a scale consisting of three sub scales. Each sub scale measures a dimension of work engagement. To understand the relationship between work engagement and organizational culture better, the correlation coefficient was calculated between organizational culture and each sub scale of work engagement. The following tables the relationship between organizational culture and critical existential sub scale of work engagement.

Table 3 Showing the correlation between Organizational culture and Vigor


Sig. (2- tailed)

Vigor Organizational Culture

0.631** .000

**Correlation is significant at the 0.01 level (2-tailed)

The correlation coefficient between the two variables is 0.631; this is significant at 0.00 level. The null hypothesis that there is no relationship between vigor and organizational culture is rejected. Since vigor is high levels of energy shown by an employee when working and organizational culture refers to the set of shared implicit assumptions that a group holds so they high positive relation and they are related to each other.

Table 4 Showing the correlation between Organizational culture and Dedication


Sig. (2- tailed)

Dedication Organizational Culture

0.317** .000


The correlation coefficient between the two variables is 0.317; this is significant at 0.00 level. The null hypothesis that there is no relationship between dedication and organizational culture is accepted. As, dedication refers to being strongly involved in one’s work and organizational culture refers to the set of shared implicit assumptions that a group holds so they are related to each other. The level of correlation between organizational culture and dedication is only 31.7% and this indicates that there is a positive correlation between the variables. The reason for the less positive correlation among these variables compared to the other dimensions of work engagement will be that the employees in the organization are less dedicated and could not connect with the organization as they feel that the organization does not create them a good and a better environment where their goals are attainable.

Table 5 Showing the correlation between Organizational culture and Absorption


Sig. (2- tailed)

Absorption Organizational Culture

0.568** .000


The correlation coefficient between the two variables is 0.568; this is significant at 0.00 level. The null hypothesis that there is no relationship between dedication and organizational culture is rejected. Since absorption is marked by focus of work one is at work and organizational culture referring to the set of shared implicit assumptions that a group holds so they are related to each other. Thus, this indicates that there is a high positive correlation between the variables dedication and organizational culture.

Research Question 2Structural Equation modeling was applied to study the influence of organizational culture on work engagement of employees. This technique studies

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the complex relationships between one or more independent variables and one or more dependent variables which combines the factor analysis and the multivariate multiple regressions (Hair et al., 2006). This model provides the estimation of multiple interrelated dependence relationships and their associations. The main aim of SEM is to explain the model of a sequence of interrelated dependence associations simultaneously among a set of dormant (unobserved) constructs, each measured by one or more manifest (observed) variables (Yu-Kai, 2009)

Null hypothesis (H0): The hypothesized model has a good fit.

Alternate hypothesis (H1): The hypothesized model does not have a good fit.

Structural equation modeling (SEM): Model fit assessment Structural equation modeling was used to analyze the model’s appropriateness based upon the col-lected samples. The model assesses the causal relationship between the organizational culture

and work engagement and ensures the samples fit the theory proposed. The model fitness is as-sessed through the fit indices mentioned through Chi-square/degrees of freedom (x2/df), CFI, GFI, AGFI, TLI, IFI, RMSEA and PGFI (Table 5).

According to Gerbing and Anderson (1992), the criteria for an acceptable model are as follows: RMSEA of 0.08 or lower; CFI of 0.90 or higher; and NFI of 0.90 or higher. The fit between the data and the proposed measurement model can be tested with a chi-square goodness-to-fit (GFI) test where the probability is greater than or equal to 0.9 indi-cates a good fit (Hu and Bentler, 1999). The GFI of this study was 0.953 which is more than the recommended value of 0.90, the other measures also fitted satisfactorily; AGFI= 0.915, CFI=0.975, TLI=0.960, IFI=0.976 and NFI=0.960 with x2/

df<3 at 2.458 and RMSEA= 0.071 ((Bagozzi and Yi, 1988) indicate a good absolute fit of the model. The goodness of fit indices supports the model fit and the above em-phasized indices indicate the ac-ceptability of this structural model. For testing the model the null and alternate hypothesis were framed and the result output proved that the null hypothesis is accepted and proves a good model fit.

DISCUSSION The main objectives of the study were to identify if there is a positive correlation between organizational culture and work engagement and to check whether the organiza-tional culture influences the work engagement of employees. By im-plementing the structural equation modeling the result indicated that the culture of the organization in-fluences 68% for the employee to engage in their work which shows it is highly significant. Thus, several studies have examined the impact

of organizational culture to the employee behavior, performance and engagement, but this is the first of its kind among Indian studies concentrating es-pecially in Coimbatore city. The results of this study suggest that positive perceptions of Organizational Culture are likely to be related to higher levels of work engagement. The hypothesized theoretical model was also tested using the Amos software

Table 6 Model fit indices

Fit Indices Results Suggested values

Chi-square 31.960 (0.02) DF- 13

Chi-square/degree of freedom (x2/d.f.) 2.458 ≤ 5.00 ( Hair et al., 1998)

Comparative Fit index (CFI) 0.975 >0.90 (Hu and Bentler, 1999)

Goodness of Fit Index (GFI) 0.953 >0.90 ( Hair et al. 2006)

Adjusted Goodness of Fit Index (AGFI) 0.915 > 0.90 (Daire et al., 2008)

Normated Fit Index (NFI) 0.960 ≥ 0.90 (Hu and Bentler, 1999)

Incremental Fit Index (IFI) 0.976 Approaches 1

Tucker Lewis Index (TLI) 0.960 ≥ 0.90 ( Hair et al., 1998)

Root mean square error of approximation (RMSEA)

0.071 < 0.08 (Hair et al., 2006)

Parsimony goodness-of-fit index (PGFI) 0.50 Within 0.5 (Mulaik et al., 1989)

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and the relationship was also proved significant. Thus, these results are consistent with those of previous studies that investigated the culture-work engagement relationships (Pervashnee Naidoo et al., 2014; Greenidge, 2010; and Alarcon et al., 2010). The present study also provides evidence that organizational culture is a key consideration in understanding work engagement.

Overall, the Organizational Culture dimensions of Involvement, Adaptability, Consistency and Mis-sion processes seem to have a greater influence on the work engagement dimensions of vigor, ded-ication, and absorption, suggesting a greater effect on work engagement. Further future research can be done by looking into the effect of subgroup dif-ferences related to age, gender, seniority, or ex-periences and also with the organizational cultural antecedents, the consequences of work engage-ment can also be included.

CONCLUSIONIncreasingly, the focus in modern organizations is on the management of human capital (Bakker & Schaufeli, 2008). As it is the human capital which needs to be engaged to perform better, In conclu-sion, it can be assumed that work engagement is the key driving force to the outgrowth and evolu-tion of the system and the employee himself. Thus, as work engagement has been shown to relate to several positive work outcomes, the results of the present study suggest that it makes sense for or-ganizations to foster a positive culture, and to en-sure that employees remain engaged in their work, in order to retain workers longer than organizations that fail to promote engagement (Alarcon et al., 2010).

RECOMMENDATIONSThe following points were made by the employees to improve the engagement levels:

1. The employees should be valued and acknowl-edged for their honest work. This will afford them a tone of being respected and at the same time leading to the success.

2. The Management should help and direct the employees when changes are being carried out in the system by giving them effective and hand on training to perform the job effectively.

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MJ SSIM VII (I) 1, 2015

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INTRODUCTIONBangladesh is considered one of the most appropriate countries in the world for livestock and poultry rearing (Shamsuddoha and Sohel, 2008). The appropriateness justified due to employment creation, entrepreneur development and social and economic changes in rural, urban and sub-urban areas (Shamsuddoha et al., 2013e, Shamsuddoha et al., 2013c, Shamsuddoha, 2013a). Applications of dynamic concepts of reverse supply chain, system dynamics, and simulation easily guide them toward scientific farming with better profitability and sustainability (Shamsuddoha et al., 2013e). The livestock entrepreneurs are implementing latest operation so quickly by the help of another livestock developed country like USA, Canada, France, China, Malaysia, Thailand, etc. (Shamsuddoha et al., 2011a). This research is based on poultry operation in Bangladesh and poultry operation produces huge quantity of various types of poultry wastes. Unfortunately, these wastes thrown into vacant land and river water, which cause severe environmental damage (Shamsuddoha, 2011a, Shamsuddoha, 2011b). For this, environmental problems belong to spreading diseases, polluting drinkeable water contaminate river or canal water, spread odour towards human locality. So, the research will model a poultry supply chain where wastes can be redirected to the different operations to produce byproducts. By producing various by-products from various useful wastes can be achieved sustainable production.

LITERATUREIn reality, livestock deals with the society’s benefits, optimum use of resources, sensitive environments with complex ecological balances and economically efficient production systems (Boyazoglu, 2002). In this process, reverse supply chain refers to the series of activities necessary to retrieve a product from a customer and either dispose of it or recover value (Prahinski and Kocabasoglu, 2006, Linton et al., 2007). Again, the reverse chain process potentially can reduce negative environmental impacts of extracting virgin raw materials and waste disposal (Kocabasoglu et al., 2007). Over the last decade, reverse logistics has had a significant social, economic and environmental impact on industry as well as the society. Reverse logistics with end-of-life (EOL) products embrace many different characteristics of environmentally conscious manufacturing, including disassembly, reuse (Edwards and Daniel, 1992), recycling and remanufacturing (Gungor and Gupta, 1999).

There are four different kind of poultry wastes, namely, litter (Burak Aksoy, 2008), manure/compost (combination of poultry litter) (Rivera-Cruz et al., 2008), feathers (Shih, 1993), broken eggs and intestines (Burns and Stickney, 1980). Poultry litter can be the source of fertilizer (Gupta and Charles, 1999), bio gas (Bala, 1991), charcoal and fish feed (Burns and Stickney, 1980); feathers can be raw materials for the Bed industry (Shamsuddoha, 2011a), broken eggs for the bakery and intestines for the fish farms (Shamsuddoha, 2011a). Thus,

Poultry Waste Management: A System Dynamic ApproachDr. Mohammad Shamsuddoha *

AbstractPoultry farm generates tons of wastes, which can be recycled to convert economically viable by-products. Typically, poultry wastes are dumped illegally into vacant lands, rivers or low-lying areas. This is one of the foremost problem in developing, and less-developed countries where environmental regulations are not (or cannot be) strictly enforced. Academics around the globe are steering their research to find various ways to eradicate industrial hazards. In this paper, the supply chain (reverse) applied to recycle livestock wastes into economically viable by-products. The problem domain is the livestock sub-sector of poultry industry. Using Vensim - a simulation model of the poultry supply chain under System Dynamics approach will be developed for a large poultry plant in Bangladesh where poultry wastes are modelled to turn into various by-products. Primary and secondary data was used to run the simulation model.

Keywords: Livestock, Waste Managements, Reverse Supply Chain, Bangladesh

JEL Classification Code: Q5, Q53

* Associate Professor of Marketing, University of Chittagong, Bangladesh, E-mail: [email protected]

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literature review shown that a few numbers of researches have been conducted on environmental sustainability and reverse supply chain process in the domain of poultry livestock subsector. Research gaps remain in the theory and practice of the poultry industry. Importantly, Number of the researches done in the poultry industry and its reverse supply chain along with waste reduction and environmental benefits (Shamsuddoha et al., 2013c, Shamsuddoha, 2013b, Shamsuddoha et al., 2013d, Shamsuddoha et al., 2013a, Shamsuddoha, 2011a, Shamsuddoha, 2011b, Shamsuddoha, 2011c, Shamsuddoha et al., 2011a, Shamsuddoha et al., 2011c, Shamsuddoha et al., 2011d), forward poultry supply chain with social and economic benefits (Shamsuddoha et al., 2013b, Shamsuddoha, 2013a, Shamsuddoha and Uddin, 2013, Shamsuddoha et al., 2013f, Shamsuddoha et al., 2013e, Shamsuddoha et al., 2013g, Shamsuddoha, 2012, Shamsuddoha et al., 2011a, Shamsuddoha et al., 2011b, Shamsuddoha, 2010). All of them were concentric on poultry subsector in Bangladesh. This evidence is not enough in compare to depth of problems lying on poultry industry in Bangladesh. Such kind of research gap motivated the researchers to conduct research on it.

METHODOLOGYAt first, Forrester (1961) introduced system approach and its complexities related to dealing supply chains in the mid-1900s. Afterward, system dynamic modelling implemented in the automobile industry (Sterman, 2000), Meadows’s ‘’hog cycle’’ (Meadows, 1970) and paper recycling industry (Spengler and Schröter, 2003). Forrester’s (1961) famous ‘’Beer Game’’ (Sterman, 1989) and were developed as the basis of supply chains. Most of the studies were focused on the forward supply chain but yet, there are only few researches steered on reverse chains Systems dynamic modelling is suitable approaches to analysis or observe the dynamic behaviour in particular supply chains (Aghalaya et al., 2012).

The methodological approach for this study is based upon the Systems modelling methodology (Maani and Cavana, 2007, Aghalaya et al., 2012). For structuring the problem systemically, a behaviour-over-time information and chart were developed. In the second phase, a causal loop model was developed using a rigorous simulation package of Vensim DSS 6.01b.

Table 1: Methodological Framework (Shamsuddoha et al., 2013b)

Phases Steps

Problem Structuring (Aghalaya et al., 2012, Maani and Cavana, 2007)

Behaviour over time graph development/ historical behaviour

Identify Variables (Aghalaya et al., 2012, Maani and Cavana, 2007)

In-depth interview

Causal Loop Modelling (Wolstenholme, 1990, Sterman, 2000)

Variable identification and Causal loop model development

Draw Quantitative Simulation Model with rate, level and constant variables (Wolstenholme, 1990, Sterman, 2000)

Sketch the model based on relationship among variables

Run Simulation Entered real life data once with starting variable

Reliability and Validation (Barlas, 1996)

Examine structural validity and assess the data reliability in different phase

Extreme Condition Test (Barlas, 1996)

considerable Changes of key variable values to observe output reliability

Forecasting Future Model run for 160 weeks whether it has only 104 weeks data to compare with the reality

In addition, both primary and secondary information have been used in this study. Primary information was collected in March 2013 mainly through in-depth interviews with the sample respondents from the poultry case industry. This research used in-depth interviews and observations to gain insights and develop a case poultry supply chain model. The total respondents included the five executives, including the case farm owner were interviewed. Secondary information was collected from various books, referral journals, conference papers, statistical yearbooks and company record and reports.

PROBLEM STRUCTURINGIn the problem structuring phase, historical behavior-over-time graph (BOT) was developed for case industry. Developing a historical trend graph is one of the important tools used in systems thinking (Aghalaya et al., 2012). Such graph shows the real-life trend of the key variables in a system. In this study, reference graph has drawn (figure 1) to capture the historical output (behaviour) of key variables of fertilizer, fish feed and biogas. The grasp is showing different level of production

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in different time. It might happen due to the fluctuation of business caused by market demand and supply, over-under production, calamities, and policy barriers.

QUALITATIVE MODEL BUILDINGCausal loop diagramming or qualitative modelling (Sterman, 2000) is an important part to the system dynamics model. Positive and negative feedback loops are indicating the dynamic relationship between the key variables (Richardson, 1986). The relationships between variables, represented by arrows, can be labelled as positive or negative. To generate a directed arrow, they placed a positive (+) sign near the head of the arrow if an increase (or decrease) in a variable at the tail of an arrow caused a corresponding increase (or decrease) in a variable in the head of the arrow. If an increase in the causal variable caused a decrease in the affected variable, a negative (-) sign was placed at the head of the arrow (Aghalaya et al., 2012). Causal loop diagram (figure 2) was developed based on real dynamic relationship between key variables.

QUANTITATIVE SIMULATION MODELThe model (Figure 3) has developed based on the causal diagram (Figure 2), and the relationship found among or between variables. This complete simulation model incorporates only mainstream supply chain line along with reverse supply chain where poultry wasted recall for reuse for the sake of by-product’s productions. Model starts from “Broiler Chicks Lookup” variable where policy maker/farmers decide how many breeder’s chicks can be reared in their whole process as a flock. This ‘breeder chick’s lookup’ variable is the only real-life information inputted into the system. Rests of the information are based on standard, assumption and experience of the farmers.

VALIDITY AND RELIABILITYValidity and reliability tests are the requisites to build confidence in system dynamics models (Barlas, 1996, Forrester and Senge, 1980). The formal principles of validation and realiability set by Barlas (1996) and Forrester and Senge (1980), which involved three major stages: structure validity; behaviour validity and tests of policy implications. Principally, structure validity tests resolve at assessing model structure and parameters without examining relationships between structure and behaviour. Structure validity comprises a

structure-verification test, extreme-condition test, dimensional consistency test (Barlas, 1996). Figure 4 reveals the simulated output of three main variables in the poultry industry. The blue lines are marked as simulated result and red line marked as real-life data. The model also beed tested by changing random seeds of different variables and found the satisfactory results in every run of the simulated model. Policymakers or researcher can use this model to see as far as they want to predict.

MODEL RESULT AND DISCUSSIONLivestock wastes can be vital resources for Bangladesh people. Number of by-products can be produced from wastes through reversing poultry wastes to the same industry or third party small-medium industry. A model (Figure 3) in appendix demonstrates that how poultry wastes can be managed for making economically valuable by-products of biogas, fish feed and fertilizers. Appropriate poultry Waste Management can help to alleviate environmental hazards. The economic and social aspects of reverse chain are exceptionally vivid. The Reverse supply chain process applied to every waste could help to build a new business. These businesses can easily commercialize their products for both home and industrial users in Bangladesh. This research is only concentrated on poultry waste reversing to the by-product processing unit. Reverse supply chain process showed at the bottom of the simulation model, which consists of managing poultry wastes of broken and un-hatched eggs, poultry litter, poultry feather, intestines, and fish feed. This study reveals how poultry wastes can be input to other by-product industries or additional economic potential for the existing industry. In this simulation model, production personnel can easily work out the volume of wastes based on its farm input. This model will be able to figure out volume of final output of eggs and meat, employment, wastes, by-products, based on its input. These simulated results can be examined and compared one after another to compare and contrast with standard or read life data to see its acceptability and abnormality. Policy/decision makers or entrepreneurs can easily pick right ideas among the different trials of testing the model. They can do experiments by deviating or deploying extreme condition data to see how the model works until find out the optimality or desired outcome. Real-life experiments are always expensive and time-consuming to come out a decision.

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CONCLUSIONSThe knowledge of the reverse supply chain process is effective enough to help surrounded environment for its protection and sustainability. It is now considerable ideas for the poultry entrepreneurs to utilize their poultry wastes to make economically viable by-products. Moreover, this kind of process not only utilizes poultry wastes but also keeps our environment intact for future generation. Clean hygienic environment prevents from common poultry diseases. Furthermore, such practices will open a new window of creating more employment opportunities, shield for poverty, empowering the poor people, creating small and medium businesses, etc. Future research could test as the basis of individual policy variables like calamities, disease, resource, and numbers of chicks and so on. System dynamics and simulation can give better solution immediately to the policy makers and entrepreneurs rather is experimenting all these ideas in reality.

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poultry industry. Doctoral Students Colloquium 2010. Perth, Australia: Curtin Business School.

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27. SHAMSUDDOHA, M., KLASS, D. & QUADDUS, M. 2011b. A Simulation Supply Chain Model for a Sustainable and Environment Friendly Poultry Industry: Insights from Bangladesh. In: VOGES, K. & CAVANA, B. (eds.) Australian and New Zealand Academy of Management (ANZAM). Wellington, New Zealand.

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Through Reverse Supply Chain Process to Achieve Environmental Sustainability. Australian and New Zealand Academy of Management (ANZAM). Auckland, New Zealand.

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37. SHAMSUDDOHA, M. & SOHEL, M. H. 2008. Poultry rearing - an alternative income generating activity for rural women development of Bangladesh. The Chittagong University Journal of Business Administration, Bangladesh, 20, 119-132.

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Figure 1: Historical graph of realistic data for key variable over time

Figure 2: Causal Loop Diagram

APPENDIX

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Figure 3: Poultry Reverse Supply Chain Simulation Model

Figure 4: Test for Reliability

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Figure 5: Extreme Condition Test of key Variables

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IntroductionUnfortunately, Iraq waste a huge amounts of many types of energy, gas associated with the extraction of oil for example burn for more than half a century only to pollute the atmosphere without any attempt to be utilized due to lack mechanisms for investment, according to Mounir Bouaziz the deputy director of Shell oil company for the middle east and south Africa (the amount of gas that burns in the atmosphere at about 700 billion standard cubic feet per day, and cause a loss of up to 2 billion dollars per year), Bouaziz add, if that amount of gas converted into electrical energy, it will be enough to supply more than 2.5 million Iraqi homes with electricity, and the burning gas contains impurities which represents cooking gas flaring amount of approximately four thousand tons per day, which is enough to supply (300 000) gas bottles.

Water is another wasted wealth, Iraq have two great rivers and a lot of natural lakes, for instance the area of swimming of Euphrates river count (444000) km2 distributed as (28%) located in Turkey (17%) in Syria (40%) in Iraq. the utilization

Toward a Model for managing the Sustainable energy: A Remedy against aloof culture of wasting the Iraqi next generation’s wealth

A field study to the points of view of managers in (Oil, Electricity, Environment) sectors in Basra province.

* Mohammed Hussein Manhal (PhD) **Hani Fadhil Jumaah Al-Shawi (MSc.)

AbstractThis research is attempt to diagnosing the big problem represented by wasting a huge amount of en-ergy in Iraq which become a common negative culture and irresponsible policies which destroying the wealth of next generations, those we hope they know how to use it efficiently , on the other hand we attempting to reveal the importance of alternative energy to achieve economic and societal returns and good environment to the community, which will form the basis for a better future for humanity, the research choose some of the institutions in Basra Province, and adopted the hypothesis which are (the use of alternative energy (clean and renewable) will contributing in achieving an increase in economic and societal returns and a reduction in the causes of environmental damage). we used questionnaire to collect data for the purposes of analysis, the research got some results, the most important of them are (there is an abundance of local natural resources and good enough efficient technicians who can make alternative energy applicable).

Keywords: Philosophy of Sustainability, Sustainable energy, Model for sustainable energy.

JEL Classification Code: Q4, Q420

* Assistant Prof. College of administration & economics, University of Basra-Iraq, Email: [email protected]** Business administration Dept., Shatt-Al Arab University College-Iraq

percentage of water in Turkey reaches about (94%) of the annually total incoming water whereas engaged Syria and Iraq by only (6%(. Whereas the area of basin of the Tigris river come to (289000) km2 (64.4%) located in Iraq, (19.9%( located in Turkey, (12.5%) in Iran (0.2%) in Syria, these percentages do not reflect the level of participation of water, for example, Turkey alone involved with 54.6% of the discharge water, Iran 11.8%, Iraq 33.4%.

Although the above facts about water levels in Iraq there is no dams to store the two rivers water, no farms to be planted except private little bit projects which not match the real need of Iraqi citizens, the main reason behind wasting the resources according to Iraqi government justification is the high costs of investment in this resources, wherein utilizing such as energy requires much money, hence, its utilizing will be too costly compared to its benefits. So, the looking for cheap energy just like ( solar, wind etc…) energy may be the suitable therapy, at least, for this period of time.

An efficient investment in such resources would surely save large expenses to be spent on

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medical treatment of diseases caused by pollution .accordingly the alternative energy techniques have great economic, environmental and social benefits.

Literature Review1-Research Idea and Philosophy The academic activity has emerged because of anxiety of advanced countries governments and people about the environment, which is surrounded by risks in response to the organizations reckless operations which threaten people and universe, the mentioned awareness about environment represent a public culture in advanced countries we need in our country. It is then our divine responsibility, to preserve our country sustainability and peace.

Some of the initiatives that adopted by universities and institutes in advanced countries in order to promote specialism with renewable energy disciplines classified by ( Martin Ort -2008) as follows:-

German Institutes:- (The German centre for thermodynamics -2005)

• Aldenburg University (renewable energy). It has an international program for higher studies basically assigned to graduates from the developing countries.

• Bochum higher Institute (specialized in underground energy ) the future energy can also be provided from underground .This institute and underground energy centre in Bochum offer the academic study which is referred to as the study of the unique underground energy systems in Europe to attain MSc. in engineering and natural science .

• University of Castle (renewable energy programs) in which multi dimensional MSc. Programs can be done in three semesters to help postgraduates conduct in deep studies on renewable energy techniques and upgrade energy use and efficiency .

• University of Monster - Aachen Institute of ( energy economy ), It offers MSc. Courses in the economy of energy . It was founded in May,2008 in the city of Aachen and it offers engineers, lawyers and economists dual certificates.

• University of Fryeburg - (Environmental management programs), It offers MSc. courses which are focused on the interlocks of markets, state establishments and society role in resolving environmental problems . Fryeburg University, which is one of the forerunner universities in this field, presents programs to scholars from all over the world .

Apparently, there is also a wide range of scientific preparations in the advanced countries addressed to the alternative energy techniques although the gap between those countries and the developing ones is increasing. This can be obvious from the scientific efforts experienced by specialized universities and institutes in addition to other scientific research centers . The US experience in the field of sustainable Energy :- • F. Douglass Moshet-2009 has been said

"compared to Europe, USA seems to be less efficient in the field of solar energy business and processing because of its central government failure in adopting long run policy to motivate energy companies". With the absence of such policies, solar energy may not be competitive with other power-generating resources such as coal and natural gas. In spite of uncertain governmental interest in the USA and some other countries in the world, many countries are currently adopting the renewable energy standards . (smart Grid System report, U.S. Department Energy,July 2009).

The Arab experience in the area of sustainable energy:- Some Arab authors interested with alternative energy like (Hamza, 2011, 3) noticed similar achievements in some Arab countries . Egypt, internationally ranked (22) So, it is considered as the first among the middle east and north African countries to adopt renewable or alternative energy investments because sunshine rate in Egypt ranges between (9-11) hours a day. Therefore the Egyptian government supported this type of energy .Sustainable Energy Potential in Iraq:- Iraq is characterized by the abundance of different types of sustainable energy. For example wind power can be obtained in different areas across the country, particularly in Basra. Wind speed rate

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varies from 8M/S – 12 M/s which can produce high electrical power. Huge solar energy can also be obtained in the desert areas of Iraq and these regions are not exploited for any type of investment (Alwan, Alaa Kamil -2011). An efficient investment of such resources would surely save large expenses to be spent on medical treatment of diseases caused by pollution . So, the alternative energy techniques including the solar energy have great economic, environmental and social benefits . On the other hand traditional energy can have negative effects on life in the sense that it consumes the resources of generations and, causes dangerous radiations which transfer across continents (WHO,2006). 2-The philosophy of sustainabilityThe tight relationship between environment and development let to the emerging of the concept of (sustainability) .The fourth principle established by ( Rio De Janeiro conference, 1992 ) suggested that sustainability is achieved when associated with the environment protection .Sustainability was first recognized by the (World Committee for Environment and Development) which called for achievement of development that satisfy the present generation's needs with no damage to the future generation's needs .when they define sustainable development as ‘a process to meet the needs of the present without compromising the ability of future generations to meet their own needs.’ (World Commission on Environment and Development, 1987)Sustainability was concerned with the necessary achievement of preserved rights for present and future generations. Thus the term ( sustainability ) is not only applicable to economic development, rather it further implies a wide range of issues involved in multidimensional conception to manage the economy, environment and society, these elements form the foundation of (Sustainability) and when we consider these foundations as overlapped circles, we find that the overlap area achieving the human welfare . Figure (1) shows the overlapped relationships among the sustainability elements.

Sustainability is considered a controversial issue in a lot of universities and this idea is obvious through scientific boards including the research centers and international conferences. Politicians and some other organizations occasionally call for joint work and private sectors could also contribute to application of sustainability and its standards . In this regard, the former UN secretary General Kofi Anan(2002) uttered that sustainability will be just a dream without the act of private sector, we started to realize that by activation of the mixed sectors we could achieve tangible progress . Mixed sector has technology, funds and management capabilities to achieve the goal . In addition, it is non-monopolist and does not wait for the government’s decisions . (Al-Essawi et al, 803 -2012) .

So, we consider that funding such projects could achieve huge beneficial outputs for all of us and consequently we can make use of advantages such as ( quietness, availability, harmony and flexibility. etc ). Therefore, this is an international issue and the world at large must be concerned about the future of energy resources.

On the other hand, the contemporary facts represented by the world huge developments and dramatic changes, emphasize more different future world than the current one . They will have a great impact on different areas and sectors . Our economy, society,environment, health, business and education will substantially affected by these changes which support the suspicion of the predicted danger which are depletion of natural energy reserve. It would therefore be familiar matter to highly consider the issue of energy .

Everyone around the world must be concerned about the future of energy resources. Energy currently influencing our welfare and behavior and rather is touching the critical issues of societies after different parts of the world were severely inflicted by various disasters, which consumed the inherited resources and damaged the civil features, there have been increasing concerns about the critical area of (energy). An example of the natural disasters which had terrible effect on the environment is the Tsunami that hit Japan and the following explosion of Fokushima nuclear reactor . Should this issue be ignored ? Shall we be at alert to potential similar events and disasters ? We live closer to one of the most dangerous nuclear reactors, the Iranian (Bushehr). Recent studies confirm that the city of Basra is most likely

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to get directly affected in case this reactor is blown up . Bushehr is situated at the geological belt of earthquakes as geographical facts confirm . In addition, there is the risk of continuous damages catching the Ozone layer and the resulting phenomena like the unusual climate changes .Above mentioned issues escalate premonitions for researchers and cause them to get involved in this due study that shed lights on a crucial phenomena to reach logical conclusions and recommendations for Iraqi decision-makers.

3- The research methodology a- ProblemAll the present Iraqi institutions are depending 100% on traditional energy like electricity, so, they improperly consuming energy and this culture of randomly wasting wealth would definitely lead to negative effects on the economical, social and environmental aspects. Therefore the emphases of the research is represent an attempt to convince Iraqi government to preserve the next generation’s wealth via exploiting the available cheaper, cleaner and unexpired alternative energy. In Iraq sunrise hours are 11 -12 a day, hence, when Iraqi government make some arrangements for exploiting such energy, thus, these policy will give a next generations a big opportunity for utilizing their wealth efficiently. b- AimsThe aim of this research is to • Diagnosing the big problem represented by

wasting a huge amount of energy in Iraq which become a common negative culture and irresponsible policies which destroying the wealth of next generations,

• Attempting to reveal the importance of alternative energy to achieve economic and societal returns and good environment to the community, which will form the basis for a better future for humanity.

c- Research questionsThe research matter is concerned with the response to two important questions which are: • Is it possible to convince Iraqi government to

make arrangements to exchange the resources waste culture by another exploitative culture which help discover sustainable alternative energy resources to be utilized by the industrial organizations?

• Does the use of sustainable alternative energy achieve economic, social and environmental returns for Iraq ?

d- The research hypotheses. This study was concerned with two main hypotheses:

• It is possible to convince Iraqi government to make arrangements to exchange the resources waste culture by another exploitative culture that help discover available sustainable alternative energy resources to be utilized by the industrial organizations.

• The use of sustainable alternative (clean and renewable) energy contribute to the achievement of increasing economic outcomes,improvement of social benefits and reduction of damages to the environment)

e- The proposed research model

The independent factors in this research are ( government policy, society culture, academic support and funding ) those represent the basic dimensions. They were graphed in forms of circles surrounding the centre which consist of the dependent dimensions (economy, society and environment). Positive effect is predicted to achieve the sublime goal of human welfare. Figure (2) shows the proposed research diagram.

Figure (2) Sustainable energy management model

f- Population

The study was applied to governmental directorate which belong to the sectors shown in (table 1) below . The reasons for choosing the three sectors are :

• Those sectors are technically related to the subject in research .

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• Work tasks experienced in those sectors are scientifically and practically correlated to the research matter.

• The research sample individuals are the most persons who know exactly about energy (classical and alternative) availability in Iraq.

Table (1) Research Population

No. Sector Area of work & place

Speciali- zation

Num-ber

Percen-tage

1 Oil South Oil Co. (SOC) Basra

Oil engineer

130 40%

2 Electri-city

Directorate of Electricity production & distribution/ Basra

Electrical engineer Electricity technician

70

80

22%

25%

3 Environ-ment

Directorate of environmental protection/ south area

Environ- mental researcher

41 13%

321 100%

g- Sample

The research sample involved a group of specialist employees in the field of energy from different sectors .The study tools were given out to (50) individuals of the society which comprise (321) people .This is supposed to meet the requirements to conduct the survey, Table (2) shows the details :

Table (2) Research sample

No Sector Field of work & place Speciali-zation

Num-ber

1 Oil SOC,Basra Engineer 10

2 Electricity Directorate of elect. Production & distribution

Engineer Technician

10 10

3 Environ-ment

Environment protection & improvement /Basra

Environment researcher

20

Total (4) 50

The following table shows Validity test results of research measurement tool, the results assure that all the measurement tool item is valid.

Table(3) Measure validity test results N=50

No Dimension Number of explanation

items

Value of Alpha

Cronbach

1 Government policy 2 0.791

2 Society culture 2 0.812

3 Academic support 2 0.833

4 Funding 2 0.844

5 Economic benefits 2 0.896

6 Environmental benefits 2 0.817

7 Society welfare 2 0.895

Total 14 5.888

Entire measure validity 0.981

Results : 0.8411 = m(α)

4- The findings analysis and hypotheses verification

Table (4) shows the statistical analysis results i.e. mean values, standard deviations, and the rank of each of the seven dimensions which refer to requirements availability according to the sample individual views. The mean value of potential availability of alternative energy requirements in public sectors reached (3.008) along with standard deviation value of (1.0154) as shown in table (4) below.

No Dimensions Symbol Mean (α)

St.d rank

1 Dimension1: government policy

X1 2.700 1.2817 Sixth

2 Dimension 2: social culture

X2 2.860 1.0882 Fifth

3 Dimension 3: academic support

X3 3.120 0.733 Fourth

4 Dimension 4: funding

X4 2.040 1.009 Seventh

5 Dimension 5: economic benefits

X5 3.140 1.143 Third

6 Dimension 6: environmental benefits

X6 3.500 0.8391 Second

7 Dimension 7: social benefits

X7 3.700 0.9742 First

Total 3.008 1.0145

Throughout the table above dimension 7: the social benefits, appears to be the most available where mean value reached (3.7) and standard deviation (0.9742). Whereas the least available alternative energy dimension is funding which achieved the minimum mean value of (2.040) and St.d of (1.009). the sample individual views on each of the seven dimensions according to the statistic outputs of the research (n= 50) are shown in table (5) below .

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Table (5) percentage of research sample responses

Dim. Symbol Item No. & Symbol Response measure Mean value

St.d Rank

1 2 3 4 5

Gov. policy X1

1 frequency 6 15 8 9 12 3.12 1.3944 sixth

c1 Percent. 12% 30% 16% 18% 24%

2 Freq. 4 18 12 10 6 2.92 1.1753

c2 Percent. 8% 36% 24% 20% 12%

Society Culture X2

3 Freq. 1 16 12 11 10 3.26 1.1747 fifth

c3 Percent. 2% 32% 24% 22% 20%

4 Freq. 4 5 17 15 9 3.4 1.1429

c4 Percent. 8% 10% 34% 30% 18%

Academic Support X3

5 Freq. 1 7 23 12 7 3.34 0.9607 fourth

c5 Percent. 2% 14% 46% 24% 14%

6 Freq. 0 3 20 22 5 3.58

c6 Percent. O% 6% 40% 44% 10%

Funding X4 7 Freq. 12 14 11 11 2 2.54 1.1988 seventh

c7 Percent. 24% 28% 22% 22% 4%

8 Freq 11 19 13 4 3 2.38 1.1045

c8 Percent. 22% 38% 26% 8% 6%

Economic Benefits X5

9 Freq. 1 5 12 16 16 3.82 1.0631 third

c9 Percent. 2% 32% 24% 32% 32%

10 Freq 1 13 14 11 11 3.36 1.1563

c10 percent 2% 26% 28% 22% 22%

Environment. Benefits X6

11 Freq 0 4 11 22 13 3.88 0.8953 secondc11 Percent 0% 8% 22% 44% 26%

12 Freq 0 3 13 22 12 3.86 0.8574

c12 Percent. 0% 6% 26% 44% 24%

Social Benefits X7

13 Freq 0 1 15 20 14 3.94 0.8184 first

c13 Percent. 0% 2% 30% 40% 28%

14 Freq 1 3 5 20 21 4.14 0.9961

c14 Percent. 20|% 6% 10% 40% 42%

The table shows that item (14) alternative energy provide clean atmospheres suitable for human health requirements, is the most expressive in relation with principle perception across the surveyed sectors in Basra. It got the highest mean value of (4.14) with St.d of (0,9961) whereas item (8) our civil society organizations support alternative energy – related activities is the least expressive regarding the sample response to the alternative energy culture in Basra . It got mean value of (2.38) and St.d value of (1.1045).

A detailed discussion of the results of each separate dimension is outlined as follows :

1- The independent dimension results analysis (z1): the four requirements for alternative energy availability (x1-x4)

• The first dimension ( government policy x1 ) . Table (5) shows that item (1) is the most expressive one about the alternative energy abundance in response to the government's policy regarding the basic sectors in Basra . This item, which implies the government's orientation towards new alternatives: solar, water,wind,biological,ets.), achieved higher mean value than the following items .It got mean value of (3.12) and St.d of (1.394)

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whereas item (2), which suggests that the government is inclined to reduce reliance on the traditional energy, was the least expressive. It achieved (2.92 ) mean value along with St.d value of (1.753)

The second dimension (society culture x2 )

• According to table (5),item (4) represents the most expressive one in terms of society agreement with the alternative energy . It reads: (society is bound to preserve energy to guarantee future generations rights ) and its mean value reached (3.4) with St.d of (1.1429) ; whereas item (3),which implies ( society think the present energy is threatened with running –out ),had mean value of (3.26) with St.d of (1.1747)

The third Dimension (Academic Support x3)

• As given in the mentioned table, the item which received agreement among the sample individuals in regard with the academic support for the alternative energy efforts was item (3) which involves ( the universities' scientific research centers orientation to environment damage –reduction energy ). It scored mean value of (3.58) with St.d rate of (0.7584) whereas mean value scored in item (5) was (3.34) and St.d was ( 0.9607) . This item suggests that (Scientific research centers in our universities are interested in detection and use of alternative energy resources) .

• We think that the result is considered give scientific and technical clues which predict more mature stages towards the local environment and alternative energy resources.

The Fourth Dimension ( funding x4)

• This dimension appeared to be the worst among the other seven dimensions where analysis findings indicated that the dimension two items (7,8) got the lowest mean values of (2.54 and 2.38 successively ). The approximate responses of the sample individuals are related to the St.d rates which were (1.1988) for item (7) and ( 1.1045) for item (8) . Those results are generally attributed to the poorly supported issue of alternative energy .

• This result reflects our disappointment and deep concerns about the coming generations future, a case that might probably be caused by the current government's financial and

administrable policy . Therefore we call for our institutions to wake up and take their responsibilities to face these challenges .

2- The responsive dimension results analysis (z2): the predicted three benefits of alternative energy (x7-x5)

The fifth Dimension (economical benefits x5).

• The statistic analysis results indicate that variables of this dimension represented by the two items (10-9) have achieved fair mean values compared to those scored by the previous dimensions .They reached (3.82-3.36) successively with St.d of (1.0631 – 1.1563) and this may be attributed to the satisfaction of people who responded positively to the survey.

The sixth Dimension (environmental benefits x6)

• This dimension is represented by the two items (11-12) which imply the amount of predicted environmental outputs when clean alternative energy is used. Item (11),which has the implication that alternative energy would help reduce the negative impact on the environment .Item (12) implies that alternative energy enable the industrial organization to respond to the environmental standard specifications ( ISO-14001). The mean value for (item (11) was (3.88) with an St.d of ( 0.8953) which suggests similar sample individual responses about the environmental benefits of alternative energy . The mean value and St.d scored for item (12) were (3.86) and (0.8574) successively which suggests the use of alternative energy as an application of ISO-1400 .

The seventh Dimension (social benefits x7)

• scored the highest rates since this item was tried on all of the research variables where similar response figures were obtained . The percentages reached ( 42% and 28% ) for items (14,13) successively and mean value and St.d for item (14) were (14) and (0.9961) which refer to identical sample responses: alternative energy provide suitable clean atmospheres for human health requirements. Item (13) achieved mean value of (3.94) with St.d of (0.8184) which suggests that ( alternative energy is characterized by high degree of security compared to traditional energy).

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• The responsive research sample individuals supported the idea of turning to more secure alternative energy. So, the first hypothesis which are. (It is possible to convince Iraqi government to make arrangements to exchange the resources waste culture by another exploitative culture that help discover available alternative energy resources to be utilized by the industrial organizations) has been proved to be true. Table (6) below shows test of the research results.

Table (6) T-test of research results

Dimensions Item Mean value

St.d t. value obtained

Degree of freedom

(D.F)

indica-tion

Government policy

C1 3.13 1.3944 0.609 49 0.546

C2 2.92 1.1753 0.481 49 0.632

Society culture

C3 3.26 1.1747 1.565 49 0.124

C4 3.4 1.1429 2.475 49 0.071

Academic support

C5 3.34 0.9607 2.603 49 0.016

C6 3.58 0.7584 5.408 49 0.000

Funding C7 2.54 1.1988 -2.713 49 0.009

C8 2.38 1.1045 -3.969 49 0.000

Economic benefits

C9 3.82 1.0631 5.454 49 0.032

C10 3.36 1.1563 2.201 49 0.032

Environment benefits

C11 3.88 0.8953 6.950 49 0.000

C12 3.86 0.8574 7.093 49 0.000

Social benefits

C13 3.94 0.8184 8.122 49 0.000

C14 4.14 0.9961 8.318 49 0.000

Independent variables

Z1 1.7 0.7354 -12.500 49 0.000

Responsive variables

Z2 2.74 0.9649 -1.905 49 0.000

The results in the above table shows the tight correlation among the research's seven dimensions and branch areas as clarified in the following table.

Table (7) , Pearson's correlation coefficient-relations among the seven dimensions

Dimensions Government policy

Society culture

Academic support

funding Economic benefits

Environment benefits

Social Benefits

Government policy 1.000 -0.206 0.078 0.372** 0.196 -0.142 0.025

Society culture -0.206 1.000 -0.052 0.042 -0.164 -0.o78 -2.214

Academic support 0.078 -0.052 1.000 0.098 0.327** 0.189 0.157

funding 0.372** 0.o42 0.098 1.000 0.349* -0.145 0.012

Economic benefits 0.196 -0.164 0.327** 0.349* 1.000 0.372** o.313*

Environment benefits -0.142 -0.078 0.189 -0.145 0.372** 1.000 0.437**

Social benefits 0.025 -0.214 0.157 0.012 0.313* 0.437** 1.000

**Correlation is significant at 0.01(2-tailed *Correlation is significant at 0.05(2-tailed)

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The results in the above table showed significant correlations between the two dimensions (1st government policy and 4th funding) and the two dimensions (3rd academic support and 5th economic benefits) and finally between the dimensions (6th environmental benefits and 7th social benefits) which is the strongest – it reached (0.437) . (R²) between the interpreted dimensions and the responsive ones totally reached (R²= 0.55). This implies a statistically acceptable strong correlation .

Accordingly, the second hypotheses : (The use of alternative (clean and renewable) energy contribute to the achievement of increasing economic outcomes,improvement of social benefits and reduction of damages to the environment) has been proved to be true.

5- Conclusions

• Government's support and funding do not meet the level of ambitions of the institutions' staff according to the statistical analysis results regarding dimension (X4 of independent variable Z1) . The results were frustrating in terms of the government's limited financial support for this clean technology.

• The analyzed results showed that alternative energy compared to traditional energy, could achieve significant degree of security which was referred to throughout the responses of sample in research. This sample is characterized by technical awareness and knowledge since it involves high proportions of specialists (engineers, technicians and ecological specialists ). Responses were highly identical in the standard hierarchy - they reached (42%) of the total responses and thus they represent an evident proof of those people's efficiency and readiness to make this type clean technology feasible .

• Responses to the tried sample in the three sectors in Basra referred to the necessity for alternative energy which reflects the individuals' constant satisfaction with the huge economic incomes predicted to be saved by alternative energy .

• According to the study results, there have been limited awareness and recognition of the alternative energy and environment issues in the side of staff working for Basra electricity directorate ; and this was remarkable when

engineers were reluctant to fill in the survey forms. Actually such responses raise deep feeling of anxiety in the side of researchers since they are convinced with the demand for an academic – technical cooperation between those professionals and university concerned activities to upgrade the pursuits in the environmental issues .

6- Recommendations

• It is necessary for Iraqi government to make a suitable arrangement to include the energy topic in their future strategies, charter policies for rationalizing the use of energy and stop wasting resources to preserve the future generations rights in addition to publicizing special culture on the importance of the alternative energy .

• Enactment of laws which constrain overuse of all types of the current traditional energy and reduce reliance on them . It does not mean cancellation of these resources rather it is meant to provide new auxiliary resources to satisfy the rising requirements for power .It is also important to preserve the next generations rights and thus institutions are all invited to bring this crucial issue to a tangible success.

• Making decisions that limit reliance on the traditional energy resources.

• Encouraging the staff in the area of energy to effectively participate in the scientific sessions held at universities and research centers in order to support the technical-academic correlation aimed at development of alternative renewable energy culture .

• Efficient processing and recycling of industrial wastes instead of leaving them scattered causing pollution and damages to human and environment health

• The institutions (research population) have to invest the staff abilities by encouraging them and engaging them in the future natural resource-power projects to achieve the corporate objectives for sustainability. And this issue requires an inclusive perspective through which both government and people are responsible for its success .

• Provide institutions by suitable technical efficiencies in order to facilitate the applicability

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of the alternative, clean, renewable energy technology which can be an active alternative of the traditional energy, what enable government to keep energy for the future generation who can exploit it economically instead of current aloof culture that wasting wealth with unconcerned manner.

References:- 1. The German centre for thermodynamics

(2005)-solar energy stations in the Mediterranean territory, Stuttgart, Germany.

2. Al-Essawi, Mohammed Hussein, Al- Aredhi Jalil and Al-Abadi Hashim (2012) – Sustainable Strategic Management – an introductory to managing organizations in the third millennium, Al-warraq publishing company, Amman Jordan.

3. Al-Mashaal, Sulaiman Bin Abdul-Aziz (2011)- alternative energy and healthy environment .

4. Alwan, Alaa Kamil (2011) – environment pollution : challenge and treatment, quoted from ( lifeye10.gmail.com)

5. Al-Sharbini, Ahmed and Samih Aoiuth (solar energy doubles to 3000 Giga- watt by 2020 UAE today magazine.2010.

6. Aubaid, Mustafa Fuad (2003) – (scientific research skills) world Studies Academy,Gazza,Palestine.

7. Talbi, Mohammed and Sahel, Mohammed, (2008)- the importance of renewable energy in environment protection for sustainability. Albahith Magazine, no (6) Al-Bulayda university, Algeria.

8. F. Douglass Moshet, (sustainability principles), translated by Behaa Shahin, Cairo. Egypt.

9. Martin Ort (2008),- (We have to increase efficiency), German magazine No (2), societies press,Frankfurt

10. Smart Grid System report, U.S. Department Energy,July 2009.

Bibliography:- 1. The Mediterranean regional office / WHO

report (2006) health care secure management (the regional office for environment protection) Amman, Jordan

2. Mohammed Huedi (2004) ( Altefseer Al maeen lilwaedheen wel mutaedheen), the sacred Koran in Thi Aqurba publications, Riyadh, KSA

3. Abd al –Azeem, Hussni Ibrahim ( 2009) –( The ecological dimensions of disease), human science magazine, fourth year No 245, Algeria.

4. Quddi Abdul-Majeed (2005), ( Entrance to the overall economic policies ),analytic study university press, Algeria .

5. Naylor(1999)".Management 'Financial Times "Prentice Hall. Pearson Education. England.

6. Kimberley Dugmor (1977) " welcome to Solar Energy Equipment est.1977."

7. Mediawiki.org (environmental engineering society website.

8. Smart Grid System report, U.S. Department Energy,July 2009.

9. www.ngoce.org/content/nseer.doc .

10. www.netfirms.com/domain-names .

11. www.usinfo.state.gov/ar/home/p.

12. www.egyptiangreens.com/docs/firstpage/index.php.


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Introduction‘Business Models’ is a much deliberated topic today. In online retail the adoption of the suitable business model has become utmost importance. The factors that influence the decision about the business models for ecommerce companies may be product related or infrastructure related. For example in case of B2B ecommerce huge upfront investment has to be made in infrastructure because most B2B companies have to integrate their operations with their partners. B2C business generally get more attention in media but B2B ecommerce offers more opportunities for revolutionizing the ecommerce sector. The adoption of the relevant business model depends not only on the revenue related metrics but also the regulatory related issues.

Whatever may be the reason the understanding of existing and emerging business models in online retailing in India has become unavoidable.

India is one of the fastest-growing e-commerce markets in Asia-Pacific along with China. With increase in Internet penetration, adoption of smartphones and lower data rates are completely changing the way India shops. Furthermore, favoured demographics and growing Internet user base helped in aiding the growth1. The online retailers in India are offering two types or products or services such as a) Digital Products which do not require any physical handling examples are online travel booking portals b) products that need physical delivery and there is a substantial cost in physical delivery. Apart from selling products or

E-COMMERCE BUSINESS MODELS IN INDIA – AN OVERVIEW Pardhasaradhi Madasu *

AbstractIndia bas roughly 205 million internet users which makes it the third largest interest user-base after China and USA. This huge interne user-base and explosive growth e-retailers in India has made India the third largest e-commerce market by value. According to brokerage frim CLSA online retail is worth USD 3.1 billion or 10% of the organized market, and is estimated to grow to USD 22 billion, or over 15% of the organized retail market in next five years. The further growth of online retailing in India depends on the capital infusion by the industry leaders. The investors both local and global are looking into the business models suitable for operating online retail in India. E-commerce players like Amazon have created com-plex structures to comply with local laws. However, these structures have recently come under scrutiny of the regulators for potential violation of foreign direct investment (FDI) norms. Most E-commerce firms, including Flipkart, have now moved to the marketplace model from the inventory-led model. This is partly because of the current bar on FDI in direct online retail. The importance of the study comes from the mere fact that the understanding of the business models hold the key to understand the performance of the related companies. In this backdrop the present paper makes an attempt to highlight the changing scenario with respect to the business models adopted by the E-commerce players to suit Indian market. Even though the term e-commerce companies is much wider than online retailers, the article uses vari-ants of these terms while referring to different companies. The paper is exploratory and descriptive in nature and focuses on the ecommerce business models adopted in the Indian context.

Key Words: E-Commerce, Business Models, Inventory-led Model and Marketplace Model

JEL Classification Code: M15

* Associate Professor (Finance Area), Siva Sivani Institute of Management, Kompally – Secunderabad, Email- [email protected]

1 The Hindu daily in its article titled ‘E-Commerce benefits Real Estate and Logistics Sector’ dated Jan 27th, 2015 has stated that India’s warehousing and logistics real estate segment has benefited immensely from the expansion in e-commerce over the last two years. The emerging retail segment took up about 1.7 million sq. ft. of warehousing space across Mumbai, Chennai, Bengaluru and the Delhi National Capital Region in 2014, according to a report by CBRE, a leading commercial real estate services and investment firm. The report said that almost 25 per cent of the total warehousing/logistics space uptake across India in 2014 was by e-retail players, while the uptake in logistics space rose by more than seven times over that of 2013.2 Lenskart.com which is an online optical shop has started operations in India from 2011. The company operates on ‘Inventory-Led Model’ because of the special nature of the prescription based eye care business. Lenskart.com owns every part of the value chain to benefit from the economies of scale. Lenskart.com is the first online retailer to have own manufacturing facility. Lenskrt.com has started its own manufacturing plant at Delhi.

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services some E-Commerce such as Lenskart.com2 are also offering add on services like physician check-up for their customers for a nominal fee. These companies are using ‘Virtual Technologies’ for giving solutions to the customer’s problems. Innovative online start-ups are also providing allied services like offering ‘Cash Rebates’ or ‘Cash Backs’ to customers who buy products from the website’s retail partners3 or on purchase made through their own portals. These affiliates provide more traffic to the online retailers and receive commission for the sales drive they take up. Due to the nature of the Indian retail markets many of the online retailers are moving from a ‘Pure Play Models’ to ‘Hybrid Models’ which means the online retailers are providing a mix of online and offline experience. To provide the touch-and-feel factor to the customers the online retailers are opening up kiosks or franchisee outlets.

Flipkart, Snapdeal and Amazon, have ensured that this industry hogs considerable attention from both the customers and the prospective investors. The potential for the ecommerce companies to become profitable is very huge. However, the suitable business models has to be put in place. Many recent industry studies relating to the current profitability and potential valuations of ecommerce companies have quoted that as of now the Indian online retailers are looking at high valuations4. They are foregoing the present profitability to build scale. The high valuations placed by PE and VC firms on the

online retailers is in anticipation of these business scaling up5. The success of the Indian ecommerce companies depends upon the huge investment required in the areas of infrastructure and logistics which are the essential ingredients of success for ecommerce companies6. Much of the investments into the ecommerce businesses are from PE or VC investors7. The investments from PE and VC firms attract FDI norms in India. The government of India is focusing on framing rules and regulations for the fast growing ecommerce Industry in the country. There has been a lot of debate regarding FDI investment in ecommerce. Currently, India permits 100% FDI in B2B e-commerce activities. Companies such as Walmart are actively engaging their B2B registered merchants to do bulk ordering on their ecommerce. RCEP8 forum is increasing the pressure on the GoI for relaxing the norm of FDI in the ecommerce sector. Japan, one of the key members of the RCEP, has floated a paper proposing relaxation in the foreign direct investment (FDI) norms in the e-commerce sector9. Japanese companies including Uniqlo have sought relaxations in the foreign investment norms in the sector. Japan is an important partner country for India as it has committed huge investments in areas such as Delhi-Mumbai industrial corridor and other infrastructure related projects. The following sections of the paper deal with the review of literature relating to business models in ecommerce followed by the overview of business

3 In India Cashkaro.com is offering online rebates. The firm has 500 partner e-commerce sites including Amazon.in, and Flipkart.com. Other cashback online companies in India are Pennyful.in, GoPaisa.com and topcashback.in. 4 As per the Wall Street Journal and Dow Jones VentureSource Report published in mid of March, 2015 Flipkart.com has made it to the top five global billion dollar start-up club with a valuation of USD 11.O billion. Flipkart, which is valued more than start-ups like Airbnb and Dropbox, ranks number five behind China’s cell phone maker Xiaomi Corp., online taxi hailing service Uber Technologies Inc., data analytics firm Palantir Technologies Inc. Rival Snapdeal.com ranks number 30 with a valuation of $2 billion in the list of 73 companies, which also features Indian start-ups such as online ad company InMobi and online taxi service provider Ola cabs. As per the report, China’s Alibaba Group Holding Limited, which went public in 2014 is valued at USD 217 billion5 Since 2007, Flipkart has raised roughly USD 2.0 billion from investors such as Tiger Global Management and Naspers6 As per the joint study made by ASSOCHAM and PwC Indian e-commerce industry is expected to spend an additional $500 to $1,000 million on infra-structure, logistics and warehousing, leading to a cumulative spend of $950 to $1,900 million till 2017-2020, 7 According to new article published in The Hindu daily on 2nd June, 2015 PE investments touch four year high at USD 10.9 Billion in 2014 out of which the E-Commerce companies received a funding of about USD 4.1 Billion across 106 deals. In 2014, two home-grown online marketplace businesses Flipkart and Snapdeal collected almost USD 3 Billion. 8 The Regional Comprehensive Economic Partnership (RCEP) comprises 10 ASEAN members and its six free trade agreement partners -- India, China, Japan, Korea, Australia and New Zealand. 9 In the paper floated by Japan at the previous round of negotiations in New Delhi, it sought most favoured nation and national treatment to be accorded to the ecommerce sector, which is not in line with the Modi government’s current policy. The paper by Japan makes no distinction between B2C and B2B, the way ecommerce is seen globally. It seeks minimum barriers in ecommerce, seeking harmonisation of the regulatory framework. Ecommerce has become very important and there is a strong interest to enter the Indian market. India distinguishes between B2B and B2C, which creates a grey area for international companies.

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models adopted by major players in online retailing in India.

Review of LiteratureThe study of business models has become an important aspect for analysts. Even though huge literature on ‘Business Models’ exists there is a lack of common understanding among the researchers. There exists no generally accepted definition of business model in the electronic commerce literature. The term is defined differently by many authors and there is little consensus as to the attributes of business models. Brief review of literature of related issues has been conducted for this study.

The studies made by Timmers (1998) has resulted in specification of 11 generic e-business models. Timmers (1999) also observes that “The literature about Internet electronic commerce is not consistent in the usage of the term ‘business model’ and moreover, often authors do not even provide a definition of the term”. Timmers (1999), and Dubosson-Torbay et al (2002) refer to business models as ‘architectures’, whilst Krishnamurthy (2003) states that, “A business model is a path to a company’s profitability”. Many authors put forward categories of business models. They are referred to as taxonomies, categories, business types and business designs. Two broad categories that are mentioned in the literature are: a) Presence in physical and/or Internet based markets i.e. pure-play or bricks-and-clicks b) Buyer type, (i.e. B2B, B2C, B2G, G2B, G2C, and P2P). Rappa (2003) acknowledges that “Presently there is no single, comprehensive and cogent taxonomy of web business models one can point to.” Apart from the studies on the basic business models in ecommerce some studies have focused on the specific business models like ‘Marketplaces’. Bakos (1991) define electronic marketplace (or electronic market system or simply e-marketplace) as an inter-organisational information system that allows the participating buyers and sellers to exchange information about prices and product offerings. The firm operating the system is referred to as intermediary, which may be a market participant- a buyer, or seller, an independent third party, or a multi-firm consortium. Bakos (1991) identify five major characteristics of electronic marketplaces such as 1. An electronic marketplace can reduce customer costs of obtaining information about the prices and product offerings of alternative suppliers as well as supplier’s costs of communicating information

about their prices and product characteristics to additional customers. 2. The benefits realized by individual participants in an electronic marketplace increase as more organisations join the system. 3. Electronic marketplaces can impose significant switching costs on their participants. 4. Electronic marketplaces typically require large capital investments and offer substantial economies of scale and scope. 5. Potential participants in electronic marketplaces face substantial uncertainty regarding the actual benefits of joining such a system.

Many business models exists in ecommerce business depending on various parameters such as ownership of the goods and services provided. According to Premkumar (2003b) Electronic marketplaces can be classified based on ownership as buyer hosted, seller hosted, neutral and industry or consortium hosted. Neutral e-marketplaces are owned by an independent intermediary. Crowley (1998) states that today every business competes in two markets: the “marketplace”, in which resources and products exist physically and the “marketspace”, which is a virtual world of electronic commerce in which the main object of transaction is information. Managing these two interacting value-adding processes, in the two mutually dependent realms, is seen as posing new conceptual and tactical challenges for every firm.

Along with reviewing the literature relating to business models the body of knowledge having connection with revenue models also becomes essential. For the purpose of this study the studies made by Timmers (1998) and Chaffey (2002) were found to be relevant. In general the study of Chaffey (2002) has referred to five online revenue models such as a) Direct product or service sales b) Commission-Based sales c) Subscription or Rental of Services d) Advertising and e) Sales of syndicated content or service. In general the advertising revenue model is considered as indirect source of revenue. All these studies highlight the importance of understanding the business models applied in ecommerce business.

The review of literature can be summarized by stating that the studies have categorized the business models and referred them as taxonomies, categories, business designs or business types. However, in the ecommerce literature there is a need for consensus on the definition on the term ‘Business Model’.

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Objective of the StudyThe primary objective of the present study is to provide an overview of the various ecommerce business models being adopted by the Indian ecommerce companies. The studies makes an attempt to bring bind the conceptual framework with the real time environment wherever possible.

Methodology and Scope of the StudyThe data from the study has been collected from various industry reports as well as the updates given by the reputed daily newspapers. The scope of the study is limited to providing an overview of the existing ecommerce business models in India. The study can be extended to understand the various dimensions of the stated models. However, the ecommerce businesses are still in their early stages of evolution and are also funded hugely by private equity or venture capitalists hence the data for further analysis is not available in public domain.

Business Models in Ecommerce BusinessesRappa (2003) observes that in the most basic sense, a business model is a method of doing business by which a company can sustain itself- that is, generate revenue. The business model spells out how a company makes money by specifying where it is positioned in the value chain and this observation can be seen as an extension of the opinion expressed by Elliot in 2002. According to Elliot (2002) Business models specify the relationships between different participants in a commercial venture, the benefits and costs to each and the flow of revenue. Business strategies

specify how a business model can be applied to a market to differentiate the firm from its competitors. These two studies may be taken as the starting point for understanding the business models being adopted by ecommerce companies in India. Any business model tries to create ‘Value’ to the stakeholders. The value creation is a strategic level decision. In country like India where the total ecosystem for the optimum performance of ecommerce businesses are not yet available deciding on one particular business model is not yet possible. The ecommerce companies are trying out various alternative keeping in view the profitability and other legal issues in view. Being in the growth stage the Indian online retailers are being branded as ‘Market Followers’ because they are regularly adopting the best practices of offshore online retailers10

E-Commerce players in the market have been moving from the traditional inventory-led model to the marketplace model11 in conducting their business operations. The recent example of such transition is Flipkart and the reason for such transition is the need to adhere to the FDI norms relating to ecommerce sector12. To align with the policy of Enforcement Directorate (ED) Flipkart adopted marketplace model13. In a marketplace model, any vendor wishing to sell its product online can do so after registering with the e-commerce portal. The e-commerce portal doesn’t hold any immediate inventory rather it relies on the decentralized vendors for supply. In the entire process Flipkart just plays the role of intermediary i.e. they virtually they converted themselves from a shopping store to shopping mall which is a B2B model.

10 Flipkart India Pvt. Limited launched its own tablet brand Digiflip Pro to compete with Google Inc. and Amazon.com Inc. Apart from this Flipkart has launched annual membership fee-based service named Flipkart First. 11 EBay which is one of the top ecommerce company and which is a 100 per cent subsidiary of its US-based parent, is operating in India using marketplace model where FDI is already allowed. 12 India’s FDI policy restricts e-commerce companies from offering services directly to retail consumers. However, 100 per cent FDI is allowed in business-to-business e-commerce. A number of global e-commerce companies, including US-based Amazon, are lobbying with the Indian Government for opening up the sector to FDI.13 In an interview given to DNA Daily on 27th October, 2014 Mr. Naveen Aggarwal, partner, KPMG in India, said while the marketplace model still needs to be tested under the Foreign Exchange Management Act policy, it does not seem to have approval from state value-added tax (VAT) authorities. This is evident from the recent controversy around levy of state specific VAT on e-tail companies, operating under marketplace model, alleging them as ‘trader/ dealer’ of goods and asking the third-party vendors to stop supplying goods to e-retailer’s warehouses.

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In India the ecommerce companies have started off with the inventory-led model of business14 and the inventory led e-commerce models have almost the same economic characteristics as the traditional brick-and-mortar model when it comes to inventory risk exposure, warehousing, and sourcing. It is highly unlikely to achieve profitability and extremely large scale merchandise. Four distinct things that set apart an inventory led e-commerce model from a marketplace model are: the value proposition to a customer for the inventory-led e-commerce models is that whatever a customer is buying from them, they have those items in their inventory stock. Second, there is only one seller for each product sold by these companies and that would be these companies themselves. Third, these companies are merchants of record for the products sold by them. And finally, these companies issue invoices to the customers in their names. On the other hand, all the four distinctions are not applicable on a marketplace model15. In the recent past the ecommerce companies have started moving to marketplace model because of its perceived economies and norms of FDI16.

The Marketplace model is an alternative to the inventory-led model and in this model the ecommerce portal does not hold any inventory and they operate similar to Just-In-Time inventory model. Under this model the ecommerce company brings the buyers and sellers together. In this type of model the ecommerce company/site processes the transactions and the product or service information is provided by multiple third-parties. In

marketplace model the ecommerce site aggregates the product or service information from wide variety of providers and therefore the selection is much wider for the customer at competitive prices. In short, under the marketplace model, the vendor sells the product, while the ecommerce company gets a commission for the platform use.

A marketplace is more like a virtual mall which provides an established platform for sellers and buyers to connect, share, sell, buy and build ongoing relationships. Amazon was the first to introduce the online marketplace model in India last year followed by Flipkart, Quikr, OLX17, Snapdeal, ebay, shopclues etc. While Snapdeal has converted into a purely marketplace model, Flipkart converted into the hybrid marketplace.

Another emerging model of E-commerce business in India is the Consumer-to-Consumer (C2C) model18. An example of C2C would be the classifieds section of a newspaper, or an auction. In both of these cases, a customer, not a business, sells goods or services to another customer. The goal of a C2C is to enable this relationship, helping buyers and sellers locate each other. Customers can benefit from the competition for products and easily find products that may otherwise be difficult to locate. On the other hand, Consumer-to-Business models are also operating in India. Under this category the consumers are ready to sell their products or services to businesses using the ecommerce platform. Monster.com is one such portal where the individuals post their resumes such that organisations will respond.

14 Flipkart.com initially had Amazon as the role model and followed the inventory-led model and now the role model for Flipkart.com is China’s Alibaba Group which uses the marketplace model for its operations.15 As told by Mr. Kiran Khalap, Co-Founder, Chlorophyll Brand & Communications Consultancy for an interview given to exchange4media.com.16 Mr. Kunal Bahl, Chief Executive of Snapdeal.com during his interview with LiveMint daily on April 12th 2013 has quoted that marketplace model is the only viable way to work around poor logistics and high costs of holding inventory and further said that inventory-led direct online retail model in India was ‘Dead’.17 OLX.in is an online classified players and can be categorized as C2C ecommerce model. According to Mr. Amarjit Batra, CEO, OLX India – OLX strategy of C2C model is different. Mr. Amarjit in an interview given to Ms. Preethi Chamikutty on Yourstory.com has said that their strategy of connecting C2C was very different from the usual model that was followed by most online classifieds players, which brought together the businessman and the consumer. “This was a new concept that we introduced in the country and have spent considerable time and money in educating the market and the masses,” OLX entered India in 2006, and after setting up, started the C2C focus from 2009 onwards. In 2011, they aggressively targeted the ‘for sale’ category and very consciously looked at second-hand goods selling on the site. The closest competitor OLX has in India is Quikr, which was launched in 2008.18 EBay has been successful since its launch in 1995, and it has been a C2C Model. Craigslist is another well-known site where people can buy and sell goods, as well as trade services.

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ConclusionEither due to the regulatory norms or due to the capital scarcity the business models suited for the Indian ecommerce players is ever changing. Multiple ecommerce models have evolved in the market starting from Pure Inventory Model (capital intensive) on one extreme to Pure Marketplace Model on the other (technology based agent model. Globally three models dominate the ecommerce business viz. a) pure inventory model b) pure marketplace model and c) hybrid model. However in India, while the market initially started off with Inventory led ecommerce model the capital intensive nature of business, concerns from stakeholders on profitability and scale as well as threat from International players like Amazon has led to emergence of new class of ecommerce Model namely ‘Managed Marketplace Model’. The future of the business models for ecommerce companies partly depends on the huge penetration of mobiles in the Indian context. For instance many online retailers are considering moving away from ‘Desktop Website’ focused model to ‘Mobile App’ focused model. The trend of using mobile app and getting success out of that model can be clearly seen in Online Travel Agency (OTA) market. Roughly15% to 20% of the searches for air travel are done on mobiles and in this regard Cleartrip.com and Makemytrip.com may be considered as market leaders. Apart from mobile penetration the business models also depend on the consumer behaviour with respect to touch-and-feel approach of the Indian consumers. There is a long way to go for the players in ecommerce space before we talk on the most suitable models for online business in India.

References1. Bakos, J. Y. “A Strategic Analysis of Electronic

Marketplaces.” MIS Quarterly, September 1991, pp. 295-310.

2. Bakos, J.Y. and Nault, B.R. “Ownership and Investment in Electronic Networks.” Information Systems Research, Vol. 8, Number 4, December, 1997.

3. Chaffey, D. (2002). E-business and E-commerce management (3rd edn). Harlow: Pearson Education Uitgeverij

4. Crowley J.A. (1998), Virtual logistics: Transport in the marketspace, International Journal of Physical Distribution and Logistics Management, 28(7), pp.547-574.

5. Dubosson-Torbay, M.; Osterwaldeer, A., and Pigneur, Y. E-Business model design, classification and measurements. Thunderbird International Business Review. 2002; Jan/Feb 2002.

6. Elliot. Electronic Commerce: B2C Strategies and Models. Chichester: PrenticeHall; 2002.

7. Krishnamurthy, S. E-Commerce Management, Text and Cases, Thompson Learning; 2003.

8. Premekumar G. Prem (2003), “Perspectives of the E-Marketplace by multiple Stakeholders”, Communications of ACM, Vo. 46 No. 12, p.279-288.

9. Rappa, P. Business Models on the Web. ttp://digitalenterprise.org/models/models.html

10. Timmers, P. (1998). Business Models for Electronic Markets. Journal on Electronic Markets. 3-8.

11. Timmers, P. Electronic Commerce: Strategies and Models fro business-to-business trading. Chichester: Wiley & Sons Ltd; 1999.


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BackgroundIn India, the ethical and moral model initiated by Mahatma Gandhi during 1930s is well known which affirmed the responsibility of family-run-businesses conducting social and economic activities. Corporate social responsibility has no standard definition. However, we can generally define that it is a type of contribution/s from the corporate houses out of their hug profit to the various aspect of social development of the society. Whatsoever business houses functions in the domestic and global economy. They have to respond the local social needs in which they are working. On other hand they have to also address the needs of the share holders demands on time. Corporate houses are basically aimed to make maximum profit out of their business. They are not the charitable institutes. However, sometime they may need to fulfill corporate accountability, responsibility and stewardship. In a most philosophical meaning we can say since corporate are working in the society they must address the social problems by sharing their small portion of their total profit. Hence, through their social interventions corporate not only get social reorganizations but also good branding. Because it is widely found that any

Tracing Historical Development of Corporate Social Responsibility (CSR) Practices in India:

A Retrospection and Future Action*Dr. NANJUNDA

AbstractIn India, the ethical and moral model initiated by Mahatma Gandhi during 1930s is well known which affirmed the responsibility of family-run-businesses conducting social and economic activities. Corporate social responsibility has no standard definition. However, we can generally define that it is a type of contribution/s from the corporate houses out of their hug profit to the various aspect of social development of the society. Whatsoever business houses functions in the domestic and global economy. They have to respond the local social needs in which they are working. On other hand they have to also address the needs of the shareholders demands on time. Corporate houses are basically aimed to make maximum profit out of their business. They are not the charitable institutes. However, sometime they may need to fulfill corporate accountability, responsibility and stewardship. In a most philosophical meaning we can say since corporate are working in the society they must address the social problems by sharing their small portion of their total profit. Hence, through their social interventions corporate not only get social reorganizations but also good branding. This paper is based on the review of various documents to trace the historical development of CSR in India

Key words: CSR. Companies, Management, Society, Profit

JEL Classification Code: M14

general decision of corporate will impact upon society & environment in one way or other. Good CSR increases reputation & branding of any business house.

The magnitude of CSR emerged significantly in the last decade in India. Since business houses are required to do business in the society it would be their obligation to share small portion of their profit for the betterment of society to help the excluded section of the country. To relate fundamental business philosophy to make CSR sharper, smarter, and focused is what really matters and is the chore for ahead. However according to the new bill Section 135 of Companies Act 2013 (1) Every company having net worth of rupees five hundred crore or more, or a net profit of rupees five crore or more during any financial year spend 2% from the profits and shall constitute a Corporate Social Responsibility committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director. The Act also specified under Schedule VII the money to be spent on the activities specified. Activities which may be included by companies in their corporate social responsibility policies:

* UGC-CSSEIP Centre, University of Mysore, Mysore-06, Ph:09880964840, Email id: <[email protected]>

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(i) Eradicating extreme hunger and poverty;

(ii) Promotion of education;

(iii) Promoting gender equality and empowering women;

(iv) Reducing child mortality and improving maternal health;

(v) Combating human immune-deficiency virus, acquired immune-deficiency syndrome, malaria and other diseases ;

(vi) Ensuring environmental sustainability;

(vii) Employment enhancing vocational skills;

(viii) Social business projects

(ix) Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women; and

(x) such other matters as may be prescribed

It would be mandatory on the part of the companies to involve in social causes. Indian companies also involved in various CSR activities. Some of the big corporate like Infosys, WIPRO, TATA, have become a kind of role model in CSR activities in India. TATA group spending more than 40% of its profit for social service. It should be an example for other companies. However it should not be a mere exercise to escape from the different taxes to be remitted by the companies to the Government exchequer This study is conducted by choosing both Nifty and Non nifty Index Companies ( small and medium scale) to reveal their perception and execution of different CSR activists in the country using field work and literature review methodology and it concludes that the local business houses should comprehend their obligation towards giving back to the society.

Objectives and MethodologyTo trace out the history of CSR through review of literatures in India

MethodologySecondary data analysis of various articles and focus group studies

Review of LiteratureBrigitte et al (2010) investigated platforms of CSR and the communication nearby that platform in India. It looks to set up the platforms of CSR that are typically used, jointly with attitudes of stakeholder to both the appearance and contented of individuals platforms. The study finds that the Indian corporate reviewed follow above all platform of philanthropic with a center on projects of community development, as envisaged by earlier studies. It also shows that the consumers of India may not worth philanthropic. CSR since highly as other responsibility activities and this may perhaps in turn pressure their approaches to dissimilar strategies of marketing communication.Chandra (2009) carried out the basic purpose of this study concludes that the social segment stayed a untouched of CSR area as, in spite of a rise in their earnings, the conditions are perennially inside financially suffering due to a additional balanced boost in expenditure. The study examined the highlights of the weak budget allocation for ineffective heavy interest payments/servicing debt, doctor patient ratio, and education smaller government efforts to conduct the major effective tool as CSR. Additional, the suggestions of the study envisages models of CSR in three Indian prospective.A study defines by Gupta (2005) in India shows that the CSR focuses on the environmental, social and economically achievement of a corporate, so identified triple bottom line through the objective of achieving corporate social development whereas reached corporate business achievement. Freeman, (1998) companies Stakeholders are group of people and individuals who advantage from or are injured by and those legal rights are violated or symbolized by company actions. In difference to Werhane and Freeman (1998) observation theory of stakeholder holds that the objective of any business firm is or must be the prosperous of the companies and all its stakeholders principle (Friedmans, 1998)

Historical Development of CSR in India The history of CSR in India has its four phases which run parallel to India’s historical development and has resulted in different approaches towards CSR. However the phases are not static and the features of each phase may overlap other phases. The Four Phases of CSR Development in India can be traced

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1. Ethical Model (1930 –1950)One significant aspect of this model is the promotion of Trusteeship that was revived and reinterpreted by Gandhiji. Under this notion the businesses were motivated to manage their business entity as a trust held in the interest of the community. In the first phase charity and philanthropy were the main drivers of CSR. Culture, religion, family values and tradition and industrialization had an influential effect on CSR. In the pre-industrialization period, which lasted till 1850, wealthy merchants shared a part of their wealth with the wider society by way of setting up temples for a religious cause. Moreover, these merchants helped the society in getting over phases of famine and epidemics by providing food from their go downs and money and thus securing an integral position in the society, with the arrival of colonial rule in India from 1850s onwards, the approach towards CSR changed. The industrial families of the 19th century such as Tata, Godrej, Baja, Modi, Birals, Singhania were strongly inclined towards economic as well as social considerations. However it has been observed that their efforts towards social as well as industrial development were not only driven by selfless and religious motives but also influenced by caste groups and political objectives. 2. Statist Model (1950 –1970s)Under the aegis of Jawahar Lal Nehru, this model came into being in the post-independence era. The era was driven by a mixed and socialist kind of economy. The vital characteristic of this model was that the state ownership and legal necessities decided the corporate responsibilities. In the second phase, during the independence movement, there was increased stress on India Industrialists to demonstrate their dedication towards the progress of the society. This was when Mahatma Gandhi introduced the notion of “trusteeship”, according to which the industry leaders had to manage their wealth so as to benefit the common man. “I desire to end capitalism almost, if not quite, as much as the most advanced socialist. But our methods differ. My their of trusteeship is no make-shift, certainly no camouflage. I am confident that it will survive all other theories. “This was Gandhi’s words which highlights his argument towards his concept of “trusteeship”. Gandhi’s influence put pressure on various Industrialists to act towards building the nation and its socio-economic development. According to Gandhi, Indian companies were supposed to be the “temples of modern India”.

Under his influence businesses established trusts for schools and college and also helped in setting up training and scientific institutions. The operations of the trusts were largely in line with Gandhi’s reforms which sought to abolish untouchability, encourage empowerment of women and rural development. 3. Liberal Model (1970s –1990s):The model was encapsulated by Milton Friedman. As per his model, CSR is confined to its economic bottom line. This implies that it is sufficient for business to obey the law and produce wealth, which through taxation and private charitable choices can be directed to social ends. The third phase of CSR (1960-80) had its relation to the element of “mixed economic”, emergence of Public Sector Undertakings (PSUs), enactment of labour laws and environment standards. During this period the private sector was forced to take a backseat. The public sector was seen as the prime mover of development. Because of the stringent legal rules and regulations surrounding the activities of the private sector, the period was described as an “era of command and control”. The policy of industrial licensing, high taxes and restrictions on the private sector led to corporate malpractices. This led to enactment of legislation regarding corporate governance, labour and environmental issues. PSUs were set up by the state to ensure suitable distribution of resources (wealth, food etc.) to the needy. However the public sector was effective only to a certain limited extent. This led to shift of expectation from the public to the private sector and their active involvement in the socio-economic development of the country became absolutely necessary. In 1965 Indian academicians, politicians and businessmen set up a national workshop on CSR aimed at reconciliation. They emphasized upon transparency, social accountability and regular stakeholder dialogues. In spite of such attempts the CSR failed to catch steam.4. Stakeholder Model (1990 –onwards)The model came into existence during 1990s as a consequence of realization that with growing economic profits, businesses also have certain societal roles to fulfill. The model expects companies to perform according to “triple bottom line” approach” Prabhakar and Mishra (2013)(Sources; Rajeev Prabhakarand Ms. Sonam Mishra(2013) Proceedings of 21st International Business Research Conference10 -11 June, 2013, Ryerson University, Toronto, Canada, paper title: Study of Corporate So-cial Responsibility in Indian Organization: An-Introspection)

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In (1980 until the present) Indian companies started abandoning their traditional engagement with CSR and integrated it into a sustainable business strategy. In 1990s the first initiation towards globalization and economic liberalization were undertaken. Controls and licensing system were partly done away with which gave a boost to the economy the signs of which are very evident today. Increased growth momentum of the economy helped Indian companies grow rapidly and this made them more willing and able to contribute towards social cause. Globalization has transformed India into an important destination in terms of production and manufacturing bases of Trans National Companies are concerned.Western markets are becoming more and more concerned about and labour and environmental standards in the developing countries. Indian companies who export and produce goods for the developed world need to pay a close attention to compliance with the international standards. (Sources: CSR: Concept, Theories and Practices by Dr. Ramaswamya and Dr. B. Chandrasekhar, 2013 Alfa Publication New delhi)The relation between Corporate Social Responsibility and Corporate GovernanceBoth CSR and Corporate Governance (CG) by definition feature as an issue of company’s

Management practices and therefore some times get confused with each other. (Australian Parliamentary Joint Committee on Corporations and Financial Services, above n 4, 6.)Australian Parliamentary Joint Committee on Corporations and Financial Services considers CSR as a part of total governance framework as it remarks,corporate responsibility is only one aspect of an organization’s governance and risk management process.‟ (Australian Parliamentary Joint Committee on Corporations and Financial Services, above n 4, 124, p.7)In addition, CSR has also been mentioned as one the four pillars on which the edifice of corporate governance built. (Ahmmed, Momtaz Uddin amd Mohammad Abu Eusuf, „Corporate Governance: Bangladesh Perspective‟ (Nov.-Dec. 2005) 33: 6 The Cost and Management 18, 19The four pillars are:1. Compliance with all regulatory requirements;2. Equitable treatment of all stakeholders such as suppliers, employees, consumers and so on;3. Full and fair disclosure of all material information with specific stress or emphasis on accurate and objective presentation of financial information; and4. Respects for norms of business and social responsibility

Recommendations of Various Committees on Corporate Governance in India

Cll Code Recommendations 1998 Birla Committee (SEBI) Recommendations 2000

Narayana Murthy committee (SEBI) Recommendations 2003

Board of Directors

(a). No need for German style two-tiered board.

(b). For a listed company with turnover excceding Rs.100 crores, if the Chairman is also the MD, at least half of the board should be Independent directors, else at least 30%.

(c). No single person should hold directorships in more than 10 listed companies.

(d). Non-executive directors should be competent and active and have clearly defined responsibilities like in the Audit Committee.

(e). Directors should be paid a commission not exceeding 1% (3%) of net profits for a company with (out) an MD over and above sitting fees. Stock options may be considered too.

(f). Attendance record of directors should be made explicit at the time of re-appointment. Those with les s than 50% attendance should not be reappointed.

(a) At Least 50% non-executive members.

(b) For a company with an executive Chairman, at least half of the board should be independent directors, else at least one-third.

(c) Non-executive Chairman should have an office and be paid for job related expenses.

(d) Maximum of 10 directorships and 5 chairmanships per person.

(e) Audit Committee: A board must have an qualified and independent audit committee, of minimum 3 members, all non-executive, majority and chair independent with at least on having financial and accounting knowledge. Its chairman should attend AGM to answer shareholder queries. The committee should confer with key executives as necessary and the company secretary should be he secretary of the committee. The committee should meet at least thrice a year-one before finalization of annual accounts and one necessarily every six months with the quorum being the higher of two members or one-third of members with at least two independent directors.

(a). Training of board members suggested.

(b). There shall be no nominee directors. All directors to be elected by shareholders with same responsibilities and accountabilities

(c) Non-executive director compensation to be fixed by board and ratified by shareholders and reported. Stock options should be vested at least a year after their retirement Independent directors” should be treated the same way as non-executive directors.

(d). The board should be informed every quarter of business risk and risk management strategies.

(e). Audit Committee: Should comprise entirely of “financially Literate” non-executive members with at least one member having accounting or related financial management expertise. It should review a mandatory list of documents including information relating to subsidiary companies. “Whistle blowers” should have direct access to it and all employees be informed of such policy.

(Sources: Dipkadas and S.K Singh (2011), Corporatization and CSR, SBS Publications, New delhi)

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Future of CSR in India: There are some reports showing rapid inclusive growth is possible with the more participation of the Companies. How-ever, unless big companies make significant im-provement and constructive changes in promoting philanthropic behaviors their best efforts may not prove sufficient for ending various problems being faced by the larger section of the society. Recent Bill brought under CSR act will have few repercus-sions. Some of the experts have put in two head-ings 1.Unenthusiastic Effect of CSR 2. Enthusias-tic Effect of CSR .

a) Unenthusiastic Effect of CSRIn India, there may be some unenthusiastic effect in the pathway of CSR. These may be:

1. Companies will shift to minimal CSR activities.

2. CSR will be a technical fix.

3. Real substantive issues will not be addressed by CSR.

4. The business case will not be clear enough for companies, unless it is legislated or there are other incentives,

5. CSR will not be on the public’s radar screen and there won’t be any clarity about the impor-tance of CSR.

6. CSR will become excessively prescriptive,

7. Companies that once embraced CSR will lose interest.

8. Companies will pursue other objectives rather than CSR,

b) Enthusiastic Effect of CSRIt is found that, there will be lots of enthusiastic ef-fect of CSR and that will help for sustainable devel-opment in India. These are:

1. CSR will be seen as good corporate govern-ance,

2. There is a crisis industrial capitalism, which lacks in trust and social responsibility. There-fore, a rethinking should be done to decide the role of companies in society,

3. CSR is at connection, in a time of real discon-tinuity, enormously in flux.

4. The crisis in global markets is broadening the discussion of accountability and transparency. In this situation, there will be more openness

to CSR ideas,

5. In the future a significant number of compa-nies will be convinced it’s in their strategic benefit to incorporate CSR substantively into their operations,

6. There will be pressure though competition for better CSR performance- this will put an im-pact on suppliers, distributors, etc,

7. A small group of companies will be moving a head quickly along with CSR,

8. There will differentiation between different models and levels of CSR, as a result of in-cessant improvement and quality assurance.

9. CSR will advance, but it will advance incon-sistently across sectors, depending on a company’s economic performance, economic downturns, competitiveness of the market, etc.

10. Underlying structural drivers will impact large scale companies, such as the value of knowl-edge works and other intangible assets, driv-ing companies to take different issues into ac-count.

11. In India, only some companies committed to CSR, but there is a vast possibility by many companies to began a long path on this jour-ney,

12. Increasingly businesses will see CSR resulting in increased competitiveness and profitability,

(Sources: Dipkadas and S.K Singh (2011), Corporatization and CSR, SBS Publications, New delhi)

ConclusionIt is found that Corporate Social Responsibility (CSR) has much bigger implications for develop-ment of the any country. It reduces dependency on the government for social expenditure and helps for speedy inclusive growth. The scale of CSR emerged significantly in the last decade in India. Since business houses required doing business in the society only; it would be an obligation to share small portion of their profit for betterment of soci-ety. To relate fundamental business philosophy to make CSR sharper, smarter, and focused is what really matters and is the chore for ahead. How-ever, critiques are emerging on the recent Gov-ernment bill on CSR which makes mandatory on the part of the companies to spend small portion of their profit for the social causes. Many compa-nies have invested noted share profits in various

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social development sectors. Also there is research evidence to show that CSR work of the companies has reach where government could not reach so for. However there are some reports showing most of the companies have not even have CSR policies yet. All though various Indian corporate involved in CSR activities; it is not enough when contrast to their actual financial strength. This paper is base don review of various secondary materials to gives a solid background for the discussion about recent research on various issues of CSR.

References 1. Brigitte, Planken., Subrat Sahu and Catherine,

Nickerson (2010). Corporate social respon-sibility communication in the Indian context, Journal of Indian Business Research, Vol. 2 (1): pp. 10-22.

2. Chandra, Das Sudhir., (2009). Status and di-rection of corporate social responsibility in In-dian perspective: an exploratory study, Social Responsibility Journal, Vol. 5(1): pp. 34-47.

3. Dipkadas and S.K Singh Corporatization and CSR, SBS Publications, New delhi 2011

4. Friedman, M., (1998).The social responsibility of business is to increase its profits, in Pincus, L.B. (Ed.), Perspective in Business Ethics, McGraw-Hill, Singapore, pp. 246-51.

5. Gupta, D. (2005). Three routes to sustainable CSR, The Economic Times, May 26, p. 4.

6. Freeman, R., (1998). A stakeholder theory of the modern corporation, in Pincus, L.B. (Ed.), Perspective in Business Ethics, McGraw-Hill, Singapore, 171-81.

7. Ramaswamya and Chandrasekhar, CSR: Concept, Theories and Practices Alfa Publica-tion New delhi2013

8. Werhane, P.H., and R.E. Freeman (1999). Business ethics: the state of the art, Interna-tional Journal of Management Reviews, Vol. 1(1):1-16.


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* Asst Professor, Department of Management, DR YSR National Institute of Tourism and Hospitality Management, Hyderabad-32, TS, India, E mail id : [email protected], Mobile No: 09032099913

1. INTRODUCTIONAn organization's human resources department is responsible for a variety of functions such as policy development and implementation, recruitment and selection.HR department conducts background checks of the employees. Human resource departments monitor employee payroll, tax filing, employee benefits and health administration. Human resources department also manage legal compliance, maintain files, monitor performance management systems (PMS) and oversee the training and development. It also handles employee assistance, counseling, employment relocation process, grievances handling and expatriate administration. Now a day’s HR outsourcing is common and its magnitude is subject to the demographics of the organizations. The demographics of the organization include nature and size of operations and also the satisfaction of employees and managers etc. Here it is a great challenge for the organizations that how much is to be outsourced. The effectiveness of HR

outsourcing in the organization can be weighted through satisfaction of the employees about the magnitude of HR outsourcing operations. In this context an attempt has been made to understand the effectiveness of HR outsourcing from the sample of 16 companies of Pharma industry and 23 companies of IT industry at Hyderabad city.

1.1 DEFINING THE MAJOR CONCEPTS OF THE STUDY Outsourcing is simply obtaining work, previously done by employees inside the company from sources outside the company. In other words it is kind of subcontracting. If someone has specialized in an activity which is not strategically important to business-and is able to do it cost effectively, it is recommended to get it done outside specialists. From this process organizations have benefitted from excellent quality, reliable supply and cost effectiveness. Organizations can focus exclusively on the core competencies which can enhance their competitive advantage.

EFFECTIVENESS OF HR OUTSOURCING – A STUDY WITH REFERENCE TO IT AND PHARMACY INDUSTRY

*Dr. D. Maheswara Reddy

ABSTRACTPurpose: Now a day’s HR outsourcing is common and its magnitude is subject to the demographics of the organizations. The demographics of the organization include nature and size of operations and also the satisfaction and acceptance of employees and management. Here it is a great challenge for the organi-zations that how much is to be outsourced. The effectiveness of HR outsourcing in the organization can be weighted through satisfaction of the employees about the magnitude of HR outsourcing operations. In this context an attempt has been made to understand employees’ satisfaction against HR outsourcing in the Pharma and IT companies in Hyderabad city. Methodology: To evaluate the satisfaction and comfort level against outsourcing, the statistical tech-niques like mean, SD, MD, t-statistic and p-values are computed.Findings: By churning the edited date with suitable methodology, the interesting findings about HR out-sourcing were found in the IT and Pharma companies i.e difference in the welfare activities, overall satis-faction of employees, level of freedom and level of involvement.. Value/Contribution: Thus the mentioned findings would help the management of select companies of both IT and Pharma to leverage more financial and non-financial benefits out of HR outsourcing. Key words: Employee satisfaction, outsourcing, cost reduction, non-cost factors, expertise technology, risk factors and overall performance. JEL Classification Code: M14

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1.2 Reasons for outsourcing: The reasons nor-mally include resource shortages and these are overcome by outsourcing. Outsourcing provides the ability to concentrate on the core business and subsequently it generates cost savings for the or-ganization.

1.3 Advantages of resourcing: The large size organizations normally gaining different types of advantages while outsourcing their routine operations to the proven outsourcing vendors. That includes; cost effectiveness, expert service, concentration on the core business, outsourcing helps in geographic expansion of the organization, operational control, staffing flexibility, risk management and develop internal staff of the organization etc.

1.4 HR outsourcing: HR department is in charge of HRIS in the organization and which has a major role in dealing with strategic business planning which helps to anticipate the future vacancies in an organization, and also assists the employee in retirement planning and pension benefits administration. For many businesses, the various functions of the HR department are too comprehensive and complex to maintain with in-house workforce. Businesses that outsource HR functions receive several advantages that support the company's bottom line.

1.5 HR functions commonly outsourced: These include; recruitment and selection, background checks, training and development, performance appraisals, executive development, compensation management, employee relocation process, union relations process, employee grievance handling, expatriate administration, health care benefits administration, HRI’s risk management system, retirement planning and pension & benefits administration.

2. REVIEW OF LITERATUREDespite there are lots of theoretical and empirical articles on outsourcing organizational function such as information system and accounting, but the academic literature on outsourcing the HR functions is almost non-existing. In the context of HR outsourcing, the most important argument that comes to discussion is the cost benefit analysis for firing out services which were performed internally. In connection with HR outsourcing the following reviews have been made.

Anderson et al, 1986; Greer et al, 1999; Gupta et

al, 1992; Kakabadse et al, 2002; Lever, 1997, and Vining & Globerman 1999 have noted that empirical data from government agencies outsourcing to private suppliers generated savings in the range of 20-30 % in production costs. They also observed that there should be non-cost factors which should be considered in outsourcing decision.

Barthelemy, (2003) has observed and categorized the non-cost factors as vendor customer satisfaction, employee satisfaction & expertise and loss of strategic advantage.

Adler (2003) notes in his MIT Sloan Management Review that a review by the Granter group listed six factors that are important in outsourcing decisions: dependency risk, spillover risk, trust, relative proficiency, strategic capabilities, and flexibility. The first four of these factors are short term factors, whereas the last two are considered more long term or strategic. However, no clear formula exists that identifies when outsourcing is most efficient and effective.

Greer et al, (1999), in their Academy of Management Executive, have been identified a number of competitive forces as drivers in the outsourcing of HR outsourcing.

As per the forecast of US. HR Management Services 2005-2009 the business process outsourcing will grow at a compound annual growth rate of 16.1%.

The Bureau of National Affairs, (BNA), U.S.A. made a study on HR Department Benchmark and Analysis in 2007. It has been reported that 72% of surveyed employers outsource at least one HR activity. It also revealed that there are five most commonly outsourced HR activities which include; employee assistance, pension plans, other employee benefits, training and payroll.

Michael Heric and Bhanu Singh (2010) Based on their research and experience with clients, they found that leading companies use capability-sourcing to build five strategic capabilities.

The Economist (June 2013) India is no longer the automatic choice for IT services and back-office work.

The Economist (June 2014) As traditional industries are declining, outsourcing, off-shoring and subcontracting are booming.

It has been understood from the past literature that there are some studies/surveys disclosed the functions which were outsourced and how much

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percentage of outsourcing was hired. Few of the above studies made a report on competitive forces of HR outsourcing and also about the factors of outsourcing (i.e cost as well as non-cost factors). One of the above studies revealed that the cost saving percentage in the production cost when the HR functions were outsourced. At this juncture, it is found that there is no sufficient information on the effects of HR outsourcing in the employee’s perspective. Hence the present study needs to find out the implications of outsourcing in the Pharma and IT companies in around the Hyderabad city.

3. OBJECTIVES OF THE STUDY1. To examine the employees satisfaction about the HR outsourcing in IT and Pharma companies in Hyderabad city

2. To compare the satisfaction levels of employees about the HR outsourcing between Pharma and IT companies in Hyderabad city

3. To understand the level of freedom and level of involvement of employees with HR outsourcing in Pharma and IT companies in Hyderabad city

3.1 LIMITATION OF THE STUDY: This study confined to Pharma and IT industry in around the Hyderabad city only. The respondents include different grades of employees of Pharma and IT companies.

4. RESEARCH METHODOLOGY:The nature of the study is descriptive in nature. The population of the study is IT and Pharma companies in around of Hyderabad city. The sample units are different grades of employees including HR managers. The sampling technique used in the study is convenient sampling. The data collection technique for the study is a structured questionnaire. The sample size of Pharma companies is 16 which include; Novartis, Raje Retail Pvt. Ltd, Bayer Pharmaceutical Pvt. Ltd, Abbott Healthcare, Inogeat Laboratories Pvt. Ltd, Dr Reddy’s, DIVIS Laboratories Pvt. Ltd, Hetro Drugs, Therdose Pharmaceutical Pvt. Ltd, Shanthabiotech Pvt. Ltd, Arobindo Pharmaceutical Pvt. Ltd, Natco Pharmaceuticals, Arch Pharmaceutical Laboratories, Vasudha Pharmaceutical Pvt. Ltd, Neoland Laboratories Pvt. Ltd and Synthous. The sample size of IT companies is 23 which include; CA Technologies Ltd, Oasis Ltd, Live Apps Solutions, Verizon Data Services, Infosys, Subhasni Software Solutions,

Bally, CSE, Vamainfo, Pegasystems, Serco Pvt. Ltd, Sri Technologies, IBM, Amazon Developers, Accenture, Deloitte, Beam, Dell Computers, TCS, CTS, Capgemini Technology, Microsoft, JP Morgan Chase and Mc Graw Hill Financial. The average respondents from each Pharma companies and IT companies are 9 and 7 respectively. The sample size of employees for IT and Pharma companies are 170 and 150 respectively. The scaling technique used for the sample variables is likert scale ranging from 1 to 5 points. Period of study is 2013-2014. The statistical techniques and tool used in the study are mean, standard deviation, mean deviation, t-test and software used is IBM SPSS 20v.

5. DATA ANALYSIS AND DISCUSSIONHere, the satisfaction of employees is tested in six components and also tested the overall satisfaction with respect to various parameters of HR outsourcing. Finally the level of freedom and level of involvement of employees with service provider is analyzed.

5.1 Welfare activities: Welfare activities include everything that is offered for the comfort and improvement of employees. Welfare helps in keeping the morale and motivation of the employees high so as to achieve productivity. Employee welfare includes monitoring of working conditions, health benefits and insurance against accident for the workers and their families. Employee welfare activities offered by the HR outsourcing provider includes various facilities, services and amenities provided to workers for improving their health, efficiency, and social status. The relevant data for employee welfare activities offered by the HR outsourcing provider has been processed and the results were furnished in the table 1.

Null hypotheses (H0): There is no significant difference in the satisfaction levels of employees about welfare activities between IT and Pharma companies in around Hyderabad city.

Alternate hypotheses (H1): There is a significant difference in the satisfaction levels of employees about welfare activities between IT and Pharma companies in around Hyderabad city.

Table-I

From the table 1, it has been observed that the calculated t- value and p-value are;-7.249 and 0.000 which is less than 0.05 which means that the

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null hypotheses has been rejected and alternate hypotheses is accepted. Therefore, it can be inferred that there is a significant difference in the satisfaction level of the employees with respect to welfare activities provided by HR outsourcing provider between IT and Pharma companies in around Hyderabad city.

5.2 Gaining technical expertise of the vendor company: Organizations sometimes might be lacking the technical expertise to perform the functions. Acquiring the infrastructure for in-house technical expertise may be a budgetary constraint for the organization. In this case, organizations outsource HR functions to the service provider. The relevant data pertaining to the above variable has been processed and the results were furnished in the table 2

Null hypotheses (H0): There is no significant difference in gaining the technical expertise of the vendor company between IT and Pharma companies.

Alternate hypotheses (H1): There is a significant difference in gaining the technical expertise of the vendor company between IT and Pharma companies.

Table-2

From the table 2, it has been observed that the calculated t value and p-value are;-0.96 and 0.339 which is more than 0.05 which means that the null hypotheses has been accepted and alternate hypotheses is rejected. Therefore, it can be inferred that there is no significant difference in gaining the technical expertise of the vendor company between IT and Pharma companies. In other words, the positive effect of HE outsourcing is same in the Pharma and IT.

5.3 Reduction of cost factors: Reduction in cost factor is considered as one of the important and prime factor in HR Outsourcing. By outsourcing HR functions, which incurs large cost increases, the organization would be in reducing costs. As per SHRM’s 2004 survey about HR outsourcing, 56% of the 169 surveyed HR professionals said that their companies outsourced HR functions to save money or reduce operating costs, and 41% to reduce the number of HR staff and related expenses. The relevant data pertaining to the reduction of cost factors has been processed and results were furnished in the table 3

Null hypotheses (H0): There is no significant

difference in reduction of cost factors of the vendor company between IT and Pharma companies.

Alternate hypotheses (H1): There is a significant difference in reduction of cost factors of the vendor company between IT and Pharma companies.

Table-3

From the table 3, it has been observed that the calculated t value and p-value are 0.608 and 0.544 which is more than 0.05 which means that the null hypotheses has been accepted and alternate hypotheses is rejected. Therefore, it can be generalized that there is no significant difference in the reduction of cost factors between IT and Pharma companies.

5.4 Minimizing risk factors: Handling HR functions is associated with risk .Employee issues

have to be handle with great diligence. If the organizations are concentrating on these issues they lose track of the main core competencies and business objective. Pharmacy and IT organizations are outsourcing certain HR functions which are associated with risk factors as they are dealt effectively by the specialists, so that they can be relieved from tension and can concentrate on their main business objectives. The relevant data pertaining to the minimizing risk factors have been processed and results were furnished in the table-4.

Null hypotheses (H0): There is no significant difference in the risk associated with HR outsourcing in IT and Pharma companies.

Alternate hypotheses (H1): There is a significant difference in the risk associated with HR outsourcing in IT and Pharma companies.

Table-4

From the table 4, it has been observed that the calculated t- value and p-value are .962 and .337 which is more than 0.05 which means that the null hypotheses has been accepted and alternate hypotheses is rejected. Therefore, it can be inferred that there is no significant difference in the risk associated with HR outsourcing in IT and Pharma companies.

5.5 Eliminating administrative burden: HR functions are routine and repetitive. They incur lot of time and effort. If the organizations can outsource these repetitive and routine functions to a specialist HR service provider can be relieved the administrative

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burden of managers and they can be assured of guaranteed service .The relevant data is processed and the results were furnished in table 5.

Null hypotheses (H0): There is no significant difference in eliminating administrative burden between IT and Pharma companies.

Alternate hypotheses (H1): There is a significant difference in eliminating administrative burden between IT and Pharma companies.

Table-5

From the table 5, it has been observed that the calculated t- value and p-value are 1.265 and .207 which is more than 0.05 which means that the null hypotheses has been accepted and alternate hypotheses is rejected. Therefore, it can be inferred that there is no significant difference in eliminating administrative burden between IT and Pharma companies.

5.6 Employee productivity: When routine and repetitive HR functions are outsourced in an organization, employees are relieved and can concentrate on the core competency and contribute to the organizational productivity.

Null hypotheses (H0): There is no significant increase in employee productivity by outsourcing HR functions between IT and Pharma companies.

Alternate hypotheses (H1): There is a significant increase in employee productivity by outsourcing HR functions between IT and Pharma companies.

Table-6

From the table 6, it has been observed that the calculated t- value and p-value are .688 and .492 which is more than 0.05 which means that the null hypotheses has been accepted and alternate hypotheses is rejected. Therefore, it can be inferred that there is no significant difference in employee productivity between IT and Pharma companies.

5.7 Overall satisfactions of HR outsourcing activities: By outsourcing HR functions, there was overall satisfaction related to organization perspective, employee’s perspective, policy perspective. The overall satisfaction of employees can be assessed through various parameters.

The research hypotheses of overall satisfaction of employees from various perspectives have been tested with independent t-test and the results were furnished in the table 7.

Null hypotheses (H0): There is no significant difference in the overall satisfaction of employees in terms of reduction in direct costs and overall impact on the organization between IT and Pharma companies.

Alternate hypotheses (H1): There is a significant difference in the overall satisfaction of employees in terms of reduction in direct costs and overall impact on the organization IT and Pharma companies.

Table-7

From the table 7, it has been observed that the calculated t- value and p-value for reduction in direct costs and overall impact on the organization are; -1.72 and 0.087, -0.11 and 0.916 which is more than 0.05 which means that the null hypotheses has been accepted and alternate hypotheses is rejected. Therefore, it can be concluded that there is no significant difference in the overall satisfaction of employees in terms of reduction in direct costs and overall impact on the organization between two select industries.

Null hypotheses (H0): There is no significant difference in the overall satisfaction of employees in terms of impact of outsourcing on HR function, impact on human capital, impact on standardized practices, improvement in individual efficiency & effectiveness, improvement in service quality, reduction in indirect costs, ability to manage effective vendor relationship between IT and Pharma companies.

Alternate hypotheses (H1): There is a significant difference in the overall satisfaction of employees in terms of impact of outsourcing on HR function, impact on human capital, impact on standardized practices, improvement in individual efficiency & effectiveness, improvement in service quality, reduction in indirect costs, ability to manage effective vendor relationship between IT and Pharma companies.

From the table 7, it has been observed that the calculated t-value and p-value for impact of outsourcing on HR function, impact on human capital, impact on standardized practices, improvement in individual efficiency & effectiveness, improvement in service quality, reduction in indirect costs, ability to manage effective vendor relationship are; -3.2 and 0.002, -2.45 and 0.015, -3.45 and 0.001, -2.26 and 0.024, -2.82 and 0.005, -2.39 and 0.017, -2.39 and 0.019, -4.12 and 0.000 which is less

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than 0.05 which means that the null hypotheses has been rejected and alternate hypotheses is accepted. Therefore, it can be inferred that there is a significant difference in the overall satisfaction of employees in terms of impact of outsourcing on HR function, impact on human capital, impact on standardized practices, improvement in individual efficiency & effectiveness, improvement in service quality, reduction in indirect costs, ability to manage effective vendor relationship between IT and Pharma companies.

5.8 Level of freedom with HR outsourcing vendor: Freedom refers to the comfort level of the employees in disclosing the information to the HR outsourcing service provider. When the employees are asked to give the details of their experience, achievements, accomplishments and other particulars for career decisions like promotions, transfers, increments and other fringe benefits.

5.9 Level of involvement in the HR outsourcing Function: Level of involvement refers to the extent to which the HR outsourcing service provider permits the employees of the organization to be a part of the HR outsourcing process. The HR outsourcing process can be a participative process or tell and sell process. Participative process refers to the situation where the HR service provider and the employee are equally involved in the process. Tell and sell process refers to the situation where the HR service provider just communicates the decision already taken by him and the employee has no role in the outsourcing process. The relevant data pertaining to the level of freedom and level of involvement of employees with HR outsourcing vendor has been processed and furnished the results in the table 8.

Table-8

From the table 8, it has been observed that the calculated mean value and SD for level of freedom of employees with HR outsourcing vendor in the pharma companies is 2.7733 and 1.05644 at 5% level of significance where as in IT companies it is 3.3294 and 1.17557 which means that there is a large extent of freedom for employees with HR outsourcing provider in IT companies when compare to Pharma companies.

It also observed that the calculated mean and SD values for level of involvement of employees with HR outsourcing vendor in the pharma companies is 2.48 and 1.21909 at 5% level of significance where as in IT companies it is 3.3059 and 1.07718. Which

means that there is a large extent of involvement for employees with HR outsourcing provider in IT companies when compare to Pharma companies.

Null hypotheses (H0): There is no significant difference in the level of freedom and level of involvement of employees with HR outsourcing vendor between IT and Pharma companies.

Alternate hypotheses (H1): There is a significant difference in the level of freedom and level of involvement of employees with HR outsourcing vendor between IT and Pharma companies.

Table-9

From the table 9, it has been observed that the calculated t-value and p-value for level of freedom of employees with HR outsourcing vendor are; -4.43 and 0.000 which is less than 0.05 which means that the null hypotheses has been rejected and alternate hypotheses is accepted. Therefore, it can be inferred that there is a significant difference in the level of freedom of employees with HR outsourcing vendor between IT and Pharma companies.

It also observed that the calculated t value and p-value for level of involvement of employees with HR outsourcing vendor are; -6.43 and 0.000 which is less than 0.05 which means that the null hypotheses has been rejected and alternate hypotheses is accepted. Therefore, it can be inferred that there is a significant difference in the level of involvement of employees with HR outsourcing vendor between IT and Pharma companies.

6. FINDINGS AND SUGGESTIONSBy churning the edited data in various dimensions of HR outsourcing with respect to the employees satisfaction and morale, the following interesting finding were found;

1. There is a significant difference in the satisfaction level of the employees’ welfare activities provided by HR outsourcing provider between IT and Pharma companies. The same was supported by its respective t-test and mean difference results. In this context, the Pharma industry has been excelled over the IT industry, at Hyderabad, in meeting the expectations of the employees with respect to the welfare activities offered by the outsourcing providers.

2. There is no significant difference in the satisfaction level of the employees with respect

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to the gaining of technical expertise, reduction of cost factors, risk minimization factors, relief in administration burden and employee productivity between IT and Pharma companies. The same was supported by their respective statistical values.

3. Overall satisfaction of the employees with respect to the various parameters of HR outsourcing was revealed that there is no significant difference in the reduction of direct cost of both the industries. This means that the employee’s insights about the effects of HR outsourcing on the direct cost of industries are status quo. In the rest of the parameters of HR outsourcing, there is significant

TABLESTable 1: t and p-values of welfare activities between IT and Pharma companies at Hyderabad

Variable t-test for Equality of Means

t df p-value MD

Employee welfare activities

Equal variances assumed

-7.249 318 0 -0.68784

Equal variances not assumed

-7.344 315.73 0 -0.68784

Source: Questionnaire data using IBMSPSS 20v.

Table 2: t and p-values of gaining technical expertise of the vendor company between IT and Pharma companies at Hyderabad


t df p-value MD

Gaining technical expertise of the vendor company


-0.96 318 0.339 -0.1357


-0.96 316.75 0.337 -0.1357


Table 3: t and p-values of reduction of cost factors between IT and Pharmacy companies


t df p-value MD

Reduction of cost Equal variances assumed

0.608 318 0.544 0.08118


0.615 316.597 0.539 0.08118


difference in the overall satisfaction and morale of the employees between IT and Pharma companies in around Hyderabad city.

4. Last but not least, there is significant difference in the comfort of the employees about their level of freedom and level of involvement with service provider between IT and Pharma companies. When comparing the comfort, the Pharmacy industry made the employees more confident and reliable by providing opportunities to have freedom and involvement in the regular operations of the organizations over IT industry in around Hyderabad city.

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Table 4: t and p-value of Minimizing Risk factors between IT and Pharma companies


t df p-value MD

Minimizing risk factors


.962 318 .337 .13647


.969 317.991 .333 .13647


Table-5: t and p-value of eliminating administrative burden between IT and Pharma companies


t df p-value MD

Eliminating Administrative Burden


1.265 318 .207 .13647


1.283 314.925 .201 .18039


Table-6 t- and p-value of increase in Employee productivity between IT and Pharma companies


t df p-value MD

Increase in Employee productivity


.688 318 .492 .11451


.701 307.546 .484 .11451


Table-7 t- and p-value of overall satisfaction of various parameters of employees between IT and Pharma companies

Variables t-test for Equality of Means

t df p-value MD

Impact of outsourcing on HR functions


-3.2 318 0.002 -0.3357


-3.18 301.45 0.002 -0.3357

Impact on human capital


-2.45 318 0.015 -0.2722


-2.45 310.82 0.015 -0.2722

Impact on standardized practices


-3.45 318 0.001 -0.3788


-3.43 302.1 0.001 -0.3788

Improvement in individual efficiency & effectiveness


-2.26 318 0.024 -0.2769


-2.25 304.31 0.025 -0.2769

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Improvement in service quality


-2.82 318 0.005 -0.331


-2.79 291.67 0.006 -0.331

Reduction in direct costs


-1.72 318 0.087 -0.2


-1.69 284.53 0.092 -0.2

Reduction in indirect costs


-2.39 318 0.017 -0.2604


-2.36 288.53 0.019 -0.2604

Ability to manage effective vendor relationship


-4.12 318 0 -0.4392


-4.08 295.02 0 -0.4392

Overall impact on the organization


-0.11 318 0.916 -0.0149


-0.11 316.91 0.915 -0.0149


Table-8 Mean and SD values of level of freedom of employees with HR outsourcing vendor between IT and Pharma companies

Variables Company N Mean SD

Level of freedom for sharing personal & workplace issues

Pharma 150 2.7733 1.05644

IT 170 3.3294 1.17557

Level of involvement In Hr Outsourcing Functions

Pharma 150 2.48 1.21909

IT 170 3.3059 1.07718


Table-9 t- and p values with respect to level of freedom of employees with HR outsourcing vendor between IT and Pharma companies

Variables t-test for Equality of Means

t df p-value MD

Level of freedom for sharing persons & work place issues


-4.43 318 0 -0.5561


-4.46 317.89 0 -0.5561

Level of involvement In HR Outsourcing Functions


-6.43 318 0 -0.8259


-6.39 299.63 0 -0.8259


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REFERENCES1. Anderson, E. & Weitz, B. A. (1986). Make-

or-buy decisions: Vertical integration and marketing productivity. Sloan Management Review 27, 3-20.

2. Gupta, U. & Gupta, A. (1992). Outsourcing the IS function: Is it necessary for your organization? Information Systems Management, (Summer), 44-50.

3. Kakabadse, A., & Kakabadse, N. (2002). Trends in outsourcing. European Management Journal 20, 189-198.

4. Vining, A. & Globerman, S. (1999). A conceptual framework for understanding the outsourcing decision. European Management Journal 17, (6), 645-654.

5. Adler, P.S. (2003). Making the HR outsourcing decision. MIT Sloan Management Review, 45, 53-60.

6. Barthelemy, J. (2003). The seven deadly sins of outsourcing. Academy of Management Executive 17, (2), 87-100.

7. Greer, C. R., Youngblood, S. A., & Gray, D. A. (1999). Human resource management outsourcing: The make or buy decision. Academy of Management Executive. 13, 85-96.

8. Bureau of National Affairs. (2007). Human resource department benchmarks and analysis survey 2007.

9. SHRM’s 2004 survey report

10. US. HR Management Services 2005-2009 survey report

11. Michael Heric and Bhanu Singh (2010) Social Idea management, Ignite your cultureof innovation. Discover and execute ideas faster.

12. The Economist (June 2014)

13. The Economist (January 2013)


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MANAGEMNT GAME ON THE INTERNAL ENVIRONMENT: RESOURCES, CAPABILITIES,

COMPETENCIES AND COMPETITIVE ADVATAGE

*Dr.Pavan Patel

Learning Objective:This gave game will targeted to the Strategic Management students. This game relevant to understand very important concept in strategic management i.e The Internal Environment: Resources, Capabilities, Competencies and Competitive Advantages. The following are the objectives the game.

1. Explain why firms need to study and understand their internal organization.

2. Define value and discuss its importance.

3. Describe the differences between tangible and intangible resources.

4. Define capabilities and discuss how their development.

5. Describe four criteria used to determine whether resources and capabilities are core competencies.

No of Participants: Depend on the strength of the class, students can be divided into teams, each team consists 6 to 7 voluntaries, each team will have one spokesperson will be heading the team.

Play Time: Overall time of the game range from 30minutes to 45minutes.

Material Required: The material includes exercise/puzzle sheet (Annexure-1), white papers, pencils, erasers, markers etc. infrastructure of the class room should be accommodate the teams to discuss the exercise/puzzle comfortably and without any external disturbances.

To play the activity: The game can be played as follows:

(a) The puzzle sheet will be distributed on time.

(b) Form the teams with ideal volunteers, each team will be asked to elect the Spoke person/ Team leader/Group head

(c) The exercise/ puzzles emphasis that the Consecutive number should not be connected

in any direction, which means the consecutive numbers, should not be connected in Vertical, Horizontal, Diagonal and Cross.

(d) The structure of the puzzle should not change. Structure of the puzzle remained to be unchanged.

(e) If the teams are able find first solution, instructed the teams to find alternative solutions

(f) In a stipulated time, the team which able to find more number of solutions can be declared as winning team.

(g) All team spoke persons will be allowed to give presentation on the team experience and observation,

(h) After completing the spoke person presentation on team experience/ observation, instructor need to focus on all team members allowed to share their observation and experiences with other teams.

(i) The instructor needs to consolidate the experience/observation of all respective team members.

Summary: The game serves to achieve some general goals and other specific one. Since the game is primarily designed to train the Strategic Management students, it will help to understand and it will give opportunity for breaking the ice. It would help them familiarize with organization culture in general-what is the chain of command, what amount of responsibility is delegated to the team memebrs,how formal and informal interactions with in the team members. It would help the new people gel with the organization. These games/puzzles can also be means scout for hidden talent in an organization. It will help the new students to gel in teams. Specifically the person would be familiarized with the team members in handling and understanding the talent of team members. Moreover it would provide a platform for the more reticent members of the organization to come forth and express themselves. Specifically the

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* Professor, SSIM, Kompally, Secunderabad. 500 100.


person would be familiarized with team members capabilities and competencies.

The role of team and team leader/spoke person/group head in particular demonstrates the need to think in the perspective of potential of team members the need to have flexible adaptive mindset to understand the team members. More over the directions towards the team members should also be free from any ambiguity. In the

end rest of the team could compare themselves with winning team to assess their shortcoming. For Strategic management students/company executives monitoring the game it would serve as a yardstick to measure the strength areas of the organization in general and individual in particular. This would help in future in design training programs and deciding on team composition.

TEACHING NOTES ON THE INTERNAL ENVIRONMENT: RESOURCES, CAPABILITIES, COMPETENCIES AND

COMPETITIVE ADVATAGE

Introduction: As indicated the firms follow two competing models to generate the inputs needed to formulate and implement strategies. First model focused on the external environment, which is the known as I/O model. The emphasis on another model is internal resources and their potential to create competitive advantage for the firm, which falls in line with the resource-based model. However, it should also be emphasized that no competitive advantage lasts forever and, over time, any firm’s value-creating strategy can be duplicated. Competitive advantages are often strongly related to the resources firms hold and how they are managed. Resources are the foundation for strategy and these can generate competitive advantages leading to wealth creation when they are bundled together uniquely. People are an especially critical resource for producing innovation and gaining a competitive advantage. Even if they are not as critical in some industries, they are necessary for the development and implementation of firm’s strategies.

The sustainability of a competitive advantage is a function of three factors:

1. The obsolescence of a core competence—the basis of value creation—as a result of environmental changes

2. The availability of substitutes for the core competence (or the extent to which competitors can use different core competencies to overcome value created by the original core competence)

3. The imitability of the core competence (or the abilities of competitors to develop the same core competences.

In other words, strategists must continuously make investments that will both enhance the value of current competencies while striving to develop new ones.

Analyzing the Internal Organization: Components of Internal Analysis Leading to Competitive Advantage and Strategic Competitiveness

Firm's tangible and intangible resources (for example, its facilities and corporate culture, respectively) represent sources of capabilities these capabilities (teams or bundles of resources) represent sources of core competencies when exploited and nurtured (and valuable, costly to imitate, rare, and non-substitutable), core competencies are potential sources of competitive advantage if a firm is able to use its core competencies to achieve a competitive advantage, it will achieve strategic competitiveness and earn above-average returns so long as competitors are unable or unwilling to imitate them successfully.

Creating Value Some thoughts on ―value‖:

• Firms create value by exploiting core competencies and meeting the standards of competition.

• Value is measured by the product‘s performance and by its attributes for which customers are willing to pay.

• Firms must provide value to customers which are superior to the value provided by competitors in order to create a competitive advantage.

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• Customers perceive higher value in global rather than domestic-only brands.

• Firms create value by innovatively bundling and leveraging their resources and capabilities.

• Ultimately, value is the foundation for earning above-average profits.

• Core competencies, combined with product-market positions, are the most important sources of advantage.

The Challenge of Analyzing the Internal Organization The conditions or decision characteristics presented:

Uncertainty regarding the assessment of the general and industry environments, assessments, and predictability of competitive actions, and customer preferences

Complexity regarding the nature of any interrelatedness of the causes of change in the environment and how the environments are perceived, especially regarding decisions as to which of the firm‘s resources and capabilities might serve as the foundation for competitive advantage

Intraorganizational conflicts among managers making decisions about which core competencies are to be nurtured and about how the nurturing should take place

Tangible Resources A firm's tangible resources generally can be placed into one of four categories:

• Financial resources, such as borrowing capacity

• Organizational resources, such as its formal reporting structure and systems

• Physical resources, such as location

• Technological resources, such as patents and trademarks

Intangible Resources:• A firm's intangible resources can be classified

as:

• Human resources, such as knowledge, trust, and managerial capabilities

• Innovation resources, such as scientific capabilities and capacity to innovate

• Reputational resources, such as the firm's reputation with customers or suppliers Capabilities

• A firm's capabilities represent its capacity to integrate individual firm resources to achieve a desired objective, though this ability does not emerge overnight.

• Capabilities develop over time as a result of complex interactions that take advantage of the interrelationships between a firm's tangible and intangible resources that are based on the development, transmission, and exchange or sharing of information and knowledge as carried out by the firm's employees (its human capital).

• A firm's ability to achieve a competitive advantage is thus reflected in its knowledge base and the ability of its human capital to successfully exploit firm capabilities. Thus, human capital is of significant value in the firm's ability to develop capabilities and core competencies to achieve strategic competitiveness.

Core Competencies Once a firm has identified its resources and capabilities, it is ready to identify its core competencies, the resources and capabilities that are a source of competitive advantage for the firm over its competitors. Core competencies emerge over time through an organizational process of accumulating and learning how to deploy different resources and capabilities. As the capacity to take action, core competencies are the ―crown jewels of a company,‖ the activities the company performs especially well compared with competitors and through which the firm adds unique value to its goods or services over a long period.

Building Core Competencies: Two conceptual tools/frameworks firms can use to identify competitive advantages:

• Four criteria determine (Valuable, rare, costly-to –imitate, non-substitutable), which of the firm‘s resources and capabilities are core competencies.

• Value chain analysis, a tool for determining which value-creating competencies should be maintained, upgraded, and developed and which should be outsourced.

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Annexure-II

Solution:

Annexure-IInstruction:-The consecutive numbers should not be connected in diagonal, cross, vertical and horizontal, reconstruct the structure as it is.


References:1. Strategic Management; A South Indian

Perspective, 9th Edition, Cen gage learning; page no: 58-74, by Hitt, Ireland, Hoskisson and Manikutty.

2. Crafting and Executing Strategy; The Quest for Competitive Advantage; Concepts and Cases,16th Edition, Special Indian Edition by McGraw Hill publication, page no:98-131,by Arthur A.Thompson,Jr, A.J.Strickland III, John.E Gamble and Arun K. Jain.

3. Strategic Management and Business Policy;3rd Edition McGraw Hill publication, page no:108 to 139, by Azhar Kazmi.

4. An Integrated Approach to Strategic Management; Indian Edition, Cen gage Learning: page no 82-139, by Charles W.L Hill, and Gareth R Jones.

5. Strategic Management; Analysis, Implementation and Control, Vikas publication, page no: 89-106, A Nag.

6.


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CASE STUDY

BHOOMI FARMCO-PRODUCER ORGANIZATIONS AND ENHANCING STAKEHOLDER EXPERIENCES

*Prasannakumar Ganji & **Dr. V. Murugaiah

ABSTRACTThe case discusses role of Bhoomi Farmco a producer organization in inclusive growth by utilizing voluntary sector and private sector. Bhoomi Farmco works for the poor farming community in rural area. The case highlights the issues of the farmer’s related to inorganic farming, costly agri inputs, production cost, lack of market facilities, farmer exploitations and farmer suicides etc. Case additionally focuses on the problems concerning agri finance and its impact on the farmer’s life for managing inputs cost for production of crops.

Bhoomi Farmco is pioneer organization of its kind promoting company for chemical free organic cotton in India. Farmer’s living standard can be elevated by increasing incomes and decreasing the cost of production. The aim is to setup the farmer owned marketing organization which can offer the chemical free organic cotton to industries directly from farmers themselves. Bhoomi targeted to mitigate risks, develop new marketing opportunities or diversify existing market by producing goods and services of premium quality.

Keywords: Corporate Social Responsibility (CSR), organic farming, Producer organization, and Stakeholder experiences.

* Sr. Lecturer, Bapuji Institute of Engineering and Technology (BIET) MBA Programme Davangere Karnataka, [email protected] Mobile no: 9481730858.

** Professor and Dean IMS, Davangere University, Davangere, Karnataka. [email protected], Mobil no: 9480363150

INTRODUCTIONWe Indians strongly believe in “Anna daata Sukhi bhava”, it is a way to express gratitude to the one who provided us food for the day and every day. It is saying thank you to the farmers who have put in lots of efforts in growing and yielding crops. But the literal meaning of Anna daata Sukhi bhava is “May the provider of food be happy that means let the farmers be happy. But the one question still strike in all our minds that whether the farmer is really happy? The answer of most of us is no.

India is an agrarian economy with more than half of the population is directly or indirectly associated with agriculture. Even today monsoon play an important role in the yield so it is said that the Indian agriculture is “gambling with monsoons”. The failure of the monsoon leads to draught and lack of income and which will lead to lot of problems. Along with this farmer has lot of other problems like lack of pricing mechanism, exploitation by middleman and money lenders because of which

farmers are under tremendous pressure.

Farmer were in the news headlines in year 1990 when media highlighted the large number of farmer suicides, initially government deprived of fact but later more factual information was publicized and it was accepted. There was much disagreement on the legitimacy of exact numbers of suicides as it was an emotional issue. More than 17500 farmers committed suicide between 2002 and 2006 this data is according to expert’s analysis of government’s data, but the other private studies narrates different story all together of increase in the numbers. Most of the suicides occurred in states of Andhra Pradesh, Maharashtra, Karnataka, Kerala and Punjab. A complete national study on farmer’s suicide is still expected. The situation was severe enough to force at least the government of Maharashtra state to set up a dedicated office to deal with farmer’s distress.

In 2006, the state of Maharashtra was leading the list with 4,453 farmers’ suicides accounted for

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more than a quarter of national’s count of 17,060, according to the National Crime Records Bureau (NCRB). NCRB’s study in 2008 affirmed that there were about 16,196 farmers' suicides in India that will bring the cumulative score to 199,132 since 2005. In Maharashtra the year 2005-2009 more than 5000 farmers committed suicide as per government statistics. But the case with Andhra Pradesh is about 1313 farmer suicides reported between 2005-2007 and neighbor Karnataka’s score was 1003 since 2005-2009. These are top rankers followed by least ranked are Gujarat, Kerala, Punjab and Tamil Nadu with scores 387, 905, 75 and 26 respectively during 2005-2009. As per the records of Chhattisgarh Govt 1500 framers ended their life because of debt trap and crop failure. Year 2009 proved to sinister year due to the 17,368 farmer suicide reported according to data of the National Crime Records Bureau (NCRB).

Research by various investigators identified a numerous causes. India was moving towards urbanization, industrialization and industrial sector is major contributor to the GDP like other developing economies in world. The government and society started to neglect the conditions of the rural poor in fact most of them were farmers.

A recession in the urban economy was instigated a large number of distressed non-farmers to try their hand in farming the farmer was also caught in a crisis. Such stresses pushed many into such a hasty decision of suicide. The presence of any responsible counseling either from the government or from society would have saved many farmers who did not know how to survive in the changing economy.

Research has proved that the changes in the agriculture related technology led to the disastrous situation of the farmer’s suicides. A study from the Punjab focused on mishandling of agricultural chemicals in farmer households due to no guidance about how to correctly use these deadly chemicals. The use of chemical fertilizers was also responsible for rise in farm’s working capital investment has lead to suicides. An important study in Andhra Pradesh exposed a drastic change in seeds and pesticide products to have caused "deskilling" in the cotton sector. There have been allegations on genetically-modified (GM) seeds such as BT cotton being responsible for the farmer suicides. A short documentary by television channel suggested that farmers using GM seeds promoted by private seeds corporations have led

to rising debts and money lending mafia. As per the other studies various social and economic factors are responsible for the rise in the farmer suicides they majorly include debt, less irrigated lands make it complex farming, decreasing income from agriculture, lack of additional income sources, the jumping of non farmers to farming due to unsavory urban financial system and finally not having proper counseling channels to mitigate frustration.

Nagpur Division and the Amravati Division were highlighted by media due to the rise in the farmer suicides apparently because of lack of scientific method of minimum support price fixation for cotton. The minimum support prices started reducing. The problem is intense and the causes include instable policies of World Trade Organization and the respective nation’s subsidy policy for cotton growers, which made the divisions of eastern Maharashtra, mentioned above uncompetitive in the world cotton markets. Due to this eastern Maharashtra characterized by high rates of school drop outs by children of farmer’s, bankruptcy made farmers to commit suicides, money lenders and abuse of the financially weak groups. Initially Government of India promised to increase the cotton minimum support price by approximately Rs100 per tonnage but later gone back on its own words by reducing the Minimum Support Price further. Consequently farmers stated committing suicide as farmers were embarrassed due to default on debt payments to financial institutions and money lenders. "In the year 2006, there were 1,044 suicides reported in eastern region of Maharashtra alone – that means one suicide in every eight hours. By looking in to this problematical condition NGO for organic farming (NFOF) wanted to do something to stop the farmer’s suicides.

NGO for organic farming (NFOF) is a network of community based development organizations, farmers associations like farmer federation and rural NGOs. NGO for organic farming (NFOF) works with small, marginal farmer forums and indigenous communities for promoting organic chemical free farming.

NGO for organic farming (NFOF) India organizes, empower and educate the rural communities for self-sufficiency, reduce rich poor gap and inclusive growth. Agro-bio diversity and employment options for poverty reductions are addressed and promoted through farmer groups. Farmer field schools provide a new direction of quality production,

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reduction of post harvest loss and competitive marketing. NFOF promote empowerment of women and reduction of household debts by facilitating and promoting Self Help Groups, micro credits and family farming activities. Integration of family farming activities in a specific geographical area are providing assured quantitative production of crops for localized value addition and marketing opportunities. NFOF has ventured into many projects like organic farming, United Nations (UN) projects, fair-trade and organic farming, national seminars and joint projects.

As NGO for organic farming’s (NFOF) ambitious fair-trade and organic farming project of the farmer groups, associations, farmer co-operatives and farmer owned producer companies for quality production, value addition, storage and marketing. Quality improvement services are provided to farmers on organic farming, fair trade, certification of crops and entrepreneurship for rural development, natural resource management and conservation of agricultural ecology, biodiversity and sustainable development. The project started during 2006 as part of the project one marketing company by name Bhoomi Farmco a producer organization was set up to help the cotton growers. Farmers of eastern Maharashtra are part of the company. The production, procurement and supply chain is conducted for reducing the long chain of middleman.

Bhoomi Farmco is pioneer fair trading organic and pesticide free cotton marketing company of its kind. Rise in incomes and decrease in the cost of production helps to elevate farmer’s standard of living. The aim is to setup a farmer owned marketing organization which will supply the pesticide free organic cotton to textile industries directly without middleman. Bhoomi’s ideology focused on stabilize farmers economically by reducing the unit costs of inputs and services, and focus on producing goods, improving product and service quality and reducing risks, developing new market opportunities or expanding existing markets.

Bhoomi Farmco's philosophy and objectives are farmer empowerment centric. Farmers are the major stakeholders in Bhoomi Farmco and they play a significant role in determining Bhoomi‘s strategy as well as getting advantage from shareholder dividends. Bhoomi also enable two farmers’ representatives to participate in the board as part of participatory management. Bhoomi is

also a supply chain management company, seeking out partnerships with compatible companies to more uniformly allocate profits along the value chain so that our farmers get a 'fairer' piece of total profit. Bhoomi works with textile industry and fashion brands on special projects and to help raise social and environmental standards across supply chains, offering our customers high levels of transparency and traceability.

Cotton farmers in India repeated victims of losses in cotton farming due to lack of ‘fair price’ sometimes earning fall below the acceptable level of cost of production. Bhoomi works for small land holding farmers and marginal farmers who are struggling to maintain their businesses. Living away from mainstream development they are often extremely vulnerable to loses beyond their control and have little or no access to support. Many of Bhoomi’s farmers had been forced to borrow money at very expensive rates of interest. Inability to sustain with their loans and support their families, suicide is seen as the only dignified way out. By joining Bhoomi, marginalized farmers have been able to get away with rising debt and obligatory loan agreements to moneylenders. The 5,000 farmer members are leading happy lives who are with Bhoomi since we set up in 2006. Farmers have regained their self-respect through self determination and fair trading environment.

By encouraging organic cotton farming and reducing dependency of farmers from expensive agrichemicals, input costs can be brought up to 50%. Agrochemical can dangerously damage our ecosystem, pollute local water resources, degrade soil quality, harm animal and birds. Due to the direct exposure of agricultural communities to these harmful chemicals and fertilizers they likely to get infected to diseases like cancer etc. Through training these farmers in pesticide free organic farming practices, Bhoomi farmers have also noticed remarkable improvement in their health conditions. Soil fertility quality is sustained and enriched through organic compost and regular crop change, preserving the natural resilience of the crops and increasing and sustaining yields.

As a Fair-trade specialized organization, farmers are no more exposed to complex and unstable market prices. The additional revenue from Fair-trade is also added benefit for the farmer association, which is democratically invested in socially responsible projects. So far, retained earnings of Bhoomi farmers have been invested

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in water wells, their children's education and back into their businesses. Fair-trade rules also prohibit child labour and supports movement towards gender equality. Well informed about international markets and organizing into an association has given Bhoomi farmers increased bargaining power advantage and a stronger collective voice.

The Central India has the ideal tropical weather required for cultivating cotton and has cotton cultivation legacy for over 3,000 years. Surprising India is the principal cotton exporter in the world. Bhoomi works with 5,000 cotton farmers in eastern Maharashtra state.

In the decade 1950-1960 food shortage was a major problem for many countries and India was no exception. Indian farmers were encouraged to utilize hi-tech and modern methods of farming to increase yields. Pesticides and insecticides were heavily promoted in this area. The formers in this eastern Maharashtra have already understood the importance of organic farming, ecological awareness and was receptive to Bhoomi’s vision.

Bhoomi believes in the fare trade not subsidy approach to socio economic development of farmers. The farmers who are investing their own capital into Bhoomi also have the same ideology of fare trade not subsidy approach. For every 1000 kgs of raw cotton we buy from our farmers, we set aside an organization development fund of 1,100 rupees to invest in Bhoomi. By taking share investment in Bhoomi farmers have a vested interest in the company doing well. The farmers are actively involved in the operations of the Bhoomi due to their vested interest.

Bhoomi has a close partnership with NFOF, a non-profit NGO. NFOF desired to facilitate the development of autonomous, legally-registered farmer producer organization that is self administered and able to sell organic Fair-trade cotton to buyers directly without middleman. It focuses on building management teams, establishing business infrastructure like offices and storage facilities and increasing the technical capacity to raise yields and profit potential of the organic farmers.

Bhoomi provides brands and farmers with direct access to each others' resources to reduce supply chain complexities and creates a transparent cost effective process. Farmers are made to move up the value chain by dealing directly with buyers which enable the farmers to gain maximum benefits

by cutting the middleman from the value chain.

Bhoomi’s partnership with socially responsible organization (Ashok Mills Ltd) can be best suited example. Bhoomi entered into a three year contract with Ashok Mills Ltd, a Textile Company and one of the largest mills in Asia. Ashok mills Ltd guarantees to carry the fair trade credentials of our supply chain to the ultimate consumer. All Bhoomi’s cotton is milled by Ashok Mills Ltd which enables us to track every product right back to our farms. Brands can be confident that their products are made to the highest ethical standards from start to finish, and they are able to inspect conditions if they choose. Bhoomi’s long term goal is to move up the value chain, integrating manufacturing processes into our business model.

TEACHING NOTESBhoomi Farmco is first of its kind marketing company for fair trading organic and pesticide free cotton in India. By increasing incomes and decreasing the cost of production helps to improve farmer’s standard of living. The objective is to setup the farmer owned marketing organization which will supply the pesticide free and organic cotton to industries direct from the farmers themselves. Bhoomi’s philosophy centered at empowering farmers by reducing the unit costs of inputs and services, and focus on producing goods, improving product and service quality and reducing risks, developing new market opportunities or expanding existing markets.

In addition to empowering farmers by themselves, Bhoomi works to build profitable supply and demand partnerships between the farmer groups and ethically oriented organizations (Ashok Mills Ltd) using the help of NGO for organic farming (NFOF). Bhoomi market the farmers’ crop and vision that Bhoomi has for marginal farmers that helps create long lasting trading relationships with buyers, offering complete transparency within the supply chain.

In the case there are three major players they are Bhoomi the producer organization, a NGO (NFOF) will help Bhoomi to realize the dream and an ethically oriented organization (Ashok Mills Ltd) which is key role player in reaching an ultimate consumer as final product.

Here Bhoomi will be able to achieve better marketing facilities and better bargain power and reduced cost of production due to reduction in the usage

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of pesticides and chemicals. NGO will be able to achieve strengthening and improving farmer’s life and environmental protection by promoting organic farming. Ethically oriented organizations will be able to achieve sense of satisfaction by joining hands with Bhoomi, a competitive advantage by getting good quality raw material which will have reflection in the final product and justified itself as a responsible corporate citizen of India.

Target audience:The case is suited for the discussion in courses like Strategic Management, Business Ethics & Corporate social Responsibility in a Post Graduate programme in Business Management (MBA\PGDBM). It can also be used for discussion at the Executive Education Programs and MDPs.

Learning Objectives:This case provides learners with opportunities to critically understand

(1) Role of public private partnership in association with producer organization in poverty reduction.

(2) Building competitive advantage by joining hands with producer organization

(3). Cost effective methods of Corporate Social Responsibility (CSR) and Business Ethics (BE) in tough times.

Teaching approachThis case can be discussed in the classroom in the standard method of Group case discussion. The students are given case in advance and expected to come to the class with preparation for discussion in the class.

Case Discussion in Groups: As per this approach the Faculty/ Moderator is expected to divide the class in to 3-6 member groups based on the number of students in the class. The group will be given some time to discuss the case facts among the members of the groups and collect points for the oral presentation which may include Key facts or issues, further options which could have been implemented, finally learning outcome from the case.

In this particular case the students are expected to analyze case from 3 dimension one Farmers, Stakeholders and Organization Ashok mills ltd.

Session plan:Expecting that classes are of 90minits the case session plan prepared in case of change in the class timings the session plan needs to be adjusted accordingly.

1-5 minutes: Brief introduction to the case.

5-20 minutes: Group level discussion for the collection of case facts and revenant points.

20-75 minutes: Oral presentation by the groups

75-90 minutes: Collating case important information and finally conclusion and remarks.

Discussion Questions:1. Whether Bhoomi has taken right solution?

2. Whether Bhoomi Farmco’s efforts are sustainable?

3. If you were the Government representative of the north Maharashtra what actions you would be taking to solve the farmer suicide?

MJ SSIM VII (I) 8,2015

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Mr. Ken Blanchard is a Cofounder and Chief Spiritual officer of The Ken Blanchard Companies which is an international management training and consulting firm. He is a high flying most sought after speaker , consultant and authored and coauthored around fifty books of which The One Minute Manager (coauthored with Spencer Johnson) is one of the best sellers even today. Mark Miller is Vice President of Training and development in Chick –Fil-A. Over thirty years he served in many capacities in the organization. He is the Coauthor with Ken Blanchard” The Secret” which is also an international bestseller apart from this book.

The duo have written Great Leaders Grow with an insight that successful leaders don’t rest on their laurels, because leadership is not a title on a business card. Leadership is a living process –and means growth. They narrated the ways and means for leader’s growth, and indicated areas to focus on so that an individual can remain effective throughout their lives by using a character Debbie Brewster who is an accomplished leader, and now becomes a mentor to Blake, the son of Debbie's former mentor. Through Debbie the authors explained that there are four ways a leader could fuel his or her growth. The four ways are formed as acronym GROW.

The book ironically begins with an unexpected twist. An empowering statement to Blake from his father Jeff Brown “You can be a leader “, and the sudden death of his father in a heart- attack . An allegory of the void people can create in our lives. It is here that Debbie, his dad’s protégé steps in to help him get more focused. The book thereby points out an important fact that, not only do mentors provide protégés with important career advice and emotional support, but they can also open doors that can otherwise remain shut. Debbie prods Blake to resort to a self-introspection and asks him to honestly assess his strengths and weaknesses. As a mentor, she is careful to give him his freedom and not impose her thoughts on him.

It serves as a guide to young graduates entering the job market to understand their true calling and the attributes they should look for in their first job. Aligning personal core values to the company’s values can kick start a great Career.

The crux, of the second chapter, progress on the thought of Servant Leadership .Debbie incites his enthusiasm for the leadership challenge , by asking him to imbibe values true to servant leaders like , humility, altruism, trust and service.“ Great leaders don’t think less of themselves , they just think of themselves less”-(p,20). Good leadership is the choice people make in engaging in the right behavior. The authors trace the manner in which orgnaization’s which invest in people, invest time in getting the right people into the bus. The book alerts young graduates to look for cues in the environment and differentiate professional from unprofessional one’s and GROW as leaders. The rest of the journey helps us to understand the acronym GROW, more clearly.

According to Ken and Mark, the letter G in the word GROW stands for Gain Knowledge. Anyone who wants to grow as a leader should Gain Knowledge about oneself, which is nothing but self-awareness, strengths, passions and learning styles, etc. Next one as a part of Gain knowledge is knowing about others whom one leads. Their ambitions, dreams, hopes, fears, their families and past work experience. The more one knows about others, the better one can serve the others. Industry knowledge is another important element to gain Knowledge where in one is expected to understand industry trends of past, present and estimate future. Leadership is the last component of gaining knowledge covering aspects like best leadership practices, skills, books to be read. The fundamental premise of Gaining knowledge is an awareness of self , others , industry and an unquenchable desire to learn. The book therefore highlights the importance of Leader Member Exchange (LMX) that elevates knowledge sharing.

Book Review

Great Leaders Grow: Becoming a Leader for LifeAuthor: Mr. Ken Blanchard & Mr. Mark MillerPublisher: Harper Collins Publishers India Ltd., New DelhiISBN: 978-1- 60994-788-0Reviewers: Dr. S.V. Ramana Rao, Dr. Agna FernandezJEL Classification Code: Y3

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Knowledge is the component of creativity and innovation in organizations and empowers workers to create and deliver value. Organizational leaders should facilitate knowledge creation and sharing processes to promote creativity and innovation among workers and that’s exactly what Blake’s mentor points out to him.

R stands for Reach Out to Others in the acronym GROW. One who is aspiring to be a leader should reach out to others formally and informally. Reaching out others as per the authors are one needs to be proactive about helping others grow, if one is going to grow and learn. At the early stages of career one of the best ways for growth is teach. Teaching is one of the primary ways that leaders learn. Debbie explains Black that three things are important for learning. One is take notes of training programs, meetings, discussions attending. Second one is review of the notes taken and last one is spread the message of learnings happened during meetings and discussions to the important people who missed the meetings and discussions. The second letter ‘R’, has a very thought provoking statement , Blake makes a powerful statement , “ I’ve also begun to discover the stories of people I work with”. Debbie has a quick retort , which is an eye opener,”( p,53) The more you discover them , the more you’l be able to see the true picture of who they really are “.( p.55). In other words individuals who feel , that they have been supported by messages through organizations have enhanced levels of normative and affective commitment. Through this chapter reaching out , Debbie unravels the need for openness and trust in organizations. The three dimensions underlying trust , openness( being truthful), integrity ( honesty), and consistency (reliability in handling situations), are communicated as vital to one’s growth in the organization.

To continue to grow as a leader , you’ve got to Open your world. A series of suggestions on enhancing one’s experience of the world is given by Debbie to Blake. It ranges from listening in to customer calls to finding a mentor from another department. The authors creatively, suggest ways by which new recruits can find space in organizations to learn , without feeling awkward and embarrassed. Open you world at work and

outside Work , makes for very intuitive reading and makes the book irresistible and gripping. The third letter in the acronym GROW is O stands for Open your world- At work and Outside work. It means, an individual who wants to grow as leader needs to be on the lookout for experiences inside and outside the work place. Ken and Mark explained the usage of these experiences by using an analogy to be considered. An artist before painting uses a palette to place paints. Those paints are being used while drawing a painting. Similarly a leader’s life is like palate where the experiences inside and outside gained over a period of time can be used to grow as a leader.

The hallmark of persuing wisdom as a leader is to ask for honest feedback. Feedback about past performance and counsel to guide future action are other thoughts of Debbie to Blake. Honest feedback and it’s performance orientations can never be undermined is the subtle message the authors try to engage with the reader. The process of seeking feedback , the need to engage honestly with the mentor and grow are highlighted adequately in the book. The forth arena in which leaders need to grow is Walk towards wisdom. W is the last letter in the acronym GROW. Wisdom can be outcome of gaining knowledge, reaching out to others and opening your world. Growth in wisdom has no formula, but it involves at least one of four elements. They are rigorous self-evaluation, honest feedback, counsel from others and time.

A Personal Assessment format has been given at the end of all chapters covering the four aspects like Gain Knowledge, Reach out to others, Open your world and Walk toward Wisdom truly worth using for self- assessment. There will be one question that really matters for aspiring leaders is “Do you want to be a leader for life?” If so to what extent you wanted to GROW. Ken and Mark simply answered in one sentence by saying YOUR CAPACITY TO GROW DETERMINES YOUR CAPACITY TO LEAD. Growing for great leaders is like breathing. It is not an optional. It is not something leaders do in addition to real job. It is at the core of leader’s job. Leaders – the good ones- are always learners. This book is a must read to anyone wishes to become a leader for life.


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Siva Sivani Institute of ManagementS.P Sampathy’s Siva Sivani Institute of Management is promoted by the Siva Sivani Group of Educational Institutions, which has been running the prestigious and internationally renowned Siva Sivani Public Schools for more than four decades. Approved by the All India Council for Technical Education, Ministry of Human Resource Development, Government of India, New Delhi, Siva Sivani Institute of Management started functioning as an autonomous institute in 1992.Located in Secunderabad, far from the maddening crowd, about 6 Km. from Bowenpally along the National Highway No.7, Siva Sivani Institute of Management has an enviable environment - serene, spacious and stupendous. It offers an ideal environment for imparting value- based management education. The Institute designs and updates courses at any given point of time, even if it is in the middle of an academic year or a term for that matter. Stalwarts from both the industry and the academia constantly provide inputs for fine tuning the course curriculum to meet the needs of the industry. SSIM is consistently ranked amongst the top Business Schools in the country. Currently, SSIM is ranked 35th in the country amongst the B-Schools of Excellence as per Business Barons Survey March 2009. The other Group Institutions are: Siva Sivani Global Centre for HR Excellence, Siva Sivani Institute of Global Studies, Siva Sivani Man Management Private Limited and Siva Sivani Degree College.Siva Sivani Institute of Management offers four PGDM Programmes:The PGDM (Triple Specialization)This program prepares a student towards building multifaceted functionality. PGDM (TPS) is designed in such a way that has evolved from the needs of the industry, which is continually looking for managers with cross functional skills embedded and supported by IT savvy acumen. A student of PGDM (TPS) has a major specialization one of Finance/Marketing/HR/System along with one of the specialization art of Finance, Marketing, HR, System, Operations as minor specialization and also elective courses like Finance, Human Resources and Marketing, ERP, electives such as Retail Management, Banking, Event Management, BPO Management, Insurance Management etc.PGDM (Marketing)This is a highly specialized two year management programme in Marketing. This programme is completely tailor made to the requirements of industry with respect to marketing.PGDM (Human Resources Management)This is highly specialized programme in HR along with IT focus. The latest and global concepts in the area of HR that includes compensation management, Psychometrics HR audit, Negotiating skills, Managing diversity etc.PGDM (Banking, Insurance, Finance and Allied Services)This programme encompasses all the finance related areas and we have included Banking and Insurance sectors as specializations in addition to core Finance. All the latest topics in Banking and insurance have been included and to name the few are Risk management in Banks, Technology management in Banks, Claims management in insurance, Actuarial science etc.PGDM (Global Business)Siva Sivani offers a highly specialized program - PGDM in Global Business. The world is fast becoming a global village and there is a huge demand for students who are multi skilled and who can transfer their skills and expertise seamlessly across countries and continents. This well thought out and executed course with a through exposure to global thoughts and latest global practices will equip the students to becoming truly global managers.

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volume-vii, issue-i- jan-june, 2015

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