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Table <strong>of</strong> Contents<br />
Articles<br />
STUDY ON SHOPPING STYLES OF YOUNG SHOPPERS A study with reference to young shoppers in Kerala<br />
Dheenadhayalu Sudharani, Balamurugan R N, Hari sundar G Ram<br />
Blue Ocean Strategy and the dynamic nature <strong>of</strong> business strategies: an empirical study conducted on the<br />
renewable and telecommunication sector <strong>of</strong> Bangladesh.<br />
Md. Irfanuzzaman Khan, Tahjib Shamsuddin Kolpo<br />
Comparative Scenario <strong>of</strong> Higher Education: Impact on Human Development in Bangladesh<br />
Abu Zafar Ahmed Mukul, Sabrina Hoque Chowdhuary, Md. Arafat Rahman<br />
Prepaid Visa Debit Cards <strong>of</strong> United Bank Limited<br />
Rukhsar Ahmed, Imam ud Din<br />
WTO: Trade and Environment-<strong>The</strong> two Notions<br />
Kalpana Agrawal<br />
PUBLIC DISTRIBUTION SYSTEM AND ITS SERVICE QUALITY<br />
Ramesh Kumar S<br />
INTEGRATING SUSTAINABILITY IN BUSINESS AND MANAGEMENT EDUCATION - A HOLISTIC APPROACH<br />
Vasanth R Kiran, Pr<strong>of</strong>. Sahana Madan<br />
Is Real Estate <strong>Business</strong> the way to go in East Africa? A strategic analysis <strong>of</strong> Uganda National Housing<br />
Construction Company Limited (UNHCC)<br />
Nicholas khatotoh Makayi, Dr. Laaria Mingaine<br />
A Comparative Study <strong>of</strong> Gross NPA <strong>of</strong> Old Private Sector Banks & Nationalized Banks<br />
Tanmaya kumar pradhan<br />
A Comparative study <strong>of</strong> trends <strong>of</strong> Bank wise Non-Performing Assets in Public Sector Banks and Private<br />
Sector Banks<br />
Tanmaya kumar pradhan<br />
Case <strong>Studies</strong><br />
AN EVALUATION OF MGNREGP OF ARIYALUR DISTRICT<br />
Govindarajan Vedanthadesikan, Packiyam Arokiasamy<br />
A Case Study <strong>of</strong> “McDonald’s India”with reference to Bangalore City<br />
Dr. Y. Poornima<br />
ZONE OF TOLERENCE FOR THE BANKS: EXPLORING THE SERVICE QUALITY ATTRIBUTES TO BE IMPROVED<br />
veerabhadrappa mallikarjunappa Havinal, Jayanna Sirigere
Study on Shopping Styles Of Young Shoppers<br />
A Study With Reference To Young Shoppers In Kerala<br />
Dr.Dheenadhayalu Sudharani<br />
Pr<strong>of</strong>essor- Marketing<br />
PSG Institute <strong>of</strong> Management Coimbatore<br />
&<br />
Hari Sundar Govindaram<br />
Associate Pr<strong>of</strong>essor<br />
Department <strong>of</strong> Management <strong>Studies</strong><br />
Sree Narayana Gurukulam College <strong>of</strong> Engineering, Kolenchery, Kerala<br />
&<br />
Rengasamy Natarajan Balamurugan<br />
Assistant Pr<strong>of</strong>essor<br />
PSG Institute <strong>of</strong> Management, Coimbatore<br />
Abstract<br />
Organized retailing is changing the whole concept <strong>of</strong> shopping, creating a radical shift in consumer<br />
buying behavior. In such a scenario, understanding consumer’s shopping styles and preferences is considered<br />
to be very crucial in order to succeed in selling a product or service. Consumer shopping styles<br />
is a major area <strong>of</strong> concern for marketers as it provides the advantage <strong>of</strong> aligning the sales techniques<br />
with the buying style, which improves the chances <strong>of</strong> converting more prospects to paying customers.<br />
Today, the market is driven by the changing consumption patterns and aspirations <strong>of</strong> the youth. Young<br />
consumers show more consumer confidence, are active and spend more than they save. <strong>The</strong>y represent<br />
a powerful new consumer force and shape the trends that affect the modern retail sector. Moreover,<br />
there exists considerable difference in the shopping styles exhibited by urban, semi-urban and rural<br />
consumers. <strong>The</strong> purpose <strong>of</strong> this study was to investigate the difference in shopping styles <strong>of</strong> young urban<br />
and semi-urban consumers in Kerala, India and to analyze the consumer shopping styles across<br />
different demographic variables.<br />
Data for this study were collected from 220 students in Kerala, who frequently shop from modern retail<br />
outlets. <strong>The</strong> study revealed that there exist statistically significant differences in the shopping styles<br />
<strong>of</strong> urban and semi-urban consumers. <strong>The</strong> consumer shopping styles also vary across demographic variables.<br />
This study will help marketers to understand the young shoppers in terms <strong>of</strong> their shopping<br />
styles and to adapt and improve their marketing campaigns as well as strategies to penetrate more into<br />
the market.<br />
Key words: Consumer shopping styles, Consumer Style Inventory (CSI), Young shoppers.<br />
1. INTRODUCTION<br />
Organized retailing is changing the whole concept <strong>of</strong> shopping, creating a radical shift in consumer<br />
buying behaviour. In such a scenario, understanding customer’s shopping/decision making styles is<br />
considered to be very crucial in order to succeed in selling a product or service (Rosen. J and Turano.<br />
A. M, 2003). Consumers exhibit different styles while shopping. Some may prefer to have a shopping<br />
list in hand and others may browse the aisles and buy whatever catches their eye. People respond to a<br />
sales call in many different ways. Some people are more instinctive decision makers. <strong>The</strong>y respond<br />
well to a presentation and are willing to take action straight away. Other people may leave decision<br />
making to the very last minute because it may not be a priority for them right at that moment. Being<br />
able to understand the varying dimensions <strong>of</strong> consumer shopping styles provide marketers the ad-<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 1
vantage <strong>of</strong> aligning the sales techniques with the buying style, which improves the chances <strong>of</strong> converting<br />
more prospects to paying customers.<br />
Consumers’ exhibit different characteristics and market behaviors, and they <strong>of</strong>ten have different shopping<br />
orientations, which are affected by culture, gender role, economic situations, and environment<br />
(Buss, 1990). Today, the market is driven by the changing consumption patterns and aspirations <strong>of</strong> the<br />
youth. Young consumers show more consumer confidence, are active and spend more than they save.<br />
<strong>The</strong>y represent a powerful new consumer force and shape the trends that affect the modern retail sector.<br />
Moreover, there exists considerable difference in the shopping styles exhibited by urban, semiurban<br />
and rural consumers. Pr<strong>of</strong>iling young urban and semi-urban consumers by combining their<br />
shopping styles and demographic information can provide more meaningful ways to identify and understand<br />
various consumer segments and to target each segment with more focused marketing strategies<br />
(Nargundkar, 2003)<br />
A recent study by Kiran and Jhamb (2011) pointed out that most <strong>of</strong> the studies on Indian retail formats<br />
have focused on store attributes and consumer’s choice towards emerging retail formats. <strong>The</strong>y stressed<br />
the need to further explore and focus on the holistic view <strong>of</strong> shopping styles <strong>of</strong> Indian consumers and<br />
their choice <strong>of</strong> format. <strong>The</strong> present study aims to investigate the difference in shopping styles <strong>of</strong> young<br />
urban and semi-urban consumers and to analyze the consumer shopping styles across different demographic<br />
variables.<br />
<strong>The</strong> specific objectives <strong>of</strong> the study are:<br />
To investigate the shopping styles exhibited by young shoppers in the context <strong>of</strong> organized retailing.<br />
To analyze the consumer shopping styles across different demographic variables.<br />
To analyze the difference in shopping styles <strong>of</strong> young urban and semi-urban consumers.<br />
2. LITERATURE REVIEW<br />
2.1 CONSUMER SHOPPING STYLE/DECISION-MAKING STYLE<br />
Sproles and Kendall (1986) defined consumer shopping/decision making style as a mental orientation<br />
that reveals both cognitive and affective characteristics <strong>of</strong> a consumer, while making choices (Kavas. A<br />
and Yesilada .F, 2008). Shopping styles are relevant to marketing because they determine consumer<br />
behavior and are commonly used as a basis for market segmentation and positioning. Most <strong>of</strong> the studies<br />
in the past have focused on consumer shopping styles because <strong>of</strong> the assumption that all consumers<br />
approach the market with certain fundamental decision-making styles (Stone, 1954; Darden and Reynolds,<br />
1971; Lumpkin, 1985).<br />
<strong>Research</strong> on consumer decision making styles fall into three main categories: the psychographic/life<br />
style approach (Lastovicka, 1982), the consumer typology approach (Darden and Ashton, 1974;<br />
Moschis, 1976), and the consumer characteristics approach (Sproles 1985; Sproles and Kendall, 1986;<br />
Sproles and Sproles, 1990). <strong>The</strong> cognitive and affective aspect <strong>of</strong> consumer behavior is explained in<br />
the consumer characteristics approach and hence it is considered to be the most powerful construct<br />
(Yesilada .F and Kavas. A, 2008).<br />
In order to measure consumer decision making styles, Sproles and Kendall (1986) developed an instrument<br />
named Consumer Style Inventory (CSI) which measures eight mental characteristics <strong>of</strong> consumers<br />
while shopping – Perfectionist/High-quality conscious (degree to which a consumer searches<br />
carefully and systematically for the best quality in products); Brand conscious/Price equals quality (a<br />
consumer’s orientation towards buying the more expensive, well known national brands); Novelty and<br />
fashion conscious (consumers who like new and innovative products and gain excitement from seek-<br />
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ing out new things); Recreational and shopping conscious (the extent to which a consumer finds shopping<br />
as a pleasant activity and shops just for the fun <strong>of</strong> it); Price conscious/Value-for-money (a consumer<br />
with high consciousness <strong>of</strong> sale prices and lower prices in general); Impulsiveness/Careless (one<br />
who tends to buy on the spur <strong>of</strong> the moment and appear unconcerned about how much he or she<br />
spends); Confused by over choice (a consumer who likely experiences information overload in the<br />
market); and Habitual/Brand-loyal (a consumer who repetitively chooses the same favorite brands and<br />
stores).<br />
2.2 YOUNG CONSUMER’S SHOPPING STYLES<br />
Kaur and Singh (2007) investigated the important dimensions <strong>of</strong> motivation for young consumers<br />
when they shop. <strong>The</strong> results <strong>of</strong> the study revealed that young consumers tend to shop with a hedonistic<br />
perspective seeking fun and enjoyment from the shopping trip. <strong>The</strong> main motivation for shopping for<br />
them is to get product ideas, meet friends or even alleviate depression and to have a break from the<br />
daily routine. Jain and Bagdare (2009) analyzed customer experience in the context <strong>of</strong> new format retail<br />
stores and stated that the modern outlook and practices <strong>of</strong> new format stores such as well designed<br />
layout, ambience, display, self service, value added services, technology-based operations etc. attracts<br />
and influence young consumers and help to satisfy both hedonic and utilitarian needs.<br />
2.3 INFLUENCE OF DEMOGRAPHIC FACTORS<br />
According to Singh (2007) the urban consumers are found to have high degree <strong>of</strong> brand awareness<br />
than rural consumers especially with respect to food products. Post graduate urban and rural consumers<br />
exhibit a high level <strong>of</strong> brand awareness for food products than other education levels. <strong>The</strong> increase<br />
in disposable income has been phenomenal for the increased preference and growth <strong>of</strong> organized retailing.<br />
<strong>The</strong> study by Ali et al. (2010) indicated that income level is an important factor that affects<br />
consumer’s purchase decisions. Results revealed that higher income as well as education level <strong>of</strong> consumers<br />
influence their purchase decision where as age and gender have no significant impact.<br />
3. RESEARCH METHODOLOGY<br />
3.1 SAMPLE<br />
<strong>The</strong> sample for the study comprised <strong>of</strong> graduate and post-graduate students in Kerala, who frequently<br />
shop from different formats <strong>of</strong> modern retail. A sample <strong>of</strong> 220 with equal representation <strong>of</strong> urban and<br />
semi-urban consumers was selected for the survey.<br />
3.2 DATA COLLECTION<br />
<strong>The</strong> information was collected personally from the respondents by administering a pre-tested, structured<br />
questionnaire. <strong>The</strong> study employed Consumer Style Inventory (CSI) developed by Sproles &<br />
Kendall (1986); Sproles & Sproles (1990) to measure consumer shopping styles. <strong>The</strong> CSI is composed<br />
<strong>of</strong> 39 items that cover eight consumer shopping styles namely- Perfectionist/High-quality conscious;<br />
Brand conscious/Price equals quality; Novelty and fashion conscious; Recreational and shopping conscious;<br />
Price conscious/Value-for-money; Impulsiveness/Careless; Confused by over choice and Habitual/Brand-loyal.<br />
For each style, a three-item short form <strong>of</strong> the scale with 24 items is available, which was included in<br />
the questionnaire. All items are scored on 5-point Likert type scale in which respondents were asked to<br />
indicate their level <strong>of</strong> agreement from strongly disagree (1) to strongly agree (5). <strong>The</strong> questionnaire<br />
also consisted <strong>of</strong> questions to solicit demographic information <strong>of</strong> the respondents such as age, gender,<br />
marital status, education and monthly income.<br />
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4. RESULTS AND DISCUSSION<br />
4.1 DEMOGRAPHIC PROFILE OF THE SAMPLE<br />
A total <strong>of</strong> 220 (equal proportion <strong>of</strong> urban and semi-urban) graduate and post graduate students participated<br />
in the survey. Demographic characteristics <strong>of</strong> the sample are presented in Table - I. <strong>The</strong> urban<br />
sample consisted <strong>of</strong> 45% female and 55% male respondents whereas the semi-urban sample consisted<br />
<strong>of</strong> 71% female and 29% male respondents. Majority <strong>of</strong> the respondents (urban – 76%, semi-urban –<br />
95%) fall in the age group <strong>of</strong> 21 and 26 years. 86% <strong>of</strong> the urban and 99% <strong>of</strong> the semi-urban respondents<br />
were single. Most <strong>of</strong> the respondents had income above 10, 000 (urban – 94%, semi-urban –<br />
87%).<br />
Variables<br />
TABLE - I<br />
DEMOGRAPHIC PROFILE OF URBAN AND SEMI-URBAN SAMPLE<br />
Age 15-20 18<br />
21-26 76<br />
27-35 6<br />
55 & above 0<br />
Gender Female 45<br />
Male 55<br />
Marital Status Single 86<br />
Married 14<br />
Education Level Secondary school or Equivalent 0<br />
Bachelor Degree 13<br />
Master Degree 87<br />
Income Below 10,000 6<br />
10,000 - 20,000 36<br />
20,000 - 30,000 39<br />
Above 30,000 19<br />
Source: Survey data<br />
% <strong>of</strong> Sample<br />
Urban<br />
4.2 ANALYSIS OF CONSUMER SHOPPING STYLES ACROSS DEMOGRAPHIC VARIA-<br />
BLES<br />
Analysis <strong>of</strong> variance (ANOVA) was used to study the variations in consumer shopping styles across<br />
different demographic variables. <strong>The</strong> output <strong>of</strong> ANOVA is summarized in Table - II. <strong>The</strong> analysis <strong>of</strong><br />
eight consumer shopping style dimensions is described below:<br />
TABLE – II<br />
ANALYSIS OF CONSUMER SHOPPING STYLES ACROSS DEMOGRAPHIC VARIABLES<br />
Dimensions Age Gender Marital status Edu. Level Income<br />
F Sig F Sig F Sig F Sig F<br />
Perfectionist 7.233 0.001 1.787 0.183 0.739 0.391 4.326 0.039 2.877<br />
Brand conscious 0.004 0.996 10.48 0.001 0.162 0.688 2.114 0.147 6.927<br />
Novelty 0.162 0.851 2.326 0.129 0.239 0.625 4.885 0.028 5.47<br />
Recreational 1.973 0.141 9.869 0.002 0.108 0.743 1.86 0.174 0.149<br />
Price & Value 0.308 0.735 4.948 0.027 5.352 0.022 0.077 0.781 1.548<br />
Impulsive 0.897 0.409 0.581 0.447 2.166 0.143 1.676 0.197 2.443<br />
Confused 0.174 0.84 4.782 0.03 0.776 0.379 0.49 0.485 3.946<br />
Habitual 0.624 0.537 0.123 0.727 0 0.986 0.726 0.395 5.846<br />
Source: Primary data<br />
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1. PERFECTIONIST / HIGH QUALITY CONSCIOUS: Consumers who score high on this<br />
dimension give utmost importance to quality. <strong>The</strong>y search carefully and systematically for the best<br />
quality in products. <strong>The</strong> analysis revealed that the perfectionist dimension varies across age, education<br />
level and income. <strong>The</strong>re is no variation seen with respect to gender and marital status. It was found that<br />
young consumers in the age group <strong>of</strong> 15-20 years were more quality conscious (mean value=4.69) followed<br />
by the age group <strong>of</strong> 21-26 years (mean value=4.28). Respondents in their graduation level and<br />
those who have income above 30,000 score high on this dimension.<br />
2. BRAND CONSCIOUSNESS / PRICE EQUALS QUALITY: Consumers who score high on<br />
this dimension considers price as an indicator <strong>of</strong> quality. <strong>The</strong>y are oriented towards buying the more<br />
expensive, well known National brands. <strong>The</strong> brand conscious dimension varies across gender and income.<br />
No variation is evident in terms <strong>of</strong> age, marital status and education level. Male consumers were<br />
more brand conscious (mean value=3.43) than female consumers (mean value=3.08). Respondents<br />
with monthly family income more than 30,000 were more brand conscious (mean value=3.72) followed<br />
by the income group <strong>of</strong> 20,000-30,000(mean value=3.25).<br />
3. NOVELTY AND FASHION CONSCIOUS: Consumers having high score on this dimension<br />
are always driven by novelty products. <strong>The</strong>y like new and innovative products and gain excitement<br />
from seeking out new things. <strong>The</strong> analysis show significant variation across education level and income<br />
with respect to novelty dimension. No variation is seen in terms <strong>of</strong> age, gender and marital status.<br />
Young graduate consumers having monthly family income above 30,000 exhibit novelty and fashion<br />
conscious behaviour.<br />
4. RECREATIONAL AND SHOPPING CONSCIOUS: Consumers who score high on this factor<br />
considers shopping as a pleasant activity and shops just for the fun <strong>of</strong> it. <strong>The</strong> results indicate that<br />
recreational dimension varies across gender. No variation is seen with respect to age, marital status,<br />
education level and income. Young female consumers were found to be more recreational (mean value=3.34)<br />
than male consumers (mean value=3.05).<br />
5. PRICE CONSCIOUS / VALUE FOR MONEY: Consumers who score high on this dimension<br />
are very price conscious. <strong>The</strong>y look for sale prices and lower prices in general. <strong>The</strong> analysis show<br />
significant variation across gender and marital status with respect to price and value consciousness.<br />
<strong>The</strong>re exists no variation in terms <strong>of</strong> age, education level and income. Young female consumers score<br />
high on this dimension (mean value=3.46) than male consumers. However, married consumers (mean<br />
value=3.67) were significantly higher than single consumers (mean value=3.37) on price and value<br />
consciousness.<br />
6. IMPULSIVENESS / CARELESS: Consumers having high score on this dimension never<br />
plan their shopping. <strong>The</strong>y buy spontaneously and appear to be unconcerned about how much he or she<br />
spends. Impulsive behaviour does not vary across age, gender, marital status, education level and income.<br />
7. CONFUSED BY OVER CHOICE: Consumers who score high on this dimension find the<br />
market place as confusing. <strong>The</strong>y perceive too many brands and stores from which to choose and experience<br />
information overload in the market. Analysis revealed that confused by over choice dimension<br />
varies across gender and income. Female consumers were found to be mostly confused by over choice<br />
(mean value=3.84) than male consumers (mean value=3.65). Respondents having monthly family income<br />
30,000 and above score high on this dimension (mean value=3.98).<br />
8. HABITUAL / BRAND LOYAL: Consumers who score high on this dimension are very brand<br />
loyal. <strong>The</strong>y repetitively choose the same favourite brands and stores. Habitual or brand loyal dimension<br />
varies across income. No variation is seen in terms <strong>of</strong> age, gender, marital status and education<br />
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level. Young consumers who fall in the income group <strong>of</strong> 30,000 and above were found to be brand loyal<br />
consumers (mean value=3.78) followed by consumers in the income group <strong>of</strong> 20,000-30,000 (mean<br />
value=3.49).<br />
4.3 ANALYSIS OF SHOPPING STYLES OF YOUNG URBAN AND SEMI-URBAN CONSUM-<br />
ERS<br />
Table III shows variation in the shopping styles <strong>of</strong> urban and semi-urban consumers in terms <strong>of</strong> perfectionist,<br />
brand conscious, novelty conscious, recreational and habitual dimensions. <strong>The</strong> young urban<br />
consumers demonstrated a higher preponderance than semi-urban consumers in terms <strong>of</strong> quality consciousness,<br />
brand consciousness, novelty consciousness and brand loyalty whereas young semi-urban<br />
consumers were more recreational or shopping conscious than urban consumers. <strong>The</strong>re is no difference<br />
seen between urban and semi-urban respondents with respect to price and value conscious, impulsive<br />
and confused by over choice dimensions.<br />
TABLE - III<br />
ANALYSIS OF SHOPPING STYLES OF YOUNG URBAN AND SEMI-URBAN CONSUMERS<br />
Dimensions Urban mean Semi-urban mean t test result<br />
F<br />
Perfectionist 4.43 4.22 8.73<br />
Brand conscious 3.47 2.98 23.26<br />
Novelty 3.63 3.25 12.43<br />
Recreational 2.90 3.53 57.90<br />
Price & Value 3.45 3.33 2.81<br />
Impulsive 3.48 3.43 0.33<br />
Confused 3.78 3.73 0.27<br />
Habitual 3.50 3.28 4.53<br />
Source: Survey data<br />
<strong>The</strong> results are in line with the report that there exists considerable difference among urban, semiurban<br />
and rural consumers in terms <strong>of</strong> shopping behavior. A product being treated as a gift item in an<br />
urban area may be perceived as a necessity item in the semi-urban or rural area. It may happen that the<br />
urban consumer buys any item out <strong>of</strong> impulse and for rural consumer it may be a planned activity to<br />
buy the same (Singh J, 2011). <strong>The</strong> present study also attempted to understand the prominent differences<br />
in the shopping styles <strong>of</strong> urban and semi-urban consumers.<br />
5. CONCLUSION<br />
Examining shopping style differences is an important area <strong>of</strong> inquiry that lead to a better understanding<br />
<strong>of</strong> consumer behavior. <strong>The</strong> main objectives <strong>of</strong> the study were to examine the difference in shopping<br />
styles <strong>of</strong> young urban and semi-urban consumers and to analyze the consumer shopping styles across<br />
different demographic variables. This study used the consumer style inventory model, developed by<br />
Sproles and Kendall (1986), to determine the young consumer’s shopping style differences in the context<br />
<strong>of</strong> organized retailing. <strong>The</strong> changes in the consumer environment have affected traditional shopping<br />
patterns; thus consumer purchasing behaviour has also been changing over the past years. <strong>The</strong><br />
study revealed that there exist statistically significant differences in the shopping styles <strong>of</strong> urban and<br />
semi-urban consumers. Young urban consumers were found to be more quality conscious, brand conscious,<br />
novelty conscious and brand loyal when compared to semi-urban consumers whereas young<br />
semi-urban consumers manifested a greater tendency towards recreational or shopping consciousness<br />
than urban consumers.<br />
<strong>The</strong> consumer shopping styles vary across various demographic variables. It was found that young<br />
consumers between the age group <strong>of</strong> 15-20 years were more quality conscious. Young female consum-<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 6
ers were more price conscious, recreational shoppers and <strong>of</strong>ten confused by over choice. Moreover,<br />
male consumers were higher than female consumers on brand consciousness and preferred to buy the<br />
well known brands. Married consumers were more price and value conscious than single consumers.<br />
Young graduate consumers prefer best quality products and are variety seekers. Respondents who fall<br />
in the income group <strong>of</strong> 30,000 and above were found to be more quality conscious, variety seekers and<br />
brand loyal consumers.<br />
Marketers are eager to know how consumers make their decisions and therefore try to figure out the<br />
consumer psyche and various factors that influence the process. <strong>The</strong> study on consumer’s shopping<br />
style enables marketers to adapt and improve their marketing campaigns as well as strategies to penetrate<br />
more into the market.<br />
IMPLICATIONS FOR MARKETERS<br />
According to Sam Walton and Jack Welch, ‘Consumer is the source <strong>of</strong> competitive advantage and understanding<br />
consumer can be a source <strong>of</strong> redefining business and gaining sustainable advantage’. It is<br />
evident that understanding the psyche <strong>of</strong> the consumer as well as the shopping styles exhibited by them<br />
is critical to success in retailing. Youth is emerging as the major consuming class due to high disposable<br />
incomes and they are entering the world as new, independent consumers. Aspirations and desires <strong>of</strong><br />
the young generation are evolving and will undergo frequent shifts in the coming years. Hence for<br />
marketers, who always try to stay one step ahead <strong>of</strong> the competition, future growth relies on understanding<br />
and attracting young consumers. With changes that are happening at a rapid pace, a deliberate<br />
attempt from the part <strong>of</strong> marketers to understand the shopper’s dynamics in terms <strong>of</strong> shopping styles<br />
and evolve tailor-made strategies, holds the key to success in modern retailing.<br />
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British Food <strong>Journal</strong>, Vol. 112, No 2, pp 109-124.<br />
2. A.T Kearney Global Retail Development Index (2011), Retail Global Expansion: A portfolio <strong>of</strong><br />
opportunities.<br />
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Store and Shopping Preferences”, Fifth Asia Pacific Retail Conference, 2009.<br />
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www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 8
An Evaluation <strong>of</strong> MGNREGP in Ariyalur District<br />
P. Arokiasamy<br />
Assistant Pr<strong>of</strong>essor, <strong>Economics</strong> Wing, Directorate <strong>of</strong> Distance Education, Annamalai University<br />
&<br />
Dr.G. Vedanthadesikan<br />
Sr.Assistant Pr<strong>of</strong>essor, Rural Development Wing, Directorate <strong>of</strong> Distance Education, Annamalai<br />
University<br />
Introduction and Statement <strong>of</strong> the Problem<br />
<strong>The</strong> Rural Development programmes <strong>of</strong> India right from Community Development to the latest<br />
SJSY (2003) did not give the direct benefit to the Rural Poor. Hence, the Government has decided to<br />
amend the NREG Act in the year 2004. After amending this act , it has implemented in the name <strong>of</strong><br />
National Rural Employment Guarantee Programme and later modified as Mahathma Gandhi National<br />
Rural Employment Guarantee Programme (MGNREGP). Whether the programme has benefitted the<br />
rural poor by means <strong>of</strong> employment and income generation? Before probing it, it is necessary to<br />
evaluate the programme by means finding out the awareness about the programme in the midst <strong>of</strong> the<br />
beneficiaries.<br />
Selection <strong>of</strong> Study Area & Samples<br />
Ariyalur District is considered as one <strong>of</strong> the backward district <strong>of</strong> Tamil Nadu. No evaluator<br />
studies on MGNREGP is conducted so far. Hence, it decided to take up the study here. Out <strong>of</strong> six<br />
blocks, three blocks were selected randomly. 150 respondents, 50 from each block (the registered<br />
people <strong>of</strong> MGNREGP) is selected randomly. Simple percentage analysis is used in this study.<br />
Table 1 Basic information about the Employment Guarantee Programme<br />
Educational<br />
Level<br />
Awareness about the programme Total Grand<br />
Total<br />
Kallathur Ayyur Govindapuram<br />
Yes No Yes No Yes No Yes No<br />
Illiterate 7<br />
(26.93)<br />
10<br />
(41.67)<br />
5<br />
(35.71)<br />
14<br />
(38.89)<br />
3<br />
(27.27)<br />
17<br />
(43.59)<br />
15<br />
(29.41)<br />
41<br />
(41.41)<br />
56<br />
(37.33)<br />
Primary 10<br />
(38.47)<br />
4<br />
(16.67)<br />
2<br />
(14.29)<br />
10<br />
(27.78)<br />
2<br />
(18.18)<br />
12<br />
(30.77)<br />
14<br />
(27.45)<br />
26<br />
(26.26)<br />
40<br />
(26.67)<br />
Middle 6<br />
(23.08)<br />
6<br />
(25.00)<br />
4<br />
(28.57)<br />
9<br />
(25.00)<br />
2<br />
(18.18)<br />
7<br />
(17.95)<br />
12<br />
(23.53)<br />
22<br />
(22.22)<br />
34<br />
(22.67)<br />
High 2<br />
(7.69)<br />
2<br />
(8.33)<br />
1<br />
(7.14)<br />
3<br />
(8.33)<br />
4<br />
(36.36)<br />
1<br />
(2.56)<br />
7<br />
(13.73)<br />
6<br />
(6.06)<br />
13<br />
(8.67)<br />
H.S.C 1 2 2 0 0 2 3 4 07<br />
(3.83) (8.33) (14.29)<br />
Total 26 24 14<br />
(100) (100) (100)<br />
Source: computed<br />
Figures in parentheses represent percentage<br />
36<br />
(100)<br />
11<br />
(100)<br />
(5.12)<br />
39<br />
(100)<br />
(5.88)<br />
51<br />
(100)<br />
(4.04)<br />
99<br />
(100)<br />
(4.66)<br />
150<br />
(100)<br />
One should know about the basic information about the programme that gives benefit to the needy.<br />
Here, a question, what is the basic objective <strong>of</strong> the programme is raised. Actually, the basic objective<br />
<strong>of</strong> the programme is to ensure 100 days employment. Out <strong>of</strong> 150 respondents 99(66%) did not know<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 9
asic information about the MGNREGA. Only 51(34%) respondents know basic information about<br />
this programme.<br />
Table 2 Awareness about the basis <strong>of</strong> act on this programme is implemented<br />
Educational<br />
Level<br />
Awareness about the basis <strong>of</strong> act, this programme is<br />
implemented<br />
Total<br />
Kallathur Ayyur Govindapuram<br />
Yes No Yes No Yes No Yes No<br />
Illiterate - 17<br />
(42.5)<br />
2<br />
(15.38)<br />
17<br />
(45.95)<br />
4<br />
(36.36)<br />
16<br />
(41.03)<br />
6<br />
(17.65)<br />
50<br />
(43.10)<br />
Primary - 14 2 10 2 12 4 36<br />
(35.00) (15.38) (27.02) (18.18) (30.77) (11.76) (31.03)<br />
Middle 3 9 3 10 1 8 7 27<br />
(30.00) (22.5) (23.08) (27.02) (9.09) (20.51) (20.59) (23.28)<br />
High 4 0 4 4 4 1 12 1<br />
(40.00)<br />
(30.76) (10.81) (36.36) (2.56) (35.29) (0.86)<br />
H.S.C 3 0 2 0 0 2 5 2<br />
(30.00)<br />
(15.38)<br />
(5.12) (14.70) (1.72)<br />
Total 10 40 13 37 11 39 34 116<br />
(100) (100) (100) (100) (100) (100) (100) (100)<br />
Source: computed<br />
Figures in parentheses represent percentage<br />
Grand<br />
Total<br />
56<br />
(37.33)<br />
40<br />
(26.67)<br />
34<br />
(22.67)<br />
13<br />
(8.67)<br />
07<br />
(4.66)<br />
150<br />
(100)<br />
For any act, there should be certain basic reasons. Likewise, in this study also, a question is raised<br />
what are the basic reasons <strong>of</strong> the act. Or what made the government to enact this amendment. <strong>The</strong><br />
rural development programmes implemented right from 1950 up to 2004 failed to reach the poor. That<br />
is why the government enacted the NREG Act. Out <strong>of</strong> 150 respondents, 116 (77.34%) do not know the<br />
reasons for enacting this law.<br />
Without knowing the reasons, it is not possible to obtain the full benefits.<br />
Table 3 Registration under MGNREGA<br />
Educational Level Awareness about the registration Total Grand Total<br />
Kallathur Ayyur Govindapuram<br />
Yes No Yes No Yes No Yes No<br />
Illiterate 17 - 19 - 20 - 56 - 56<br />
Primary 14 - 12 - 14 - 40 - 40<br />
Middle 12 - 13 - 9 - 34 - 34<br />
High 4 - 4 - 5 - 13 - 13<br />
H.S.C 3 - 2 - 2 - 07 - 07<br />
Total 50 - 50 - 50 - 150 - 150<br />
Source: computed<br />
To get the employment under this act, one should get registered and get the job card. In the study<br />
villages, all the 150 respondents have registered. This is a good sign that atleast they got the awareness<br />
to register.<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 10
Before employment<br />
After employment<br />
Before employment<br />
After employment<br />
Before employment<br />
After employment<br />
Before employment<br />
After employment<br />
Educational<br />
level<br />
Illiterate<br />
Primary<br />
Middle<br />
High<br />
H.S.C<br />
Total<br />
Table 4 Amount <strong>of</strong> wage getting for a day<br />
Awareness about the programme<br />
Kallathur Ayyur Govindapuram<br />
Total<br />
Rs.80 Rs.100 Rs.80 Rs.100 Rs.80 Rs.100 Rs.80 Rs.100<br />
6 11 6 13 2 18 14 42<br />
(42.86) (30.56) (42.85) (36.11) (4.44) (43.9) (37.84) (37.17)<br />
6 8 3 9 3 11 12 28<br />
(42.86) (22.22) (21.43) (25) (6.66) (26.83) (32.43) (24.78)<br />
1 11 4 9 2 7 7 27<br />
(7.14) (30.56) (28.57) (25) (4.44) (17.07) (18.92) (23.89)<br />
0 4 1 3 2 3 3 10<br />
(11.11) (7.14) (8.33) (4.44) (7.32) (8.11) (8.85)<br />
1 2<br />
2<br />
2 1 6<br />
0<br />
0<br />
(7.14) (5.56)<br />
(5.56) (4.88) (2.70) (0.88)<br />
14 36 14 36 9 41 37 113<br />
(100) (100) (100) (100) (100) (100) (100) (100)<br />
Source: computed<br />
Figures in parentheses represent percentage<br />
Grand<br />
Total<br />
56<br />
(37.33)<br />
40<br />
(26.67)<br />
34<br />
(22.67)<br />
13<br />
(8.67)<br />
07<br />
(4.66)<br />
150<br />
(100)<br />
<strong>The</strong> MGNREGA is to provide equal wage to both gender. Further, it ensures, the minimum wage<br />
according to 2005 Index, as per the act, the minimum wage should be Rs.100/- per day. Here, out <strong>of</strong><br />
150 respondents, 113(75.33%) said that they are getting the wage <strong>of</strong> Rs.100/- per day. Whereas,<br />
37(24.67%) said they got Rs.80/- per day. This should be probed, that is it should be verified with the<br />
records <strong>of</strong> the <strong>of</strong>ficials for further action.<br />
Educational<br />
level<br />
Table 5 Awareness about the opening <strong>of</strong> bank account<br />
Awareness about the bank account<br />
Kallathur Ayyur Govindapuram Total<br />
Grand<br />
Total<br />
Illiterate 7<br />
(53.85)<br />
10<br />
(27.03)<br />
6<br />
(40)<br />
Primary 0 14 2<br />
(37.84) (13.33)<br />
Middle 0 12 3<br />
(32.43) (20)<br />
High 3 1 2<br />
(23.08) (2.7) (13.33)<br />
H.S.C 3 0 2<br />
(23.08) (13.33)<br />
Total 13 37 15<br />
(100) (100) (100)<br />
Source: computed<br />
Figures in parentheses represent percentage<br />
13<br />
(37.14)<br />
2<br />
(15.38)<br />
10 3<br />
(28.57) (23.08)<br />
10 2<br />
(28.57) (15.38)<br />
2 4<br />
(5.71) (30.77)<br />
0 2<br />
(15.38)<br />
35 13<br />
(100) (100)<br />
18 15<br />
(48.65) (36.59)<br />
11 5<br />
(29.73) (12.19)<br />
7 5<br />
(18.92) (12.19)<br />
1 9<br />
(2.70) (21.95)<br />
- 7<br />
(17.07)<br />
37 41<br />
(100) (100)<br />
41<br />
(37.61)<br />
56<br />
(37.33)<br />
35 40<br />
(32.11) (26.67)<br />
29 34<br />
(26.61) (22.67)<br />
4 13<br />
(3.67) (8.67)<br />
- 07<br />
(4.66)<br />
109 150<br />
(100) (100)<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 11
<strong>The</strong> MGNREG act rightly pointed out that the wage should be credited in the individual’s account. For<br />
that, the beneficiary should open an account in a bank and the details should also be intimated to the<br />
authorities concerned. In this study, 109(72.67%) have opened their account only after getting<br />
employment through MGNREGP. This act made them to open an account for their saving habit.<br />
Educational<br />
Level<br />
Illiterate<br />
Primary<br />
Middle<br />
High<br />
Table 6 Awareness about the working hours<br />
Awareness about the registration<br />
Kallathur Ayyur Govindapuram<br />
Total<br />
Yes No Yes No Yes No Yes No<br />
8 9 8 11 7 13 23 33<br />
(24.24) (52.94) (23.53) (68.75) (24.14) (61.90) (23.96) (61.11)<br />
12 2 10 2 9 5 31 9<br />
(36.36) (11.76) (29.41) (12.5) (31.03) (23.81) (32.29) (16.67)<br />
6 6 10 3 7 2 23 1<br />
(18.18) (35.29) (29.41) (18.75) (24.14) (9.52) (23.96) (20.37)<br />
4<br />
(12.12)<br />
0<br />
4<br />
(11.76)<br />
3<br />
2<br />
H.S.C<br />
0<br />
(9.09)<br />
(5.88)<br />
33 17 34<br />
Total<br />
(100) (100) (100)<br />
Source: computed<br />
Figures in parentheses represent percentage<br />
0<br />
0<br />
16<br />
(100)<br />
4<br />
(13.79)<br />
2<br />
(6.89)<br />
29<br />
(100)<br />
1<br />
(4.76)<br />
0<br />
21<br />
(100)<br />
12<br />
(12.50)<br />
7<br />
(7.29)<br />
96<br />
(100)<br />
1<br />
(20.37)<br />
-<br />
54<br />
(100)<br />
Grand<br />
total<br />
56<br />
(37.33)<br />
40<br />
(26.67)<br />
34<br />
(22.67)<br />
13<br />
(8.67)<br />
07<br />
(4.66)<br />
150<br />
(100)<br />
According to labor act, a labor should work for 8 hours per day. <strong>The</strong> NREGA also emphasize the<br />
same. <strong>The</strong> labor should not be exploited so as to avoid such exploitation the beneficiary should be<br />
aware about the working hours. Here, out <strong>of</strong> 150 respondents only 96 (64%) <strong>of</strong> them are aware about<br />
the hours <strong>of</strong> work.<br />
Table. 7 Participation in the planning <strong>of</strong> MGNREGP<br />
Educational<br />
Level<br />
Participation in the planning <strong>of</strong> MGNREGP Total Grand<br />
total<br />
Kallathur Ayyur Govindapuram<br />
Yes No Yes No Yes No Yes No<br />
Illiterate 2<br />
(40)<br />
15<br />
(33.33)<br />
2<br />
(28.57)<br />
17<br />
(39.53)<br />
1<br />
(20)<br />
19<br />
(42.23)<br />
5<br />
(29.41)<br />
51<br />
(38.34)<br />
56<br />
(37.33)<br />
Primary 1<br />
(20)<br />
13<br />
(28.89)<br />
1<br />
(14.29)<br />
11<br />
(25.58)<br />
1<br />
(20)<br />
13<br />
(28.88)<br />
3<br />
(17.65)<br />
37<br />
(27.32)<br />
40<br />
(26.67)<br />
Middle 1<br />
(20)<br />
11<br />
(24.44)<br />
1<br />
(14.29)<br />
12<br />
(27.91)<br />
- 09<br />
(20)<br />
2<br />
(11.76)<br />
32<br />
(24.56)<br />
34<br />
(22.67)<br />
High - 4<br />
(8.89)<br />
2<br />
(28.57)<br />
2<br />
(4.65)<br />
2<br />
(40)<br />
3<br />
(6.67)<br />
4<br />
(23.53)<br />
9<br />
(6.77)<br />
13<br />
(8.67)<br />
H.S.C 1<br />
(20)<br />
2<br />
(4.44)<br />
1<br />
(14.28)<br />
1<br />
(2.32)<br />
1<br />
(20)<br />
1<br />
(2.22)<br />
3<br />
(17.64)<br />
4<br />
(3)<br />
07<br />
(4.66)<br />
Total 5<br />
(100)<br />
45<br />
(100)<br />
7<br />
(100)<br />
43<br />
(100)<br />
5<br />
(100)<br />
45<br />
(100)<br />
17<br />
(100)<br />
133<br />
(100)<br />
150<br />
(100)<br />
Source: computed<br />
Figures in parentheses represent percentage<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 12
In any rural development prgramme the people are the beneficiaries. Hence it is necessary to plan the<br />
programme that will make them to participate. In the context <strong>of</strong> MGNREGP, the <strong>of</strong>ficials should<br />
include the people in the process <strong>of</strong> MGNREGP planning process. What are the activities should be<br />
taken under MGNREGP should be decided by the people <strong>of</strong> the village. If it taken in such way<br />
automatically the involvement will be created and the programme will be successful one both for the<br />
village concerned and people. In the study area out <strong>of</strong> 150 respondents 133 (88.67%) <strong>of</strong> the<br />
respondents and in all the three villages more than 90% <strong>of</strong> the respondents opined that they are not<br />
included in the planning process <strong>of</strong> MGNREGP.<br />
Table 8 Conducting <strong>of</strong> Social Audit<br />
Educational<br />
Level<br />
Participation in the planning <strong>of</strong> MGNREGP Total Grand<br />
total<br />
Kallathur Ayyur Govindapuram<br />
Yes No Yes No Yes No Yes No<br />
Illiterate 2<br />
(25)<br />
20<br />
(41.67)<br />
2<br />
(28.57)<br />
15<br />
(35.71)<br />
1<br />
(20)<br />
16<br />
(40)<br />
5<br />
(25)<br />
51<br />
(39.23)<br />
56<br />
(37.33)<br />
Primary 1<br />
(12.5)<br />
12<br />
(25)<br />
1<br />
(14.28)<br />
11<br />
(26.17)<br />
1<br />
(20)<br />
14<br />
(35)<br />
3<br />
(15)<br />
37<br />
(28.46)<br />
40<br />
(26.67)<br />
Middle 1<br />
(37.5)<br />
12<br />
(25)<br />
1<br />
(14.28)<br />
12<br />
(28.57)<br />
- 08<br />
(20)<br />
2<br />
(10)<br />
32<br />
(24.62)<br />
34<br />
(22.67)<br />
High 0 0 2<br />
(28.57)<br />
2<br />
(4.76)<br />
2<br />
(40)<br />
2<br />
(5)<br />
7<br />
(35)<br />
6<br />
(4.62)<br />
13<br />
(8.67)<br />
H.S.C 0 2<br />
(4.17)<br />
1<br />
(14.28)<br />
3<br />
(4.76)<br />
1<br />
(20)<br />
- 3<br />
(15)<br />
4<br />
(3.08)<br />
07<br />
(4.66)<br />
Total 4<br />
(100)<br />
46<br />
(100)<br />
7<br />
(100)<br />
43<br />
(100)<br />
5<br />
(100)<br />
45<br />
(100)<br />
20<br />
(100)<br />
130<br />
(100)<br />
150<br />
(100)<br />
Source: computed<br />
Figures in parentheses represent percentage<br />
As per the NREG Act, Social Audit should be conducted to show the transparency in the<br />
programme. Because people’s money is involved in this programme. Hence, the implementing<br />
authority should take up the accountability and responsibility. If the social audit is not conducted, the<br />
people have the right to go to the court <strong>of</strong> law and the people concerned are liable to punish.<br />
Unfortunately, in the study are out <strong>of</strong> 15 respondents, 130 (86.66%) respondents said that the social<br />
audit is not all conducted. In all the selected villages more than 90 per cent <strong>of</strong> them said that the social<br />
audit is not at all conducted.<br />
Table 9 Provision <strong>of</strong> Water facilities and resting place<br />
Educational<br />
Level<br />
Provision <strong>of</strong> Water facilities and resting place Total Grand<br />
total<br />
Kallathur Ayyur Govindapuram<br />
Yes No Yes No Yes No Yes No<br />
Illiterate 06<br />
(31.58)<br />
11<br />
(35.48)<br />
07<br />
(43.75)<br />
12<br />
(35.29)<br />
08<br />
(27.59)<br />
12<br />
(57.14)<br />
21<br />
(32.81)<br />
35<br />
(40.69)<br />
56<br />
(37.33)<br />
Primary 06<br />
(31.58)<br />
08<br />
(25.81)<br />
03<br />
(18.75)<br />
09<br />
(26.47)<br />
11<br />
(37.93)<br />
03<br />
(14.28)<br />
20<br />
(31.25)<br />
20<br />
(23.25)<br />
40<br />
(26.67)<br />
Middle 05<br />
(26.32)<br />
07<br />
(22.58)<br />
04<br />
(25)<br />
09<br />
(26.47)<br />
05<br />
(17.24)<br />
04<br />
(19.05)<br />
14<br />
(21.88)<br />
20<br />
(23.25)<br />
34<br />
(22.67)<br />
High 01<br />
(5.26)<br />
03<br />
(9.68)<br />
01<br />
(6.25)<br />
03<br />
(8.82)<br />
04<br />
(13.79)<br />
01<br />
(4.76)<br />
06<br />
(9.38)<br />
07<br />
(8.14)<br />
13<br />
(8.67)<br />
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H.S.C 01<br />
(5.26)<br />
02<br />
(6.45)<br />
01<br />
(6.25)<br />
Total 19 31 16<br />
(100) (100) (100)<br />
Source: computed<br />
Figures in parentheses represent percentage<br />
01<br />
(2.94)<br />
34<br />
(100)<br />
01<br />
(3.45)<br />
29<br />
(100)<br />
01<br />
(4.76)<br />
21<br />
(100)<br />
03<br />
(4.68)<br />
64<br />
(100)<br />
04<br />
(4.65)s<br />
86<br />
(100)<br />
07<br />
(4.66)<br />
150<br />
(100)<br />
Keeping the welfare <strong>of</strong> the respondents, the NREG Act pointed out in the area where the MGNREGP<br />
is going on the implementing authority should make necessary arrangements to keep good drinking<br />
water and resting place should be provided during the lunch time. Out <strong>of</strong> 150 respondents (42.67%)<br />
said the facilities are available and 86 (57.33%) opined that these facilities are not available. When<br />
researcher visited the field and he found that water facilities are available since it is much necessary<br />
and the resting facility was also available but with a small thatched ro<strong>of</strong>. But the respondents felt that it<br />
is insufficient for all the workers.<br />
Table 10 Getting <strong>of</strong> employment at the village itself<br />
Educational Getting <strong>of</strong> employment at the village itself Total Grand<br />
Level Kallathur Ayyur Govindapuram<br />
total<br />
Yes No Yes No Yes No Yes No<br />
Illiterate 17 - 19 20 56 56<br />
(37.33)<br />
Primary 14 12 14 40 40<br />
(26.67)<br />
Middle 12 13 09 34 34<br />
(22.67)<br />
High 04 04 05 13 13<br />
(8.67)<br />
H.S.C 03 02 02 7 07<br />
(4.66)<br />
Total 50 50 50 150 150<br />
(100)<br />
Source: computed<br />
In the context <strong>of</strong> getting employment all the 150 respondents said that they are able to get the<br />
employment through MGNREGP at their villages itself. Since, Ariyalur is considered as the backward<br />
district in certain aspects and the works under MGNREGP is necessary for the villages <strong>of</strong> this District,<br />
the people are able to get the employment at their villages itself.<br />
Educational<br />
Level<br />
Illiterate<br />
Primary<br />
Middle<br />
High<br />
Table 11 Employment days acquired by the respondents<br />
Days <strong>of</strong> employment obtained by the respondents<br />
Total<br />
Kallathur Ayyur Govindapuram<br />
50-75 76-100 50-75 76-100 50-75 76-100 50-75 76-100<br />
10 07 10 9 11 09 31 25<br />
(35.71) (31.82) (41.67) (34.12) (37.93) (42.85) (36.23) (36.23)<br />
0 06 05 07 10 04 23 17<br />
(28.57) (27.27) (20.83) (26.92) (34.48) (19.04) (24.63) (24.64)<br />
07 05 07 06 05 04 19 15<br />
(25) (22.73) (29.17) (23.08) (17.24) (9.52) (21.74) (21.74)<br />
02 02 02 02 03 02 07 06<br />
(7.14) (9.09) (8.33) (7.69) (10.34) (9.52) (8.70) (8.69)<br />
Grand<br />
total<br />
56<br />
(37.33)<br />
40<br />
(26.67)<br />
34<br />
(22.67)<br />
13<br />
(8.67)<br />
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01 02<br />
02<br />
02 01 06 07<br />
H.S.C<br />
0<br />
0<br />
(3.57) (9.09)<br />
(7.69)<br />
(9.52) (1.23) (8.69) (4.66)<br />
28 22 24 26 29 21 81 69 150<br />
Total<br />
(100) (100) (100) (100) (100) (100) (100) (100) (100)<br />
Source: computed<br />
Figures in parentheses represent percentage<br />
<strong>The</strong> main aim <strong>of</strong> the programme is to provide minimum <strong>of</strong> 100 days guaranteed employment to the<br />
people who have demanded and registered themselves for getting employment. In the study area out<br />
<strong>of</strong> 150 respondents 81 (56.67%) got employment ranging from 50 – 75 days. Most <strong>of</strong> the employees<br />
got employment for 70 + days and 69 (43.33%) got employment ranging from 75-100 days. In the<br />
context <strong>of</strong> three villages also 28 (56%), 24(48%) and 29 (58%) got maximum <strong>of</strong> 75 days <strong>of</strong><br />
employment and the remaining respondents got 75+ days <strong>of</strong> employment.<br />
Table 12 Awareness about the unemployment allowance<br />
Educational Level Awareness about the unemployment allowance Total Grand total<br />
Kallathur Ayyur Govindapuram<br />
Yes No Yes No Yes No Yes No<br />
Illiterate 17 - 19 - 20 - 56 - 56<br />
(37.33)<br />
Primary 14 - 12 - 14 - 40 - 40<br />
(26.67)<br />
Middle 12 - 13 - 09 - 34 - 34<br />
(22.67)<br />
High 04 - 04 - 05 - 13 - 13<br />
(8.67)<br />
H.S.C 03 - 02 - 02 - 7 - 07<br />
(4.66)<br />
Total 50 - 50 - 50 - 150 - 150<br />
(100)<br />
Source: computed<br />
To ensure the livelihood <strong>of</strong> the people, the Act pointed out that during the non availability <strong>of</strong><br />
employment through MGNREGP, the implementing authority should provide unemployment<br />
allowance for the registered beneficiaries. Most <strong>of</strong> the studies on NREGP found that the people do not<br />
have awareness regarding the unemployment allowance. <strong>The</strong> unemployment fund is being misutilised<br />
and misappropriated by the <strong>of</strong>ficials. But in the study area all the 150 respondents have an awareness<br />
regarading the provision <strong>of</strong> unemployment allowance.<br />
Educational<br />
Level<br />
Table 13 Getting Employment through MGNREGP during the agricultural season<br />
Do you get employment during the agricultural season Total Grand<br />
total<br />
Kallathur Ayyur Govindapuram<br />
Yes No Yes No Yes No Yes No<br />
Illiterate 17 - 19 - 20 - 56 - 56<br />
(37.33)<br />
Primary 14 - 12 - 14 - 40 - 40<br />
(26.67)<br />
Middle 12 - 13 - 09 - 34 - 34<br />
(22.67)<br />
High 04 - 04 - 05 - 13 - 13<br />
(8.67)<br />
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H.S.C 03 - 02 - 02 - 7 - 07<br />
(4.66)<br />
Total 50 - 50 - 50 - 150 - 150<br />
(100)<br />
Source: computed<br />
<strong>The</strong> NREG Act strictly pointed out that during the agricultural season the work <strong>of</strong> MGNREGP should<br />
not be taken. It should be clearly made known to the respondents by the implementing authority. But<br />
in the study areas all the 150 respondents said that they are getting employment even during the<br />
agricultural season. It is not only against the Act, such thing will hamper the agricultural activities.<br />
Table 14 Do you know during the agricultural season MGNREGP should not be implemented<br />
Educational<br />
Level<br />
Do you know during the agricultural season MGNREGP<br />
should not be implemented<br />
Total Grand<br />
total<br />
Kallathur Ayyur Govindapuram<br />
Yes No Yes No Yes No Yes No<br />
Illiterate 17 - 19 - 20 - 56 - 56<br />
(37.33)<br />
Primary 14 - 12 - 14 - 40 - 40<br />
(26.67)<br />
Middle 12 - 13 - 09 - 34 - 34<br />
(22.67)<br />
High 04 - 04 - 05 - 13 - 13<br />
(8.67)<br />
H.S.C 03 - 02 - 02 - 7 - 07<br />
(4.66)<br />
Total 50 - 50 - 50 - 150 - 150<br />
(100)<br />
Source: computed<br />
It is heartening to note that all the respondents <strong>of</strong> the study villages replied that they know well that the<br />
MGNREGP should not be implemented during agricultural season. But due to the pressure given by<br />
the authorities they have to assemble on the spot where the MGNREGP is going on. More over people<br />
now feel that instead <strong>of</strong> working hard in the agricultural field it is better to keep silent in the<br />
MGNREGP site and get the wages without any physical work.<br />
Findings<br />
1. 66 per cent <strong>of</strong> the respondents do not know about the basic information about the MGNREGP.<br />
2. Almost 77 per cent <strong>of</strong> the respondents do not know on what basis this programme is<br />
implemented.<br />
3. 50 per cent <strong>of</strong> the respondents aware about this Act that guarantees 100 days <strong>of</strong> employment.<br />
4. All the respondents are aware about the registration that leads to guaranteed employment.<br />
5. This programme made the respondents to open a bank account.<br />
6. 64 per cent <strong>of</strong> them are aware about the working hours.<br />
7. 89 per cent <strong>of</strong> them are not participating in the planning process <strong>of</strong> MGNREGP.<br />
8. 87 per cent <strong>of</strong> the respondents opined that the Social Audit is not at all conducted. Further they<br />
stated that even if it is conducted, it is conducted with very few members.<br />
9. 57 per cent <strong>of</strong> the respondents felt that the water and resting facilities are not provided.<br />
10. All the 150 respondents are getting employment at their village itself.<br />
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11. More than 55 per cent <strong>of</strong> the respondents used to get 50-75 days <strong>of</strong> employment.<br />
12. All the 150 respondents are aware about the unemployment allowance.<br />
13. All the 150 respondents said that they get employment through MGNREGP even during the<br />
time <strong>of</strong> agricultural season.<br />
14. All the 150 respondents know pretty well that the MGNREGP should not be implemented<br />
during the agricultural season.<br />
Suggestions<br />
1. Before the implementation <strong>of</strong> MGNREGP, the people <strong>of</strong> the area should be explained about the<br />
Act completely.<br />
2. Training should be given to the people’s representatives about the Act.<br />
3. What are the works needed through MGNREGP that should be ascertained from the public.<br />
4. Planning under MGNREGP should not be from the top level.<br />
5. On the basis <strong>of</strong> the need <strong>of</strong> the village the plan <strong>of</strong> MGNREGP should be formulated.<br />
6. Homogenous plan should neither be formulated nor implemented.<br />
7. Works and accounts should be made transparent.<br />
8. Social Audit should be conducted. It should be monitored by the team <strong>of</strong> other villages.<br />
9. An NGO should be involved to monitor and supervise the programme.<br />
10. What are all the works undertaken that should be recorded for financial claim.<br />
11. Records must be transparent.<br />
References<br />
Aiyar, Y. & S. Samji (2009): Guaranteeing Good Governance: Understanding the Effectiveness <strong>of</strong><br />
Accountability Mechanism in NREGA ; NREGA e-Knowledge Network; UNDP, New Delhi.<br />
Bagchi, K.K : Good Governance and Sustainable Local Development: A Case Study <strong>of</strong> GPs in West<br />
Bengal; (www.ignou.ac.in) Governance for Sustainable Human Development, A UNDP policy paper<br />
UNDP 1997.<br />
Islam, Nazrul Md (2004): Decentralised Governance Transparency and Accountability:Empirical<br />
Evidence from West Bengal; ISEC Working Paper144; Institute for Social and Economic Change.<br />
Maitreesh Ghatak and Maitreya Ghatak: “Recent Reforms in the Panchayat System in West Bengal:<br />
Toward Greater Participatory Governance?”; Economic and Political Weekly, Vol. 37, No. 1 (Jan. 5-<br />
11, 2002).<br />
North. Douglass C. (2005) Understanding the Process <strong>of</strong> Economic Change (Princeton, NJ: Princeton<br />
University Press, 2005).<br />
NREGA Sahayika (in Bengali) 2008: State Institute <strong>of</strong> Panchayat and Rural Development, Panchayats<br />
andRural Development Department, GoWB.Panchayati Raj (2008): Panchayats and Rural<br />
Development Department, Government <strong>of</strong>West Bengal, May 2008.<br />
Rao; V.M (2007): ‘Making Safety Nets Effective for Hardcore poor’; Economic and Political Weekly;<br />
August 18, 2007.<br />
Report: “<strong>The</strong> Appraisal <strong>of</strong> Procedures and Processes <strong>of</strong> NREGA in ORISSA: A case study <strong>of</strong> Balasore<br />
and Mayurbhanj District”(2009): HSS Department, IIT Kharagpur, Sponsored by MoRD, Govt. <strong>of</strong><br />
India<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 17
Blue Ocean Strategy and the dynamic nature <strong>of</strong> business strategies: an empirical<br />
study conducted on the renewable and telecommunication sector <strong>of</strong> Bangladesh.<br />
Md. Irfanuzzaman Khan, Senior Lecturer, School <strong>of</strong> <strong>Business</strong>, Bangladesh.<br />
Abstract<br />
This paper presents a methodical and critical analysis <strong>of</strong> the key elements regarding the strategic<br />
management literature and the Blue Ocean strategy. It provides the direction for the development <strong>of</strong><br />
two sets <strong>of</strong> hypotheses which are redefined to formulate a “dynamic strategy” framework. <strong>The</strong> primary<br />
theme <strong>of</strong> the conceptual framework is to identify the main components <strong>of</strong> strategy that has<br />
continuously evolved over the years and establish the principle that business organisations have to<br />
develop strategies according to the vibrant nature <strong>of</strong> the external environment through a dynamic<br />
strategy process.<br />
Empirical research on the renewable energy and telecommunication sector <strong>of</strong> Bangladesh is conducted<br />
through a collection <strong>of</strong> research methods to gather sufficient evidence and knowledge about the<br />
potential <strong>of</strong> the Blue Ocean Strategy. Additionally, examples <strong>of</strong> Google and Apple are analysed as<br />
case studies for secondary research to strengthen the foundation <strong>of</strong> the research. Primary data’s<br />
through surveys and questionnaires are systematically tested using analytical tools to maintain the<br />
relationship between theories, hypotheses and the research findings. <strong>The</strong> paper concludes by answering<br />
the research questions and objectives, addressing the research limitations and summarizing the<br />
research findings to recommend the possibilities <strong>of</strong> future research.<br />
Introduction<br />
Strategies over the years have evolved with the changes <strong>of</strong> economies and industrialization. However,<br />
the basic definition <strong>of</strong> strategy can be outlined as: “the continuous process <strong>of</strong> evaluation and control <strong>of</strong><br />
the business, monitoring its competitors to set objectives and strategies, to compete with potential<br />
threats to the business and re-examining each strategy to evaluate any shortcomings due to changing<br />
global economy, business environment, climate, technology, new competitors and political influences,<br />
and modify strategic policies when necessary” (Lamb, 1984).<br />
Nevertheless, there is still no consensus and evidence <strong>of</strong> a concrete definition or outline to business<br />
strategy at this time. <strong>The</strong>re are many authors including Chandler (1962), Ans<strong>of</strong>f (1965), Mintzberg<br />
(1990) and Porter (1985), whose judgments <strong>of</strong> strategy, are still considered as the pillars <strong>of</strong> strategic<br />
management. However, each <strong>of</strong> the authors has criticized each other based on several important<br />
grounds. Thus, this paper goes on to explore the newest development <strong>of</strong> strategic management to<br />
enhance a wider view: <strong>The</strong> Blue Ocean Strategy.<br />
<strong>The</strong> basic philosophy <strong>of</strong> the Blue Ocean Strategy is for companies to come out <strong>of</strong> the eternal<br />
competition in competitive markets by creating new demand via a set <strong>of</strong> principles, analytical tools and<br />
frameworks. <strong>The</strong> methods primarily focuses on reorganizing the traditional approaches and reshaping<br />
products and strategies by targeting non-users and thus creating new demand instead <strong>of</strong> competing for<br />
existing demand (Kim and Mauborgne, 2005).<br />
However, while Kim and Mauborgne (2005) strive to create uncontested market space, there are few<br />
success stories <strong>of</strong> companies that have gained success by applying these theories in the practical world.<br />
In addition, focusing on innovation as the foundation <strong>of</strong> the Blue Ocean Strategy, authors Kim and<br />
Mauborgne (2005) failed to address several important points, for example, how to avoid imitations<br />
when rivals will begin to copy a company’s product (Pollard, Wayne E. 2005).<br />
Although, there are previous researches conducted on the principles <strong>of</strong> strategic management, this<br />
paper aims to determine the dominant factors that changed strategy concepts over time from the<br />
theoretical viewpoint. <strong>The</strong> critical analysis will enable to generate hypotheses out <strong>of</strong> the key<br />
developments, providing the room to devise a conceptual framework based on the assumption:<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 18
“strategy is a dynamic process <strong>of</strong> continuous advancement, corresponding to the rapid growth <strong>of</strong><br />
technology, innovation, ideas and organisational capabilities”.<br />
Statement <strong>of</strong> the problem<br />
<strong>The</strong> renewable energy and telecommunication industry <strong>of</strong> Bangladesh are used to identify the practical<br />
implications <strong>of</strong> the research through critical examination <strong>of</strong> strategic principles because <strong>of</strong> the viability<br />
and correlation <strong>of</strong> the data with the research topic and objectives. <strong>The</strong> justification for choosing the<br />
two industries derives from the idea that firms’ competition is mainly based on two criteria’s:<br />
developing and marketing innovation and surviving on a rapidly changing business and technological<br />
environment. <strong>The</strong> research outcome will confirm the evolving nature <strong>of</strong> strategic management<br />
principles and will promote the need <strong>of</strong> a dynamic process <strong>of</strong> strategizing. <strong>Business</strong> corporations will<br />
be benefited by understanding the factors related with the BOS and the rationale behind its<br />
implementation.<br />
<strong>Research</strong> Questions<br />
(1) How did the concept <strong>of</strong> strategy evolve as the means <strong>of</strong> achieving competitive advantage?<br />
(2) What are the true characteristics <strong>of</strong> a competitive strategy and what are its limitations?<br />
(3) To what extent strategy can be considered as a dynamic process rather than a prescriptive and<br />
descriptive process?<br />
(4) What are the complications that might arise for practically developing a blue ocean strategy?<br />
(5) Is a dynamic strategy process the solution to keep up with the constraints <strong>of</strong> the developing world?<br />
<strong>Research</strong> Limitations<br />
This research has been conducted during a scheduled and short time and certain limitations restricted<br />
the boundaries <strong>of</strong> the paper. Firstly, this paper presents the views from a short listed category <strong>of</strong><br />
individuals, as the total population could not be surveyed due to time constraints. Secondly, only local<br />
country respondents took part in the survey. Finally, the secondary information was collected by<br />
reviewing online journals, which can be old and unreliable for the current research problem.<br />
Literature Review<br />
Many <strong>of</strong> the great scholars and practitioners <strong>of</strong> the past and recent times, beginning with Mintzberg<br />
(1975), Porter (1985), Henderson and Hinterhuber (1989), Barney (1991), Cool Costa (2002) has<br />
mentioned, “the primary question in the field <strong>of</strong> strategic management field is how can companies<br />
achieve and sustain competitive advantage”. Competitive advantage may be classified as belonging to<br />
two distinctive categories. <strong>The</strong> resource based view- which emphasizes the significance and benefits<br />
<strong>of</strong> resources and capabilities a company has, (e.g. innovative capabilities, core competencies etc) and<br />
market positioning- that enables a company to gain competitive advantage by positioning itself<br />
higher at the market in a certain industry structure where competitors have no incentive to imitate the<br />
leader.<br />
<strong>The</strong> most predominant impacts <strong>of</strong> the strategic literature are marked by the industrialization era <strong>of</strong> the<br />
1960’s and the major contributions <strong>of</strong> prominent scholars such as Chandler (1962), Andrews (1965)<br />
and Ans<strong>of</strong>f (1965). However, organisations concentrating on planning, long-term resource allocation,<br />
environmental analysis to response to market demands faced environmental uncertainties during the oil<br />
crisis and increasing competition from emerging nations from Europe and Japan during the 70’s.<br />
Consequently, Mintzberg (1978) developed ten schools <strong>of</strong> thought to evaluate previous concepts <strong>of</strong><br />
strategic management <strong>of</strong> Ans<strong>of</strong>f and Andrews (1965) and analysed them according to the<br />
transformations <strong>of</strong> industrialisation to identify newer concepts.<br />
Mintzberg and Walters (1985) categorized strategy into two ways: emergent strategies and deliberate<br />
strategies. <strong>The</strong>y referred deliberate strategy as traditional strategic approaches, where planned business<br />
strategies that are strictly controlled by organisational mechanisms are inflexible during changing<br />
environments. <strong>The</strong> emergent strategy focused on the strategic ability <strong>of</strong> the firm to be responsive<br />
towards the environment in the purpose <strong>of</strong> sustaining competitive advantage.<br />
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<strong>The</strong> market positioning concept was devised by Michael Porter during the 1980’s to provide<br />
companies direction towards the new millennium with influential analytical frameworks, including the<br />
value chain, five forces analysis and the generic strategies to achieve competitive advantage.<br />
However, Porter’s (1980) concepts <strong>of</strong> competitive positioning received several criticisms. Mintzberg<br />
(1990) noted that his theory only concentrated on positioning a company into its industry and when a<br />
firm engaging in generic strategies fails to achieve any <strong>of</strong> them, it will find itself “stuck in the middle”.<br />
Shrivastava, (1986) argued that the foundation <strong>of</strong> the problem to Porter’s framework is that if every<br />
business adopted the suggested generic strategies, none would be able to secure a competitive<br />
advantage. Scholars criticized the P5F model as static and incapable <strong>of</strong> identifying the rapid changes <strong>of</strong><br />
the industry and the external environmental factors such as globalisation and new technologies e.g.<br />
internet, nanotechnology and renewable energy.<br />
Drawbacks <strong>of</strong> the Process<br />
Various academics (Beinhocker and Kaplan, 2002; Camillus 1996; Hamel and Prahalad 1989;<br />
Mintzberg 1994) states that strategic planning and development in companies today is the persistence<br />
adaptation <strong>of</strong> last year’s plans and budgets rather than the search for new opportunities and<br />
differentiation. <strong>The</strong> traditional strategic planning process is an analytical process (Davenport, Leibold<br />
et al. 2006; Roos 2004) consisting <strong>of</strong> painstaking data collection and evaluation to create huge reports<br />
that probably no one even reads (Markides, 2001). It is also argued that in today’s rapidly changing<br />
global environment, a formal analytical process <strong>of</strong> strategic planning is very time consuming and by<br />
the time the findings are reported and the final plan is published and distributed, the environment is<br />
likely to have changed making the plan to be obsolete. (Beinhocker and Kaplan 2003; Mintzberg 1987)<br />
According to strategy scholars, planning and analysis eventually does not lead to a definite strategy.<br />
As the future is always transforming and unpredictable management scholars’ advices companies to<br />
change strategies according to the changes happening in the global environment by encouraging<br />
innovation, rather than trying to reshape organisational boundaries and structures in an attempt to<br />
‘position’ itself as the market leader to gain competitive advantage (Krinsky and Jenkins, 1997;<br />
Mintzberg, 1993).<br />
Drawbacks <strong>of</strong> the Content<br />
Criticisms regarding the content <strong>of</strong> current strategy practice involve three closely related basic issues:<br />
(1) concentrating on operational effectiveness and best practices (2) copying competitor’s strategies<br />
and (3) continuously holding one strategic position.<br />
When a particular firm concentrates solely on productivity to achieve operational efficiency and to<br />
continue its operations, it usually misleads to the imitation <strong>of</strong> competitors strategies, matching and<br />
copying their products, and not the necessary differentiation (Hamel 2001; Kim and Mauborgne 2002;<br />
Porter 1996). Academics debate that companies do not differentiate themselves anymore, but the basis<br />
<strong>of</strong> their competition follows the basic method, process and dimensions <strong>of</strong> competition: cost,<br />
operational efficiency and price (Kim and Mauborgne, 1999; Nattermann 1999). As a result, several<br />
studies show that this lack <strong>of</strong> strategic differentiation only <strong>of</strong>fers customers’ choices based on price,<br />
which consecutively results in decreasing margins within an industry (Hammonds 2001; Kim and<br />
Mauborgne, 2005).<br />
Most organisations only follow a common set <strong>of</strong> rules and guidelines to compete in a certain industry,<br />
mainly focusing to hold on to their strategic positions, instead <strong>of</strong> searching for new ones in the market<br />
(Markides 2000). <strong>The</strong>refore, instead <strong>of</strong> differentiating themselves from competitors, firms continue to<br />
operate one successful strategy for a longer period. Consequently, a company never understands the<br />
need for change when the strategy that was successful once becomes obsolete (Christensen 1997,<br />
Chung et al).<br />
Drawbacks <strong>of</strong> the Tools<br />
<strong>The</strong> evolution <strong>of</strong> strategic management and corporate planning began with the problems faced my<br />
managers in the 1950’s and 1960’s. As corporations grew larger and the business environment became<br />
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more complex, they devised separate tools, techniques and systems to maintain control. Two examples<br />
are Ans<strong>of</strong>f’s S.W.O.T model, and Porter’s Five Forces.<br />
According to Amram and Kulatilaka (1999) and Leibold et al. (2006) these tools used today to achieve<br />
competitive advantage through differentiation, were developed 50 years ago, for analyzing the<br />
environment and planning. But, the purpose <strong>of</strong> strategic management and the circumstances under<br />
which the tools were developed in the first place have considerably changed over the years (Hamel<br />
1998; Roos 2004)<br />
While traditional tools like Porters Five Forces may provide insight, they do not generally provide<br />
foresight, which is one <strong>of</strong> the most important factors to construct creative strategies for the future<br />
(Courtney 2001). Furthermore, Mintzberg and Lampel (1999) add that these analytical tools do not to<br />
build strategies as proposed by Porter, but they provide ideas which can only be used in thinking about<br />
what strategy to pursue.<br />
Kim and Mauborgne (2005) argue that “the traditional approach, and thus the tools applied to<br />
formulate strategies focuses too much on competing in existing market space, defeating the<br />
competition, exploiting existing demand, making the value/cost exchange, and aligning the total<br />
system <strong>of</strong> a organisation’s activities with its strategic choice <strong>of</strong> differentiation or low cost.<br />
<strong>The</strong> above discussions, brings out the opportunity to develop the first pair <strong>of</strong> hypotheses for strategy<br />
formulation:<br />
Hypothesis 1: Companies can only follow market positioning through differentiation, low cost and<br />
focus while formulating business strategies.<br />
Hypothesis 2: Organisations should come out <strong>of</strong> the traditional approaches and seek to formulate new<br />
strategies by creating newer developments on the existing industry.<br />
<strong>The</strong> Blue Ocean <strong>The</strong>ory<br />
<strong>The</strong> theory <strong>of</strong> Blue Ocean proposed by Kim and Mauborgne in 2005 is firmly grounded on a study<br />
based upon 150 strategic moves made by companies in a range <strong>of</strong> industries. <strong>The</strong> misconceptions <strong>of</strong><br />
the BOS theory are that it induces companies to evade the existing competition and apply the blue<br />
ocean strategy as a shortcut. In reality, Kim and Mauborgne explain that red oceans and blue oceans<br />
are both equally important for business practices. Considering the example <strong>of</strong> IBM who created the<br />
modern computer industry, from there on Apple and Micros<strong>of</strong>t have continuously reinvented business<br />
models, thus reconstructing market boundaries <strong>of</strong> competition, and therefore creating an entirely new<br />
market for their products (Kim and Mauborgne, 2005).<br />
Kim and Mauborgne (2005) demonstrate their ‘reconstructuralist’ view as opposed to Porter’s<br />
structuralist approach and traditional methods <strong>of</strong> strategy making. <strong>The</strong> cornerstone <strong>of</strong> the Blue Ocean<br />
Strategy is value innovation. Value innovation challenges the conventional method <strong>of</strong> strategizing,<br />
pursues differentiation, and low cost simultaneously to create a leap in value for both buyers and the<br />
company to create new customer demand and break away from the competitive benchmarking.<br />
Kim and Mauborgne (2005) further condemns the focus on benchmarking arguing that it leads to<br />
imitation not innovation which results in “price pressure” and further “commodization”. <strong>The</strong> creation<br />
<strong>of</strong> blue oceans is a process rather than a market outcome. In this regard, the value innovation process<br />
consists <strong>of</strong> reducing costs and simultaneously driving up value for buyers. (Kim and Mauborgne,<br />
2005) As shown in Figure 2.1, value innovation is achieved when a company’s actions positively<br />
affect both its cost structure and value proposition to buyers.<br />
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Figure 1 <strong>The</strong> Value Innovation Process (Kim and Mauborgne, 2005)<br />
Drawbacks <strong>of</strong> the Blue Ocean <strong>The</strong>ory<br />
<strong>The</strong> blue ocean theory suggests creating new market spaces for companies to achieve the pioneering<br />
advantage. <strong>The</strong>re is likely to be no competition for the first movers, therefore it can position itself to be<br />
the market leader and gain maximum <strong>of</strong> the market share. However, companies creating a blue ocean<br />
will face increasing complexities as the brand and its products will be unknown to the customers.<br />
<strong>The</strong>refore, late movers can use the marketing investments <strong>of</strong> the pioneer and acclimatize its product<br />
and services, to take over the fast mover’s market share.<br />
Pioneers rely on high investments in R&D and marketing activities to inform customers about the new<br />
<strong>of</strong>ferings. Second movers can use it to their advantage by educating itself from the pioneer’s mistakes<br />
and develop better products (Demos, Chung and Beck, 2001). <strong>The</strong>refore being the pioneer depends<br />
upon the strategic capability <strong>of</strong> the company to create high entry barriers for competitors. It depends<br />
on the ability <strong>of</strong> the company to develop inimitable products which requires high investments and<br />
risks.<br />
Furthermore, the blue ocean theory assumes that organisations compete in a highly competitive<br />
environment where market entry and product differentiation is low and high exit barriers exist.<br />
Although a part <strong>of</strong> this theory makes sense, it disregards recent emerging industries where different<br />
entry barriers, market growth and product differentiation exists, contemplating a dynamic nature <strong>of</strong><br />
strategic decision making. Assumptions <strong>of</strong> the blue ocean theory considers market conditions <strong>of</strong> a red<br />
ocean to be stable whereas in reality, recent firms compete in a dynamic and changing business<br />
environment where strategic decision making is a continuously evolving process (Mintzberg, 1988).<br />
Evaluation <strong>of</strong> the blue ocean strategy enables to develop two distinctive hypotheses to make room for<br />
further empirical research.<br />
Hypothesis 3: <strong>The</strong> blue ocean theory is a practically suitable method to formulate business strategies<br />
for today’s organisations.<br />
Hypothesis 4: Strategy formulation is a dynamic and evolving process.<br />
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Conceptual Model<br />
<strong>The</strong> Dynamic Strategy Framework<br />
Constraints:<br />
High level <strong>of</strong><br />
industry<br />
competitiveness.<br />
Constraints:<br />
Benchmarking by<br />
competitors.<br />
Traditional Strategy<br />
Formation is a prescriptive<br />
and descriptive process.<br />
Introduction <strong>of</strong> Generic<br />
Strategies based on market<br />
positioning and industry<br />
analysis.<br />
Constraints:<br />
Changes in the<br />
external business<br />
environment.<br />
Constraints:<br />
Constant shifts in<br />
the external<br />
business<br />
environment.<br />
Constraints:<br />
Benchmarking by<br />
competitors.<br />
Hypotheses 1 Hypotheses 2<br />
Emergence <strong>of</strong> the Blue Ocean<br />
Strategy – creating new<br />
markets through value<br />
innovation.<br />
Constraints:<br />
Lack <strong>of</strong><br />
theoretical and<br />
practical<br />
application.<br />
Hypotheses 3 Hypotheses 4<br />
<strong>The</strong> Dynamic Strategy<br />
Framework<br />
Strategy is a dynamic and evolving<br />
process.<br />
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<strong>The</strong> “dynamic strategy” model is based on the previously developed hypotheses and the research<br />
questions. <strong>The</strong> first segment shows the evolution <strong>of</strong> strategy and reflects the traditional approaches <strong>of</strong><br />
strategizing. <strong>The</strong> constraints are always constant throughout each element, and only the key ones are<br />
highlighted. <strong>The</strong> red arrow reflects the giant leap <strong>of</strong> industrialisation and creation <strong>of</strong> newer<br />
methodologies such as the generic strategies. However, the root <strong>of</strong> organisation strategy remains the<br />
same which is replicated by the consistent gloomy border color <strong>of</strong> the two elements. However, the fill<br />
color changes because <strong>of</strong> the new methods <strong>of</strong> strategic planning.<br />
<strong>The</strong> two hypotheses are formed and the constraints gave rise to a new element in the “dynamic<br />
strategy” framework, the blue ocean strategy. <strong>The</strong> color is simultaneously blue and the outline also<br />
transforms which refer to the complete ‘restructure’ as proposed in the blue ocean strategy literature.<br />
<strong>The</strong>re onwards, two set <strong>of</strong> hypotheses arises and together with the drawbacks <strong>of</strong> the BOS, the<br />
conceptual framework reaches its climax. <strong>The</strong> dynamic strategy framework, as illustrated with a<br />
dynamic green color, also represents the overall assumption that strategy should consist <strong>of</strong> a dynamic<br />
process <strong>of</strong> constant invention and re-invention <strong>of</strong> new tools, concepts and strategic methods.<br />
Finally, the dynamic strategy framework box is surrounded, by a broken line as it is only at the<br />
hypothesis level whereas the others are proven concepts. As a result, the overall model is also bordered<br />
by a broken line which reflects that the hypotheses are yet to be proved.<br />
3.0 <strong>Research</strong> Methodology<br />
This paper is based on the philosophical assumption <strong>of</strong> positivism. <strong>The</strong> overall purpose is to gain<br />
insights from existing literature and analyse primary data’s to reach justifiable conclusions.<br />
This paper is exploratory in nature with a hint <strong>of</strong> descriptive measures while conducting thorough and<br />
empirical research. <strong>The</strong> overall assumption <strong>of</strong> using a descriptive method is to obtain fairer results<br />
from the respondents and portray a clear understanding <strong>of</strong> the research topic. Similarly, the nature <strong>of</strong><br />
the problem issues the need to be flexible and follow the exploratory research technique. In addition,<br />
this paper is build upon a critical discussion <strong>of</strong> the existing literatures, interviews <strong>of</strong> pr<strong>of</strong>essionals and<br />
market surveys, which are the main components <strong>of</strong> an exploratory research paradigm.<br />
3.1 <strong>Research</strong> Approach<br />
<strong>The</strong> hypotheses were constructed by following a deductive research approach from the strategic<br />
literature in the context <strong>of</strong> the present business environment to prove the dynamic relationship between<br />
strategy and process. Quantitative data collection methods were used to describe key theories and<br />
concepts during hypothesis development and secondary data analysis.<br />
3.2 Sampling Techniques<br />
This paper is based on the probability sampling method to provide equal chance to every individual <strong>of</strong><br />
the telecommunication and renewable energy sector <strong>of</strong> Bangladesh. <strong>The</strong> respondents were randomly<br />
selected from the sample population although a definite sampling size was not visualized before the<br />
start <strong>of</strong> data collection.<br />
3.3 Sampling Size<br />
<strong>The</strong> questionnaire were handed out to the managers, management employees and small-scale<br />
entrepreneurs <strong>of</strong> the renewable energy industry and the telecommunication industry to conduct the<br />
survey. An overall <strong>of</strong> amount <strong>of</strong> 96 completed questionnaires from the telecom industry was included<br />
to facilitate the research process. Meanwhile, given to the small number <strong>of</strong> enterprises operating in the<br />
renewable energy sector <strong>of</strong> Bangladesh, only 30 filled up questionnaires was able to add itself in the<br />
research data basket. An in-depth formal personal interview was conducted through open-ended<br />
questionnaires with two pr<strong>of</strong>essionals representing the telecom and renewable energy sector to obtain<br />
more knowledge and understand the implications <strong>of</strong> developing strategies on that particular industry.<br />
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3.4 Data Collection Methods<br />
For this research, most <strong>of</strong> the secondary data’s were collected by reviewing books, journals and<br />
newspaper publications followed by online sources such as google.books, proquest and relevant online<br />
articles. A significant amount <strong>of</strong> research was also conducted by accessing government and company<br />
websites for industrial statistics, figures and organisational pr<strong>of</strong>iles. Primary data’s was collected<br />
through e-mails and physical one-on-one surveys. <strong>The</strong> in-depth interview with the experts was<br />
conducted physically via previously appointed meetings.<br />
3.5 <strong>Research</strong> Design<br />
For primary data collection, a “strategy evaluation” questionnaire was prepared, adapted from Donald<br />
D. Bergh from the book “<strong>Research</strong> Methodology in Strategy and Management”. <strong>The</strong> confidentiality <strong>of</strong><br />
the close ended questionnaire was maintained by using a five point Likert scale to obtain explicit<br />
results. <strong>The</strong> overall data collected from the primary and secondary research was unclassified and<br />
unstructured. <strong>The</strong> analysis <strong>of</strong> primary data’s were done through Micros<strong>of</strong>t Excel 2010 and SPSS<br />
version 15 for hypotheses testing and are presented in appendix 1a and 1b in an organised manner. <strong>The</strong><br />
paper ensures a valid collection <strong>of</strong> data’s from different sources which can be verified by reviewing the<br />
bibliography and appendices.<br />
4.0 Results<br />
From Questionnaires:<br />
4.1 Question: Do you frequently update the business strategy with the shifts in the external business<br />
environment?<br />
Updating the business strategy<br />
100%<br />
50%<br />
0%<br />
No<br />
Partially<br />
Average<br />
Most <strong>of</strong><br />
the time<br />
Yes<br />
Telecommunication<br />
Renewable energy<br />
Respondents from both the sector agrees on the importance <strong>of</strong> updating strategies with the changes in<br />
the global marketplace. It is more frequent in the renewable energy sector than telecommunications as<br />
the market span <strong>of</strong> their products and strategies is parallel with technological advancement and<br />
consumer demands. <strong>The</strong> telecommunication industry on the other hand, can be assumed as the<br />
followers <strong>of</strong> the ‘resource based view’ – emphasizing the correct utilization <strong>of</strong> key firm competencies;<br />
making their own path towards market and strategy development, instead <strong>of</strong> adapting.<br />
4.2 Question: Do you believe that technology, innovation and constant research and development are<br />
the most vital considerations while formulating business strategies?<br />
It is a vital question regarding the strategy formulation process <strong>of</strong> the respective industries and a major<br />
determinant while proving the hypotheses. By understanding the priorities given by these companies to<br />
technology and innovation, an assumption can be drawn that business organisations are trying to be<br />
unique to gain competitive advantage rather than just concentrating on ‘positioning’ or utilizing its<br />
‘resources’.<br />
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Importance <strong>of</strong> technology, innovation and R&D<br />
Yes<br />
Most <strong>of</strong> …<br />
Average<br />
Renewable energy<br />
Telecommunication<br />
Partially<br />
No<br />
0% 10% 20% 30% 40%<br />
<strong>The</strong> renewable energy sector are the prime followers <strong>of</strong> this idea, therefore a high percentage <strong>of</strong> the<br />
managers and entrepreneurs deeply agree to the question. <strong>The</strong>y believe that there core competencies<br />
and source <strong>of</strong> power is their ability to innovate. <strong>The</strong>refore, a successful business strategy in their<br />
perspective depends on its uniqueness. <strong>The</strong> telecommunication respondents deliver the message that<br />
business strategies must be formulated considering the present capability <strong>of</strong> the resources, both human<br />
and capital.<br />
4.3 Question: How much will you rate the importance <strong>of</strong> new tools <strong>of</strong> strategy formulation relative to<br />
traditional internal and external audits?<br />
Importance <strong>of</strong> new tools for strategy formulation<br />
50%<br />
40%<br />
30%<br />
20%<br />
10%<br />
0%<br />
45%<br />
35%<br />
32%<br />
20%<br />
19%<br />
16%<br />
10%<br />
12%<br />
8%<br />
3%<br />
Very Low Low Medium High Very High<br />
Telecommunication<br />
Renewable energy<br />
Respondents <strong>of</strong> the telecommunication sector show their dependence on the existing tools <strong>of</strong> strategy<br />
formulation. It is clearly seen from the above diagram that individuals <strong>of</strong> both the field hugely depends<br />
on traditional mechanisms <strong>of</strong> strategizing. However, the shift <strong>of</strong> renewable entrepreneurs is towards<br />
understanding the new perspectives <strong>of</strong> strategy making. It can be understood that although they want to<br />
utilise new tools, methods and processes, they are unaware <strong>of</strong> the emergence <strong>of</strong> recent concepts such<br />
as the blue or green ocean strategies ‘four action framework’ or the ‘strategy canvas’.<br />
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4.4 Question: Pursuing unique business strategies and models that were previously unrecognized and<br />
not attempted, carries huge financial risks.<br />
80%<br />
60%<br />
40%<br />
20%<br />
0%<br />
27%<br />
12%<br />
Untested business strategies are risky<br />
42%<br />
33%<br />
15%<br />
40%<br />
7% 8%<br />
7% 7%<br />
Strongly Agree Agree Neutral Disagree Strongly<br />
Disagree<br />
Telecommunication<br />
Renewable energy<br />
This question was asked to outline the similarities between the two distinctive industries rather than<br />
trying to distinguish them like earlier questions. <strong>The</strong> results seem to be accurate <strong>of</strong> the assumption.<br />
Pr<strong>of</strong>essionals <strong>of</strong> both the industries feel that unknown and unpracticed areas <strong>of</strong> the strategic<br />
management are associated with financial risks. <strong>The</strong>refore, investing for an unknown future is not<br />
pursued at the two industries. It shows that these firms are not aware <strong>of</strong> new strategic management<br />
methods but thrives to take small steps at a time so that investments do not account for a big loss. This<br />
can be stated as one <strong>of</strong> the key drawbacks <strong>of</strong> the blue ocean strategy because it does not completely<br />
describe a process which business leaders can adopt. It only <strong>of</strong>fers firms a concept, that they can<br />
eliminate existing competition by stepping into a new horizon where there is none.<br />
4.5 Question: Would you pursue new market development opportunities rather than competing in<br />
existing ones even if the future is uncertain?<br />
Possibility <strong>of</strong> investment for an uncertain future<br />
Renewable energy<br />
Telecommunication<br />
Yes<br />
Most <strong>of</strong> the time<br />
Average<br />
Partially<br />
No<br />
2%<br />
3%<br />
8%<br />
12%<br />
20%<br />
24%<br />
26%<br />
30%<br />
35%<br />
40%<br />
Members <strong>of</strong> both the telecommunication industry and the renewable energy sector concur that<br />
pursuing newer markets is the solution way by which they can expand their business and most<br />
importantly, can earn higher pr<strong>of</strong>its. <strong>The</strong> assumption is that they will invest if the outcome is fruitful<br />
and also because all pr<strong>of</strong>itable investments carry a risk and those who can conquer the challenges<br />
wins. <strong>The</strong> respondents see the uncertainty as ‘short term’ which will transfer itself into opportunities in<br />
the long run. This question is deeply related with the blue ocean strategy <strong>of</strong> creating new markets and<br />
strategies, therefore also associated with its drawbacks. One <strong>of</strong> them can be benchmarking. When all<br />
the firms <strong>of</strong> the renewable and telecom sector will follow the same blue ocean strategy, there will be<br />
no uncontested market. <strong>The</strong> blue ocean strategy literature does not provide any framework to hold on<br />
to the newly created competitive advantage.<br />
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4.6 Question: Do you think a constant evaluation <strong>of</strong> strategic direction towards new developments is<br />
essential to sustain the business over a longer period <strong>of</strong> time?<br />
Constant strategic evaluation for long term growth<br />
Strongly Disagree<br />
Disagree<br />
Neutral<br />
Agree<br />
Strongly Agree<br />
1%<br />
3%<br />
6%<br />
12%<br />
17%<br />
17%<br />
30%<br />
42%<br />
38%<br />
34%<br />
0% 10% 20% 30% 40% 50%<br />
Renewable energy<br />
Telecommunication<br />
As shown in the diagram, strategic evaluation and direction towards newer developments are also<br />
considered essential by both the sectors. <strong>The</strong> telecommunication sector agrees on the notion but also<br />
regards the importance <strong>of</strong> maintaining existing systems in place while changing strategic directions.<br />
Both the firms highly agree that to perform business over a longer period <strong>of</strong> time, they have to tackle<br />
complexities and adapt to the changes. <strong>The</strong>refore it is essential for a systematic evaluation system is<br />
place to provide direction to the company for future growth.<br />
4.7 From In-depth Interviews<br />
4.7.1 Question: Performing strategic audits<br />
<strong>The</strong> telecom industry usually performs analytical duties <strong>of</strong> their own devised actions, but the methods<br />
philosophically relates to the methodological tools drawn by Porter (1985) and Andrews (1965).<br />
Internal and external analyses are conducted through carefully oriented s<strong>of</strong>tware programs where<br />
logical data’s are provided after the careful examination <strong>of</strong> key strengths, weaknesses, opportunities<br />
and threats. <strong>The</strong> market analysis is considered in an analytical manner, through surveys and measuring<br />
outcomes from investments, methods reflecting the process described in the Porter’s five forces model<br />
<strong>of</strong> industry analysis. <strong>The</strong> renewable energy side consistently uses similar methods while performing<br />
strategic audits but the interviewee also acknowledged the need to develop new processes to evaluate<br />
industrial progressions. <strong>The</strong>y concur that the technological fluctuations are more intensive when<br />
compared with the telecom industry; therefore the market and industry evaluation process must be<br />
swift in order to design relevant business strategies before competitors.<br />
4.7.2 Question: Perceptions about the future business structure<br />
Both the individuals from their relative industries confess that formulating positive business strategies<br />
is the first basic function they undertake before any other administrative duties. Additionally they also<br />
admit that the competitive future <strong>of</strong> the business marketplace is getting uncertain day by day. As a<br />
result, the ‘Porter’ or ‘Ans<strong>of</strong>f’ method is losing its practical affectability consistently along with its<br />
theoretical concepts. <strong>The</strong> entrepreneur representing renewable energy argues that business strategies<br />
are turning to be short term regarding product development and approaches. On the other hand, both<br />
the enterprises stress the importance <strong>of</strong> long term objectives and visions to perform operations for<br />
endless generations.<br />
4.7.3 Question: <strong>The</strong> ‘Blue Ocean Strategy’ – reality or myth?<br />
This part <strong>of</strong> the interview focuses on identifying the familiarity <strong>of</strong> the individuals with the term the<br />
‘blue ocean strategy’ and if they practically apply the method while strategizing.<br />
<strong>The</strong> entrepreneur from the renewable energy exclaimed that their business is almost entirely based on<br />
the blue ocean strategy. <strong>The</strong> market niches they operate consist <strong>of</strong> a high entry barrier, low competition<br />
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and high imitation costs. He also explained that their strategy is also similar with the BOS as the<br />
business objective is totally based on innovation and the development <strong>of</strong> existing products. <strong>The</strong> BOS<br />
assumption <strong>of</strong> the telecom sector is focused upon creating new product models based on the existing<br />
telecom industry such as 3G or 4G services. However, the drawbacks <strong>of</strong> the BOS such as the market<br />
being saturated (turning red) day by day and business strategies are getting rigid and imitated by rivals<br />
along with clone products are major barriers behind implementation. <strong>The</strong> interviewees concluded with<br />
the urge for newer strategic methods to meet these challenges.<br />
4.7.4 Question: Application <strong>of</strong> the dynamic strategy process<br />
<strong>The</strong> thorough interview reveals the potentiality for newer strategic processes that would enable firms<br />
to compete in the dynamic and constantly changing environment. <strong>The</strong> individuals’ produced mixed<br />
reactions on the statement. <strong>The</strong>y explained that the market risks associated with the BOS or any newer<br />
strategy models is very high. <strong>The</strong>refore, while performing in a high barrier to entry market, any minor<br />
mistakes will result in lost market share and ultimately the company’s insolvency. However,<br />
conclusive evidence did show the concern <strong>of</strong> the respective individuals about market adaptation<br />
becoming increasingly prescriptive. <strong>The</strong>y identified the need for newer strategic perspectives that can<br />
sustain a BOS or else provide newer ways for competitive strategy formulation. Under the following<br />
circumstances, the application <strong>of</strong> the dynamic strategy making process will provide new prescriptions<br />
for strategizing, which will be proven in the next chapter.<br />
4.9 Discussion and Findings<br />
<strong>The</strong> first hypothesis was proved invalid from the discussion <strong>of</strong> strategic literature and case study<br />
analysis. <strong>The</strong>ory and findings prove that there are several ways <strong>of</strong> formulating business strategies<br />
rather than concentrating only on market positioning differentiation, low cost and focus. Hypotheses 2<br />
was tested by measuring strengths between research data’s from the questionnaires. Respondents <strong>of</strong><br />
both the sector agreed that innovation is important to carry on the business and similarly it is also<br />
important to update the business strategy according to environmental transformations. This confirms<br />
hypotheses that business organisation should come out <strong>of</strong> the traditional methods <strong>of</strong> strategy<br />
formulation and adopt new methods <strong>of</strong> strategizing that reflects the developments <strong>of</strong> the industry<br />
structure.<br />
Respondents from both the sector highly agreed to the fact that pursuing unique and untested business<br />
strategies carries major financial risks. <strong>The</strong> calculation found a stronger relationship among the<br />
dependent and independent variables. Majority <strong>of</strong> the respondents disagreed or else was neutral to the<br />
suggestion <strong>of</strong> the importance <strong>of</strong> new tools <strong>of</strong> audits. <strong>The</strong>y were reluctant to adopt the new methods <strong>of</strong><br />
strategy formulation and audit tools. <strong>The</strong> overall evaluation merely rejects hypotheses 3 and confirms<br />
that the blue ocean strategy, although is a useful method, cannot be used for long term strategizing and<br />
investment.<br />
<strong>The</strong> final hypothesis was tested using the regression analysis and the mean <strong>of</strong> the responses was also<br />
measured. <strong>The</strong> analysis found a stronger relationship among the variables. Respondents agreed that<br />
they would pursue new market development opportunities rather than performing on existing ones.<br />
Similarly they also regarded that a constant evaluation <strong>of</strong> strategic directions is also essential to sustain<br />
the business over a longer period <strong>of</strong> time. <strong>The</strong> final analysis proves hypothesis four that strategy<br />
formulation consists <strong>of</strong> a dynamic and evolving process.<br />
<strong>The</strong> evaluation <strong>of</strong> results from questionnaires and knowledge from in-depth interviews can be<br />
accumulated to conclude that companies truly perceive a business strategy that can separate itself from<br />
its competitors and can also generate extravagant pr<strong>of</strong>its. However, the blue ocean strategy is still a<br />
developing idea in terms <strong>of</strong> the strategy formulating process therefore, although companies pursue<br />
innovation and uniqueness, they do not <strong>of</strong>ten know the path to get there. In depth interviews also<br />
shows that companies still believe that traditional analytical approaches while conducting strategic<br />
audits and determining organisation’s strategic direction are the best methods that exist in the strategy<br />
literature.<br />
In reality, the blue ocean strategy truly exists and the phenomenon has also occurred before. For<br />
example, the Internet, and dot.com companies (eBay, Priceline, Amazon) were blue oceans when first<br />
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introduced. Every innovation; television, gaming consoles, computers, tabs, laptops, notebooks were<br />
blue oceans until it became red. From the secondary data’s it can also be gathered that blue ocean<br />
strategies can be applied to any industry, by achieving the value-cost trade <strong>of</strong>f. However,<br />
differentiation does not last long when it’s been copied, and the ocean turns red. <strong>The</strong>refore, companies<br />
create constant blue oceans in a dynamic manner achieves competitive advantage over a longer period<br />
<strong>of</strong> time. Apple and Google are such examples which have realistically achieved competitive advantage<br />
by executing the concepts <strong>of</strong> the blue ocean strategy in their own unique and dynamic fashion.<br />
5.0 Justification <strong>of</strong> the “dynamic strategy” framework<br />
Hypotheses test results show that the “dynamic strategy” framework provides a valid outcome <strong>of</strong><br />
research conducted throughout this paper. It provides a critical understanding <strong>of</strong> the nature <strong>of</strong> strategic<br />
management and how business strategies evolved over time. <strong>The</strong> framework was developed by<br />
ambiguous assumptions that emerged out <strong>of</strong> the literature review. <strong>The</strong> purpose was to back the<br />
arguments based on specific research methodologies and analyse primary and secondary information<br />
to reach a positive outcome.<br />
<strong>The</strong> primary data analysis was conducted on the telecommunication sector with the assumption that<br />
they formulate strategies on a consistently changing environment and consists <strong>of</strong> a product line that is<br />
highly innovative. <strong>The</strong> renewable energy sector maintains business activities based on technological<br />
innovation, imaginative business ideas and unique strategic approaches. It can be seen that both the<br />
industries can be related with the industry structure favorable with the BOS. Additionally, the<br />
secondary data analysis was entirely conducted on two companies applying the BOS to maintain its<br />
operations.<br />
<strong>The</strong> aim <strong>of</strong> this research was to confirm that strategy development is a dynamic and ever-changing<br />
process <strong>of</strong> transformation. In addition, it aimed to identify the function ability <strong>of</strong> the newest<br />
development <strong>of</strong> the strategy literature: the BOS. <strong>The</strong> complexities regarding the BOS discussed<br />
throughout the paper depicts that it is <strong>of</strong>ten critical to maintain a solid blue ocean strategy over a<br />
longer period <strong>of</strong> time. <strong>The</strong>refore, the necessity <strong>of</strong> a dynamic strategy process is just a matter <strong>of</strong> time.<br />
<strong>The</strong> framework mainly highlights the primary issues <strong>of</strong> how strategy evolved over time and the<br />
limitations that arises accordingly. It is the outcome <strong>of</strong> the key developments <strong>of</strong> the strategic literature<br />
and does not aim to provide any tools or methods for businesses to construct strategies. <strong>The</strong> primary<br />
goal for the dynamic strategy framework is to provide a simple but critical understanding <strong>of</strong> the current<br />
strategic dimensions to business organisations, and to demonstrate that strategies should be a process<br />
<strong>of</strong> continuous development positively integrated with the shifts <strong>of</strong> the external environment to sustain<br />
the competitive advantage over a longer period <strong>of</strong> time.<br />
5.1 Recommendation<br />
<strong>Business</strong> organisations attempting to perform activities in the ever changing global marketplace adopt<br />
a range <strong>of</strong> strategies. <strong>The</strong> dynamic strategy framework can be useful for those organisations that need<br />
to be vibrant in their decision making and strategy development. <strong>The</strong> recommendation for these<br />
companies is to evaluate its business surroundings by using newer methods and tools that can be<br />
applied to the current establishments. To sustain the business over the long run, companies <strong>of</strong> a given<br />
industry has to reinvent them, maximize risks and reconstruct market boundaries consistently to<br />
achieve higher results and a pr<strong>of</strong>itable return on investments.<br />
5.2 Conclusion<br />
<strong>The</strong> dynamic framework constitutes the need for business enterprises to understand the drawbacks <strong>of</strong><br />
established principles. <strong>The</strong> framework will provide a strong theoretical background for further research<br />
regarding strategic management. <strong>The</strong> implication is to take this research to the next step by<br />
constructing the ‘dynamic strategy model’ based on the theoretical assumptions provided in the paper<br />
and from the results gathered through hypotheses testing. To avoid future research limitations, research<br />
should be conducted on different industries <strong>of</strong> different shapes and sizes. This paper is assumed to be<br />
the beginning <strong>of</strong> many research problems regarding strategic management and planning at the<br />
competitive and futuristic marketplace <strong>of</strong> the upcoming centuries.<br />
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5.3 <strong>Research</strong> Limitations<br />
This research was only conducted on companies based on Bangladesh therefore it does not provide a<br />
thorough evaluation <strong>of</strong> industry variables. Furthermore, the time constraints and word limit associated<br />
with the research work limited its capacity to implore further into the field <strong>of</strong> strategic management.<br />
To avoid future research limitations, research should be conducted on different industries <strong>of</strong> different<br />
shapes and sizes. Lastly, future research must be conducted through the exploratory approach and<br />
should be based on more practical assumptions rather than theoretical. <strong>The</strong>refore a realistic guideline<br />
can be provided to organisations in order to formulate and execute future business strategies.<br />
6.0 References<br />
Ans<strong>of</strong>f, HI (1965) Corporate Strategy New York: McGraw-Hill<br />
Ans<strong>of</strong>f, H. I., <strong>Business</strong> Strategy, Penguin Books, New York, 1969<br />
Andrews, K.R., 1965. <strong>The</strong> Concept <strong>of</strong> Corporate Strategy. Dow Jones-Irwin, Homewood, IL.<br />
Barney, J. (1991). "Firm Resources and Sustained Competitive Advantage." <strong>Journal</strong> <strong>of</strong><br />
Management<br />
Beinhocker, E. D. and S. Kaplan (2002). "Tired <strong>of</strong> Strategic Planning." McKinsey Quarterly<br />
Special Edition: Risk and Resilience<br />
Cool, K., L. A. Costa and I. Dierickx (2002). Constructing Competitive Advantage. Handbook <strong>of</strong><br />
Strategy and Management. A. Pettigrew, H. Thomas and R. Whittington, Sage.<br />
Christensen, C. M. (2001). "<strong>The</strong> Past and Future <strong>of</strong> Competitive Advantage." MIT Sloan<br />
Management Review<br />
Courtney, H. (2001). "Making the most <strong>of</strong> uncertainty." McKinsey Quarterly Number 4. Thomson.<br />
Davenport, T. H., M. Leibold and S. Voelpel (2006). Strategic Management in the Innovation<br />
Economy. Publicis Wiley.<br />
Demos, N., S. Chung and M. Beck (2001). "<strong>The</strong> New Strategy and Why It Is New."<br />
Hamel, Gary, and C. K. Prahalad. 1994. Competing for the Future. Boston: Harvard <strong>Business</strong><br />
School Press.<br />
Henderson, B. D. (1989). "<strong>The</strong> Origin <strong>of</strong> Strategy." Harvard <strong>Business</strong> Review<br />
Hinterhuber, H. H. (1989). Strategische Unternehmensführung ‐ Band 2. Berlin ‐ New York,<br />
Walter de Gruyter.<br />
Hammonds, K. H. (2001). "Michael Porter's Big Ideas." Fast Company<br />
Kaplan, R. S. and D. P. Norton (2004). "Measuring the Strategic Readiness <strong>of</strong> Intangible Assets."<br />
Harvard <strong>Business</strong> Review<br />
Krinsky, R. and A. C. Jenkins (1997). "When worlds collide: <strong>The</strong> uneasy fusion <strong>of</strong> strategy and<br />
innovation." Strategy & Leadership 25(4)<br />
Kim, W. C. Mauborgne, R. 2005, How to make the competition irrelevant. Harvard Busines<br />
School Press.<br />
Kim, W. C. Mauborgne, R. 2005, Blue ocean strategy: from theory to practice, Harvard Busines<br />
School Press.<br />
Lamb, Robert, Boyden (1984) Competitive strategic management, Englewood Cliffs, NJ: Prentice-<br />
Hall, 1984<br />
Mintzberg, H. (1978). Patterns in strategy formation. Management Science, 24(9): 934-38.<br />
Markides, C. (2001). "Strategy as Balance: From "Either‐ Or" to "And"." <strong>Business</strong> Strategy<br />
Review<br />
Mintzberg, H.; Ahlstrand, B.; & Lampel, J. (1998). Strategy Safari: A Guided Tour through the<br />
Wilds <strong>of</strong> Strategic Management, Free Press.<br />
Nattermann, P. M. (1999). "Best practice doesn't equal best strategy." McKinsey Quarterly<br />
Number 4<br />
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Porter, ME (1980) Competitive Strategy: Techniques for Analyzing Industries and Competitors<br />
New York: Free Press<br />
Porter, ME (1985) Competitive Advantage: Creating and Sustaining Superior Performance New<br />
York: Free Press<br />
Porter, ME (1996) ‘What is strategy?’ Harvard <strong>Business</strong> Review<br />
Roos, J. (2004). "Sparking Strategic Imagination." MIT Sloan Management Review<br />
Shrivastava, P (1986) ‘Is strategic management ideological? <strong>Journal</strong> <strong>of</strong> Management 12(3)363-77<br />
Additional Reading<br />
Kim, C., Yang, K.H. and J. Kim, 2008. A strategy for third-party logistics systems: a case analysis<br />
using the blue ocean strategy. Omega, 36: 522-34.<br />
Sharplin, A., Strategic Management, McGraw Hill, New York, 1985<br />
De Wit, R. and Meyer, R., Strategy – Process, Content, Context: an internationalperspective, 2nd<br />
edition, International Thomson <strong>Business</strong> Press, London, 1998 cited by White, C., 2004<br />
Thompson, A.A. and A.J. Strickland, 2001. Strategic Management Concepts and Cases, 12th<br />
Edition. McGraw-Hill, Boston, MA.<br />
Chandler, A. D. Jr., Strategy and structure: chapters in the history <strong>of</strong> industrial enterprise, MIT<br />
Press, Cambridge, 1962 cited by White, C., 2004<br />
Lengnick-Hall, C. and J.A. Wolff, 1999. Similarities and contradictions in the core logic <strong>of</strong> three<br />
strategy research streams. Strategic Management <strong>Journal</strong>, 20: 1109-32.<br />
Gluck, F. W., Strategic Management for Competitive Advantage, Harvard <strong>Business</strong> Review,<br />
Harvard <strong>Business</strong> School Press; USA, (July, 1 - 1980) cited by Sharplin, A. 1985<br />
Grant, R. M. (1991). "<strong>The</strong> Resource‐ Based <strong>The</strong>ory <strong>of</strong> Competitive Advantage: Implications for<br />
Strategy Formulation." California Management Review<br />
Kumar, R. (2005), “<strong>Research</strong> methodology: a step-by-step guide for beginners”, SAGE<br />
Publications.<br />
Kothari, C. K. (2008), “<strong>Research</strong> methodology: methods and techniques”, New Age Internationals,<br />
India.<br />
Dul, J. and Hak, T. (2007), “Case study methodology in business research”, Butterworth-<br />
Heinemann/Elsevier.<br />
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Comparative Scenario <strong>of</strong> Higher Education: Impact on Human Development in<br />
Bangladesh<br />
Abu Zafar Ahmed Mukul<br />
Lecturer, School <strong>of</strong> <strong>Business</strong> & <strong>Economics</strong>,<br />
United International University (UIU), Dhaka-1209<br />
&<br />
Sabrina Hoque Chowdhuary<br />
Lecturer, School <strong>of</strong> <strong>Business</strong> & <strong>Economics</strong>,<br />
United International University (UIU), Dhaka-1209<br />
&<br />
Md. Arafat Rahman<br />
<strong>Research</strong> Associate<br />
Implementation <strong>of</strong> Monitoring and Evaluation (M & E)<br />
for IFC ( World Bank Group) at A. D. S. L.<br />
Abstract<br />
Higher education plays a vital role in the progress <strong>of</strong> human capital formation. A country rich in<br />
human capital can pave the way for the growth & development in that country. <strong>The</strong> aim <strong>of</strong> the present<br />
paper is to trace out the higher education impact on Human development in Bangladesh. Our research<br />
based on primary source <strong>of</strong> data collected by the authors thoroughly field survey from different higher<br />
educational institute both private and public universities. <strong>The</strong> study has concluded that education<br />
related with Human development. <strong>The</strong> higher educated person has also significant impact on Human<br />
development in Bangladesh. <strong>The</strong> study suggests that government should more education facilities to<br />
the students <strong>of</strong> Bangladesh.<br />
Keywords: Higher education, Career, Impact, University.<br />
Introduction<br />
Education is considered as a core component <strong>of</strong> growth & development in Bangladesh. It is regarded<br />
as inputs to the aggregate development functions. Education is very important for satisfying and<br />
rewarding human life while basic needs are necessary for human welfare & well being. Education<br />
plays a curtail role in absorbing the modern technology in developing countries like Bangladesh for<br />
self sustaining growth and development. Moreover, higher education improves the human capital and<br />
raises the productive capacity.<br />
<strong>The</strong> analysis in a education is unified in the human capital approach. Human capital means the<br />
productive capabilities <strong>of</strong> human beings in income-producing agent. Human development is essential<br />
for transformation <strong>of</strong> social and educational intuitions. Alfred Marshal has emphasized the importance<br />
<strong>of</strong> education as a national investment and in his view; the most valuable <strong>of</strong> all capital is the one that is<br />
invested in human beings.<br />
It is obvious from the above discussion that an increase <strong>of</strong> educational opportunities and all levels has<br />
resulted a raising economic growth by creating more educated and skilled manpower or by providing<br />
employment opportunities at large scale. That is why one can deny that the necessary condition for<br />
economic growth educated and skill manpower. Bangladesh has been remained unable to increase the<br />
capacity <strong>of</strong> the people to face the challenge <strong>of</strong> rising growth and development because at a little<br />
investment expenditure in education in the past. Lack <strong>of</strong> education and low growth <strong>of</strong> knowledge is a<br />
great obstacle in the way <strong>of</strong> progress people is unaware about the availability <strong>of</strong> natural resources, the<br />
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possible alternative techniques, the necessary skill, the prevailing market conditions and the<br />
development <strong>of</strong> the intuitions which are useful for economic efforts. <strong>The</strong>se are the reasons <strong>of</strong> low<br />
quality <strong>of</strong> population.<br />
According to the UNDP, the human development report-2005, the education index for Bangladesh for<br />
the year <strong>of</strong> 2003 was 0.45, 0.44 for Pakistan, for India it was 0.61. As far concerned HDI, it was 0.520<br />
for Bangladesh, 0.527 for Pakistan, for India it was 0.602. <strong>The</strong> gross enrollment ratios are<br />
comparatively lower in Bangladesh with the other countries <strong>of</strong> the region. Recently, it has been<br />
observed that the Government <strong>of</strong> Bangladesh is serious to resolve the issues. <strong>The</strong> government <strong>of</strong><br />
Bangladesh has not only increased expenditure on education but also made effective and better<br />
planning.<br />
Objectives <strong>of</strong> the study<br />
<strong>The</strong> Study aimed at determining the patterns <strong>of</strong> higher education’s impact on Human development in<br />
Bangladesh. Most importantly, the study pursued the following specific objectives:<br />
• To find the predictors <strong>of</strong> higher education index as means <strong>of</strong> Human development in<br />
Bangladesh<br />
• To formulate recommendations for the improvement <strong>of</strong> Higher education across the<br />
country.<br />
Literature Review<br />
Some empirical studies regarding education and their impact on Human development in Bangladesh is<br />
reviewed in this section. Schultz T.W (1960) has studied contribution <strong>of</strong> education to national income<br />
for the US for the period 1990-1956. He has found that the income elasticity <strong>of</strong> demand for education<br />
was about 3 over the period. Education could be considered as an investment which is 3.5 times more<br />
attractive than investment in physical Capital. Schultz has also tried to measure the total stock <strong>of</strong><br />
educational capital for the US at different points in time. <strong>The</strong> result indicates that the ratio <strong>of</strong> the stock<br />
<strong>of</strong> educational capital to stock <strong>of</strong> physical capital raises form 22 % in 1900 to 42 % in 1957.<br />
Panchamuki P.R (1965) has made educational capital estimates for India. His estimates <strong>of</strong> educational<br />
capital reveal that cost <strong>of</strong> formal educations in India raises from RS. 341 corers in 1950-51 to RS. 769<br />
corers in 1959-60.<br />
Data and Methodology:<br />
<strong>The</strong> data used in the present study is collected through field survey in the year 2011-2012, considering<br />
the sample <strong>of</strong> different universities in Bangladesh. Activities <strong>of</strong> higher educational intuitions are<br />
examined by studying various educational factors. In this study non probability sampling is used. We<br />
have collected our primary data from 100 students <strong>of</strong> 4 Universities randomly on the basis <strong>of</strong><br />
convenience. Primary data have been collected from personal interview method. We have used 5 point<br />
scale to get the responses. To process and analyzed the data SPSS 17.0 has used.<br />
Factor Analysis<br />
Factor analysis is applied to investigate with a set <strong>of</strong> small number <strong>of</strong> uncorrelated factors. <strong>The</strong> result<br />
<strong>of</strong> this factor analysis is used in multivariate analysis, specifically used to principle component<br />
analysis. So, we have two Hypotheses to test:<br />
Ho: Variables are uncorrelated<br />
H1: <strong>The</strong> variables are correlated.<br />
Multiple Regression Analysis:<br />
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By conducting multiple regression analysis, the study has shown how dependent variable changes<br />
according to the changes in independent variables. <strong>The</strong>refore, we can formulate the following<br />
Hypotheses:<br />
Ho: b1 = b2 = b3 =b4= ....…… = 0 (no relationship between dependent variable and independent<br />
variables)<br />
H1: b1 ≠ b2 ≠ b3 ≠ b4 ≠ 0 (significant relationship between dependent variable and independent<br />
variables)<br />
<strong>The</strong> basic model is given below:<br />
Human Development= a+ b1* Criteria based on brand + b2* Internship + b3* On campus interview +<br />
b4* Language club + b5* Knowledge based scholarship + b6* Campus atmosphere + b7* Own<br />
premises + b8* Workshop + b9* Computer Skill + b10* Training + b11* Satisfaction Regarding<br />
quality <strong>of</strong> education, Here, a= Constant; bi= Slope;<br />
Results and Analysis<br />
Factor Analysis<br />
To extract minimum number <strong>of</strong> factors, Principal Component Analysis (PCA) with varimax rotation<br />
was used. A Principal Component Analysis is a factor model in which the factors are based upon the<br />
total variance. In addition to selecting the factor model, we have specified how the factors are to be<br />
extracted in such a way that each factor is independent <strong>of</strong> all other factors. <strong>The</strong> Principle Component<br />
Analysis has used and total 11 variables have included in the factor analysis. At first correlation matrix<br />
has constructed and then tests the appropriateness <strong>of</strong> factor model. Bartlett’s test <strong>of</strong> Sphericity has been<br />
used to test the hypothesis that variables are uncorrelated in the population.<br />
Table 1: KMO and Bartlett's Test<br />
Kaiser-Meyer-Olkin Measure <strong>of</strong> Sampling Adequacy.<br />
Bartlett's Test <strong>of</strong> Sphericity Approx. Chi-Square 143.332<br />
df 55<br />
Sig. .000<br />
From the table, it is found that the approximate chi-square statistics is 143.332 with 55 degrees <strong>of</strong><br />
freedom which is significant at .05 levels and the value <strong>of</strong> KMO statistics (0.655) is also greater than<br />
.655<br />
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0.5. So the factor analysis may be considered an approximate technique for analyzing the data. Using<br />
verimax rotation, reducing the 11 variables, we have got 4 uncorrelated factors having Eigen value<br />
greater than 1 shown in table 2.<br />
Table 2: Total Variance Explained<br />
Com<br />
pone<br />
nt Initial Eigenvalues<br />
Extraction Sums <strong>of</strong> Squared<br />
Loadings<br />
Rotation Sums <strong>of</strong> Squared<br />
Loadings<br />
% <strong>of</strong><br />
% <strong>of</strong><br />
% <strong>of</strong><br />
Total<br />
Varianc<br />
e<br />
Cumulativ<br />
e % Total<br />
Varian<br />
ce<br />
Cumulativ<br />
e % Total<br />
Varian<br />
ce<br />
Cumulativ<br />
e %<br />
1 2.496 22.687 22.687 2.496 22.687 22.687 2.339 21.267 21.267<br />
2 1.584 14.399 37.086 1.584 14.399 37.086 1.388 12.622 33.890<br />
3 1.296 11.785 48.871 1.296 11.785 48.871 1.352 12.290 46.180<br />
4 1.014 9.2119 58.089 1.014 9.2119 58.089 1.310 11.910 58.089<br />
5 0.976 8.876 66.966<br />
6 0.815 7.408 74.374<br />
7 0.721 6.551 80.924<br />
8 0.604 5.491 86.416<br />
9 0.562 5.112 91.528<br />
10 0.483 4.387 95.915<br />
11 0.449 4.085 100<br />
From the above Rotated Component Matrix we get the following uncorrelated variables:<br />
Table 3: Uncorrelated Factors through Rotated Component Matrix (a)<br />
Component<br />
1 2 3 4<br />
Criteria based on brand .803 .042 -.044 -.086<br />
Satisfaction Regarding quality <strong>of</strong> education .655 -.202 .211 .183<br />
Training -.217 .785 -.177 .279<br />
Language club -.196 .679 .142 -.019<br />
Computer Skill -.543 .622 -.343 .259<br />
Workshop .047 .770 -.189 -.039<br />
Own premises .000 .442 .722 -.154<br />
Campus atmosphere .425 -.102 .654 -.038<br />
Knowledge based scholarship .012 -.387 .386 .716<br />
On campus interview .450 .062 .221 .641<br />
Internship .157 .019 .058 .748<br />
Variable<br />
Reputation <strong>of</strong> University<br />
Extracurricular activities<br />
Infrastructure development<br />
Career management<br />
Regression Analysis<br />
Table 4: Uncorrelated Factors<br />
Factors Identification<br />
Criteria based on brand, Satisfaction Regarding quality <strong>of</strong> education<br />
Training, Language club, Computer Skill, Workshop<br />
Own premises, Campus atmosphere<br />
Knowledge based scholarship, On campus interview, Internship<br />
From the factor analysis we get 4 uncorrelated factors, those are - Reputation <strong>of</strong> University,<br />
Extracurricular activities, Infrastructure development, Career management. <strong>The</strong>se factors are selected<br />
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as the independent variables and preference as the dependent variable for the multiple regression<br />
analysis.<br />
Table 5: Model Summary<br />
Model R R Square Adjusted R Square Std. Error <strong>of</strong> the Estimate<br />
1 0.830(a) 0.690 0.642 .59752<br />
a Predictors: (Constant), Criteria based on brand, Satisfaction Regarding quality <strong>of</strong> education ,<br />
Training, Language club, Computer Skill, Workshop, Own premises, Campus atmosphere, Knowledge<br />
based scholarship, On campus interview, Internship<br />
Table 6: ANOVA (b)<br />
Model Sum <strong>of</strong> Squares df Mean Square F Sig.<br />
1 Regression 58.84 4 14.71 44.441 .000(a)<br />
Residual 32.04 95 0.337<br />
Total 90.88 99<br />
a Predictors: (Constant), Criteria based on brand, Satisfaction Regarding quality <strong>of</strong> education ,<br />
Training, Language club, Computer Skill, Workshop, Own premises, Campus atmosphere, Knowledge<br />
based scholarship, On campus interview, Internship<br />
b Dependent Variable: Human Development<br />
Table 7: Coefficients (a)<br />
Variables Beta t Sig.<br />
Reputation <strong>of</strong> University .527 15.2341 .000<br />
Extracurricular activities .250 8.364 .000<br />
Infrastructure development .215 5.587 .000<br />
Career management .223 7.652 .000<br />
<strong>The</strong> results <strong>of</strong> the regression analysis revealed that all <strong>of</strong> the control variables had statistically<br />
significant effects on the Human Development towards the students’ satisfaction <strong>of</strong> the universities<br />
under his higher study that equivalently correspond to the factor analysis results.<br />
Conclusion and Recommendations<br />
<strong>The</strong> study shows that there are eleven important factors that influence the students more towards<br />
Human development. With a few notable exceptions, most private universities impart education <strong>of</strong><br />
uncertain quality, and high tuition fees charged by such institutions make them accessible only to the<br />
affluent sections in the society. Public universities, primarily dependent on limited government<br />
funding shrinking in real terms, unable to generate additional resources by raising tuition fees due to<br />
political constraints, are hardly in a position to improve their quality <strong>of</strong> education through greater<br />
investment in libraries and laboratories. Many democratic provisions <strong>of</strong> the University Acts not only<br />
encroach upon the limited teaching time <strong>of</strong> the faculty members by engaging them in active politics,<br />
but also fail to ensure accountability <strong>of</strong> the teachers, that contribute to lengthening <strong>of</strong> session jams,<br />
quite <strong>of</strong>ten accentuated by unscheduled closures <strong>of</strong> universities due to violent inter and intra-party<br />
clashes <strong>of</strong> student fronts <strong>of</strong> major political parties.<br />
References<br />
[1] Andaleeb, Syed Saad 2003,‘Revitalizing Higher Education in Bangladesh: Insights from alumni<br />
and policy prescriptions’, Higher Education Policy (2003) 16,pp. 487–504.<br />
[2] Ashraf, Mohammad A. and Ibrahim, Yusnidah ,Joarder, Mohd. H. R. 2009,‘Quality education<br />
Management at private universities In Bangladesh: An Exploratory Study’ Jurnal Pendidikdan<br />
Pendidikan, Jil. 24, pp. 17–32.<br />
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[3] Bosh<strong>of</strong>f, C 1997,‘An Experimental study <strong>of</strong> service recovery options’,I nternational <strong>Journal</strong> <strong>of</strong><br />
Service industry Management, vol. 8, no.2,pp. 110-130.<br />
[4] Chen, Yu-Fen, Hsiao, Chin-Hui & Lee, Wen-Ching, 2005, ‘How does student satisfaction<br />
influence student loyalty – from the relationship marketing perspective’<br />
[5] Hossler, D., & Gallagher, K. (1987). Studying college choice: A three-phase model and the<br />
implication for policy makers. College and University, 2, 207–21.<br />
[6] Hearn, J. (1984). <strong>The</strong> relative roles <strong>of</strong> academic ascribed and socioeconomic characteristics in<br />
college destinations. Sociology <strong>of</strong> Education, 57, 22–30.<br />
[7] Hallenbeck, T. R. 1978, ‘College student satisfaction: An indication <strong>of</strong> institutional vitality’,<br />
N.A.S.P.A. <strong>Journal</strong>, vol.16, no. 2, pp. 19-24.<br />
[8] Haque, HM Jahirul; Das, Debashish and Farzana, Riaheen 2011, ‘Satisfaction <strong>of</strong> student services<br />
in tertiary level: perspective Bangladesh’, European <strong>Journal</strong> <strong>of</strong> Social Sciences, Vol.19, No. 2,pp. 286.<br />
[9] Haque, MS 2004, ‘Quality management issues in business education in Bangladesh: A synoptic<br />
review based on Canadian and European papers’, Management Forum 2004<br />
[10] Jamal, Shawkat A. N. M. (2002), Role <strong>of</strong> Private Universities in Human Resource Development.<br />
[11] Jackson, G. (1982). Public efficiency and private choice in higher education. Educational<br />
Evaluation and Policy Analysis, 4, 237–47.<br />
[12] James, R., Baldwin, G., & McInnis, C. (1999). Which University? <strong>The</strong> Factors Influencing<br />
Choices <strong>of</strong> Prospective Undergraduates, Evaluation and Investigations Programme. Higher Education<br />
Division, Australia.<br />
[13] Kau, A.-K., Loh, E. W.-Y. 2006, ‘<strong>The</strong> effects <strong>of</strong> service recovery on consumer satisfaction: a<br />
comparison between complainants and non-complainants’, <strong>Journal</strong> <strong>of</strong> Services Marketing, vol. 20, no.<br />
2, pp. 101-111.<br />
[14] Keaveney, SM 1995,‘Customer switching behavior in service industries: an exploratory study’,<br />
<strong>Journal</strong> <strong>of</strong> Marketing, vol. 59, no. 2, 71-82.<br />
[15] Khan, Rezwanul Huque, Mridha, Ali Haider Al Mamun & Barua, Suborna 2009, ‘Higher<br />
education in private universities <strong>of</strong> Bangladesh: a study on female students’ enrollment behavior’,<br />
BRAC University <strong>Journal</strong>, vol.6, no.2, pp. 33-48.<br />
[16] Majid, A. K. M. S., Mamun, M. J. and Siddique, S. R.(2000). “Practices <strong>of</strong> Teaching Methods,<br />
Aids and Students’Performance Evaluation”.Private University Act, 1992 (Amended 1998) Section-2,<br />
Subsection-(g).<br />
[17] Ralph G. Lewis, Douglas H. Smith (1994). Total Quality in Higher Education, St. Lucie Press,<br />
1994.<br />
[17] St. John, E. P. (1991). <strong>The</strong> impact <strong>of</strong> student financial aid: A review <strong>of</strong> recent research. <strong>Journal</strong> <strong>of</strong><br />
Student Financial Aid, 21, 18–32.<br />
[18] Salahuddin et al. (2008) “How can we increase the quality <strong>of</strong> private schools in Bangladesh from<br />
the perspectives <strong>of</strong> students and managers?”, International <strong>Journal</strong> <strong>of</strong> Management Perspectives, ISSN:<br />
1307-1629, 2008, 2(1), 2008.<br />
[19] Tierney, M. L. (1983). Student college choice sets: Toward an empirical characterization.<br />
<strong>Research</strong> in Higher Education, 18(3), 271–284.<br />
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Prepaid Visa Debit Cards <strong>of</strong> United Bank Limited<br />
Dr. Rukhsar Ahmed<br />
Pr<strong>of</strong>essor & Dean<br />
Preston University<br />
&<br />
Dr. Imam ud Din<br />
Assistant Pr<strong>of</strong>essor<br />
University <strong>of</strong> Balochistan, Quetta.<br />
Karachi.<br />
Abstract<br />
Prepaid Visa Debit Cards enable a user to enjoy the convenience <strong>of</strong> a credit card without going<br />
through the hassles <strong>of</strong> credit worthiness evaluations by banks. As the name suggests, this sort <strong>of</strong> card<br />
can be obtained by paying a minimum amount to a bank <strong>of</strong>fering the service; the bank issues a card<br />
that can be used as plastic money. This card can be reloaded at any time and gives the user access to<br />
the funds that he has already loaded. <strong>The</strong>re are two companies that provide electronic payment<br />
settlement services globally: Master and Visa. If the prepaid card is linked to the Visa Company’s<br />
settlement process it is known as Visa Debit Card.<br />
Keywords:<br />
Debit Cards, Prepaid Cards, Bank Visa Cards, UBL Cards, Bank Services.<br />
Introduction<br />
UBL Wiz is Pakistan’s first ever Prepaid VISA Debit Card that provides the convenience, security and<br />
benefits <strong>of</strong> an ATM and Debit Card, locally and internationally 1 . <strong>The</strong> card was launched in August<br />
2008 and has quickly gained popularity; following are some interesting stats related to the card 2 :<br />
• A base <strong>of</strong> over 150,000 cards in the market.<br />
• Out <strong>of</strong> the total card base, almost 50% are traveller category card.<br />
• Over 85% <strong>of</strong> the transactions being carried out on the Wiz card are on the internet.<br />
<strong>The</strong> need for a Foreign Currency Card<br />
Presently, the customers have to face significant currency exchange charges when using the card<br />
abroad; thus, the card user faces a loss <strong>of</strong> around 2.5% <strong>of</strong> the transaction value due to these charges.<br />
“To effectively counter the adverse rate regime, UBL is planning to launch an FCY prepaid card that<br />
will enable cardholders to withdraw funds and conduct transactions without any currency conversion<br />
charges or exchange rate fluctuations. <strong>The</strong> card will be a standard prepaid VISA debit card and<br />
available in four denominations (USD, Euros, Saudi Riyal, and GBP) and a customer will be able to<br />
purchase the same from all UBL Online branches (initially, only through FCY dealing branches),<br />
either by getting PKR converted through the bank and purchasing a card <strong>of</strong> his/her choice<br />
denomination, or submitting FCY to purchase the FCY card (in the same currency). Since the card will<br />
be denominated in foreign currency, the exchange rate will be locked in at the time the card is<br />
loaded” 3 .<br />
1 (UBL, 2011)<br />
2 (UBL, 2011)<br />
3 (UBL, 2011)<br />
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Industry Life Cycle Curve:<br />
<strong>The</strong> Wiz-FCY card would be the first <strong>of</strong> its kind in the market; UBL has a great opportunity to stamp<br />
its place in this area and establish a first mover’s advantage. But since the financial industry <strong>of</strong><br />
Pakistan is by no means close to the maturity stage, it would be difficult to maintain this advantage as<br />
competitors are likely to rush in as soon as the product succeeds.<br />
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Mapping Potential Customers<br />
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Segmenting the Market<br />
Geographic: <strong>The</strong> target customers <strong>of</strong> the FCY card would predominantly be urbanites and therefore<br />
the target regions are the major cities <strong>of</strong> the country such as: Karachi, Lahore, Islamabad, Hyderabad,<br />
Faisalabad, Multan, Bahawalpur, Quetta, Peshawar, Sukkur, Sialkot, and Gujranwala etc. Even from<br />
among these, Karachi and Lahore would constitute the bulk <strong>of</strong> the target market.<br />
Demographic: <strong>The</strong> target consumer would be within the age bracket <strong>of</strong> around 20-60; this is because<br />
anyone who is in the college going age (which is around 20) to anyone who is yet to retire would be a<br />
potential customer <strong>of</strong> the FCY card.<br />
Psychographic: High Net Worth individuals with a busy and high class lifestyle full <strong>of</strong> international<br />
travelling would be the main target <strong>of</strong> the FCY card.<br />
Possible Patterns <strong>of</strong> Target Market Selection<br />
Since the product in question is only one, only two patterns are relevant, namely:<br />
Single Segment Concentration: When one product is used for targeting a single-segment <strong>of</strong> the<br />
market; for instance, the Wiz-FCY card targeting only people having the particular traits mentioned<br />
above.<br />
Full Market Coverage: <strong>The</strong> product targets all market segments. For instance, Wiz-FCY targeting all<br />
possible users regardless <strong>of</strong> their characteristics.<br />
P=Product<br />
M=Market<br />
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WTO: Trade and Environment-<strong>The</strong> two Notions<br />
Dr. Kalpana Agrawal<br />
Asst.Pr<strong>of</strong>.Prestige Institute <strong>of</strong> Management and <strong>Research</strong>,Indore<br />
Abstract<br />
Trade has grown dramatically in the last decades and has increased widely in scope: it affects more<br />
and more other areas <strong>of</strong> public policy, such as environmental standard setting, environmental<br />
protection, agricultural subsidies, or health measures. <strong>The</strong> general decline in tariff barriers at the<br />
national borders has ensured that any given cost-raising standard is becoming relatively more<br />
important for international competitiveness. Thus, the WTO increasingly has to deal with non-tariff<br />
barriers to trade, such as standards <strong>of</strong> environmental protection, which <strong>of</strong>ten go at the heart <strong>of</strong> national<br />
policy-making.<br />
Concern for the environment is now building in to the mandate <strong>of</strong> WTO, though there is disagreement<br />
about the nature <strong>of</strong> this commitment. At the same time, environmental awareness has increased, and<br />
the scientific basis for environmental protection is becoming more solid. Various attempts have been<br />
made to co-operate internationally in order to stop environmental degradation. This trend <strong>of</strong> increased<br />
emphasis on environmental policies is relatively recent: with higher income in the industrialized world,<br />
demand for environmental goods has increased and channels to lobby have become institutionalized<br />
and organised more effectively.<br />
Since trade and environment both affect the use <strong>of</strong> natural resources, they naturally interact - and the<br />
two camps have had a long legacy <strong>of</strong> mutual mistrust. As Fontagné (2001) puts it succinctly, “Trade<br />
and environment: the two notions are at the epicenter <strong>of</strong> the globalization debate”. In recent years, the<br />
relationship between international trade and environmental policies has attracted increasing attention.<br />
In some ways international policies and instruments on trade and environment have compatible goals,<br />
but in others the objectives and effects appeared to conflict. <strong>The</strong> present paper is an attempt to study<br />
the same. <strong>The</strong> first part <strong>of</strong> this paper will compile an inventory <strong>of</strong> the WTO’s environmental provisions<br />
and the recent developments in the negotiations as well as in WTO-case law. It will primarily focus on<br />
the Marrakech and the Doha Declarations and the workings <strong>of</strong> the Committee on Trade and<br />
Environment.<br />
Introduction<br />
Today the whole world is witnessing a paradigm shift in the way the businesses have been carried over<br />
the years and the way in which they are being designed in the present scenario. After the Second<br />
World War, the whole world was divided into two regional blocks, one that was led by the USA and<br />
the other which was headed by the then USSR. During the cold war scenario, the trade and business<br />
related to the international trade was done with the political interest being given more weightage than<br />
the business development plans. <strong>The</strong> formation <strong>of</strong> GATT (General Agreement on Tariff and Trade)<br />
which was formed in the 1948 as a measure to develop the international trade served as a base for<br />
integration <strong>of</strong> the world trade. <strong>The</strong> countries which were a part <strong>of</strong> the GATT had several round <strong>of</strong><br />
negotiations so that more liberal terms and conditions could be evolved for the expansion <strong>of</strong> the<br />
international trade. But the real challenge was witness when the eighth round <strong>of</strong> the negotiation which<br />
was held in the Uruguay in 1986 lasted for about many years and until in 1994, Mr. Authur Dunkel<br />
who was the Director <strong>of</strong> GATT had prepared a draft as there could not be a consensus <strong>of</strong> the<br />
participating countries. On 31 st December 1994, the much debated GATT agreement came to an end<br />
and this marked the beginning <strong>of</strong> new more powerful organization which .was called as the WTO<br />
(World Trade Organization) which was formed on 1st January about 148 countries are the members <strong>of</strong><br />
the WTO.<br />
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<strong>The</strong> basic objective <strong>of</strong> WTO were:<br />
Trade without Discrimination<br />
Trade without Barriers<br />
<strong>The</strong> above said objectives gives a required platform for the developing and the developed counties <strong>of</strong><br />
the world to provide a level playing field which would ensure that no one who is a part <strong>of</strong> the WTO<br />
agreement would suffer either economically and that the world trade develops and more employment<br />
opportunities are being provided. A very important aspect <strong>of</strong> the international business is that <strong>of</strong><br />
international trade. For over several decades, international trade has been growing much faster than the<br />
world. For more than two and half decades until the oil shock <strong>of</strong> the early 1970s there was tremendous<br />
expansion <strong>of</strong> the world trade propelled by the progressive trade liberalization and high growth rates <strong>of</strong><br />
output. <strong>The</strong>reafter, there has been a substantial growth <strong>of</strong> the non-tariff barriers to trade and a fall in<br />
the growth rates <strong>of</strong> the developed economies<br />
causing slow down <strong>of</strong> the pace <strong>of</strong> trade growth. However, the rate <strong>of</strong> growth <strong>of</strong> the world trade has<br />
been significantly higher than that <strong>of</strong> the world output implying that more and more proportion <strong>of</strong> the<br />
world output has been traded across the national borders.<br />
Growth <strong>of</strong> World Exports<br />
During 1950-60s the value <strong>of</strong> world exports became more than doubled. During the 1970s the value <strong>of</strong><br />
the world exports increased by about five and half times. During the1980-90, the value <strong>of</strong> world<br />
exports increased by 80 per cent. In the first half <strong>of</strong> the 1990s, it increased by about 47 per cent. By the<br />
end <strong>of</strong> the 1990s, the combined value <strong>of</strong> the world trade in good and services reached $ 7 trillion and<br />
in achieving this growth the WTO has a leading role to play. But at the same time this growth <strong>of</strong><br />
international trade in the recent past has come under attack for ignoring environmental and social<br />
issues in promoting global trade. <strong>The</strong>re are ample evidence that it has undermined health, safety,<br />
environmental standards, and human rights in making trade policy worldwide. <strong>The</strong> Tuna-Dolphin and<br />
Shrimp Turtle case reveal the same. <strong>The</strong>re thus exists an undesirable effect <strong>of</strong> rapid increase in trade<br />
on deforestation, depletion <strong>of</strong> Ozone layer, climate change, hazardous waste and exploitation <strong>of</strong> natural<br />
resources.<br />
Environmental issues<br />
Environment refers primarily to the things which are around us and infact the liberalization,<br />
globalization cannot achieved by neglecting the environment which is the prime reason for the<br />
development <strong>of</strong> mankind and a healthy environment is a must for the growth and survival <strong>of</strong> the<br />
mankind and for the coming generation. <strong>The</strong> developed countries <strong>of</strong> the world have always raised the<br />
environmental issues. Developed countries, particularly EU, were very keen on negotiations on<br />
environment related issues to accommodate concerns <strong>of</strong> their civil society. <strong>The</strong>y wanted environmental<br />
considerations integrated throughout the negotiations in the new Round ('mainstreaming') which will<br />
also dilute the focused mandate <strong>of</strong> the Committee on Trade and Environment (CTE ) to that extent.<br />
USA was further keen that Members right to set high environmental standards was not undermined by<br />
trade rules. US and CAIRNS Group countries also called for the removal <strong>of</strong> environmentally damaging<br />
subsidies such as agricultural subsidies and fishery subsidies that contributed to over capacity.<br />
Developing countries sought adjustments in the TRIPS Agreement for preservation <strong>of</strong> biological<br />
diversity and reward for traditional knowledge. <strong>The</strong> proposal to mainstream environment dilute the<br />
role <strong>of</strong> CTE and the US proposal regarding environmental standards were opposed by some developing<br />
countries including India while there was considerable support for removal <strong>of</strong> environment- related<br />
subsidies. <strong>The</strong> TRIPS related proposals were supported by some, but there was no consensus.<br />
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Nature <strong>of</strong> Environmental Barriers:<br />
<strong>The</strong>se barriers focus on areas, which have been the subject <strong>of</strong> environmental campaigns to: (Aserkar<br />
andVyas,2007)<br />
Eliminate use <strong>of</strong> toxic, substances - chemicals and heavy metals in particular<br />
Recycling <strong>of</strong> waste product and packaging;<br />
Protect wildlife;<br />
Raise food safety standards;<br />
Promote organic food and oppose genetically modified organisms(GMOs).<br />
Critical Environmental Issues :<br />
1)Eco-labeling<br />
2)Effluent Emission Norms<br />
3)Standards regulating (maximum residue) levels <strong>of</strong> toxic substances in products<br />
4)Standards for product harvesting<br />
5)Packaging and labeling requirements<br />
6)Standards mandating energy efficiency/emissions reductions<br />
7)Regulations pursuant to MEAs and other international treaties<br />
Issues in Environment and Trade:<br />
Trade and environment issues started gaining mainstream attention in the beginning <strong>of</strong> the 1990s, in<br />
the wake <strong>of</strong> the now (in)famous General Agreement on Tariffs and Trade (GATT) Tuna/Dolphin<br />
decision. In this particular case, the WTO ruled the US policy <strong>of</strong> banning imports <strong>of</strong> tuna from states<br />
that used purse seine fishing techniques to catch tuna, and subsequently kill dolphins, violated the<br />
terms <strong>of</strong> GATT. <strong>The</strong> ruling struck a raw nerve among the flipper generation and provided the impetus<br />
for bringing the issues associated with trade and the environment to national attention.<br />
<strong>The</strong> topic stayed in front <strong>of</strong> the public throughout the 1990s because in1998, the WTO gain<br />
ruled against a US ban on shrimp imports caught without Turtle Excluder Devices (TEDs) , equipment<br />
developed to help save endangered sea turtles. <strong>The</strong>se two cases show how process, the issue <strong>of</strong> how<br />
goods are produced, can stir up trade and environmental problems. However, trade and environment<br />
issues encompass a much broader and complicated set <strong>of</strong> issues than merely the issue <strong>of</strong> process.<br />
Environmentalists express concern that years <strong>of</strong> work negotiating environmental treaties could be<br />
disrupted if WTO rules <strong>of</strong> trade are used to nullify those environmental enforcement measures under<br />
the assumptions that they violate free trade principles.<br />
Trade Policy and Global Environmental Changes:<br />
In recent years the relationship between international trade and environmental policies has attracted<br />
increasing attention. In some ways international policies and instruments on trade and environment<br />
have compatible goals, but in others the objectives and effects appear to conflict. Issues within the<br />
trade environment debate include:<br />
to what degree international trade regulation and liberalization may constrain international and<br />
domestic environmental regulation;<br />
whether trade agreements provide a forum for Harmonization <strong>of</strong> Environmental Standards and<br />
whether harmonization positively or negatively affects the environmental impact <strong>of</strong> economic activity<br />
if trade agreements provide an effective forum for internalizing environmental costs not<br />
currently accounted for in production and processing <strong>of</strong> traded goods. the question <strong>of</strong> tansparency <strong>of</strong><br />
dispute resolution mechanisms in multilateral trade agreements if applied to environmental matters.<br />
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the application <strong>of</strong> intellectual property rights and patent regimes, especially as related to<br />
biodiversity.<br />
Harmonization <strong>of</strong> Environmental Standards:<br />
Harmonization refers to the process through which environmental standards in different countries are<br />
brought to similar levels. This process can become an issue in trade, because higher environmental<br />
standards may impose costs on manufacturers or other goods producers. Trade disadvantages could<br />
result for countries where more stringent standards increase the price <strong>of</strong> goods compared to that in<br />
countries with less restrictive environmental standards. <strong>The</strong> Organization for Economic Cooperation<br />
and Development (OECD) and the European Union (EU) have both actively promoted harmonized<br />
environmental standards.(Joshi and Srinivas,2007)<br />
WTO and Environment<br />
Why is the environmental topic important for the WTO? First <strong>of</strong> all, the WTO itself calls it a “new<br />
high pr<strong>of</strong>ile”. <strong>The</strong> trade and environment debate is complex and varied, and it involves some <strong>of</strong> the<br />
most fundamental WTO principles and rules, such as the concept <strong>of</strong> non-discrimination and the<br />
definition <strong>of</strong> “like products”. It is a horizontal issue that cuts across many disciplines in WTO. For<br />
example, Multilateral Environmental Agreements have consequences for trade which may come into<br />
conflict with the general aim <strong>of</strong> the WTO to reduce trade barriers.<br />
In addition, the recent WTO round is marked by great cleavages and drifts and has more than once<br />
been at the brink <strong>of</strong> failure. Although they are not the main focal point <strong>of</strong> the internal cleavages,<br />
environmental issues bear the potential <strong>of</strong> worsening the North-South drift in the WTO, which could<br />
possibly escalate and eventually undermine the global trading system.<br />
Nordström and Vaughan (1999) regret that, “One <strong>of</strong> the unfortunate features <strong>of</strong> the trade and<br />
environment debate is that at times it has generated more heat than light”: too many generalizations<br />
have been made both from the trade and the environmental communities.<br />
<strong>The</strong> complexity <strong>of</strong> the interrelation and the scarcity <strong>of</strong> empirical evidence undermine the ground for a<br />
solid and factual debate. Thus, in the following, this article seeks to shed light on the trade and<br />
environment debate in general arguing that the WTO cannot turn its back on environmental aspects <strong>of</strong><br />
trade. This article follows the premise that - independent from what the WTO concludes with regard<br />
to its relationship with environmental aspects - environmental concerns are among the crucial issues<br />
that need to be addressed for the WTO to strengthen its credibility and public image. After having<br />
depicted the “green” provisions by the WTO and recent developments, the focus is on the normative<br />
aspects <strong>of</strong> the role <strong>of</strong> the WTO and on the assessment <strong>of</strong> recent WTO-developments with regards to<br />
the environment.<br />
Trade and environment, as an issue, is by no means new. <strong>The</strong> link between trade and environmental<br />
protection both the impact <strong>of</strong> environmental policies on trade, and the impact <strong>of</strong> trade on the<br />
environment was recognized as early as 1970. Growing international concern about the impact <strong>of</strong><br />
economic growth on social development and the environment led to a call for an international<br />
conference on how to manage the human environment. <strong>The</strong> 1972 Stockholm Conference was the<br />
response.<br />
Objectives <strong>of</strong> the study<br />
• To understand the trade liberalization and the need for environmental cooperation.<br />
• To understand is trade liberalization and environmental protection compatible ?<br />
• To understand the appropriate role <strong>of</strong> WTO regarding environment.<br />
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<strong>Research</strong> Methodology<br />
<strong>The</strong> information needed for the study was obtained from secondary sources. To understand the role <strong>of</strong><br />
WTO better, a few real-world cases, interviews available at net, that elaborate the benefits <strong>of</strong><br />
environmental protection were also analyzed. <strong>The</strong> information obtained was analyzed keeping the<br />
objectives in mind and presented in the relevant format.<br />
Review <strong>of</strong> Literature<br />
Environmental issues as Non-Tariff Barriers<br />
With the progress <strong>of</strong> liberalization process, that is, gradual reduction <strong>of</strong> tariff levels and removal <strong>of</strong><br />
quantitative restriction, mainly from agricultural and textile products, the developed countries are<br />
resorting to the alternate trade restricting measures. <strong>The</strong>se new era barriers include the non-tariff<br />
barriers such as environment standards, food safety regulation, labeling requirement and quality<br />
standards. <strong>The</strong> trade and environment have are closely related to each other in free trade regime. This<br />
focus on trade and environment in the international trade framework helps promoting environmental<br />
protection and ensures an open, equitable, multilateral trade system.<br />
Environmental and health-related standards and regulations in developed-country markets are creating<br />
hurdles for the exports <strong>of</strong> products from developing countries like India. <strong>The</strong> environment-related<br />
non-tariff barriers (ETBs) generally cover all barriers that have been introduced by the importing<br />
country to protect the environment, as well as the<br />
health and safety <strong>of</strong> wildlife, plants, animals and humans. Developing countries have to adjust their<br />
production processes in response to changing environmental regulations in developed countries.<br />
Measures such as pesticide maximum residue levels (MRL) permitted in foodstuffs, emission<br />
standards for machines, and packaging eco-labeling requirements have created operational hurdles for<br />
our exporters. <strong>The</strong>se barriers mainly have distorting effects on our small sector exporters because huge<br />
costs are involved in adhering to the standards set.<br />
It is assumed that when a single country or a limited number <strong>of</strong> countries enforce an ETB it is more<br />
likely that these countries have simply enforced a non-tariff barrier. Such trade restrictive measures are<br />
bigger threat for the trading environment.<br />
At the global level, 185 products have been identified, which face environment-related trade barriers in<br />
at least one importing country. <strong>The</strong>se environmental based issues are <strong>of</strong> great concern for India<br />
because these are largely affecting the vibrant export sectors <strong>of</strong> the Indian economy. <strong>The</strong>y are mainly<br />
leather and leather products, textiles, chemicals, marine products, tea and other agricultural products<br />
and are mostly concentrated in SME sector. <strong>The</strong> nature <strong>of</strong> NTBs faced by these sectors, ranges from<br />
technical standards and product content requirements to mandatory labeling, eco-labeling. packaging<br />
requirements and other SPS-related measures.<br />
WTO & Environmental Barriers:<br />
<strong>The</strong>re is no specific agreement dealing with the environment in WTO, however, a number <strong>of</strong> the WTO<br />
agreements include provisions dealing with environmental issues. At the end <strong>of</strong> the Uruguay Round in<br />
1994, the participating countries decided to begin a comprehensive work }programme on trade and<br />
environment in the WTO. <strong>The</strong>y created the Trade and Environment Committee (CTE). While<br />
following such environmental barriers countries have to follow the basic principles <strong>of</strong> WTO pertaining<br />
to transparency, non-discrimination and MFN. WTO keeps a check on the member the countries that<br />
they use these environmental provisions only as precautionary measure and not as preventive measure.<br />
Such measures should not be invariably high, aiming to restrict the imports <strong>of</strong> certain commodities.<br />
E.g. In early 1997, India, Malaysia, Pakistan and Thailand brought a joint complaint against a ban<br />
imposed by the US on the importation <strong>of</strong> certain shrimp and shrimp products. <strong>The</strong> protection <strong>of</strong> sea<br />
turtles was at the heart <strong>of</strong> the ban..<br />
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Under <strong>The</strong> US Endangered Species Act <strong>of</strong> 1973, the US required US shrimp trawlers to use "turtle<br />
excluder devices" (TEDs) in their nets when fishing in areas where there is a significant likelihood <strong>of</strong><br />
encountering sea turtles, as they consider some varities <strong>of</strong> turtles as endangered.<br />
In the ruling the Appellate Body made clear that under WTO rules, countries have the right to take<br />
trade action to protect the environment (in particular, human, animal or plant life and health) and<br />
endangered species and exhaustible resources. <strong>The</strong> WTO does not have to "allow" them this right. So,<br />
this action <strong>of</strong> US to ban the imports <strong>of</strong> shrimps on environmental protection ground was acceptable.<br />
Still, the US lost the case, on the grounds <strong>of</strong> practicing discrimination among the members. It provided<br />
countries in the western hemisphere mainly in the Caribbean - technical and financial assistance and<br />
longer transition periods for their fishermen to start using turtle-excluder devices, though the same<br />
were not provided to the four Asian countries (India, Malaysia, Pakistan and Thailand) that filed the<br />
complaint with WTO.<br />
Provisions in the WTO agreements dealing with environmental issues:<br />
GA TT Article 20 : policies affecting trade in goods for protecting human, animal or plant life<br />
or health are exempt from normal GATT discplines under certain conditions.<br />
Technical Barriers to Trade (i.e. product and industrial standards), and Sanitary and<br />
Phytosanitary Measures (animal and plant health and hy!,rienc): explicit recognition <strong>of</strong> environmental<br />
objectives.<br />
Agreement on Agriculture: environmental programmes exempt from cuts in subsidies<br />
Subsidies and Countervail: allows subsidies, up to 20% <strong>of</strong> firms' costs,for adapting to new<br />
environmental laws.<br />
Intellectual property: governments can refuse to issue patents that threaten human, animal or<br />
plant life or health, or risk serious damage to the environment<br />
(TRIPS Article 27).<br />
GATS Article 14: policies affecting trade in services for protecting human, animal or plant life<br />
or health are exempt from nornal GATS disciplines under certain conditions.<br />
<strong>The</strong> Trade and Environment<br />
In theory, the objectives <strong>of</strong> trade liberalization and environmental protection are compatible: they both<br />
aim for the reduction <strong>of</strong> distortion and thus optimization <strong>of</strong> efficiency in the use <strong>of</strong> resources. From a<br />
normative, welfare-theoretical point <strong>of</strong> view, free trades and environmentalists have a common goal:<br />
the increase <strong>of</strong> social welfare. <strong>The</strong>re are possible win-win situations in which trade liberalization and<br />
environmental protection interact positively, for example in the case <strong>of</strong> elimination <strong>of</strong> trade subsidies<br />
that increase environmental degradation such as agricultural over-use <strong>of</strong> resources, deforestation or the<br />
depletion <strong>of</strong> fisheries. Trade encourages the economy to develop - from primary resource extraction to<br />
manufacturing and eventually to (less polluting) services. If poverty is the core <strong>of</strong> the problem <strong>of</strong><br />
environmental degradation, economic growth will be part <strong>of</strong> the solution <strong>of</strong> a shift from more<br />
immediate concerns to long-run investment into the future resources. Furthermore, an improvement in<br />
production techniques through international dissemination <strong>of</strong> technological knowledge helps reduce<br />
pollution.<br />
Yet there are as well areas <strong>of</strong> conflict between trade and environment. Most importantly, trade<br />
increases economic growth and with the rise in quantities produced (and given market failures),<br />
pollution increases. Furthermore, trade liberalisation opens up the possibility <strong>of</strong> firms moving their<br />
production to countries with lower environmental standards in order to save costs. This can lead to<br />
“eco-dumping” in less regulated countries or to a “race to the bottom” <strong>of</strong> standards, if more regulated<br />
countries want toattract or keep business. <strong>The</strong> net environmental outcome <strong>of</strong> trade is difficult to<br />
evaluate precisely, but Brack (2000) evaluates that the structural effects and win-win situations are<br />
most likely to be <strong>of</strong>fset by the large negative scale effects from the expansion <strong>of</strong> economic activity,<br />
and smaller aggregate negative distribution effects.<br />
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On the appropriate role <strong>of</strong> the WTO regarding the environment<br />
<strong>The</strong>re is no international consensus on which role the WTO is supposed to play in environmental<br />
issues. Many free-traders world argue that the WTO should have nothing to do with environmental<br />
concerns, as its sole purpose is to promote free trade and that environmental protection should be left<br />
to another body, possibly the MEAs’ secretariats or a new body. It is claimed that the WTO is not the<br />
appropriate institution for environmental concerns, as it is arguably overloaded. This trade round is<br />
arguably overburdened, and by advancing another the contentious issue such as environment and trade,<br />
this might contribute to the failure <strong>of</strong> the already-fragile round.<br />
Similarly, developing countries are very skeptical about an expanded role <strong>of</strong> the WTO in maintaining<br />
environment standards. <strong>The</strong>y accuse the EU <strong>of</strong> pushing for the WTO’s further development in its own<br />
environmental terms. This in turn decreases the capacity for developing countries to capitalise on their<br />
own comparative advantages and it could be seen as “green protectionism” or “protectionism in<br />
disguise”, . In this sense, many suspect that environmental standards would not serve as market<br />
correction, but as disguised non-tariff trade barrier. <strong>The</strong>re is the danger that pressure groups find it<br />
advantageous to support environmental claims in order to provide an additional, socially respectable,<br />
reason for unilateral import restrictions. Hence, although environmental issues have gained some<br />
legitimacy as an element <strong>of</strong> global trade policy, many economists remain unconvinced <strong>of</strong> the benefits<br />
from systematic linkages.<br />
But at the same time “ <strong>The</strong> WTO cannot operate in isolation from the world in which it exists”: In the<br />
absence <strong>of</strong> a parallel organisation, with inclusive membership and a built-in mechanism for dispute<br />
resolution with sanctions, the WTO has emerged as a platform for debate on environment and trade<br />
issues over the last decade. In the need for cooperation, trade measures through the WTO are a<br />
powerful stick-and-carrot method to conform to international environmental standards. <strong>The</strong> theory <strong>of</strong><br />
the second best suggests that one distortion (i.e. the environmental spill-over) can <strong>of</strong>ten be best met by<br />
another distortion (i.e. a trade ban) to enhance welfare on the whole.<br />
Though while trade policy is clearly a second-best means to achieve environmental objectives, in<br />
practice it has become difficult to justify the exclusion <strong>of</strong> environment from negotiation on trade.<br />
Morici (2001) states that whether one is in favour or against it, the WTO participation in<br />
environmental issues is already a practical fact and not a theoretical proposition - an inevitable<br />
outcome <strong>of</strong> the recent trends. To Esty (1996), responding to environmental concerns is a political<br />
necessity for the trade community: “If the momentum for trade is to be maintained, the already-narrow<br />
coalition in favour <strong>of</strong> freer trade” is risked. As an influential institution <strong>of</strong> global governance, the<br />
WTO should to promote environmentally sensitive trading regimes and show responsibility to the<br />
common global goods.(Gnath 2008)<br />
Market Access- green protectionism<br />
<strong>The</strong> issue <strong>of</strong> environmental protection based on PPM-discrimination has great consequences for the<br />
developing countries. <strong>The</strong>se countries <strong>of</strong>ten find themselves on the receiving end <strong>of</strong> environmental<br />
regulation: due to structural weaknesses they are standard-takers, and not standards makers. Thus,<br />
many developing countries are very suspicious about high-income countries’ motives and condemn<br />
this form <strong>of</strong> disguised protectionism vigorously. Krueger (2000) criticises: “Those seeking protection<br />
have no hesitation in cloaking their aspiration with the legitimacy <strong>of</strong> other issues.” It is thus vital that<br />
environmental concern do not become an alibi for reintroducing unilateral trade barriers, which have<br />
been reduced elsewhere. Recently, rather than tackling these difficult issues, discussions have<br />
concentrated on the win-win situations on agriculture and fishery, where trade liberalization could play<br />
a positive role for the environment. <strong>The</strong> width <strong>of</strong> existing decisions on the WTO has favoured free<br />
trade but there is no closure on these issues, as can be seen from the second shrimp ruling. Thus, Brack<br />
and Branczik(2004) claim that, “<strong>The</strong> story <strong>of</strong> the trade and environmental debate in the world trade<br />
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organization is one continued failure to make any substantial progress in rewriting WTO rules- but<br />
significant changes in the way in which existing rules have been interpreted.”(Gnath 2008)<br />
Discussion<br />
Assessment <strong>of</strong> the WTO’s provisions and latest developments<br />
This paper argues that WTO and environment are naturally linked and the role <strong>of</strong> the WTO in<br />
environmental protection should be an active one. From the review <strong>of</strong> literature it is obvious that the<br />
trade and environment debate has steadily moved inward to the WTO agenda. While GATT was an<br />
agreement solely with the purpose <strong>of</strong> reducing trade barriers, the WTO, according to Cottier (1997),<br />
“increasingly assumes constitutional functions in a globalizing economy. It moves center stage to<br />
shape global economic policies ,the system become multifunctional.” Thus, the WTO has developed<br />
into an important forum <strong>of</strong> international environmental policy.<br />
Yet it is not entirely clear whether the provisions built into the WTO-framework to protect the<br />
environment are a mere lip service to the environment. <strong>The</strong> establishment <strong>of</strong> the CTE and the<br />
provisions in the Doha Ministerial Declaration do not imply that that much progress has actually been<br />
made in terms <strong>of</strong> reaching a resolution <strong>of</strong> the inherent tensions. Despite progress being made in<br />
bridging some gaps between free traders and environmentalists, the North-South gap has become<br />
critical enough to threaten further programme on the agenda at all, including environmental aspects.<br />
How green is the WTO?<br />
Marrakech Declaration 1994 and the creation <strong>of</strong> WTO<br />
<strong>The</strong> WTO has no specific agreement dealing with the environment, as it is foremostly a trading<br />
organisation. It did not include a specific agreement in order to centralise all linkages; when the WTO<br />
was founded in 1994, negotiators took a more diffuse approach by establishing the Committee on<br />
Trade and Environment to deal with environmental issues. Yet a number <strong>of</strong> agreements include<br />
provisions for the environment. <strong>The</strong>se „green provisions” actually countervail the general stance <strong>of</strong> the<br />
organisation’s principle <strong>of</strong> free trade.<br />
"Governments are trading away our environment at the WTO. <strong>The</strong> WTO has already been used in the<br />
past as a weapon against environmental protection and public health. With this deal, even more<br />
environmentally and socially sensitive sectors will be liberalised. Corporate lobby groups will be the<br />
big winners, the environment and the poor the big losers."<br />
David Waskow <strong>of</strong> Friends <strong>of</strong> the Earth US said: "<strong>The</strong> WTO process is completely undemocratic, and<br />
this framework agreement is the result. If the WTO proceeds on the course just laid out, these<br />
negotiations will pose a serious threat to people and the environment around the world."<br />
Trade could play a positive role. Trade could play a positive role in this process by facilitating the<br />
diffusion <strong>of</strong> environment-friendly technologies around the world. Of course, this would require that<br />
countries are ready to scrap trade barriers on modern technologies and suppliers <strong>of</strong> environmental<br />
services to reduce the cost <strong>of</strong> investing in clean technologies and environmental management systems.<br />
A new round <strong>of</strong> trade liberalization negotiations could make a contribution here. Another potential<br />
contribution <strong>of</strong> such a round would be to address subsidies that harm the environment, including<br />
energy, agricultural and fishing subsides. This would yield a double dividend by benefiting the<br />
environment and the world economy at the same time. In short, trade is really not the issue, nor is<br />
economic growth. <strong>The</strong> issue is how to reinvent environmental polices in an ever more integrated world<br />
economy so as to ensure that we live within ecological limits. <strong>The</strong> way forward, it would seem to us, is<br />
to strengthen the mechanisms and institutions for multilateral environmental cooperation, just like<br />
countries 50 years ago decided that it was to their benefit to cooperate on trade matters.(Gnath 2008)<br />
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Suggestions for the Development <strong>of</strong> International trade with respect to Environmental standards:<br />
1.Strict regulations to comply with international trade:- One <strong>of</strong> the methods to make the member<br />
countries follow the international environmental standards is to make the more stringent regulations<br />
which could be in the form <strong>of</strong> huge monetary penalty if the goods do<br />
or services exported do not adhere to the international norms and create environmental pollution. This<br />
method should be used in only those cases where' the default has been made with the willful intention.<br />
Those countries which violate the international environmental norms due to theinadequate availability<br />
<strong>of</strong> the infrastructure facility or due to the lack <strong>of</strong> superior technology should be exempted from the<br />
penalty.<br />
2.Increase the transition time for developing countries:- <strong>The</strong> time for the developing countries to<br />
comply with the international trade norms should be increased so that they can make the required<br />
structural changes in the economy, regulatory reforms to strengthen the implementation <strong>of</strong> the<br />
international norms, changes in the economic policies to ensure that they are in harmonization with the<br />
international trade and economic development. Countries like India where the WTO agreement has<br />
been implemented from 1st January 2005, should be given ample time to adjust with the requirements<br />
with that <strong>of</strong> the international trade. This would also ensure that the environmental norms would also be<br />
maintained.<br />
3.Broad outlines or Code for companies to follow environmental norms:- All the member countries <strong>of</strong><br />
the world which are a part <strong>of</strong> the WTO should be given a broad outlines regarding the expected<br />
behavior in terms <strong>of</strong> the environmental standards to be followed by them. <strong>The</strong> detailed guidelines<br />
should be in the form <strong>of</strong> detailed procedures which makes it possible for the member countries to make<br />
the required changes in the production processes. For instance the fisherman in India uses the normal<br />
net to catch the<br />
fishes which are then exported. But the developed countries reject them because the turtles which are<br />
considered as the endangered species are trapped in the net and die. As per the international norms the<br />
specific type <strong>of</strong> net is to be used which would ensure that the turtles go free out <strong>of</strong> the net. !Jut the<br />
farmers which are poor and ignorant do not use any <strong>of</strong> such instruments and as a result ultimately end<br />
up ill the loss.<br />
4.Monetary support :- <strong>The</strong> world agencies like the World Bank and the International Monetary fund<br />
should provide the monetary support to the poorer countries <strong>of</strong> the world so that their economies can<br />
develop and they can also be part <strong>of</strong> the international trade. For instance recently the World Bank and<br />
IMF has waived the loan <strong>of</strong> $ 40 billion given to the poorer counties <strong>of</strong> the world. Such gestures would<br />
help the poorer to shape up their economies and give them a opportunities to become the part <strong>of</strong> the<br />
global trade<br />
5.Scientific and technological aid from the developed countries:- <strong>The</strong> developed countries <strong>of</strong> the world<br />
should come forward and provide the technological support to the underdeveloped countries which<br />
would provide the level playing to them and make the compete with the other developed countries.<br />
This growth would help the underdeveloped countries to make the products as per the international<br />
standards which are also environmental friendly. This would make the more growth in the area <strong>of</strong><br />
international trade.<br />
6.Consideration <strong>of</strong> all for developing standards:- <strong>The</strong> standards which are to be framed. for the better<br />
trade and development relations among the member counties should be based after taking into<br />
consideration all the practical limitations <strong>of</strong> the member countries. This would ensure that there is no<br />
conflict among the member countries and that they could understand the importance <strong>of</strong> safer<br />
environmental standards.<br />
Conclusion<br />
While the net effect <strong>of</strong> trade on the environment is not clear-cut, the implications from the recent<br />
literature are that trade expansion through liberalisation is likely to affect the environment negatively.<br />
Thus, it is necessary to <strong>of</strong>fset the effects, especially by adjusting global environmental policies<br />
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upwardly through international coordination. <strong>The</strong> stance <strong>of</strong> the WTO on this is not entirely clear: WTO<br />
is not an environmental organisation but it is getting greener. In particular, WTO case law has<br />
developed in favour <strong>of</strong> environmental protection. Yet, in spite <strong>of</strong> the political recognition <strong>of</strong> the<br />
importance <strong>of</strong> environmental aspects and the link with trade and the WTO and the recent rulings,<br />
environment issuesare still sidelined or treated as a residual issue if one looks at the recent<br />
development <strong>of</strong> the Doha trade round or the July framework accord.<br />
As this paper has shown, the topic <strong>of</strong> environment and trade and the WTO’s role in the debate is very<br />
heated and it includes a lot <strong>of</strong> rhetoric arguments on “green disguise” on part <strong>of</strong> the free-trade<br />
community and the developing world and on fears <strong>of</strong> a “race to the bottom” from NGOs and<br />
industrialised countries. In Doha, the “demander” for WTO negotiation on environmental issues was<br />
the EU, supported by Japan, Norway, and Switzerland. Yet, the great majority <strong>of</strong> members opposed<br />
such negotiations. This cleavage within the WTO needs to be solved – not only for the sake <strong>of</strong> the<br />
environmental debate – in order to achieve fruitful results in the recent trade round. In this context, the<br />
WTO needs to address environmental concerns in a way that does not increase the inter-organisational<br />
drifts and that strengthens the WTO as part <strong>of</strong> the global governance architecture. Especially in the<br />
absence <strong>of</strong> a global counterpart for environmental issues, the trade organisation cannot turn its back on<br />
this issue - deeds have yet to follow words.<br />
Meanwhile, even within its current mandate, the WTO could do a few important things for the<br />
environment. <strong>The</strong> most obvious contribution would be to address remaining trade barriers on<br />
environmental goods and services in order to reduce the costs <strong>of</strong> investing in clean production<br />
technologies and environmental management systems. Another contribution would be to seek<br />
reductions in government subsidies that harm the environment, including energy, agriculture and<br />
fishing subsidies.<br />
Although WTO is not the right forum to raise environmental issues,developed countries are using this<br />
forum for protecting their economies. Still tough actions are needed to be taken for overcoming<br />
environmental barriers successfully.WTO is looking after the implementation <strong>of</strong> the ETBs in<br />
international trade, still the members are skeptical about the issue that whether it is the right forum to<br />
discuss these issues or not. Though WTO advocates the clause <strong>of</strong> free trade, the developed nations are<br />
using the ETBs as trade restrictive measures against the developing nations. Thus, WTO needs a more<br />
focused approach towards the implementation <strong>of</strong> the environmental issues so as to ensure more liberal<br />
and competitive trade environment.<br />
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Www.Europa.Eu.Int<br />
www.wto.org<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 53
Public Distribution System and its Service Quality<br />
G. Sangeetha, Ph.D., <strong>Research</strong> Scholar,<br />
Dr. S. Ramesh Kumar, Associate Pr<strong>of</strong>essor and Head,<br />
Dr. G. Padma Parvathy & G.Subbulakshmi, <strong>Research</strong> Department <strong>of</strong> Commerce,<br />
V.O.C College, Tuticorin, India.<br />
ABSTRACT<br />
<strong>The</strong> main aim <strong>of</strong> the study is to examine the Public Distribution System and its service quality.<br />
<strong>The</strong> cardholders and non-cardholders (n=446) are randomly selected respondents to represent in<br />
Tuticorin districts - Tamil Nadu. Majority <strong>of</strong> the respondents are housewives, followed by daily wage<br />
earners. <strong>The</strong> urban area respondents get high quality <strong>of</strong> services than rural area respondents. Both<br />
married and unmarried respondents have the same level <strong>of</strong> satisfaction with PDS commodities and<br />
services. <strong>The</strong>re is no delay in issuing cards and no manipulation play very important role in assessing<br />
PDS services. It shows that the satisfaction level on PDS services does not differ with the income <strong>of</strong><br />
respondents. Government should take steps to improve the quality <strong>of</strong> services and to ensure the<br />
distribution at right time to the cardholders.<br />
Key words: Service Quality and Public Distribution System.<br />
INTRODUCTION<br />
Public Distribution System aims at protecting the vulnerable sections <strong>of</strong> the society by bringing<br />
them into the public distribution network. PDS mainly aims to ensure food safety to the vulnerable<br />
society by providing food substances at affordable price (Swaminathan, A.M, 2010) 1 . <strong>The</strong> Government<br />
<strong>of</strong> India provides subsidy to food substances to guarantee the right to have food. <strong>The</strong> QQP (Quality,<br />
Quantity and Price) management is important for an effective public distribution system. <strong>The</strong><br />
government should evolve a mechanism to deal with this aspect. <strong>The</strong> PDS aims at eradication <strong>of</strong> rural<br />
poverty and inequality by providing justice to poor (Pattanaik, B.K, 1997) 2 . <strong>The</strong> service <strong>of</strong> Public<br />
Distribution System is one <strong>of</strong> the crucial variables mediating the relationship between aggregate food<br />
availability and the individual entitlements. Generally, the successful functioning <strong>of</strong> PDS is to be in<br />
adequate quota, correct weight and measures and the availability <strong>of</strong> commodities to the vulnerable<br />
society (Nakkiran 2004) 3 .<br />
2. MATERIALS AND METHODS<br />
2.1 SAMPLE SIZE<br />
<strong>The</strong> quantitative data for the study was collected from 446 respondents randomly selected from<br />
Tuticorin southern district <strong>of</strong> Tamil Nadu. In the field work, the data were collected through a well<br />
structured questionnaire through personal interview mode at the residence and near FPS after obtaining<br />
consent from them.<br />
2.2 RESEARCH DESIGN<br />
<strong>The</strong> survey analyses the consumption pattern <strong>of</strong> the respondents in PDS during the period <strong>of</strong><br />
January 2010 to February 2012 as a part <strong>of</strong> Doctoral research work. <strong>The</strong> questionnaire was divided<br />
into four sections (1) Demographic factor, (2) Mode <strong>of</strong> purchase, (3) Ownership and utilization nature<br />
and (4) Amount spending for rice.<br />
2.3 PILOT STUDY<br />
<strong>The</strong> questionnaire was pre-tested by collecting data from 90 respondents in Tuticorin from<br />
November 2010 to January 2011. <strong>The</strong> questionnaire was revised and restructured based on the results<br />
<strong>of</strong> the pilot study. Some additional questions were added after evaluating the questionnaires in the pilot<br />
study.<br />
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2.4 DATA ANALYSIS<br />
<strong>The</strong> collected data were analysed by using a statistical package <strong>of</strong> SPSS 17.0. Scores for each<br />
category were calculated by assigning correct responses. Percentage analysis <strong>of</strong> demographic factor is<br />
calculated and presented in tabular form. F test was used to analyse the satisfaction level on PDS<br />
among different income group <strong>of</strong> respondents at 5% level <strong>of</strong> significance. t test have been used to find<br />
out the relationship between satisfaction level on PDS and residential area and marital status <strong>of</strong> the<br />
respondents. Factor analysis has been used to find out the service qualities <strong>of</strong> PDS. Regression analysis<br />
has been used to find out the service qualities and commodities. Correlation has been used to find out<br />
the availability <strong>of</strong> commodities in PDS.<br />
3. RESULTS AND DISCUSSION<br />
Table -1 Demographic Factor<br />
Demographic characteristics n %<br />
Age (n = 446)<br />
< 25 68 15.25<br />
26-35 158 35.43<br />
36-45 143 32.06<br />
> 45 77 17.26<br />
Education (n = 446)<br />
Illiterate 88 19.73<br />
Informal Education 183 41.03<br />
Primary/Secondary 156 34.98<br />
College level 17 3.81<br />
Technology 2 0.45<br />
Occupation (n = 446)<br />
Housewife 187 41.9<br />
Daily wages 89 20<br />
Farmer 56 12.6<br />
Govt. Employee 9 2<br />
Private Employee 59 13.2<br />
<strong>Business</strong> 44 9.9<br />
Retired person 2 .4<br />
Locality (n = 446)<br />
Urban 264 59.2<br />
Rural 182 40.8<br />
Family status (n=446)<br />
BPL Family 393 88.1<br />
Non BPL 53 11.9<br />
Source: Primary Data<br />
Table 1 shows the demographics <strong>of</strong> the 446 respondents by age, education, occupation, locality<br />
and family status. Analyzable questionnaires were obtained from 264 urban respondents and 182 rural<br />
respondents (n=446) in Tuticorin <strong>of</strong> Tamil Nadu. <strong>The</strong>y were randomly selected. <strong>The</strong>se respondents<br />
were interviewed face to face by well structured questionnaire by eight trained research assistants and<br />
one investigator. Majority <strong>of</strong> the respondents (35.43%) were in the age group <strong>of</strong> 26-35 years. About,<br />
41.03% <strong>of</strong> the respondents have informal education and the one third have primary education. Of all<br />
respondents interviewed, majority <strong>of</strong> the respondents (41.9%) are house wives. About 59.2% <strong>of</strong> the<br />
respondents are from urban area and 40.8% <strong>of</strong> them are from rural area. Most <strong>of</strong> the respondents<br />
(88.1%) are from BPL family.<br />
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Compone<br />
nt<br />
Tota<br />
l<br />
Table 2<br />
Service Qualities <strong>of</strong> PDS – Factor Analysis<br />
Total Variance Explained<br />
Initial Eigen values Extraction Sums <strong>of</strong> Squared<br />
% <strong>of</strong><br />
Varianc<br />
e<br />
Cumulativ<br />
e %<br />
Tota<br />
l<br />
1 4.28<br />
6<br />
53.579 53.579 4.28<br />
6<br />
2 1.06 13.322 66.901 1.06<br />
6<br />
6<br />
3 .591 7.381 74.282<br />
4 .512 6.404 80.686<br />
5 .487 6.092 86.778<br />
6 .454 5.679 92.457<br />
7 .344 4.297 96.754<br />
8 .260 3.246 100.000<br />
Extraction Method: Principal Component Analysis.<br />
Loadings<br />
% <strong>of</strong><br />
Varianc<br />
e<br />
Cumulativ<br />
e %<br />
53.579 53.579 3.15<br />
2<br />
13.322 66.901 2.20<br />
0<br />
Rotation Sums <strong>of</strong> Squared<br />
Loadings<br />
Tota % <strong>of</strong> Cumulativ<br />
l Varianc e %<br />
e<br />
39.396 39.396<br />
27.505 66.901<br />
<strong>The</strong> eight variables are used to analyse the service qualities <strong>of</strong> PDS through factor analysis<br />
1. Adequate quota<br />
2. No favouritism and nepotism<br />
3. Correct weight and measure<br />
4. Availability <strong>of</strong> commodity<br />
5. No manipulation<br />
6. No distribution <strong>of</strong> old stock<br />
7. No delay in issuing card<br />
8. No bad smell<br />
Kaiser-Meyer-Olkin<br />
Measure <strong>of</strong> Sampling Adequacy<br />
Bartlett’s Test <strong>of</strong> Sphericity<br />
Chi-Square<br />
Sig.<br />
Cronbach’s Alpha<br />
No. <strong>of</strong> items for factor analysis<br />
KMO and Cronbach’s Alpha<br />
0.873<br />
1589.557<br />
28<br />
.000<br />
0.865<br />
8<br />
To test the validity <strong>of</strong> the instrument, cronbach alpha and KMO tests were conducted.<br />
Cronbach’s alpha was used to measure the interval consistency and reliability <strong>of</strong> the instrument. <strong>The</strong><br />
cronbach’s alpha came as 0.865 as shown in the above table. Thus the instrument was considered<br />
reliable for the study. <strong>The</strong> Kaiser-Meyer-Olkin measure <strong>of</strong> sampling adequacy is a statistic that<br />
indicates the proportion <strong>of</strong> variance in the variables that might be caused by underlying factors. High<br />
value (close to 1.0) generally indicates that a factor analysis is useful with the data. If the value is less<br />
than 0.70, the result <strong>of</strong> the factor analysis is probably not inappropriate. <strong>The</strong> KMO value for the<br />
instrument was 0.873, which is acceptable as a good value. Similarly, Bartlett’s test <strong>of</strong> sphericity tests<br />
the hypothesis that the correlation matrix is an identity matrix, which would indicate that the variables<br />
are unrelated and therefore unsuitable for detection. <strong>The</strong> Bartlett’s test showed a significant level <strong>of</strong><br />
relevance and hence the instrument was accepted for further study.<br />
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Principal component analysis was the method <strong>of</strong> extraction. Varimax analysis was the rotation<br />
method. As per the Kaiser criterion only factors with Eigen values greater than one were taken into<br />
consideration. From this study, only two factors in the initial solution have Eigen values greater than<br />
one. Together, they account for almost 66.901 (67%) <strong>of</strong> the variability in the original variables. <strong>The</strong><br />
following table shows the rotated component values <strong>of</strong> the factors.<br />
Rotated Component Matrix<br />
Component<br />
1 2<br />
Adequate quota .884 .097<br />
Correct weight and measure .773 .246<br />
No bad smell .769 .297<br />
Availability <strong>of</strong> commodity .766 .268<br />
No favouritism and nepotism .559 .527<br />
No manipulation .066 .878<br />
No distribution <strong>of</strong> old stock .280 .755<br />
No delay in issuing card .447 .593<br />
Table 2 shows that Eigen value is greater than one for two factors; the cumulative value is<br />
66.90 which is moderate. In the rotated component value, the variables are classified into two factors,<br />
namely satisfaction with PDS commodity and satisfaction with PDS services.<br />
Factor 1: Satisfaction with PDS commodity<br />
Adequate quota 0.884<br />
Correct weight and measures 0.773<br />
No Bad Smell 0.769<br />
Availability <strong>of</strong> commodity 0.766<br />
No favouritism and nepotism 0.559<br />
Factor 2: Satisfaction with PDS services<br />
No manipulation 0.878<br />
No distribution <strong>of</strong> old stock 0.755<br />
No delay in issuing card 0.593<br />
1. Satisfaction - PDS commodity: It is the name given to the first set <strong>of</strong> factors and is identified<br />
through factor analysis. All these variables have a factor loading <strong>of</strong> more than 0.5. All these items<br />
have one commonality related to satisfaction on PDS commodity. In addition to this, adequate<br />
quota <strong>of</strong> PDS commodity is considered as the most important factor in maintaining the satisfaction<br />
on PDS commodity. It is followed by correct weight and measures, no bad smell, availability <strong>of</strong><br />
commodity and no favouritism and nepotism. To maintain the commodity without bad smell and<br />
availability <strong>of</strong> commodity is consider as a very important factor in determining the satisfaction on<br />
PDS commodity.<br />
2. Satisfaction - PDS services: <strong>The</strong> second factor is named as “PDS services’, It consists <strong>of</strong> certain<br />
variables <strong>of</strong> no manipulation, no distribution <strong>of</strong> old stock and no delay in issuing card which are<br />
relating to service quality. All the variables in this factor have values more than 0.59. <strong>The</strong> most<br />
important service in this factor is ‘no manipulation’ which scores the highest value, it followed by<br />
no distribution <strong>of</strong> old stock and no delay in issuing card. Hence, it is concluded that there is no<br />
delay in issuing cards and no manipulation play very important role in assessing PDS services.<br />
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Table 3<br />
Satisfaction <strong>of</strong> PDS function – Respondents in Urban and Rural area<br />
Null hypothesis: <strong>The</strong> satisfaction level with PDS is not influenced by the residential area <strong>of</strong> the<br />
respondents.<br />
Factors Resident area N Mean Std. Deviation t value P value<br />
Satisfaction with PDS Urban 264 .470 .855 14.475 .000<br />
commodities. Rural 182 -.681 .779<br />
Satisfaction with PDS Urban 264 -.275 1.101 7.391 .000<br />
services.<br />
Rural 182 .398 .653<br />
*Significant at 5% level.<br />
Table 3 reveals the satisfaction level <strong>of</strong> PDS function in relation to urban and rural respondents.<br />
<strong>The</strong> independent sample‘t’ values are 14.475 and 7.391, P0.05 is significant, showing that there is no significant difference between<br />
married and unmarried respondents level <strong>of</strong> satisfaction with PDS functions. Both married and<br />
unmarried respondents have the same level <strong>of</strong> satisfaction with PDS commodities and services.<br />
Table 5<br />
Income <strong>of</strong> the respondents and the satisfaction level on PDS<br />
Null hypothesis: <strong>The</strong> income <strong>of</strong> the respondents does not impact the satisfaction level <strong>of</strong> PDS<br />
commodities and services.<br />
Factors<br />
Monthly N Mean Std. F P value<br />
Satisfaction with PDS<br />
commodities<br />
Satisfaction with PDS<br />
services.<br />
*Significant at 5% level<br />
Income<br />
Deviation value<br />
Below2500 28 -.456 1.021 7.641 .000*<br />
2501 – 5000 311 -.068 1.034<br />
5001 – 10000 91 .397 .830<br />
Above 10000 16 -.146 .323<br />
Below2500 28 .415 1.105 2.515 .058*<br />
2501 – 5000 311 .009 .960<br />
5001 – 10000 91 -.102 1.134<br />
Above 10000 16 -.324 .466<br />
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Table 5 shows the monthly income <strong>of</strong> the respondents and their relation with satisfaction level<br />
with PDS commodities and services. As per the P value (P0.05). Hence, it is<br />
concluded that the satisfaction level with PDS services is not influenced by the income <strong>of</strong> the<br />
respondents. It shows that the satisfaction level on PDS services does not differ with the income <strong>of</strong><br />
respondents.<br />
Table 6<br />
Regression - Service Qualities and Commodities<br />
Co-efficient<br />
Model<br />
Unstandardized Standardized t Sig.<br />
Coefficients Coefficients<br />
B Std. Error Beta<br />
(Constant) .448 .092 4.846 .000<br />
Adequate quota .248 .023 .443 10.902 .000<br />
No favouritism and nepotism .215 .032 .300 6.711 .000<br />
No manipulation .041 .038 .044 1.091 .276<br />
Multiple R value 0.660<br />
Adjusted R 2 -.435<br />
F Statistic (3, 442) - 113.486<br />
a. Dependent Variable: Availability <strong>of</strong> commodity<br />
Dependent variable : Availability <strong>of</strong> commodity<br />
Independent variables : Adequate quota, No favouritisms & nepotism , No manipulation.<br />
Multiple <strong>of</strong> R : 0.660<br />
R square value : 0.435<br />
Adjusted R square value : 0.431<br />
F value : 113.486<br />
P value : 0.000<br />
R 2 describing the amount <strong>of</strong> variability has been explained by independent variables <strong>of</strong> adequate quota,<br />
no manipulation, no favouritism and nepotism. Here it is (0.0.435) 44%. Adjusted R 2 gives the<br />
indication whether there is any insignificant factor or not. It should be close to R 2 value (Multiple).<br />
Here R 2 (0.435) and adjusted R 2 (0.431) are very close to each other which indicates good model.<br />
(Adjusted R 2 always < or = multiple R square).<br />
<strong>The</strong> regression analysis R 2 value always increase with the inclusion <strong>of</strong> parameters, but adjusted<br />
R 2 may not be. This indicates the presence <strong>of</strong> nuisance parameters in the model.<br />
<strong>The</strong> P value for F test is significant and indicates that, there is at least one variable which has<br />
significant contribution to the model. <strong>The</strong> P value <strong>of</strong> t – test is significant (P <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 59
Table 7<br />
Correlation - Adequate Quota, Availability <strong>of</strong> Commodity and No Bad Smell<br />
Correlations<br />
Adequate Availability <strong>of</strong> No bad smell<br />
Factors<br />
quota commodity<br />
Adequate quota Pearson Correlation 1 .595 ** .669 **<br />
Sig. (2-tailed) .000 .000<br />
N 446 446 446<br />
Availability <strong>of</strong> commodity Pearson Correlation .595 ** 1 .558 **<br />
Sig. (2-tailed) .000 .000<br />
N 446 446 446<br />
No bad smell Pearson Correlation .669 ** .558 ** 1<br />
Sig. (2-tailed) .000 .000<br />
N 446 446 446<br />
**. Correlation is significant at the 0.01 level (2-tailed).<br />
Table 7 shows the bivariate correlation between the variables <strong>of</strong> adequate quota, no bad smell and<br />
availability <strong>of</strong> commodity. It was hypothesized that a relationship exists between the variables <strong>of</strong><br />
adequate quota, no bad smell and availability <strong>of</strong> commodity. <strong>The</strong> result shows that there exists a<br />
positive relationship between adequate quota and no bad smell (r = 0.669, P < 0.01).<br />
All the factors have inter – correlation positive values<br />
1. Highly correlated with adequate quota and no bad smell 0.669<br />
2. Adequate quota correlates with availability <strong>of</strong> commodity 0.595<br />
3. Availability <strong>of</strong> commodity correlates with no bad smell 0.558<br />
4. CONCLUSION:<br />
<strong>The</strong> urban area respondents get high quality <strong>of</strong> services than rural area respondents. Both<br />
married and unmarried respondents have the same level <strong>of</strong> satisfaction with PDS commodities and<br />
services. <strong>The</strong> satisfaction level on PDS services does not differ with the income <strong>of</strong> respondents. This<br />
analysis indicates that there is a relationship between the availability <strong>of</strong> commodity and the<br />
independent variables <strong>of</strong> adequate quota, no manipulation, no favouritism and nepotism. <strong>The</strong> result<br />
shows that there exists a positive relationship between adequate quota and no bad smell. <strong>The</strong> central<br />
government should initiate consultation with the state governments and the union territories, to revamp<br />
the PDS and its reach based on an area and income approach. <strong>The</strong> government should tries to ensure<br />
the 4 As’ viz., Availability, Accessibility, Affordability and Acceptability, and also the 5 th A i.e.<br />
Adequacy in Public Distribution System.<br />
REFERENCES<br />
1. Swaminathan, 2010, Nov, 2010, “ Public Distribution System in Tamil Nadu: evaluation <strong>of</strong> its<br />
impact & examination <strong>of</strong> policy options. University <strong>of</strong> Pondicherry.<br />
2. Pattanaik, B., K. (1997). Rural poverty and Public distribution system, Yojana, November<br />
1997.<br />
3. Dr. S. Nakkiran December-2004 A Study on the Effectiveness <strong>of</strong> Public Distribution System<br />
In Rural Tamilnadu Submitted to <strong>The</strong> Planning Commission Government <strong>of</strong> India, New Delhi.<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 60
Integrating Sustainability in <strong>Business</strong> And Management Education - A Holistic<br />
Approach<br />
ABSTRACT`<br />
Dr Vasanth Kiran,<br />
Assistant Pr<strong>of</strong>essor – School <strong>of</strong> <strong>Business</strong>, Alliance University<br />
&<br />
Pr<strong>of</strong>. Sahana Madan<br />
Assistant Pr<strong>of</strong>essor – School <strong>of</strong> <strong>Business</strong>, Alliance University<br />
Management education plays a key role in any transition in the society. Education will itself be<br />
transformed into the process. It is necessary and possible to build on the limited progress already made<br />
in which the role <strong>of</strong> sustainability plays a vital role. This paper presents a matrix <strong>of</strong> options for<br />
integrating sustainability in management and business education, and illustrates how the matrix can be<br />
used with the example <strong>of</strong> a business school in Bangalore, including lessons learned. <strong>The</strong> matrix<br />
contributes to the literature by including the co-curriculum and continuous mentoring—in addition to<br />
the curriculum—as an opportunity for integrating sustainability in management and business<br />
education. In addition, it draws from and extends previous empirical and conceptual research, and<br />
addresses the needs and weaknesses stated in earlier literature. <strong>The</strong> matrix provides a framework for<br />
discussion, as well as a framework for action—since it provides faculty, staff, and administrators with<br />
options for integrating sustainability and includes advantages, disadvantages, and recommendations for<br />
using each option. This holistic approach promises to answer some <strong>of</strong> the key problems <strong>of</strong> traditional<br />
management education giving way to a new perspective.<br />
Keywords: B-schools, Curriculum, Co-curriculum, Mentoring. Management Education, Sustainability,<br />
INTRODUCTION<br />
Management education in a pluralistic world needs to consider new approaches and curriculum<br />
changes, if its graduates are to provide effective leadership in a multicultural and multinational global<br />
economy. In the twenty-first century however, we have begun to see a shift in focus away from<br />
measures <strong>of</strong> organizational and managerial performance that are <strong>of</strong>ten limited and subject to short term<br />
manipulation at the expense <strong>of</strong> long term sustainability. Why are we advocating a “transformative”<br />
sustainability approach to management education? Our answer is obvious: Neither the “business-asusual”<br />
nor the incrementalist reform approaches that most individuals, organizations, and societies<br />
have employed to address critical global sustainability issues are apparently enough to move us far<br />
enough fast enough to prevent near-term crises. Learning lies at the core <strong>of</strong> the management process<br />
when learning it is defined holistically as the basic process <strong>of</strong> human adaptation. It is not just the result<br />
<strong>of</strong> cognition but involves the integrated functioning <strong>of</strong> the total person—thinking, feeling, perceiving<br />
and behaving which makes him/her closer to being a complete manager. It encompasses other<br />
specialized models <strong>of</strong> adaptation from the scientific method to problems solving, decision making and<br />
creativity which form as key characteristics to be a successful manager which needs to be carefully<br />
implemented holistically in management education system by B-schools. Over the past several years, a<br />
number <strong>of</strong> studies have been published on how to integrate sustainability in higher education,<br />
including studies focused on business and management education. Some <strong>of</strong> the more recent ones<br />
include Benn and Dunphy, 2009; Porter and Cordoba, 2009; Rands, 2009; Walker et.al, 2009. In June<br />
2009, the <strong>Journal</strong> <strong>of</strong> Management Education published a special issue on the topic, “Greening and<br />
sustainability across the management curriculum.” One <strong>of</strong> the summary messages from contributors—<br />
both academics and practitioners—was the need to integrate sustainability both in management<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 61
education and across the business school (Rusinko & Sama, 2009); therefore, that is the focus <strong>of</strong> this<br />
paper. This paper presents a matrix <strong>of</strong> options with respect to how to integrate sustainability in<br />
management and business education.<br />
This paper presents a matrix <strong>of</strong> options with respect to how to integrate sustainability in management<br />
and business education. It extends a matrix (Rusinko, 2010), and <strong>of</strong>fers an application that illustrates<br />
how a <strong>Business</strong> school in Bangalore, India is integrating sustainability in management and business<br />
education, including lessons learned. <strong>The</strong> matrix presented here contributes to the literature by<br />
addressing the co-curricular, academic and corporate mentoring—as well as curricular—opportunities<br />
for integrating sustainability in management and business education. It is flexible in that users can<br />
move between and among options, and can implement multiple options simultaneously. Users—<br />
including faculty, staff, and administrators—can start at whichever option (or quadrant) is most<br />
appropriate for them. <strong>The</strong> primary focus <strong>of</strong> this matrix is structural options for delivery <strong>of</strong><br />
sustainability in management and business education; however, the paper does provide a brief list <strong>of</strong><br />
current resources to facilitate integrating sustainability into management and business education.<br />
LITERATURE REVIEW AND BACKGROUND<br />
While there are multiple definitions <strong>of</strong> sustainability, here, sustainability will be defined in a manner<br />
consistent with one <strong>of</strong> the most-cited definitions, that <strong>of</strong> the Brundtland Commission. That is,<br />
sustainability refers to that which “meets the needs <strong>of</strong> the present generation without compromising the<br />
ability <strong>of</strong> future generations to meet their own needs” (World Commission on Environment and<br />
Development, 1987: 8). <strong>The</strong>re is overlap between and among these dimensions <strong>of</strong> sustainability (e.g.,<br />
Scott & Gough, 2006). According to the United Nations Educational, Scientific, and Cultural<br />
Organization (UNESCO; 2004), sustainability education must address all three dimensions—social,<br />
environmental, and economic—because this allows all people to develop the necessary skills,<br />
knowledge, and perspectives to make decisions to improve quality <strong>of</strong> life at all levels. <strong>The</strong> inclusion <strong>of</strong><br />
curricular and co-curricular learning with mentoring helps business schools to approach sustainability<br />
as a more holistic issue, which is the way that sustainability is approached by effective decision<br />
makers in effective organizations.<br />
<strong>The</strong>re is a growing literature on the importance <strong>of</strong> both curricular and co-curricular engagement in<br />
higher education (e.g. Ahren, 2009). Co-curricular options for sustainability can allow students the<br />
opportunity for additional experiential and applied learning outside the classroom, as discussed further<br />
below. While there may be some variation, the term, co-curricular is generally defined to mean<br />
complementary to, but outside <strong>of</strong> the curriculum; therefore, it will be defined that way here. Ahren<br />
(2009) defines co-curricular engagement to include a variety <strong>of</strong> student activities outside <strong>of</strong> the<br />
classroom, such as community service groups, student government, honour societies, athletics, and<br />
fraternities. Since service learning can refer to both academic service learning based in coursework<br />
(e.g., Rands, 2009) and co-curricular service learning outside <strong>of</strong> the curriculum (e.g., Keen & Hall,<br />
2009). While these stay with curriculum and outside curriculum aspects one which imbibes both is<br />
mentoring which can be defined as<br />
Mentoring<br />
Mentoring relationships range from loosely defined, informal collegial associations in which a mentee<br />
learns by observation and example to structured, formal agreements between expert and novice comentors<br />
where each develops pr<strong>of</strong>essionally through the two-way transfer <strong>of</strong> experience and<br />
perspective. Whether the relationship is deemed formal or informal, the goal <strong>of</strong> mentoring is to provide<br />
career advice as well as both pr<strong>of</strong>essional and personal enrichment. For this chapter, we define a<br />
mentoring relationship as helping and supporting people to “manage their own learning in order to<br />
maximize their pr<strong>of</strong>essional potential, develop their skills, improve their performance, and become the<br />
person they want to be” (Parsloe, 1992).<br />
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While most <strong>of</strong> the popular books on leadership expound on mentoring, you cannot learn to be a mentor<br />
or mentee by reading a book or following cookie-cutter leadership advice. One size does not fit all,<br />
particularly in Management education for the field is so dynamic and volatile in nature. For mentoring<br />
to effect institutional change in higher education, it must be more than informal or spontaneous.<br />
Despite the benefits <strong>of</strong> mentoring throughout a career, the skills and type <strong>of</strong> advice needed inevitably<br />
change over time. Spencer and Golden (2003) says that at the beginning <strong>of</strong> a college life (management<br />
course), a more generalist mentor may be appropriate and then at later stage a role specific or job<br />
specific mentor can be assigned based on the student’s career interest For example, a suitable mentor<br />
might be someone who is highly skilled and pr<strong>of</strong>icient in Marketing aspects and so can provide advice<br />
on ways to become more pr<strong>of</strong>icient in the same. As organizational roles evolve into more supervisory<br />
capacities, mentors who can provide more career-related, organizational, political, and managerial<br />
skills development can be beneficial. <strong>The</strong> leadership within an institution must first recognize and<br />
identify the need for mentoring, and then plan, develop, support, and promote a program that directly<br />
addresses specific workforce gaps—both current and future which is what Alliance University<br />
<strong>Business</strong> School, Bangalore in India practices. <strong>The</strong> institution has identified industry mentors from<br />
various premier B school graduates who are currently working in various senior level positions across<br />
various industries and organisations. <strong>The</strong> student would be assigned two mentors at the beginning viz:<br />
Academic mentor and Industry mentor. <strong>The</strong> simultaneous moulding from both ends would give a near<br />
to perfect shape to student’s focussed career and is guided till he is up on the success ladder, <strong>The</strong><br />
interesting part is note that the mentoring does not end once the student is graduated and also access to<br />
college’s LMS (Learning Management System) which would have all the information on the current<br />
and past academic information available to him at any given time. This would enable the Alumni to<br />
still be academically updated while be mentored at any stage <strong>of</strong> career.<br />
An essential first step in a successful mentoring relationship is the mentor to help mentee identify,<br />
define, and honestly articulate common and individual goals and motives. Mentoring helps over the<br />
cultural gaps between pr<strong>of</strong>essors, industry experts (mentors) and students. To be a mentor is to<br />
someone committed to the well-being and success <strong>of</strong> the protégé. Such a caring attitude not only<br />
provides a good role model, but also provides a safe environment and an excellent ambience for<br />
students to learn and excel. <strong>The</strong> mentoring approach is the preferred approach <strong>of</strong> education specially<br />
management education. Apart from this mentoring emphasizes certain skills that are important in a<br />
multicultural environment; these include active listening, becoming aware <strong>of</strong> one's own assumptions<br />
and world views; understanding the beliefs and values systems <strong>of</strong> other cultures; developing<br />
relationships with people other cultures, and adopting the appropriate communication strategy in<br />
negotiation and conflict resolution. Hence, mentoring moves management beyond the realm <strong>of</strong><br />
technology and number crunching into the realm <strong>of</strong> personal development and spirituality, because a<br />
mentor is concerned with the wholesome growth <strong>of</strong> the mentee.<br />
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Fig. 1: Model for Management Education<br />
Fig. 2: Model for Sustainable Management Education<br />
Source: Model developed by authors.<br />
Co-curricular options:<br />
a. Service Learning:<br />
Service-learning has been defined as a “course-based, credit-bearing educational experience that<br />
allows students to:<br />
Participate in an organized service activity that meets identified community needs and<br />
Reflect on the service activity in such a way as to gain further understanding <strong>of</strong> course content,<br />
a broader appreciation <strong>of</strong> the discipline, and an enhanced sense <strong>of</strong> civic responsibility." -<br />
Bringle & Hatcher (1995).<strong>The</strong> following elements emphazise in formulating a definition <strong>of</strong><br />
service-learning applicable to the management education.<br />
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Service-learning involves students in community service activities and applies the experience<br />
to personal and academic development.<br />
Service-learning occurs when there is "a balance between learning goals and service<br />
outcomes". Service-learning engages students in a three-part process:<br />
1. Classroom preparation through explanation and analysis <strong>of</strong> theories and ideas<br />
2. Service activity that emerges from and informs classroom context and<br />
3. Structured reflection tying service experience back to specific learning goals.<br />
b. Competition:<br />
<strong>The</strong> definition <strong>of</strong> human competition is a contest in which two or more people are engaged where<br />
typically only one or a few participants will win and others will not (Webster and Mitra, 2008).<br />
Competition exists when there is scarcity <strong>of</strong> a desired outcome. Individuals and/or groups are then<br />
positioned to vie for the attainment <strong>of</strong> that outcome.<br />
It is partly true that the world is competitive. It is difficult to entirely avoid competition in life;<br />
however, for the most part, competition is a self-imposed or at least self-selected condition. We can<br />
just as easily live an existence defined more by collaborative and self-referential goals than by<br />
competition with others. To say the “real world” is inherently competitive is a myth. Moreover, to say<br />
that we are preparing students for the real world by putting them in artificially constructed<br />
competitive situations is to impose on them a specifically biased world-view (Johnson & Johnson,<br />
2006). In a broad sense, educators collectively create a more or less competitive future by the way we<br />
encourage our students to think and treat one another. If we create a more cooperative environment in<br />
our schools we create the likelihood <strong>of</strong> a more cooperative future; if we create more competitive<br />
environments, we create a more competitive future.<br />
Introduce competition to the context <strong>of</strong> a group effort and a shift in attitude will occur. When<br />
competitive goals are present, groups tend to place increased value on the outcome <strong>of</strong> the effort and<br />
tend to decrease their focus on the process. <strong>The</strong>y will increase attention on what it takes to win and<br />
decrease attention on learning for its own sake. In addition, the competitive element has an effect on<br />
group dynamics (Johnson & Johnson, 2006). Suppose that we ask groups to work in teams to assemble<br />
model airplanes and set up a reward for the group who finishes first or creates the best product. If we<br />
substitute a competitive condition in place <strong>of</strong> a collaborative condition, group members will change the<br />
way they regard one another.<br />
<strong>The</strong> competitive condition encourages them to view their fellows less as peers or members <strong>of</strong> a<br />
learning community and more as instruments to be used to reach the goal (Emmer & Gerwels, 2006).<br />
Behaviors such as dialogue and reflection are useful in the collaborative condition. In the competitive<br />
condition they <strong>of</strong>ten slow the process and diffuse group focus. In a collaborative condition divergent<br />
ideas can usually be explored without penalty; when we introduce the element <strong>of</strong> competition, a<br />
disincentive to dialogue is created. No reflection is incorporated than is necessary to accomplish the<br />
task.<br />
In a collaborative setting there is no disincentive to involve the efforts <strong>of</strong> the less dominant or less<br />
skilled members <strong>of</strong> the group. In the competitive condition, however, some combination <strong>of</strong> personality<br />
dominance and individual level <strong>of</strong> competence will define the values <strong>of</strong> the process, inevitably<br />
marginalizing weaker and less skilled team members. Even with good will and/or good intentions<br />
present at the beginning <strong>of</strong> the process, these trends will take over as the structural incentive in a<br />
competitive condition inherently promotes a shift in the focus <strong>of</strong> the task and the nature <strong>of</strong> the team<br />
dynamics (Emmer & Gerwels, 2006; Johnson & Johnson, 2006).<br />
Use <strong>of</strong> competition in classrooms:<br />
<strong>The</strong>re is some subscription to the position that there is no such thing as healthy or unhealthy classroom<br />
competition. While it can be debated whether competition should be incorporated in business schools<br />
at all, it is a prevalent practice and will likely continue. With that in mind, let’s distinguish “healthier”<br />
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forms <strong>of</strong> competition from those that are less healthy. <strong>The</strong>re are a few principles to consider when<br />
judging whether a competitive classroom situation is more beneficial or less.<br />
First: competition for valuable outcomes will have more detrimental effects on a class than<br />
competition for trivial and/or symbolic outcomes.<br />
Second: <strong>The</strong> shorter the life <strong>of</strong> the competition the more likely it is to have a beneficial effect. <strong>The</strong><br />
length <strong>of</strong> the contest increases its sense <strong>of</strong> prominence and decreases its sense <strong>of</strong> intensity and fun --<br />
both undesirable effects. For example, if we keep track <strong>of</strong> the number <strong>of</strong> books each student has read<br />
over the course <strong>of</strong> the semester and post the tally on the classroom wall, the initial effect may be an<br />
increased motivation to read. We initially may assume the strategy is effective. However, as the<br />
contest goes on we notice that students are reading books just for the sake <strong>of</strong> winning the contest and<br />
will have an incentive to falsify the number <strong>of</strong> books they have read. Over time we will notice the<br />
competition is becoming less fun and increasingly burdensome. At the end <strong>of</strong> the year the competition<br />
will have produced one somewhat happy and very relieved student, many students who feel unhappy<br />
about losing, a good number who will feel a little unhappy but highly relieved that the chart is no<br />
longer being held over their heads to shame them.<br />
Third: the leader <strong>of</strong> the competition must place a conspicuous emphasis on process over product. If<br />
winning is the point, students will take on a “just do what it takes” attitude. If students are encouraged<br />
to value the process, they will feel justified in staying focused on the learning outcome and feel<br />
assured that it is okay to put their attention into quality as the primary goal. However, facilitating this<br />
mindset is only possible when the context itself does not place so much value on winning that the<br />
leader’s emphasis falls on deaf ears. <strong>The</strong> two first principles are prerequisite.<br />
C. Comman Experiences: Management schools face many challenges in knowledge sharing as<br />
subjects are dispersed and peers collaborate with each other. Also, Groups and teams are temporary<br />
and a lot <strong>of</strong> learning may be lost when they disband. Experience sharing concentrates on communities,<br />
which are informal and semi-formal groups <strong>of</strong> people bound together by shared interests. In <strong>Business</strong><br />
schools they require certain degree <strong>of</strong> formality. Communities are viewed as connecting and enhancing<br />
knowledge sharing mechanisms in and within projects. Student Communities can help to connect peers<br />
working in various projects and assignments with each other. Hence experience sharing is one <strong>of</strong> the<br />
indispensable guides to an understanding <strong>of</strong> the structure <strong>of</strong> social and intellectual movements <strong>of</strong><br />
students.<br />
d. Clubs, Activities and Communities: Here we take a critical look at to reinforce ‘traditional’ and<br />
stereotypical views about who can and should participate in what physical activities, Health clubs and<br />
other recreational clubs and the critical role that not only teachers but also pupils, parents and ‘wider<br />
society’ play in either reinforcing or challenging these views. We thereby draw attention to the many<br />
and complex ways in which inequity operates and argue that there is a need for changes in the<br />
philosophy underpinning extra‐ curricular provision, in its content and delivery, and for a critical<br />
review <strong>of</strong> student- teacher training, if traditional and stereotypical views are to be challenged and the<br />
needs and desires <strong>of</strong> all students to be met. However, we also identify the present climate <strong>of</strong> higher<br />
education in Indian context and in particular in the ideological context in which provisions are set, as<br />
far from conducive to the development <strong>of</strong> practices and attitudes aimed at empowering student<br />
communities.<br />
Conclusion:<br />
Although many ongoing, interactive, contextually relevant continuing educations can improve the<br />
knowledge, skills, and attitudes <strong>of</strong> management graduates, there is a growing literature to help guide<br />
the selection <strong>of</strong> course objectives, educational methods, and forms <strong>of</strong> evaluation. However, there<br />
remain few methodologically sophisticated outcome studies and a surprising number <strong>of</strong> negative<br />
findings. Certainly, much more high-quality research is needed on from an employer perspective, the<br />
imperative to enhance management capability arising from the changing nature <strong>of</strong> work, especially the<br />
need to cope with increased competition and “more or less continuous upheavals in present day<br />
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organisations”, demanding increased intellectual flexibility and alertness as well as relevant<br />
knowledge, skills, abilities, and self-awareness.<br />
Despite the plethora <strong>of</strong> management education aiming at student development now and with the<br />
increasing level <strong>of</strong> demand, however, there remains a significant question as to the extent to which<br />
current curriculum and provisions meets the needs <strong>of</strong> organisations. Some <strong>of</strong> the key trends are:<br />
Key Trends From To<br />
<strong>The</strong> MBA Programme • Prescribed course • Study programme & real contemporary issues.<br />
• Customised.<br />
• Standard<br />
• <strong>The</strong>ory in context.<br />
• <strong>The</strong>oretical<br />
<strong>The</strong> Time-frame • One-<strong>of</strong>f event • A journey with ongoing support<br />
<strong>The</strong> Mode<br />
• Lecturing / Listening<br />
• Participatory, Interactive & Applied.<br />
• Conceptual<br />
• Experiential & Conceptual<br />
<strong>The</strong> Focus • Individuals • Individuals within a group, for a purpose<br />
<strong>The</strong> Mentor • Developmental Alliance • Partner, Co-Designer, Facilitator, & Coach<br />
Underlying these changes are a number <strong>of</strong> transforming concepts about the purpose <strong>of</strong> management<br />
and business education. <strong>The</strong>re are <strong>of</strong> course, the practical concerns <strong>of</strong> creating more effective<br />
managers and leaders, enhancing the competitiveness <strong>of</strong> organizations and providing programmes that<br />
people will pay for, but associated with these are changing philosophical perspectives on the role <strong>of</strong><br />
Management and Leadership within organizations and how best to develop them.<br />
To conclude that “the global business school’s challenges now occurring demand approaches to<br />
management and business education that are pr<strong>of</strong>oundly different from those that have served well in<br />
the past”.<br />
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Is Real Estate <strong>Business</strong> the way to go in East Africa? A strategic analysis <strong>of</strong><br />
Uganda National Housing Construction Company Limited (UNHCC)<br />
Nicholas khatotoh Makayi<br />
School <strong>of</strong> Management, Shanghai University,China<br />
&<br />
Dr. Laaria Mingaine<br />
<strong>Research</strong> Centre for Innovation and Knowledge Management, School <strong>of</strong> Management, Shanghai<br />
University, China<br />
Abstract<br />
<strong>The</strong> development <strong>of</strong> business in Eastern African region is becoming very lucrative. One <strong>of</strong> the key<br />
reasons <strong>of</strong> the pr<strong>of</strong>ound interest in the region from the investor’s perspective is the progressing<br />
economy. <strong>The</strong> investment environment in Uganda, Kenya, Tanzanian, Burundi and Rwanda (East<br />
African Community, together with South Sudan, Sudan, Ethiopia and Somalia) now is substantially<br />
better than it was a couple <strong>of</strong> years ago. <strong>The</strong> region is becoming <strong>of</strong> interest partly due to the discovery<br />
<strong>of</strong> oil/gas, political stability as manifested by recent peaceful election in Kenya. Several multinational<br />
companies like Tullow Oil plc, CNOOC, African oil corp. and others, have entered the region,<br />
increasing demand for housing. East Africa is <strong>of</strong> particular interest to investors because the market is<br />
still virgin. Without analyzing the market situation, an organization is practically doomed to failure<br />
because it will not be able to forecast the future needs and demands <strong>of</strong> customers. This article,<br />
therefore sought to carry out a strategic analysis on East Africa’s real estate business with particular<br />
interest in Uganda National Housing and Construction Company Limited (UNHCC).<br />
Keywords: Real estate business, Strategic analysis, UNHCC, East Africa<br />
1. Introduction<br />
<strong>The</strong> development <strong>of</strong> real estate in East Africa is nowadays very prospective, due to high concentration<br />
<strong>of</strong> capitals and ample opportunities for investment in the region. One <strong>of</strong> the major reasons <strong>of</strong> the<br />
pr<strong>of</strong>ound interest in the region from the investor’s perspective is the progressing economy and the<br />
growing efforts <strong>of</strong> the local governments to develop the open market economy (World Bank 2007).<br />
<strong>The</strong> discovery <strong>of</strong> oil in the region has put pressure on <strong>of</strong>fering decent and affordable housing. Laaria<br />
(2013) while discussing school leadership challenges in the implementation <strong>of</strong> ICT in public secondary<br />
schools, Kenya, viewed that the investment environment in the region recently have become<br />
substantially better than it was a couple <strong>of</strong> years ago. Laaria & Rick (2013a) after analyzing<br />
manufacturing strategy and its implication argued that Speaking about the real estate industry, it<br />
should be noted that the industry is <strong>of</strong> particular interest to investors because the East African region<br />
attracts large numbers <strong>of</strong> tourists which makes the development <strong>of</strong> the local infrastructure and real<br />
estate industry quite pr<strong>of</strong>itable.<br />
Companies attempting to enter the local market <strong>of</strong> the real estate industry may be accompanied by<br />
serious difficulties because <strong>of</strong> the strong influence <strong>of</strong> the state (Solnik, 1996). At the same time,<br />
companies supported or even owned by the state have a very well prospective and can expand their<br />
business successfully (Jeon et al, 2011). In recent years, Uganda National Housing Corporation<br />
Council (NHCC) has started implementing the strategy <strong>of</strong> region market expansion, entering new<br />
markets and gaining a larger share in the markets. In such a situation, it is very important to analyze<br />
the strategic development <strong>of</strong> the company and its management, assess its strength and possible<br />
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weaknesses in the context <strong>of</strong> the current market situation as well as to evaluate its opportunities and<br />
possible threats in the future.<br />
2. <strong>The</strong> background information on NHCC<br />
NHCC is a Ugandan public enterprise that was established by the National Housing Corporation Act<br />
<strong>of</strong> 1964. <strong>The</strong> Company’s mandate is to increase the housing stock in the country, rehabilitate the<br />
housing industry and encourage Ugandans to own homes in an organized environment. Among the<br />
most successful projects, in which the company was involved or is still working on include the Uganda<br />
Posts and Telecommunications building, sunset apartments, apartment homes, Bukoto, Ntinda, Naalya<br />
and Lubowa Housing Projects. Modernization <strong>of</strong> the Crested Towers building was a major<br />
accomplishment, World Bank (2007). <strong>The</strong> above projects may be viewed as a pro<strong>of</strong> <strong>of</strong> the reliability<br />
and successful work <strong>of</strong> the company. Also NHCC is planning to build 8,728 housing units. <strong>The</strong><br />
construction has already been launched and the company plans to finish the construction by 2014. <strong>The</strong><br />
planned projects include, Luthuli Rise Apartments, Kiwana Apartments, Lubowa 80 Estate, Mbarara<br />
Housing Estate, Mutundwe Mixed Estate and Bukerere Mixed Estate.<br />
Among the other developments <strong>of</strong> NHCC, there is also Mpumudde Housing Project, a luxurious real<br />
estate development in Jinja district. Condominiums sales have been completed to over 200 occupants<br />
in developments in the following sections <strong>of</strong> Kampala: Kololo, Nakasero and Bugoloobi.<br />
Condominium sales are planned to over 1,300 occupants in the following sections <strong>of</strong> Kampala: Bukoto,<br />
Bugoloobi and Wandegeya. NHCC is currently into association with banking institutions for mortgage<br />
facilitation for its customers like Stanbic Bank, Housing Finance Bank, Standard Chartered Bank and<br />
many others (Uganda Bureau <strong>of</strong> statistics, 2010). NHCC also partners with a variety <strong>of</strong> companies in<br />
the construction fraternity.<br />
<strong>The</strong>refore, such projects show that the company is really ambitious and has the strategic goal to<br />
become at least the regional leader in the construction <strong>of</strong> the luxury real estate. According to Ariss<br />
(2010) it is necessary to underline that the company may be positioned as a regional real estate<br />
company because it focuses on the regional projects, though <strong>of</strong>ten it uses the developments in Kampala<br />
as pilot projects to demonstrate the significance and potential <strong>of</strong> these development to the region and,<br />
therefore, convince potential customers on its reliability and its ability to develop and implement the<br />
most sophisticated projects. Yusufu (2010) observed that the recent achievements and the current<br />
projects, in which the company is involved, are very important for the regional market promotion <strong>of</strong><br />
the company and the recognition <strong>of</strong> the company in the foreign markets. Solnik, 1996 concludes that<br />
such a strategy is supposed to facilitate the entering <strong>of</strong> new markets and overcoming the existing entry<br />
barriers in foreign countries.<br />
One more thing, the company basically operates within East Africa implying that at the present<br />
moment the company may be viewed as regional because its successes in other parts <strong>of</strong> the world are<br />
insignificant, while the traditional markets remain one <strong>of</strong> the major priorities <strong>of</strong> NHCC. Nevertheless,<br />
it is a solid basis for the further development <strong>of</strong> NHCC as an international real estate company.<br />
3. <strong>The</strong> current market situation<br />
Naturally, the development <strong>of</strong> the company cannot be independent from the market situation. To put it<br />
more precisely, while developing a marketing strategy for further development <strong>of</strong> NHCC, the company<br />
should take into consideration the current situation in the market and the prospects <strong>of</strong> its future<br />
development (Pelham, 2012). It is obvious that without the analysis <strong>of</strong> the market situation the<br />
company is practically doomed to failure because it will be unable to forecast the future needs and<br />
demands <strong>of</strong> customers and it will be unable to react adequately on the needs <strong>of</strong> the market if the<br />
company develops the strategy based on its own plans and perspective without any regard to the<br />
current market trends.<br />
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Table 1: IFE Matrix for NHCC<br />
KEY INTERNAL FACTORS<br />
WEIGHT RATING WEIGHTED<br />
SCORE<br />
Strengths<br />
1. Luxury real estate and high quality services 0.10 3 0.30<br />
2. Well-developed structure and successful 0.09 3 0.27<br />
experience <strong>of</strong> work in the region<br />
3. <strong>The</strong> company is supported by the large Libyan 0.20 4 0.80<br />
holding, 49% shares.<br />
4. Public Limited liability company thus 0.30 4 1.20<br />
government support<br />
5. Owners the largest market share 0.20 3 0.60<br />
Weaknesses<br />
6. Not serving International market 0.01 2 0.02<br />
7. Lack <strong>of</strong> mechanized construction technology for 0.10 2 0.20<br />
efficient and speedy delivery <strong>of</strong> units<br />
Total 1.00 3.39<br />
As shown in table 1, an internal strategic-management audit score <strong>of</strong> 3.39 indicates that the internal<br />
position <strong>of</strong> NHCC is strong. Furthermore, analyzing the current situation in the real estate markets in<br />
the region where NHCC is currently operating. According to Bikker & Laura, (2009) it is necessary to<br />
point out that the situation is quite positive for the development <strong>of</strong> projects created by the company. Of<br />
recent, real estate market is seen as one <strong>of</strong> the most reliable ventures for investment worldwide, with a<br />
few exceptions in countries where the domestic situation is extremely unstable (Wei et al., 2006).<br />
NHCC also focuses on the operations in the luxury segment <strong>of</strong> the real estate market. Kauranen (2010)<br />
observed that this market is considered to be very challenging to penetrate.<br />
Table 2: EFE Matrix <strong>of</strong> NHCC<br />
KEY EXTERNAL FACTORS<br />
WEIGHT RATING WEIGHTED<br />
SCORE<br />
Opportunities<br />
1. Possibility <strong>of</strong> acquiring one <strong>of</strong> its competitors 0.10 3 0.30<br />
2. Rising demand for housing units 0.20 4 0.80<br />
3. State support 0.10 2 0.20<br />
4. <strong>The</strong> development <strong>of</strong> the tourist industry in the East 0.20 2 0.40<br />
African region<br />
Threats<br />
5. Political instability in the region for example 0.10 3 0.30<br />
Congo and Somalia<br />
6. Competition within the industry 0.20 2 0.40<br />
7. Economic recession 0.05 3 0.15<br />
8. Changing government regulations for example on 0.05 1 0.05<br />
land/title ownership<br />
Total 1.00 2.60<br />
As shown in table 2, there are several challenges. Firstly, this segment <strong>of</strong> the market is already<br />
saturated because there are companies that have a huge experience and are well-recognized as leaders<br />
<strong>of</strong> the luxury real estate industry. Secondly, the investments in the development <strong>of</strong> luxury real estate<br />
are substantially higher than investments in the development <strong>of</strong> real estate <strong>of</strong> the medium level. Finally,<br />
the development and construction <strong>of</strong> the luxury real estate demands a considerable period <strong>of</strong> time and<br />
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therefore the investments need a considerable period <strong>of</strong> time to get return on investment. <strong>The</strong><br />
pr<strong>of</strong>itability <strong>of</strong> this industry is also not always certain, because the luxury real estate is destined to the<br />
representatives <strong>of</strong> the upper class. Naturally, in the situation where there is a crisis in a region, the risk<br />
that the pr<strong>of</strong>its from the luxury real estate can decrease is very high (Westhead, 2011).<br />
Nevertheless, in the current situation it is hard to predict any signs <strong>of</strong> the possible crisis that could<br />
break out in the nearest future, though the situation in some nearby countries is very unstable. It would<br />
be logical therefore to presuppose that the instability in Congo and Somalia may be viewed as a<br />
potential threat to the development <strong>of</strong> NHCC and its projects in the region. In this respect, it is possible<br />
to characterize that the general situation in the regional market is quite favorable for the development<br />
<strong>of</strong> real estate business by NHCC. In recent years the East African countries, where NHCC traditionally<br />
operates are rapidly progressing and national economies are flourishing, basically due to the constant<br />
growth <strong>of</strong> tourism, exploration and production <strong>of</strong> oil/gas in these countries.<br />
<strong>The</strong> growth <strong>of</strong> the oil/gas industry stimulates the development <strong>of</strong> local economies that naturally<br />
contributes to the enlargement <strong>of</strong> prospects <strong>of</strong> the luxury real estate business in the region. <strong>The</strong><br />
demand <strong>of</strong> such sort <strong>of</strong> real estate in East African countries steadily grows (Wijewardena & Coory,<br />
2009). To put it more precisely, the development <strong>of</strong> business stimulates the growing demand on<br />
business facilities. Taking into consideration the enormous pr<strong>of</strong>its from oil/gas industry and the high<br />
standards <strong>of</strong> life and work <strong>of</strong> the local elite, it is quite logical to presuppose that the demand for the<br />
services and real estate <strong>of</strong> the highest quality will also be very high. <strong>The</strong> demand will grow<br />
proportionally to the economic development <strong>of</strong> the East African countries. Surely speaking, the more<br />
the rich people, the higher there will be demand on the luxury real estate and, therefore, on the services<br />
<strong>of</strong> NHCC.<br />
At the same time, the region is also very attractive for foreign investors who would readily cooperate<br />
with the local economic elite. It should be noted that both local business elite and foreign investors are<br />
interested in each other because East Africa, where NHCC is currently operating, is a developing<br />
region. Consequently, they need the technological assistance to develop their major industries and<br />
infrastructures to meet the high global standards <strong>of</strong> the quality <strong>of</strong> their services and products (Pelham,<br />
2012)<br />
In addition, it is necessary to remember the fact that the East Africa, where NHCC develops its<br />
projects, is characterized by the rapid development <strong>of</strong> the tourist industry. In fact, tourism is also very<br />
effective factor that contributes to the development <strong>of</strong> the local economies and leads to the growing<br />
need in the luxury real estate. According to Bracker & Pearson (2007) it is very important to underline<br />
that, unlike business elite, tourists basically need luxury real estate which could provide them the high<br />
level <strong>of</strong> comfort <strong>of</strong> the hospitality and restaurant industry, but the latter is impossible without the<br />
development <strong>of</strong> the luxury real estate. Naturally, tourists also need entertainment and recreational<br />
facilities that also constitute a part <strong>of</strong> the luxury real estate.<br />
Finally, it is necessary to consider the local customers. Due to the growth <strong>of</strong> the local economy and<br />
increasing standards and level <strong>of</strong> life, the demand <strong>of</strong> the local customers on the luxury real estate also<br />
increases. Shibanda & Edebe, (2010) notes that, the development <strong>of</strong> the economy, tourism, and<br />
growing wealth <strong>of</strong> the local population stimulates the development <strong>of</strong> trade and facilities. Thus, it is<br />
obvious that the general market situation is quite positive for the development <strong>of</strong> NHCC since the<br />
segment <strong>of</strong> the luxury real estate market is steadily progressing and the demand on the projects and<br />
development <strong>of</strong> the company remains stable and relatively high. Tella & Mutava, (2011) argue that it<br />
is important to underline the focus on the construction <strong>of</strong> mixed-up and complex projects which<br />
combine business and hospitality facilities as well as trade centers that increases the number <strong>of</strong><br />
potential customers.<br />
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4. <strong>The</strong> analysis <strong>of</strong> the company’s position in the market and its basic strategies<br />
<strong>The</strong> current market trends are very important however to understand the perspectives <strong>of</strong> NHCC and<br />
assess the effectiveness <strong>of</strong> its strategies, it is necessary to analyze the company’s position and its<br />
development as well as discuss the strategies selected by the company as its major priority. Speaking<br />
about the position <strong>of</strong> the company in the market, it is necessary to apply SWOT analysis which will<br />
clearly define major strengths and weaknesses <strong>of</strong> the company, its opportunities as well as threats<br />
(Duchesnean & Gartner, 2008).<br />
NHCC has a number <strong>of</strong> strengths which puts it into advantageous position compared to its major<br />
competitors like Akright, Jomayi, Nationwide and Kensington. First <strong>of</strong> all, it should be said that the<br />
company constitutes a part <strong>of</strong> the Libyan Holding. This implies that the company is supported by the<br />
large holding that naturally provides it with great opportunities for the development as it can not only<br />
rely on its own sources but also on the support <strong>of</strong> other members <strong>of</strong> the holding. NHCC is a public<br />
enterprise. This fact is extremely important because the role <strong>of</strong> the government is very significant. To<br />
put it more precisely, the government can influence the economic development <strong>of</strong> the entire country<br />
and particular industries (Laaria, 2013). In such a situation, the governmental support can provide<br />
NHCC with a strategic advantage on both national and international markets. NHCC has a welldeveloped<br />
structure and successful experience <strong>of</strong> work in the regional markets<br />
On the other hand, the company still has certain weaknesses. NHCC still cannot overcome the frontiers<br />
<strong>of</strong> the International market. To put it more precisely, the company develops its most successful and<br />
serious projects only within Uganda. Naturally, such a focus on the specific region does not really<br />
meet the strategic goal <strong>of</strong> the company and indicates to its inability or, probably, the company is still<br />
not really ready to start the intensive international market expansion (Laaria & Rick, 2013a). However,<br />
it should be said that the current projects the company is developing are really very serious and it is<br />
possible to presuppose that the company simply cannot develop several projects similar to those <strong>of</strong><br />
global real estate companies. In this respect, it should be said that the company simply lacks<br />
mechanized construction technology for efficient and speedy delivery <strong>of</strong> units and the human<br />
resources for the development <strong>of</strong> several projects <strong>of</strong> such a scale.<br />
In spite <strong>of</strong> certain weaknesses, the company still has good opportunities to continue its development<br />
and further market expansion. At the present the company operates in East Africa and the situation in<br />
the market is favorable for the further progress especially in the region where it operates. Furthermore,<br />
the state support guarantees the company the privileged position in the national market as well as the<br />
support <strong>of</strong> the state in the process <strong>of</strong> entry <strong>of</strong> foreign markets.<br />
For instance, the company may participate in international agreements between the national<br />
government and foreign governments. Consequently, it can gain foreign state contracts due to the<br />
support <strong>of</strong> the national government. Also it should be said that the development <strong>of</strong> the tourist industry<br />
in the East African region as well as the development <strong>of</strong> tourism in global terms provide NHCC with<br />
ample opportunities to increase its presence in the international markets. To put it more precisely, after<br />
the realization <strong>of</strong> its successful projects the company may be involved in the development <strong>of</strong> similar<br />
projects in other parts <strong>of</strong> the region where the tourist industry is booming, for instance Rwanda.<br />
<strong>The</strong> potential threats the company can face in the international market, include the lack <strong>of</strong> the<br />
international recognition. Perspective countries as China, for instance, may prefer to deal with<br />
companies from developed countries such as the EU or the US, which are more popular and wellknown<br />
in the world. <strong>The</strong> economic crisis also undermines the position <strong>of</strong> the company in its traditional<br />
markets, while the lack <strong>of</strong> penetration in new markets will expose the company to a serious threat <strong>of</strong><br />
the pr<strong>of</strong>ound financial crisis (Laaria & Rick, 2013b). <strong>The</strong> latter is quite probable taking into<br />
consideration the huge funds that are needed for the accomplishment and realization <strong>of</strong> the projects<br />
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developed by NHCC. In fact, the possibility <strong>of</strong> the deterioration <strong>of</strong> the economic situation should not<br />
be rejected because East African region is still unstable.<br />
<strong>The</strong> growing terrorist threat may decrease the attractiveness <strong>of</strong> the region to foreign tourists as well as<br />
investors. Moreover, it is quite difficult to forecast the rapid decrease <strong>of</strong> oil prices, for instance, which<br />
are vitally important for the region. In the case <strong>of</strong> crisis, companies operating in the luxury segments <strong>of</strong><br />
any market will be the most affected because they basically count for a very narrow range <strong>of</strong><br />
customers, representing the upper classes <strong>of</strong> society, which are apparently not numerous (Kauranen,<br />
2010). <strong>The</strong> strategy <strong>of</strong> the company to focus on the luxury segment <strong>of</strong> the market is apparently risky.<br />
However, if the company focuses on the larger medium segment <strong>of</strong> the market, it could develop its<br />
business worldwide in a larger number <strong>of</strong> countries. <strong>The</strong> projects would be less expensive and they<br />
would take less time for the realization <strong>of</strong> return on investment. Consequently, the company would not<br />
need a long-term stability as it needs now. For instance, realization <strong>of</strong> some <strong>of</strong> its current progress is<br />
supposed to take about 25 years.<br />
This means that if the situation in the country changes within this period <strong>of</strong> time the company may fail<br />
to accomplish this project and thus, the financial losses <strong>of</strong> the company will be enormous.<br />
Nevertheless, the strategy <strong>of</strong> targeting the international market expansion is correct in the<br />
contemporary economic situation because in the modern globalized economy this is the main strategy<br />
that could make the company more competitive and gain the strategic advantages compared to<br />
companies operating on the national markets.<br />
On the business level, NHCC attempts to develop its cooperation within the Libyan Holding. <strong>The</strong><br />
major business goal <strong>of</strong> the company is the high quality <strong>of</strong> its products and services that leads to the<br />
growing customers’ satisfaction. <strong>The</strong> latter creates a positive image <strong>of</strong> the brand <strong>of</strong> NHCC and<br />
therefore, makes the company recognizable and opens larger opportunities for entering new markets. It<br />
should be said that the focus on the global market can secure NHCC from possible instability in the<br />
traditional markets where it is presented.<br />
5. Methodology <strong>of</strong> study<br />
A review <strong>of</strong> literature was adopted for this study. According to Laaria, (2013) literature review is<br />
conducted to determine the status given and is concerned with the gathering <strong>of</strong> facts rather than the<br />
manipulation <strong>of</strong> variables. In the study the researchers were interested in getting facts from literature<br />
on the real estate business with particular interest on NHCC. Literature review is useful in that it not<br />
only secures evidence concerning existing situations or current conditions but also identifies standards<br />
or norms with which to compare present conditions in order to plan the next step.<br />
<strong>Studies</strong> were identified through an electronic search <strong>of</strong> the databases such as Science Direct, Web <strong>of</strong><br />
Science, library files and reference list. In addition, the literature review was extended to the Internet,<br />
by use <strong>of</strong> Google, Yahoo, Baidu, and other internet search engines. Initially 46 articles were identified<br />
as potentially relevant for study, <strong>of</strong> these, 19 articles were excluded based on the title and abstract that<br />
did not match the requirements <strong>of</strong> the study. 27 articles were retrieved for more detailed evaluation, 9<br />
articles were further excluded because they did not meet inclusion criteria. Only 18 articles were<br />
reviewed in this study. Figure 1 shows Systematic review flow for the articles reviewed in the study.<br />
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Figure1. Systematic review flow for the articles reviewed in the study<br />
6. Conclusion and Recommendations<br />
Thus, taking into account all above it is worthy to conclude that NHCC is a very strategic company.<br />
<strong>The</strong> company has already achieved significant successes being involved in a number <strong>of</strong> large projects<br />
in Uganda. <strong>The</strong> company has a potential to continue the further market expansion, regardless <strong>of</strong> the<br />
existing problems and challenges, which could be overcome by proper strategic management.<br />
<strong>The</strong>re are strengths, opportunities as well as weaknesses in the real estate business (Table 3) and a high<br />
potential for growth <strong>of</strong> real estate in East Africa. In fact, in the current market situation, it is possible to<br />
recommend the strategy <strong>of</strong> the international market expansion because it can improve the position <strong>of</strong><br />
the company in the global market and facilitates entering markets <strong>of</strong> developing countries, which are<br />
very virgin.<br />
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Table 3: <strong>The</strong> SWOT Matrix for NHCC<br />
OPPORTUNITIES-O<br />
1. Possibility <strong>of</strong> expansion<br />
by acquiring one <strong>of</strong> its<br />
competitors<br />
2. Rising demand for<br />
housing units<br />
3. State support<br />
4. <strong>The</strong> development <strong>of</strong> the<br />
tourist industry in the<br />
East African region<br />
THREATS-T<br />
1. Political instability in<br />
the region for example<br />
Congo<br />
2. Competition within the<br />
industry<br />
3. Economic recession<br />
4. Changing government<br />
regulations for example<br />
on land/title ownership<br />
STRENGTH-S<br />
1. Public Limited liability<br />
company thus government<br />
support<br />
2. <strong>The</strong> company is supported<br />
by the large Libyan<br />
holding, 49% shares.<br />
3. Well-developed structure<br />
and successful experience<br />
<strong>of</strong> work in the region<br />
4. Luxury real estate and high<br />
quality services<br />
5. Owners the largest market<br />
share<br />
SO STRATEGIES<br />
1. Increase more capacity <strong>of</strong><br />
Housing Units (S2, S4, S5,<br />
O2, O3)<br />
2. Development <strong>of</strong> Human<br />
Resources ( S2, O4)<br />
ST STRATEGIES<br />
1. Develop partnerships with<br />
other companies in the<br />
construction fraternity (S2,<br />
S1, T2, T3)<br />
2. Advertise House variety,<br />
Brand recognition and<br />
Safety Policies (S1, S2, S3,<br />
S4, T2, T3, T1)<br />
WEAKNESSES-W<br />
1. Not serving<br />
International market<br />
2. Lack <strong>of</strong> mechanized<br />
construction<br />
technology for efficient<br />
and speedy delivery <strong>of</strong><br />
units<br />
WO STRATEGIES<br />
1. Begin serving the<br />
international market<br />
(W1, O4, O1)<br />
2. Seek more<br />
business/State support<br />
funding (W2, O3,)<br />
WT STRATEGIES<br />
1. <strong>Research</strong> viability <strong>of</strong><br />
entering other foreign<br />
markets (W1, T2, T4)<br />
7. References<br />
Ariss, R, T., (2010), On the implications <strong>of</strong> market power in banking: evidence from developing<br />
countries, <strong>Journal</strong> <strong>of</strong> Banking and Finance 34 (4), 765–775<br />
Bikker, A. and Laura, S (2009) Measuring and Explaining Competition in the Financial Sector<br />
Discussion paper series Tjalling C. Koopmans <strong>Research</strong> Institute, Vol. 09–01<br />
Bracker, J. & Pearson, H (2007). Planning and financial performance <strong>of</strong> small, mature firms.<br />
Strategic Management <strong>Journal</strong>, 7 (6), 503-522.<br />
Duchesneau, D. & Gartner, W (2008). A pr<strong>of</strong>ile <strong>of</strong> new venture success and failure in an emerging<br />
industry. <strong>Journal</strong> <strong>of</strong> <strong>Business</strong> Venturing, 5 (5), 297-312.<br />
Jeon, B. Olivero, M. & Wu, J., (2011), Do foreign banks increase competition? Evidence from<br />
emerging Asian and Latin American banking markets, <strong>Journal</strong> <strong>of</strong> Banking and Finance, 35(4)<br />
856–875<br />
Kauranen, I. (2010). <strong>The</strong> start-up characteristics <strong>of</strong> a new entrepreneurial firm as determinants <strong>of</strong><br />
the future success <strong>of</strong> the firms in the short term and in the long term. <strong>Journal</strong> <strong>of</strong> Enterprising<br />
Culture, 4 (4), p.363-383<br />
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Laaria, M (2013) Leadership challenges in the implementation <strong>of</strong> ict in public secondary schools,<br />
Kenya, <strong>Journal</strong> <strong>of</strong> Education and learning 2(1) 32-43<br />
Laaria, M and Rick, S (2013a) Understanding manufacturing strategy and its implications,<br />
<strong>Research</strong> <strong>Journal</strong> <strong>of</strong> economics & <strong>Business</strong> studies 2(7) 48-60<br />
Laaria, M and Rick, S (2013b) <strong>The</strong> insight into service science and its Applications to future<br />
service production, <strong>Research</strong> <strong>Journal</strong> <strong>of</strong> Commerce & Behavioral Science 2(7) 32-41<br />
Pelham, A. (2012). Market orientation and other potential influences on performance in small and<br />
medium-sized manufacturing firms, <strong>Journal</strong> <strong>of</strong> Small <strong>Business</strong> Management 38(1) 48-67<br />
Shibanda, G. and Edebe, I. (2010). Managing and developing the strategy for Africa’s information<br />
in global computerization, <strong>Journal</strong> <strong>of</strong> Library management 21(95) 228-234.<br />
Solnik, B., (1996), International Investments, 3rd edition, Massachusetts: Addision-Wesley.<br />
Tella, D and Mutava, S (2011) Strategic procurement management in local government: the role <strong>of</strong><br />
elected members, <strong>Journal</strong> <strong>of</strong> Public Procurement 7(2)194-212<br />
Uganda Bureau <strong>of</strong> Statistics, (2010) Uganda Export Promotion Board Product Pr<strong>of</strong>ile on Vanilla,<br />
No. 9, 2010. Uganda National Household Survey 2009–2010. Kampala, Uganda<br />
Wei, C., Dent, P., Roberts, C., 2006. An Exploratory Analysis <strong>of</strong> Barriers to Investment and<br />
Market Maturity in Southeast Asian Cities. <strong>Journal</strong> <strong>of</strong> Real Estate Portfolio<br />
Management 12(1), 49-57.<br />
Westhead, P. (2011). Survival and employment growth contrasts between types <strong>of</strong> owner- managed<br />
high technology firms, Entrepreneurship <strong>The</strong>ory & Practice 20 (1) 15-28<br />
Wijewardena, H. & Cooray, S. (2009). Factors contributing to the growth <strong>of</strong> small<br />
manufacturing firms: perceptions on Japanese owner/managers, <strong>Journal</strong> <strong>of</strong> Enterprising<br />
Culture 4 (4) 351-361<br />
World Bank (2007), Financial integration in two regions <strong>of</strong> sub-Saharan Africa: How Creating Scale<br />
in Financial Markets can Support Growth and Development, Washington DC<br />
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A Comparative Study <strong>of</strong> Gross NPA <strong>of</strong> Old Private Sector Banks<br />
& Nationalized Banks<br />
Dr. Tanmaya Kumar Pradhan,<br />
Dept <strong>of</strong> <strong>Economics</strong>, NM Institute <strong>of</strong> Engineering and Technology, Sijua, Patrapada, Khandagiri,<br />
Bhubaneswar, Odisha -751019<br />
Abstract:-<br />
<strong>The</strong> study is based on the secondary data. <strong>The</strong> scope the study is limited to five years data. <strong>The</strong> data<br />
has been analyzed using percentage method. <strong>The</strong> study is related to old Private Sector Banks &<br />
Nationalized banks. During the period for 2007 to 2011 the performance in old private sector banks<br />
was superb as the GNPA ratio continue to fall from 3.4% to 1.62%.<br />
Key Words: Gnpa, Incremental Component, Directed Lending, Sub- Standard<br />
1) Introduction:-<br />
Reforms have paved the way for building our banking system capable to meet the requirements <strong>of</strong> the<br />
open and competitive economy. But, on the other side, some deficiencies have persisted despite these<br />
reforms. <strong>The</strong> level <strong>of</strong> NPAs in the Indian banking industry is a greater concern and thus urgent<br />
cleaning up <strong>of</strong> bank balance sheet has become a crucial issue. Although, the ratio <strong>of</strong> net NPAs to net<br />
advances is reduced to some extent but still very high in absolute terms. <strong>The</strong> main motive <strong>of</strong> the<br />
reforms was to improve the operational efficiency <strong>of</strong> the banks to further enhance their productivity<br />
and pr<strong>of</strong>itability. It is essential to review the various issues <strong>of</strong> banking sector reforms, especially its<br />
post reforms’ impact on NPAs, interest income, capital adequacy, priority sector advances, and SLR &<br />
CRR.<br />
2) Objectives:-<br />
(i)To examine Gross NPA <strong>of</strong> Old private sector Banks and Nationalised Banks<br />
(ii)To analyse Gross Advances <strong>of</strong> Old Private Sector Banks and Nationalised Banks<br />
(iii) To determine the GNPA ratio <strong>of</strong> Old private Sector Banks and Nationalised Banks<br />
(iv)To study capital adequacy and priority sector advances<br />
3) Methodology:-<br />
<strong>The</strong> study is based on the secondary data. <strong>The</strong> scope <strong>of</strong> the study is limited to five years data. <strong>The</strong><br />
study is related to Old Private Sector Banks and Nationalised Banks. <strong>The</strong> data has been analyzed using<br />
percentage method.<br />
3.1 Gross NPA <strong>of</strong> Old private sector Banks & Nationalised Banks<br />
(Amounts in Rs. Lakhs)<br />
Year Old Private Sector Banks % Increase Nationalized Banks % Increase<br />
2007 236900 - 2629100 -<br />
2008 217700 -8% 2511900 -4%<br />
2009 261925 20% 2680380 7%<br />
2010 305391 17% 3547031 32%<br />
2011 336172 10% 4290739 21%<br />
Source :-www. Department <strong>of</strong> Banking supervision, RBI<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 78
<strong>The</strong> 3.1 Table shows that Gross NPA <strong>of</strong> both<br />
exhibit an increasing trend except the year 2008.<br />
Old private sector Banks & Nationalised Banks<br />
3.2 Gross Advances <strong>of</strong> Old private sector Banks & Nationalised Banks<br />
(Amounts in Rs. Lakhs)<br />
Year Old Private Sector Banks % Increase Nationalized Banks % Increase<br />
2007 8046900 - 97573300 -<br />
2008 9705700 21% 121855400 25%<br />
2009 11203679 15% 153560191 26%<br />
2010 13499071 20% 174640025 14%<br />
2011 17012186 26% 217696671 25%<br />
Source :-www. Department <strong>of</strong> Banking supervision, RBI<br />
<strong>The</strong> 3.2 Table shows that Gross Advances <strong>of</strong> both Old private sector Banks & Nationalised Banks<br />
exhibit an increasing trend from the year 2007 to 2011.<br />
3.3 GNPA Ratio <strong>of</strong> Old private Sector Banks & Nationalised Banks<br />
Year Old Private Sector Banks Nationalized Banks<br />
2007 3.42 2.76<br />
2008 2.53 2.01<br />
2009 2.17 1.75<br />
2010 2.22 2.03<br />
2011 1.62 1.97<br />
Source :-www. Department <strong>of</strong> Banking supervision, RBI<br />
It is evident from the above table that the performance <strong>of</strong> private sector banks is much better than that<br />
<strong>of</strong> public sector banks in checking NPA. But a close look at the problem reveals the Nationalized<br />
banks can not be construed as a failure <strong>of</strong> the fact that most <strong>of</strong> the NPA arise out <strong>of</strong> lending under<br />
Government schemes which the Nationalized banks subscribe to. <strong>The</strong>refore, the growing NPA <strong>of</strong><br />
Nationalized banks can not be construed as a failure <strong>of</strong> the management <strong>of</strong> Nationalized Banks.<br />
However, the declining quantity <strong>of</strong> NPA in private sector banks bear ample testimony <strong>of</strong> the facts that<br />
administration in private sector banks is streamlined and the management has successfully created an<br />
environment for better work culture. During the period for 2007 to 2011 the performance in old private<br />
sector banks was superb as the GNPA ratio continue to fall from 3.42% to 1.62%.<br />
3.1 Capital Adequacy Ratio<br />
Capital adequacy ratio reflects the overall financial condition <strong>of</strong> the banks and also their ability to<br />
meet the need for additional capital. An adequate capital base is essential for banks to absorb credit<br />
risk but in the pre-reform years, a large number <strong>of</strong> banks were undercapitalized, as they were unable to<br />
add to their capital base by increasing reserves due to declining pr<strong>of</strong>its. Since 1991, it was much below<br />
the internationally accepted CRAR <strong>of</strong> 8 percent. But after that reforms were introduced with present<br />
target <strong>of</strong> 10 percent CRAR in 2003-04. A favourable development indicates the banking system’s<br />
growing strength to absorb credit risk, which may arise on account <strong>of</strong> its advantages going bad<br />
resulting in losses.<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 79
3.2 Priority Sector advances<br />
Priority Sector advances to total advances ratio represents the banks credit pattern in the priority sector<br />
against the given target by RBI i.e. 40 per cent <strong>of</strong> the total advances (32 per cent in case <strong>of</strong> Foreign<br />
Banks). <strong>The</strong> share <strong>of</strong> priority sector advances to total advances first decreased till 2001-02 and then<br />
started to increase in other years. In 1998-99, its average share was 27.35% which increase to 29.22%<br />
in 2003-04. On an average, the share <strong>of</strong> Priority sector advances in the total advances is the highest in<br />
case <strong>of</strong> Nationalised Banks i.e. 32.83 percent followed by Old private sector Banks where as, New<br />
Private Sector Banks shows the least share i.e. only 18.14 per cent. It is examined that not even a<br />
single bank group have succeeded to meet the targets <strong>of</strong> RBI but still had somewhat rising contribution<br />
to this sector. One major reason for lesser share <strong>of</strong> Priority sector advances is the absence <strong>of</strong> sufficient<br />
credit takers in this sector.<br />
4) Conclusion:-<br />
<strong>The</strong> on- going reforms process and the agenda for third reforms will focus mainly to make the banking<br />
sector reforms viable and efficient so that it could contribute to enhance the competitiveness <strong>of</strong> the real<br />
economy and face the challenges <strong>of</strong> an increasingly integrated global financial architecture.<br />
References<br />
1. poongavanam.S (2011).Non Performing assets: Issues , Causes and remedial Solution.Asian<br />
<strong>Journal</strong> Of Management <strong>Research</strong> Volume 2 Issue 1.<br />
2. Mahipal Singh Yaadav, Swami Vivkananda . Impact <strong>of</strong> Non Performing Assets on Pr<strong>of</strong>itability and<br />
Productivity <strong>of</strong> Public Sector Banks in India. AFBE <strong>Journal</strong>, Academic paper (pp.232-239).<br />
3.Malyadri.P, Sirisha.S(2011,October). A Comparative Study <strong>of</strong> Non Performing Assets in Indian<br />
Banking Industry. International <strong>Journal</strong> <strong>of</strong> Economic Practices and <strong>The</strong>ories, Vol.1.No.2.<br />
4.Chaudhary K and Sharma M (2011,June).Performance <strong>of</strong> Indian Public Sector Banks and Private<br />
Sector Banks :A Comparative Study. International <strong>Journal</strong> <strong>of</strong> Innovation, Management and<br />
Technology.<br />
5.Table B6: Bank-wise Non-Performing Assets (NPAs) <strong>of</strong> Scheduled Commercial Banks-RBI Annual<br />
Report 2007.<br />
6. Table B6: Bank-wise Non-Performing Assets (NPAs) <strong>of</strong> Scheduled Commercial Banks-RBI Annual<br />
Report 2008.<br />
7. Table B7: Bank-wise Gross Non-Performing Assets, Gross Advances and Gross NPA Ratio <strong>of</strong><br />
Scheduled Commercial Banks-2009.<br />
8. Table B7: Bank-wise Gross Non-Performing Assets, Gross Advances and Gross NPA Ratio <strong>of</strong><br />
Scheduled Commercial Banks-2010.<br />
9. Table B7: Bank-wise Gross Non-Performing Assets, Gross Advances and Gross NPA Ratio <strong>of</strong><br />
Scheduled Commercial Banks-2011.<br />
10. A.V. Aruna Kumari (2002), “Economic Reforms and Performance <strong>of</strong> Indian Banking: Across<br />
Structural Analysis”, Indian Economic Panorama, A Quaterly <strong>Journal</strong> <strong>of</strong> Agriculture, Industry, Trade<br />
and Commerce ,Special Banking Issue, pp. 19-21.<br />
11. Reserve Bank <strong>of</strong> India, master circular on Prudential norms on income recognition. Asset<br />
classification and provisioning.<br />
12. Bhasin, N. (2008), Banking Developments in India 1947 to 2007, New Delhi, Century<br />
Publications.<br />
13. Malyadri , P. (2003), NPA’s in Commercial Banks –An Overview, Banking Finance, Monthly,<br />
January 2003, Vol. XVI, pp.6-9.<br />
14. Banking Sector Reforms in India, AReview <strong>of</strong> Post-1991 Developments by R.K. Uppal & Rimpi<br />
Kaur.<br />
15. Commercial Banks in India Growth, Challenges and Strategies Benson Kunjkunju.<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 80
A Comparative study <strong>of</strong> trends <strong>of</strong> Bank wise Non-Performing Assets in Public<br />
Sector Banks and Private Sector Banks<br />
Dr. Tanmaya Kumar Pradhan,<br />
Dept <strong>of</strong> <strong>Economics</strong>, NM Institute <strong>of</strong> Engineering and Technology, Sijua, Patrapada, Khandagiri,<br />
Bhubaneswar, Odisha -751019<br />
Abstract:<br />
<strong>The</strong> study is based on the secondary data. <strong>The</strong> scope <strong>of</strong> the study is limited to three years data. <strong>The</strong><br />
study is related to Public Sector Banks & Private Sector Banks. <strong>The</strong> data has been analyzed using<br />
percentage method.<br />
KEYWORDS:- BASEL, NPA, SLR, BANK<br />
1) Introduction: <strong>The</strong> birth <strong>of</strong> the new generation private sector banks is a direct outcome <strong>of</strong> this<br />
reforms process. So far, 8 such banks have come up during the last few years at different points <strong>of</strong><br />
time. As a result, the banking policy towards the banking business has grossly changed. Liberalisation<br />
and reforms have thrown up a few challenges as well as created opportunities for banks to increase<br />
revenues by diversifying into investment banking, insurance, credit cards, retail financing, depository<br />
services and more. <strong>The</strong> last few years have witnessed rapid changes in the banking sector, with a rather<br />
strong and aggressive presence <strong>of</strong> new private sector banks. <strong>The</strong>se new private sector banks have taken<br />
a sizeable amount <strong>of</strong> business away from the public sector banks as well as the foreign banks. <strong>The</strong>y are<br />
becoming a challenge and also a threat to the Indian public sector banks.<br />
2) Objectives:-<br />
(i) To determine the bank-wise NPA in public sector banks and<br />
private sector banks.<br />
(ii) To examine banking sector reforms in India.<br />
(iii) To study New Basel Capital Accord<br />
3) Methodology:<br />
<strong>The</strong> study is based on the secondary data. <strong>The</strong> scope <strong>of</strong> the study is limited to three years data. <strong>The</strong><br />
study is related to Public Sector Banks & Private Sector Banks. <strong>The</strong> data has been analyzed using<br />
percentage method.<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 81
3.1 Bank-wise NPA in 2009<br />
(Amount in Rs. Crores)<br />
Bank Name Gross NPA Gross Advance GNPA Ratio (%)<br />
State Bank <strong>of</strong> India and its Associates<br />
State Bank <strong>of</strong> Bikaner & Jaipur 490 30088 1.63<br />
State Bank <strong>of</strong> Hyderabad 486 43938 1.11<br />
State Bank <strong>of</strong> India 16346 549297 2.98<br />
State Bank <strong>of</strong> Indore 301 21747 1.39<br />
State Bank <strong>of</strong> Mysore 368 25870 1.42<br />
State Bank <strong>of</strong> Patiala 573 43961 1.31<br />
State Bank <strong>of</strong> Saurashtra 182 14306 1.27<br />
State Bank <strong>of</strong> Travancore 549 32976 1.67<br />
Other Nationalized Banks<br />
Allahabad Bank 1078 59443 1.81<br />
Andhra Bank 368 44428 0.83<br />
Bank <strong>of</strong> Baroda 1843 144845 1.27<br />
Bank <strong>of</strong> India 2471 144732 1.71<br />
Bank <strong>of</strong> Maharashtra 798 34817 2.29<br />
Canara Bank 2168 139037 1.56<br />
Central Bank <strong>of</strong> India 2317 86740 2.67<br />
Corporation Bank 559 48927 1.14<br />
Dena bank 621 29185 2.13<br />
IDBI Bank Limited 1436 103915 1.38<br />
Indian Bank 459 51831 0.89<br />
Indian Overseas Bank 1923 75810 2.54<br />
Oriental Bank <strong>of</strong> Commerce 1058 69065 1.53<br />
Punjab & Sind Bank 161 24698 0.65<br />
Punjab National Bank 2767 156098 1.77<br />
Syndicate Bank 1595 82495 1.93<br />
UCO Bank 1540 69669 2.21<br />
Union Bank <strong>of</strong> India 1923 98265 1.96<br />
United Bank <strong>of</strong> India 1020 35727 2.85<br />
Vijaya Bank 699 35875 1.95<br />
Private sector Banks<br />
Axis Bank 890 82120 1.08<br />
HDFC Bank 1984 100239 1.98<br />
ICICI Bank 9649 223621 4.32<br />
ING Vysya Bank 209 16754 1.25<br />
Karnataka Bank 443 12123 3.66<br />
South Indian Bank 261 11965 2.18<br />
Yes Bank 85 12447 0.68<br />
Source: Department <strong>of</strong> Banking Supervision, RBI posted at www.rbi.org<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 82
3.2 Bank-wise NPA in 2010<br />
(Amount in Rs. Crores)<br />
Bank Name Gross NPA Gross Advance GNPA Ratio (%)<br />
State Bank <strong>of</strong> India and its Associates<br />
State Bank <strong>of</strong> Bikaner & Jaipur 611 35563 1.72<br />
State Bank <strong>of</strong> Hyderabad 645 53296 1.21<br />
State Bank <strong>of</strong> India 17836 544408 3.28<br />
State Bank <strong>of</strong> Indore 492 23949 2.06<br />
State Bank <strong>of</strong> Mysore 595 29858 1.99<br />
State Bank <strong>of</strong> Patiala 1006 47051 2.14<br />
State Bank <strong>of</strong> Saurashtra - - -<br />
State Bank <strong>of</strong> Travancore 641 38802 1.65<br />
Other Nationalized Banks<br />
Allahabad Bank 1220 71509 1.71<br />
Andhra Bank 487 56505 0.86<br />
Bank <strong>of</strong> Baroda 2196 133588 1.64<br />
Bank <strong>of</strong> India 4481 135193 3.31<br />
Bank <strong>of</strong> Maharashtra 1209 40926 2.96<br />
Canara Bank 2504 163290 1.53<br />
Central Bank <strong>of</strong> India 2457 106102 2.32<br />
Corporation Bank 650 63629 1.02<br />
Dena bank 641 35721 1.80<br />
IDBI Bank Limited 2129 138583 1.54<br />
Indian Bank 458 59963 0.76<br />
Indian Overseas Bank 3441 73025 4.71<br />
Oriental Bank <strong>of</strong> Commerce 1468 84183 1.74<br />
Punjab & Sind Bank 206 32738 0.63<br />
Punjab National Bank 3214 188306 1.71<br />
Syndicate Bank 2004 82599 2.43<br />
UCO Bank 1665 77568 2.15<br />
Union Bank <strong>of</strong> India 2663 118272 2.25<br />
United Bank <strong>of</strong> India 1372 42755 3.21<br />
Vijaya Bank 994 41934 2.37<br />
Private Sector Banks<br />
Axis Bank 1295 93005 1.39<br />
HDFC Bank 1807 125283 1.44<br />
ICICI Bank 9267 142100 6.52<br />
ING Vysya Bank 224 18509 1.21<br />
Karnataka Bank 549 14751 3.73<br />
South Indian Bank 211 15970 1.32<br />
Yes Bank 60 22240 0.27<br />
Source: Department <strong>of</strong> Banking Supervision, RBI posted at www.rbi.org<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 83
3.3 Bank-wise NPA in 2011<br />
(Amount in Rs. Crores)<br />
Bank Name Gross NPA Gross Advance GNPA Ratio (%)<br />
State Bank <strong>of</strong> India and its Associates<br />
State Bank <strong>of</strong> Bikaner & Jaipur 835 41743 2.0<br />
State Bank <strong>of</strong> Hyderabad 1150 65422 1.8<br />
State Bank <strong>of</strong> India 23073 662444 3.5<br />
State Bank <strong>of</strong> Indore - - -<br />
State Bank <strong>of</strong> Mysore 863 34425 2.5<br />
State Bank <strong>of</strong> Patiala 1381 52330 2.6<br />
State Bank <strong>of</strong> Saurashtra - - -<br />
State Bank <strong>of</strong> Travancore 835 46470 1.8<br />
Other Nationalized Banks<br />
Allahabad Bank 1646 91585 1.80<br />
Andhra Bank 995 72154 1.38<br />
Bank <strong>of</strong> Baroda 2786 171801 1.62<br />
Bank <strong>of</strong> India 4356 165147 2.64<br />
Bank <strong>of</strong> Maharashtra 1173 47487 2.47<br />
Canara Bank 2981 202724 1.47<br />
Central Bank <strong>of</strong> India 2394 131390 1.82<br />
Corporation Bank 790 87213 0.91<br />
Dena bank 842 45163 1.86<br />
IDBI Bank Limited 2784 155995 1.79<br />
Indian Bank 720 72587 0.99<br />
Indian Overseas Bank 2793 103087 2.71<br />
Oriental Bank <strong>of</strong> Commerce 1920 96838 1.98<br />
Punjab & Sind Bank 424 42832 0.99<br />
Punjab National Bank 4379 243998 1.79<br />
Syndicate Bank 2589 97534 2.65<br />
UCO Bank 3090 93246 3.31<br />
Union Bank <strong>of</strong> India 3622 153022 2.37<br />
United Bank <strong>of</strong> India 1355 53933 2.51<br />
Vijaya Bank 1259 49222 2.56<br />
Private Sector Banks<br />
Axis Bank 1586 124119 1.28<br />
HDFC Bank 1660 156705 1.06<br />
ICICI Bank 9815 169181 5.80<br />
ING Vysya Bank 151 23661 0.64<br />
Karnataka Bank 702 17696 3.97<br />
South Indian Bank 230 20658 1.11<br />
Yes Bank 80 34435 0.23<br />
Source: Department <strong>of</strong> Banking Supervision, RBI posted at www.rbi.org<br />
During 2011 SBI had recorded highest GNPA Ratio among all PSBs. Next to SBI was UCO Bank<br />
3.31%. In the preceding year GNPA Ratio was 3.28% for SBI and 3.21% for United Bank <strong>of</strong> India.<br />
Among the Private Banks ICICI recorded highest GNPA Ratio at 5.80% and Karnatak Bank at<br />
3.97%.<br />
<strong>The</strong> performance <strong>of</strong> Corporation Bank, Indian Bank, Punjab and Sind Bank, ING Vysya Bank<br />
Ltd, was found to be very encouraging. <strong>The</strong> GNPA Ratio were less than 1% for these banks.<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 84
4) Banking Sector Reforms in India: An Overview<br />
<strong>The</strong> Narasimham Committee on financial sector reforms paved the way for far reaching reforms in the<br />
banking sector in India and they ushered as the “second banking revolution”. It recommended<br />
sweeping changes in the financial sector as per international norms to cater to the needs <strong>of</strong> the sector<br />
and to strengthen it. To transform Indian banks from largely domestic ones to truly international ones,<br />
and to tackle their internal deficiencies, the Narasimham Committee I & II put forward several<br />
recommendations.<br />
<strong>The</strong> Government and the RBI accepted and implemented all the major recommendations <strong>of</strong> the<br />
Narasimham Committee.<br />
In tune with the liberalization and privatization wave sweeping across the world, the Government<br />
decided to review its banking policy in early 1990s. In the pre-reforms period (i.e. before 1991),<br />
commercial banks in India functioned in a highly regulated environment characterized by the<br />
following:<br />
‣ Administrative interest rate structure.<br />
‣ Quantitative restrictions on credit flows.<br />
‣ High reserve requirements under CRR(Cash Reserve Ratio)<br />
‣ Pre-emption <strong>of</strong> significant proportion <strong>of</strong> lendable resources for the priority sectors, and the<br />
government under statutory Liquidity Ratio (SLR).<br />
<strong>The</strong>se and other restrictions resulted in low productivity and inefficiency which in turn led to<br />
low/negative pr<strong>of</strong>its.<br />
With this background in view, the Narasimham Committee worked out the road map <strong>of</strong> banking sector<br />
reforms. <strong>The</strong> successful implementation <strong>of</strong> its various recommendations has given a new dynamism to<br />
the banking sector since 1991.<br />
<strong>The</strong> Committee was guided by the fundamental assumption that the resources <strong>of</strong> the banks come from<br />
the general public and held by the banks in trust. <strong>The</strong>se resources have to be deployed for maximum<br />
benefit <strong>of</strong> their owners, i.e. the depositors. This assumption automatically implies that even the<br />
Government has no business to endanger the solvency, health and efficiency <strong>of</strong> the nationalized banks.<br />
4.1 New Basel Capital Accord<br />
<strong>The</strong> new Basel Accord to modify the existing capital adequacy framework is currently under<br />
discussion. Under the revised capital adequacy framework, banks will have to provide for market risk<br />
and operational risk besides credit risk. Against the background <strong>of</strong> government decisions to reduce<br />
its shareholding in nationalized banks to 33 percent, maintaining the required level <strong>of</strong> capital adequacy<br />
by the banks could come under strain.<br />
Strong banks will be able to access the capital markets for raising additional equity, but weak banks<br />
could face several problems. But, in any case, there will be tremendous pressure on banks to improve<br />
their financial performance if they have to attract additional capital.<br />
Pr<strong>of</strong>itability will thus have to be improved so that higher dividends are paid to shareholders, capital<br />
market perception about public sector banks changes and there is a positive impact on the valuation <strong>of</strong><br />
shares so that the shares <strong>of</strong> public sector banks fetch attractive market prices.<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 85
5) Conclusion:<br />
<strong>The</strong> level <strong>of</strong> NPAs in the Indian banking industry is a greater concern and thus urgent cleaning up <strong>of</strong><br />
banks balance that has become a crucial issue. NPAs will have to be reduced drastically and adequate<br />
provisioning for bad and doubtful debts will have to be made.<br />
<strong>The</strong>re is a need for long term solutions for overcoming this challenge. <strong>The</strong> internal control systems,<br />
risk management systems and systems <strong>of</strong> catch early warning signals for timely detection <strong>of</strong> NPAs<br />
have to be strengthened by banks. In addition, the role <strong>of</strong> legal reforms in bringing down the level <strong>of</strong><br />
NPAs is crucial for speedy settlement <strong>of</strong> disputes and realization <strong>of</strong> banks’ dues. Also, strengthening<br />
the Debt Recovery Tribunals and empowering banks to enforce their change with out court<br />
intervention will result in expedition recovery <strong>of</strong> bad debts.<br />
References<br />
1. poongavanam. S (2011).Non Performing assets: Issues , Causes and remedial Solution Asian<br />
<strong>Journal</strong> Of Management <strong>Research</strong> Volume 2 Issue 1.<br />
2. Mahipal Singh Yaadav, Swami Vivkananda . Impact <strong>of</strong> Non Performing Assets on Pr<strong>of</strong>itability and<br />
Productivity <strong>of</strong> Public Sector Banks in India. AFBE <strong>Journal</strong>, Academic paper (pp.232-239).<br />
3.Malyadri.P, Sirisha.S(2011,October). A Comparative Study <strong>of</strong> Non Performing Assets in Indian<br />
Banking Industry. International <strong>Journal</strong> <strong>of</strong> Economic Practices and <strong>The</strong>ories, Vol.1.No.2.<br />
4.Chaudhary K and Sharma M (2011,June).Performance <strong>of</strong> Indian Public Sector Banks and Private<br />
Sector Banks :A Comparative Study. International <strong>Journal</strong> <strong>of</strong> Innovation, Management and<br />
Technology.<br />
5.Table B6: Bank-wise Non-Performing Assets (NPAs) <strong>of</strong> Scheduled Commercial Banks-RBI Annual<br />
Report 2007.<br />
6. Table B6: Bank-wise Non-Performing Assets (NPAs) <strong>of</strong> Scheduled Commercial Banks-RBI Annual<br />
Report 2008.<br />
7. Table B7: Bank-wise Gross Non-Performing Assets, Gross Advances and Gross NPA Ratio <strong>of</strong><br />
Scheduled Commercial Banks-2009.<br />
8. Table B7: Bank-wise Gross Non-Performing Assets, Gross Advances and Gross NPA Ratio <strong>of</strong><br />
Scheduled Commercial Banks-2010.<br />
9. Table B7: Bank-wise Gross Non-Performing Assets, Gross Advances and Gross NPA Ratio <strong>of</strong><br />
Scheduled Commercial Banks-2011.<br />
10. A.V. Aruna Kumari (2002), “Economic Reforms and Performance <strong>of</strong> Indian Banking: Across<br />
Structural Analysis”, Indian Economic Panorama, A Quaterly <strong>Journal</strong> <strong>of</strong> Agriculture, Industry, Trade<br />
and Commerce ,Special Banking Issue, pp. 19-21.<br />
11. Reserve Bank <strong>of</strong> India, master circular on Prudential norms on income recognition. Asset<br />
classification and provisioning.<br />
12. Bhasin, N. (2008), Banking Developments in India 1947 to 2007, New Delhi, Century<br />
Publications.<br />
13. Malyadri , P. (2003), NPA’s in Commercial Banks –An Overview, Banking Finance, Monthly,<br />
January 2003, Vol. XVI, pp.6-9.<br />
14. Banking Sector Reforms in India, AReview <strong>of</strong> Post-1991 Developments by R.K. Uppal & Rimpi<br />
Kaur.<br />
15. Commercial Banks in India Growth, Challenges and Strategies Benson Kunjkunju.<br />
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Abstract:<br />
A Case Study <strong>of</strong> “McDonald’s India”with reference to Bangalore City<br />
“One world, One Burger”- McDonald's. Quick Service Restaurant<br />
Dr. Y. Poornima, Pr<strong>of</strong>essor,<br />
Ramaiah Institute <strong>of</strong> Management Sciences, Bangalore, Karnataka, India<br />
McDonald’s is a wonderful appetizing plant that has been successfully, strategically and<br />
advantageously transplanted in the Indian urban soil and for any busy man; it is a godsend center <strong>of</strong><br />
attraction that is welcome with open arms.<br />
McDonald’s has a special affinity with Garden city, Bangalore and here at Forum mall, Koramangala,<br />
its first outlet is flowering like anything. Its products McVeggie, McPuff etc. made tastier by the spices<br />
favored by Indians continued to be great crowd pullers. MvDonald’s has rightly understood the Indian<br />
psyche and so has taken care to avoid Pork and Beef items. It does away with eggs in S<strong>of</strong>t Serves and<br />
McShakes and the outlet has earned a good name for its local vegetarian menu. McDonald’s food<br />
chain in Bangalore comprises more than ten outlets with separate production lines for vegetarian and<br />
non-vegetarian dishes. McDonald’s has no doubt made untiring efforts for its successful adaptation in<br />
India.<br />
But what about the future? Will its global image <strong>of</strong> a fatty food co. affect its future in India? As for<br />
essential components, such as quality and responsibility for a balanced diet, a gap has been revealed.<br />
<strong>The</strong> co. must be very careful in determining the boarders <strong>of</strong> responsibility, i.e. responsibility to inform<br />
its customers on health related issues. It is opined that there is an imbalance between the quality <strong>of</strong><br />
food and standards maintained by the co. as causing obesity among the youth. Certainly these issues<br />
are to be addressed properly. Because customer delight is the sine qua non for any service organization<br />
and this can be accomplished by maintaining minimum gaps between the expectations and experiences<br />
<strong>of</strong> the customers. <strong>The</strong> lesser the gap between the customer expectations and experiences, the more will<br />
be the customer satisfaction and loyalty.<br />
Key Words: Eating out; Entry strategy; Fast food retailing; Quick service restaurant(QSR)<br />
<strong>The</strong> present study focuses on how McDonald’s India managed to survive in its early years to get more<br />
in India and how McDonald’s adopted local culture in India, its entry strategy and its quick service.<br />
“McDonald's vision is to be the world's best quick service restaurant experience. Being the best means<br />
providing outstanding quality, service, cleanliness, and value, so that we make every customer in every<br />
restaurant smile."<br />
Evolution: McDonald's is one <strong>of</strong> the most popular fast food restaurants in the nation. <strong>The</strong> menu ranges<br />
from iced c<strong>of</strong>fee and eggs to s<strong>of</strong>t drinks and the Big Macs. McDonald’s one <strong>of</strong> the world’s most<br />
recognizable logos (the Golden Arches) and spokes character ( Ronald McDonald, the clown).It is the<br />
world’s leading global foodservice retailer with more than 33,000 locations serving approximately 64<br />
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million customers in 118 countries each day, brought its values <strong>of</strong> quality, service <strong>of</strong> cleanliness to<br />
India.. Entered in India in 1996, McDonald's India is a 50 – 50 JV partnership between McDonald’s<br />
Corporation (U.S.A) and two Indian businessman AmitJatia and Vikram Bakshi and operated by<br />
independent local men and women.McDonald’s now has a network <strong>of</strong> over 235 restaurants across the<br />
country. In India, McDonald’s does not <strong>of</strong>fer any pork or beef items.In products like McVeggie Pizza<br />
McPuffetc the spices favored by Indians are used. <strong>The</strong> s<strong>of</strong>t serves and McShakes are eggless. Happy<br />
meals, Mighty Kids Meals, French Fries, ChickenMcNuggets, Saladsare some <strong>of</strong> the popular names on<br />
the menu card. It has a very good Training Excellence Centre, known as Hamburger University,<br />
providing excellent Training facilities to its employeeswhich is a reflection towards good internal<br />
marketing system as it is the most important qualities <strong>of</strong> a good service organization. It’s USP is<br />
maintaining the same ambience and environment in all <strong>of</strong> its outlets.!1996 …the first McDonald’s<br />
restaurant opened on Oct. 13, at BasantLok, VasantVihar, New Delhi. It was also the first restaurant<br />
in the world not serving beef on its menu . In 1997…the first Drive –Thru restaurant at Noida , in 1999<br />
the first Mall location restaurant at Ansal Plaza – New Delhi , in 2000the first highway restaurant at<br />
Mathura , in 2001the first thematic restaurant at Connaught Place, in 2002, the first restaurant in a food<br />
court at 3C’s, Lajpat Nagar and the first restaurant at the Delhi Metro Station at Inter State Bus<br />
Terminus .<strong>The</strong> McDonald’s way is beautifully given by the company as below.<br />
Source: Google<br />
Marketing Strategy: McDonald’s has 3 elements in its strategy to be the world’s best quick service<br />
restaurant. i.e., people, customers and system growth. It has always been a franchising company and<br />
has relied on its franchisees to play a major role in its success. McDonald’s remains committed to<br />
franchising as a predominant way <strong>of</strong> doing business. It <strong>of</strong>fers franchises to poor performing restaurants<br />
in order to sustain pr<strong>of</strong>itability. It is constantly introducing new products, usually for a limited period<br />
<strong>of</strong> time. This is because the company Management recognizes that consumers like variety as well as a<br />
continuation <strong>of</strong> good products such as Big Macs & Cheese burgers. But recently, as the intake <strong>of</strong> fast<br />
foods growing widely among the youth and children, there is a talk in the crowd that the company has<br />
not introduced healthier products in response to growing concerns about obesity. <strong>The</strong> food usually<br />
contains a lot <strong>of</strong> calories with starch and cholesterol, which ultimately leads to some chronic diseases,<br />
is the concern <strong>of</strong> the day!Despite this negative talk, it is the most loving fast food global chain with its<br />
delighted menu card! <strong>The</strong> company properly analyzed the very pulse <strong>of</strong> the customers and this can be<br />
better quoted with the <strong>of</strong>fer <strong>of</strong> a coke for even one minute delay <strong>of</strong> its delivery <strong>of</strong> the food across the<br />
counter at its restaurant to its customers.<br />
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CRM in McDonald’s: McDonald’s maintains good customer relationship management. <strong>The</strong>y have a<br />
feedback and suggestion form available at each outlet. For the techno savvy Customers they have an<br />
online Feed back form.All the upcoming product and related information are posted on there websitewww.McDonald's.com.<br />
Its niche is Cleanness, speed, Quality and transparency <strong>of</strong> process!<br />
Progressing with the evolving needs <strong>of</strong> the customers, on 10th, October, 2011, McDonald’s announced<br />
the launch <strong>of</strong> its Wi- Fi services at restaurants in Delhi NCR in conjunction with O –Zone Networks,<br />
one <strong>of</strong> the leading Wi- Fi ISP hotspot providers in the country. Customers can now enjoy first 10<br />
minutes free Wi-Fi, as McDonald’s commitment to enhance customer experience at the core <strong>of</strong> its<br />
business. For browsers to continue to stay connected at the restaurant, various packages are also<br />
available, which users can buy online. Initially launched in Delhi NCRregions at all the McDonald’s<br />
restaurants, the Wi-Fi service will also be rolled out across all other regions in phases ( Punjab,<br />
Rajasthan, UP, MP, Uttarakand, WB).<br />
McDonald’s organized an “Extempore Speech Competition” for the school children on the occasion <strong>of</strong><br />
Teachers’ Day in Jodhpur on 5th Sept.2011.Through the competition, McDonald’s made an attempt to<br />
encourage high school students to creatively express how much they honor and value their teachers in<br />
shaping their lives. This is an example <strong>of</strong> its Corporate Social responsibility (CSR).<br />
<strong>The</strong> term “Glocalization” (Globalization + Localization) aptly suits to this fast food giant as the<br />
company completely localized the menu to suit the Indian pallet. <strong>The</strong> globally no.1 company is very<br />
much proactive in understanding the socio-cultural effects <strong>of</strong> the Indian consumers and thereby<br />
expanding its frontiers steadily all over India. McDonalds’ brand new avatar is seen in the following<br />
figure.<br />
Source: Google<br />
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<strong>The</strong> Big Mac concept is very popular and it is the benchmark for exchange rate index. <strong>The</strong> price <strong>of</strong> Big<br />
Mac burgers <strong>of</strong> McDonald's is considered for the index for the reason <strong>of</strong> the presence <strong>of</strong> fast-food<br />
chain across most <strong>of</strong> the countries and the magazine calls this theory 'Burgernomics'. This index was<br />
first compiled in September 1986 and new currencies, including Indian rupee, were added to the list<br />
last year to mark its silver jubilee year. According to Burgernomics, the Swiss franc is a meaty 62 per<br />
cent overvalued. <strong>The</strong> exchange rate that would equalize the price <strong>of</strong> a Swiss Big Mac with an<br />
American one is Swiss franc 1.55 to the dollar," as per the latest index. "<strong>The</strong> cheapest burger is found<br />
in India, costing just $ 1.62. Though because Big Macs are not sold in India, we take the price <strong>of</strong> a<br />
Maharaja Mac, which is made with chicken instead <strong>of</strong> beef," it added. Maharaja Mac is the closest<br />
Indian equivalent <strong>of</strong> Big Mac burgers at the Indian outlets <strong>of</strong> McDonald's. B S Nagesh, chairperson,<br />
Retailers Association <strong>of</strong> India (RAI), addressing the crowd, mostly comprising retail industry<br />
pr<strong>of</strong>essionals, said, that those in the quick service restaurants (QSR) segment are witnessing the<br />
highest growth within the food and beverage industry. Everyone's pick, when not dining at home, has<br />
been a KFC or McDonald's outlet at some point. India, says that how chain adjusted menu and market<br />
for expansion in our country would be very challenging and establishing a cold chain is very difficult.<br />
Getting a Hamburger chain to thrive in a country where eating beef is a taboo, is really a challenge.<br />
But McDonald’s is gradually finding its way in India. <strong>The</strong> global quick service giant has not exactly<br />
taken the country by storm. He further adds that the company did research its customers and asked if<br />
they found value for the money they spent with it. <strong>The</strong> Happy Price menu should start at Rs.20. <strong>The</strong><br />
average check per person is Rs.100 approximately and the best selling items are McVeggie, the<br />
McChicken and the Alootikki burgur. (Co. sources)<br />
Regarding skilled labor is concerned, basically the company hired people who have exposure to global<br />
processes and put them in advanced leadership development programs. Every one in the Corporate<br />
<strong>of</strong>fice has to go through an executive development program so there is a possibility <strong>of</strong> expanding the<br />
horizons differently and their performance now is very higher. Every manager has to be graduated at<br />
an iconic Hamburger University and for that the training will be given to them in Australia and China.<br />
People in India are used to McDonald’s and now starting to rely on it, as it becomes more than just the<br />
occasional treat for India’s increasingly affluent middle class.<br />
Thus McDonald’s successfully and easily adapt its global restaurants to appeal to the cultural<br />
differences. Now it is the most admired fast food chain globally. It is a community oriented socially<br />
responsible company and more conscious <strong>of</strong> the Green consumerism, taking into consideration, the<br />
hygienic and safety aspects <strong>of</strong> the food supplied to the customers. It is not out <strong>of</strong> the context here to<br />
mention even Bollywood stars are making use <strong>of</strong> McDonald’s as their promotional too, for example,<br />
Sharukh Khan with his movie, Ra One and now Hrithik Roshan with Agnipath movie. Thus the<br />
success <strong>of</strong> McDonald’s in India is due to its very careful and calibrated approach and its adaptive<br />
ability.<br />
McDonald’s followed a slow strategy in India when its competitors were going aggressive. With a<br />
steady approach, it tapped the Indian market and waited 6 long years even after its initial entry was in<br />
1990.Acording to Amit Jatia, “the first challenge that McDonald’s faced was the lack <strong>of</strong> a cold chain<br />
facility. <strong>The</strong> initial years went into setting up a successful cold chain. It has immensely benefited<br />
farmers at one end and also enabled customers to get the highest quality food products”. <strong>The</strong> every day<br />
affordable Happy Price Menu platform introduced in 2004 is still a key driver <strong>of</strong> “value perception”<br />
for McDonald’s!<br />
McDonald's goes for costliest revamp to attract more adults: Fifteen years after it entered India, Big<br />
Mac is changing colors, literally. <strong>The</strong> world's largest fast-food chain is shedding its familiar red-andyellow<br />
colors for more muted tones as it goes for its biggest and costliest revamp in the country, in line<br />
with its global strategy <strong>of</strong> attracting more adults. <strong>The</strong> makeover also involves taking away the iconic<br />
mascot, Ronald McDonald, at least from some <strong>of</strong> its outlets in the country and beefing up its menu<br />
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with options that are more likely to appeal to adults. <strong>The</strong> US-based burger-and-fries chain has already<br />
added McSpicy Chicken Burger and McFlurry desserts to its <strong>of</strong>ferings in India. <strong>The</strong> red-and-yellow<br />
company logo will be replaced by white across its 240 restaurants over the next three-four years and<br />
the decor will change from neon-yellow and bright-red interiors to pale colors. "<strong>The</strong> change has<br />
already kicked <strong>of</strong>f with one outlet each in New Delhi and Mumbai," said McDonald's India (North &<br />
East) MD and joint venture partner Vikram Bakshi. <strong>The</strong> company hopes to upgrade the consumer's<br />
experience, he said, without alienating its younger customers and raising prices. Others are not so<br />
confident. "McDonald's core equity, at least in India, lies with kids, mostly in the sub-13-year age<br />
group. I am not sure if the move to bring in muted colors and decor would go well with this category<br />
<strong>of</strong> consumers," said Mahesh Chauhan, co-founder <strong>of</strong> advertising and marketing firm Salt Brand<br />
Solutions.<br />
<strong>The</strong> following diagram gives an account <strong>of</strong> the SWOT analysis, i.e. strengths, weaknesses,<br />
opportunities and threats <strong>of</strong> McDonald’s. It is quite evident that strengths <strong>of</strong> McDonald’s outweigh all<br />
the other components. This is the very strong brand equity <strong>of</strong> McDonald’s. Despite this conception,<br />
very recently McDonald’s is facing severe criticism against its quality <strong>of</strong> food that makes people more<br />
obese and it is not taking proper precautions in this regard.<br />
Source: Google<br />
Some Nutritional facts <strong>of</strong> McDonald’s: Potatoes are the staple food ingredient <strong>of</strong> McDonald’s menu,<br />
whether vegetarian or non vegetarian dish. It has been observed that by 2014, McDonald’s India<br />
estimates that it would source 50,000 metric tons <strong>of</strong> Potatoes from McCain Foods Pvt. Ltd. India<br />
according to sources. In fact Hamburger is the basic food item <strong>of</strong> McDonald’s, across the world, but in<br />
India, cow is a sacred animal and two thirds <strong>of</strong> the Indians are vegetarians, it is only burger in India<br />
specially to cater to the Indian culture and preferences. This is the most laudable strategy adopted by<br />
the fast food giant, McDonald’s India. Its marketing campaign constitutes, “Har choti Khushi Ka<br />
Celebration” (celebrate little joys <strong>of</strong> life) has become very popular. McDonald’s strictly obeys the<br />
Indian customer belief <strong>of</strong> “dine in culture”.<br />
<strong>The</strong> recent debate in Parliament on foreign direct investment in multi-brand retail has been interesting,<br />
to say the least. <strong>The</strong> highlight was that McDonald's found itself in Sushma Swaraj's line <strong>of</strong> fire. <strong>The</strong><br />
fast-food food retailer, she thundered, was importing basic inputs like potatoes and was procuring little from<br />
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Indian farmers. "Ask McDonald's about their fries. <strong>The</strong>y never buy potatoes from local Indian farmers,<br />
saying the potatoes are too small here," she said.<br />
Her argument was that Indian farmers stand to gain little from the entry <strong>of</strong> large transnational retailers<br />
like Walmart - they will import all their stuff from their existing low-cost suppliers spread across the<br />
world, mostly in China. This is the time to analyze the French fries served by McDonald's in India.<br />
French fries, and therefore potatoes, are integral to McDonald's business (Google updates).<br />
Very recently McDonald’s has taken a decision to opening <strong>of</strong> exclusively vegetarian outlets near<br />
pilgrim centers like Amritsar in Punjab and Katra in Jammu & Kashmir to have an edge over its<br />
competitors, KFC, Pizza Hut etc… This will be really a boon to the pure vegetarians who opt for a fast<br />
food for their convenience. Again this is a reflection <strong>of</strong> honoring the Indian sentiments and tracking<br />
the pulse <strong>of</strong> pure vegetarians.<br />
McDonald’s operations in western and southern India has got consolidated. Hardcastle Restaurants Pvt<br />
Ltd (HRPL), the privately-held franchisee <strong>of</strong> McDonald’s Restaurants will be merged with its parent<br />
Westlife Development Ltd. very shortly. According to Jatia, vice-chairman <strong>of</strong> Westlife Development<br />
said in a statement, “<strong>The</strong> consolidation <strong>of</strong> our companies under Westlife Development opens up<br />
options for us to accelerate our growth plans for expanding McDonald’s restaurants in west and south<br />
India. <strong>The</strong> consolidation will also open up opportunities for the India market to invest in the growth <strong>of</strong><br />
the McDonald’s Franchisee, HRPL, through Westlife Development, and we operate in a different<br />
segment <strong>of</strong> food and restaurants”.<br />
McDonald’s in Bangalore City: In Bangalore City, the first McDonald’s outlet, the large space at<br />
Forum Mall in Koramangala, continues to be a crowd-puller. Mall rats find it the perfect place to park<br />
themselves and tuck into a Maharajah Mac or McAlooTikki Burger and Coke after legging it up and<br />
down the escalators. This one is hugely popular with kiddies as well. McDonalds frequently announces<br />
combos and value-for-money <strong>of</strong>fers that regulars, especially the college set, keep a lookout for.<br />
Otherwise, it's not exactly a cheap option for fast food <strong>of</strong> the most basic kind. <strong>The</strong>y have more than<br />
twenty outlets in Bangalore. <strong>The</strong> total number <strong>of</strong> outlets in the City are ten as on Feb.2013. Many<br />
Bangaloreans opine that it’s a nice place to eat out with a variety <strong>of</strong> delicious menu and has been rated<br />
3.5 out <strong>of</strong> five.<br />
Objectives <strong>of</strong> the study:<br />
To identify the factors affecting the choice <strong>of</strong> (Indian youth) consumers for fast foods.<br />
To study the consumption pattern towards fast foods particularly with respect to the frequency<br />
<strong>of</strong> visits and choice <strong>of</strong> fast food outlets specifically to McDonald’s.<br />
To analyze the impact <strong>of</strong> delivery <strong>of</strong> the food items and maintenance <strong>of</strong> its standards on<br />
customers’ perception in this regard.<br />
Hypothesis: <strong>The</strong>re is a significant impact <strong>of</strong> delivery <strong>of</strong> the food items and maintenance <strong>of</strong> its<br />
standards on consumer perception towards preferring fast food like McDonald’s.<br />
<strong>Research</strong> Methodology: Comprises collection <strong>of</strong> data and sample size.<br />
Collection <strong>of</strong> data: can be done through primary as well as secondary sources. <strong>The</strong> primary data has<br />
been collected through administering a pre tested questionnaire by interviewing 100 respondents who<br />
are <strong>of</strong> 20- 40 age group <strong>of</strong> both male and female <strong>of</strong> different occupations in Bangalore City. <strong>The</strong><br />
secondary data has been gleaned from various journals, web sources, company sources etc.<br />
Limitations <strong>of</strong> the study: <strong>The</strong> study was limited to Bangalore City only and the age group wss<br />
confined to 20-40 years <strong>of</strong> 100 respondents.<br />
Interpretation <strong>of</strong> the study: After given an account <strong>of</strong> brief introduction, objectives and pr<strong>of</strong>ile <strong>of</strong> the<br />
company, the study has been further analyzed and interpreted with the help <strong>of</strong> the following diagrams<br />
based on the questionnaire administered on the 100 sample respondents.<br />
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Fig. No. 1: Sources to know about McDonald’s:<br />
News paper T.V, Advt. Friends<br />
Internet Others<br />
1%<br />
28%<br />
9%<br />
15%<br />
47%<br />
Fig.No. 2: Visits to McDonald’s outlets:<br />
45%<br />
40%<br />
40%<br />
35%<br />
30%<br />
30%<br />
25%<br />
20%<br />
15%<br />
10%<br />
10%<br />
20%<br />
percentage<br />
5%<br />
0%<br />
Once a<br />
month<br />
Once a Once a Very <strong>of</strong>ten<br />
fortnightweek<br />
Fig. No.3: Factors influencing to eat at McDonald’s outlets:<br />
35%<br />
30%<br />
25%<br />
28%<br />
32%<br />
20%<br />
15%<br />
15%<br />
13%<br />
12%<br />
percentage<br />
10%<br />
5%<br />
0%<br />
Price Time Quality Taste Others<br />
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Fig.No.4: Shows the preference towards food:<br />
60<br />
50<br />
40<br />
30<br />
20<br />
No <strong>of</strong> respondent<br />
Percentage<br />
10<br />
0<br />
Fig.No.5: Ranking <strong>of</strong> McDonald’s by Respondents:<br />
Fastfoods<br />
Homefood<br />
40%<br />
60%<br />
Fig. No.6: Change <strong>of</strong> Preference owing to incentive schemes:<br />
10%<br />
18%<br />
Yes<br />
No<br />
Can`t say<br />
72%<br />
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Fig.No.7: <strong>The</strong> effects <strong>of</strong> Fast Food on health:<br />
Can`t say<br />
, 12%<br />
No, 11%<br />
Yes, 77%<br />
Fig. No.8: <strong>The</strong> diversity <strong>of</strong> menu at McDonald’s according to consumer<br />
5%<br />
35%<br />
60%<br />
yes<br />
no<br />
can't say<br />
Fig No.9: Consumer perception on quality <strong>of</strong> McDonald’s :<br />
60%<br />
40%<br />
20%<br />
56%<br />
44%<br />
percentage<br />
0%<br />
Less<br />
Enough<br />
0%<br />
High<br />
Source: Questionnaires<br />
<strong>The</strong> given hypothesis statement is that “there is a significant impact <strong>of</strong> delivery <strong>of</strong> the food items and<br />
maintenance <strong>of</strong> its standards on consumer perception towards preferring fast food like McDonald’s”<br />
can be verified with the help <strong>of</strong> Chi square test. This has been proved in the light <strong>of</strong> the consumer<br />
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perception towards quality <strong>of</strong> McDonald’s. Though 56% <strong>of</strong> the respondents reacted positively towards<br />
the delivery & standards maintained would have a direct impact on the perception and purchase <strong>of</strong> the<br />
fast food like McDonald’s, 77% <strong>of</strong> the respondents opined that there would be strong impact <strong>of</strong> fast<br />
food on the health <strong>of</strong> the customers and therefore caution required.<br />
Chi square test for goodness <strong>of</strong> fit: After analyzing the hypothesis statement through chi square, the<br />
value arrived at was 5.29, at 4% d.f. whereas the table value was 7.78, therefore the given hypothesis is<br />
very much valid and acceptable.<br />
FINDINGS & CONCLUSION;<br />
FINDINGS OF THE STUDY:<br />
From the above study, the following findings have been drawn:<br />
47% <strong>of</strong> respondents came to know about fast food from their friends and close ones.32% <strong>of</strong><br />
respondents eat fast food to save time and 28% respondents because <strong>of</strong> price.<br />
40% <strong>of</strong> respondents visit fast food outlets weekly i.e. 4 to 5 times in a month, 20% <strong>of</strong><br />
respondents visit twice a month, 10% <strong>of</strong> respondents visit once in a month and 30 % very <strong>of</strong>ten. 62%<br />
<strong>of</strong> the respondents like fast food no matter how <strong>of</strong>ten they visit fast food outlets, 38% respondents like<br />
home cooked food but they also visit fast food outlets. All the respondents have a craving for fast food<br />
but they do not eat it because <strong>of</strong> many factors like health consciousness, lack <strong>of</strong> proper information<br />
about menu etc.<br />
72% <strong>of</strong> the respondents are not drawn to fast foods in spite <strong>of</strong> many incentive schemes and<br />
prizes <strong>of</strong>fered. Only 18% <strong>of</strong> the sample respondents opined that their preference can change if any<br />
attractive <strong>of</strong>fer is available.<br />
It has been observed that 77% <strong>of</strong> respondents know that fast food can be a reason for their<br />
anomalies like ill health, disorders etc... as they take fast food, 12% do not know that fast food can be a<br />
reason and 11% <strong>of</strong> the sample respondents opined negatively.<br />
<strong>The</strong> main factors which are affecting the choice <strong>of</strong> consumer for fast food are word <strong>of</strong> mouth<br />
and influence <strong>of</strong> friends etc..<br />
Internet is also a main source <strong>of</strong> affecting choice <strong>of</strong> consumer for fast foods through social<br />
networking, by displaying advertisements on different sites and sometimes with special effects like<br />
pop ups etc...<br />
Generally some <strong>of</strong> the consumers go to fast food outlets for taste as well as status.<br />
Fast food outlets have to put up a lot <strong>of</strong> effort to change the perception <strong>of</strong> the customers<br />
towards providing quality oriented, hygiene food at reasonable prices.<br />
CONCLUSION:<br />
McDonald’s believe in "Customer is the King" concept and thus the complaints if any, from the<br />
customers end are duly addressed and resolved immediately. It’s a globally no. one company and in<br />
India too! Amidst <strong>of</strong> so much uproar in the Indian Parliament regarding FDI issues, so much<br />
competition from within, McDonald’s has its own brand image in the hearts <strong>of</strong> our Indian customers!.<br />
<strong>The</strong> majority <strong>of</strong> the customers, i.e. 56% <strong>of</strong> the sample respondents’, preferably the youth, felt happy<br />
and quite contented with the standards maintained, price, quality, variety and in time delivery <strong>of</strong> the<br />
food supplied by the McDonald’s! Finally the study concludes that the youth is shifting from home<br />
cooked food to fast food, though home cooked food is always cheaper and healthy, because <strong>of</strong> their<br />
busy lifestyle or changed food habits etc... <strong>The</strong> most laudable aspect is that the net pr<strong>of</strong>it <strong>of</strong> HRPL<br />
(Hardcastle Restaurants Pvt Ltd) which operates 148 restaurants across west and south India was Rs<br />
425.1 million up 126 per cent in 2011-12.<br />
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To be successful in the international marketing, a company needs to be revise its marketing mix i.e.,<br />
4Ps (product, price, place & promotion) to suit that market as McDonald’s is doing in India. <strong>The</strong> basic<br />
philosophy, as already mentioned, Glocalization – think global but act local is very much apt to<br />
McDonald’s!!!<br />
REFERENCES:<br />
1. <strong>Business</strong> Source Premium<br />
2. Google Sources<br />
3. EBSCO Sources<br />
4. Company Sources<br />
5. Indian <strong>Journal</strong> <strong>of</strong> Marketing Volumes<br />
6. Self-Administered Questionnaire<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 97
Zone <strong>of</strong> Tolerence for the Banks:<br />
Exploring the Service Quality Attributes to be Improved<br />
Pr<strong>of</strong>. Veerabhadrappa Mallikarjunappa Havinal<br />
Pr<strong>of</strong>error in Industrial & Production Engg<br />
R Y M Engineering College, Bellary, Karnataka, India<br />
Pr<strong>of</strong>. Jayanna Sirigere<br />
Pr<strong>of</strong>essor, Department <strong>of</strong> Management <strong>Studies</strong><br />
Vijayanagara Sri Krishnadevaraya University, Bellary, Karnataka, India<br />
Abstract<br />
Indian banking industries have invested huge amount <strong>of</strong> resources to <strong>of</strong>fer innovative ways <strong>of</strong> serving<br />
customers to enhance customer satisfaction. <strong>The</strong>se include automatic teller machines, mobile banking,<br />
internet banking, NEFT (National electronic fund transfer), RTGS (Real time gross settlement) etc.<br />
Much <strong>of</strong> these resources are used to satisfy the customers with respect to those service quality<br />
attributes which the customers feels not important, this indicates the banks resources are wasted. With<br />
respect to some <strong>of</strong> the service quality attributes, the customers are not satisfied even though they are<br />
very important to customers. This indicates that an additional resource needs to be invested to satisfy<br />
these service quality attributes. This paper attempts to identify the service quality attributes <strong>of</strong> banking<br />
services where resources are wasted and service quality attributes that needs additional investment <strong>of</strong><br />
resources using Zone <strong>of</strong> Tolerance based on Importance-Satisfaction model. First, the service quality<br />
attributes are used to derive five service quality dimensions namely Tangibles, Reliability, Assurance,<br />
Responsiveness and Empathy using factor analysis. Using the importance and satisfaction <strong>of</strong> each<br />
service attribute, the Zone <strong>of</strong> tolerance (ZOT) is established by integrating two scientific approaches;<br />
importance-satisfaction model and control chart. <strong>The</strong> service quality attributes which needs<br />
improvement and the attributes where the resources are wasted are then explored.<br />
Key Words:- Importance, Satisfaction, Service quality attributes, Zone <strong>of</strong> tolerance.<br />
Introduction<br />
Service sector in most countries as a dominant sector has replaced others. With the increase in the<br />
share <strong>of</strong> services came increased the consumer concerns over perceived deterioration <strong>of</strong> service quality<br />
(Mersha and Adlaka, 1992). Because <strong>of</strong> the positive relationship between service quality and customer<br />
satisfaction (Lee et al. 2000; Suleman 2011), it has become the subject <strong>of</strong> many researchers. Superior<br />
service quality, result in enhanced customer satisfaction, loyalty, greater willingness to recommend<br />
others and reduction in customer complaints (Chiu and Lin, 2004). Banking industry involves frequent<br />
interaction with the customers. Hence the levels <strong>of</strong> service quality and customer satisfaction are <strong>of</strong><br />
greatest importance. Banking industries are finding innovative ways <strong>of</strong> operating the financial services.<br />
<strong>The</strong>se include mobile banking, internet banking, automatic teller machines etc. for which huge amount<br />
<strong>of</strong> resources are invested. It is observed that much <strong>of</strong> these resources are used to satisfy the customers<br />
with respect to those service quality attributes which the customers feels not important, which<br />
indicates the banks resources are wasted. With respect to some <strong>of</strong> the service quality attributes, the<br />
customers are not satisfied even though they are very important to customers. This indicates that an<br />
additional resource needs to be invested to satisfy these service quality attributes. This paper attempts<br />
to identify the service quality attributes <strong>of</strong> banking services where resources are wasted and service<br />
quality attributes that needs additional investment <strong>of</strong> resources to improve satisfaction using Zone <strong>of</strong><br />
Tolerance (ZOT) based on Importance-Satisfaction model<br />
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Review <strong>of</strong> Literature<br />
SERVQUAL and SERVPERF Models<br />
Measuring quality <strong>of</strong> services might be difficult because <strong>of</strong> intangible nature <strong>of</strong> services. <strong>The</strong> most<br />
widely used models in service quality in the banking sector are SERVQUAL and SERVPERF models.<br />
According SERVQUAL model, developed by Parasuraman (1985, 1988), service quality can be<br />
measured as a difference between customer’s expectations <strong>of</strong> the service to be rendered and their<br />
perceptions <strong>of</strong> the actual performance <strong>of</strong> the service. SERVQUAL is based on five dimensions namely<br />
Tangible, Reliability, Assurance, Responsiveness and Empathy. Each dimension is measured by four<br />
to five attributes. Mathematically, Service quality is measured as<br />
i<br />
i<br />
Where<br />
SQ i = Perceived service quality <strong>of</strong> individual ‘i’<br />
k = number <strong>of</strong> attributes / items<br />
= erception <strong>of</strong> individual ‘i’ with respect to performance <strong>of</strong> a service firm attribute ‘ ’<br />
= ervice quality expectation for attribute ‘ ’ that is relevant norm for individual ‘i’.<br />
i<br />
Several issues have been raised with regard to use <strong>of</strong> ( P – E ) scores. Most studies have found a poor<br />
fit between service quality measured through parasuraman, Zeithaml and Berry (1988) scale and the<br />
overall service quality measured through a single-item scale (Babacus and Boller 1992, Babakus and<br />
Mangold 1989; Finn and Lamb 1991 and preng and ingh 1993). Though the ‘gap scores’ is<br />
conceptually sensible, the ability <strong>of</strong> these scores to provide additional information beyond that already<br />
contained in the perception component <strong>of</strong> the service quality scale is under doubt (Babacus and Boller<br />
1992). Teas ( 1993, 1994) observed that a ( P – ) gap <strong>of</strong> ‘-1’ can be produced in six ways: =1, =2;<br />
P=2, E=3; P=3, E=4; P=4, E=5; P=5, E=6; P=6, E=7 and these tied gaps cannot be trusted as implying<br />
equal perceived service quality shortfalls. Brown, Peter and Churchil (1993) found different scores<br />
being beset with psychometric problems and, therefore, cautioned the use <strong>of</strong> (P-E) score. Cronin and<br />
Taylor (1992, 1994) challenged the gap score approach and developed the SERVPERF scale which<br />
directly captures customer’s performance perceptions in comparison to their expectations <strong>of</strong> the<br />
service encounter which can be expressed mathematically as follows.<br />
i i (2)<br />
Where, = erception <strong>of</strong> individual ‘i’ with respect to performance <strong>of</strong> a service firm attribute ‘ ’.<br />
Babacus and Boller (1992), Brady at al. (2002), also proved that SERVPERF is better alternative than<br />
SERVQUAL. Jain and Guptha (2004), reported that SERVPERF was more strongly correlated with<br />
overall service quality than SERVQUAL. Beerli et al. (2004), Wang et al. (2003), Lee and Hwan<br />
(2005), Zahoor (2011), Mensah (2010) and Suleman (2011) reported that SERVPERF is better<br />
alternative than SERVQUAL as it reduces the amount <strong>of</strong> data needed to measure service quality. Since<br />
Service quality attributes are not expected to be equally important across service industries, it has been<br />
suggested to include importance weights in the service quality measurement scales. Hence the service<br />
quality is measured as:<br />
i i i (3)<br />
Where W ij is the weighting factor, i.e., importance <strong>of</strong> attribute ‘ ’ to an individual ‘i’<br />
Though, on theoretical grounds, addition <strong>of</strong> weights makes sense (Bolton and drew, 1991), not much<br />
improvement in the measurement potency <strong>of</strong> either scale has been reported after inclusion <strong>of</strong> weights.<br />
Hence, the present study uses the un-weighted SERVPERF scale to measure the service quality <strong>of</strong><br />
banking services based on the perceptions <strong>of</strong> service.<br />
(1)<br />
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Customer Satisfaction<br />
Kotler and Armstrong (2012), report that satisfaction is the post-purchase evaluation <strong>of</strong> products or<br />
services taking into considerations <strong>of</strong> expectation. <strong>Research</strong>ers, academicians and managers are<br />
divided over the antecedents <strong>of</strong> service quality and satisfaction. Whilst some think service quality<br />
leads to satisfaction, others think otherwise (Ting, 2004). <strong>The</strong> studies <strong>of</strong> Lee (2000), Suleman (2011)<br />
and Buttle (1998) suggest service quality leads to satisfaction. As service quality improves, the<br />
probability <strong>of</strong> customer satisfaction increases. According to Suleman (2011), Reliability, Tangible,<br />
Responsiveness and assurance have sufficient and positive effect on customer satisfaction, mean while<br />
empathy was found to have a significant and negative effect.<br />
Importance-Satisfaction Model and zone <strong>of</strong> tolerance<br />
Deming (1986), Hardley and Choi (1992) Yang (2003) contended that customers evaluate quality by<br />
using quality attribute that they recognize as important elements. Service providers therefore should<br />
prioritize the quality attributes that have higher importance levels and lower satisfaction. With respect<br />
to this rationale Yang (2003) developed a model known as Importance-Satisfaction (I-S) model also<br />
known as Importance-Performance (I-P) model which is illustrated in figure 1. In this model the<br />
importance and satisfaction <strong>of</strong> each service quality attribute are noted in various quadrants and the<br />
improvement strategies are then considered on the basis <strong>of</strong> the area in which each attribute is located.<br />
<strong>The</strong> following areas are identified in figure 1.<br />
1. Area I: Excellent area. <strong>The</strong> attributes located in this area are important to the customers and the<br />
performance <strong>of</strong> the service provider with respect to these attributes is satisfactory. Service<br />
providers should aim to maintain the service level <strong>of</strong> these attributes.<br />
2. Area II: To-be- improved area. <strong>The</strong> attributes located in this area are important to the customers<br />
and the performance <strong>of</strong> the service provider with respect to these attributes is not satisfactory.<br />
Service providers need to undertake improvement strategies to improve the performance <strong>of</strong><br />
these attributes.<br />
3. Area III: Surplus area. <strong>The</strong> attributes located in this area are unimportant to the customers and<br />
the performance <strong>of</strong> the service provider with respect to these attributes is satisfactory, i.e.,<br />
erformance <strong>of</strong> the service provider exceeds customer’s expectation. ervice providers need<br />
not take any action with respect to these attributes unless cost pressures require them.<br />
4. Area IV: Careless Area. <strong>The</strong> attributes located in this area are unimportant to the customers and<br />
the performance <strong>of</strong> the service provider with respect to these attributes is not satisfactory.<br />
Although performance is poor, service provider need not pay much attention to these attributes<br />
because customers are not concerned about them.<br />
High<br />
h<br />
Satisfaction<br />
Mean<br />
Area III<br />
Surplus area<br />
Area I<br />
Excellent area<br />
Low<br />
Area IV<br />
Careless area<br />
Area II<br />
To be improved area<br />
Low<br />
Mean<br />
importance<br />
Low<br />
Figure 1- Importance Satisfaction model.<br />
Source: Yang, 2003.<br />
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In the I-S Model the performance matrix is divided into four performance zones that represent the<br />
effectiveness <strong>of</strong> various system improvement items as in figure 2. <strong>The</strong> horizontal axis represents<br />
‘importance (i) and the vertical axis represents ‘satisfaction’ ( ).when i = j, two performance zones (Z 11<br />
and Z 22 ) are identified in which satisfaction equals importance. <strong>The</strong> area designated Z 21 means that<br />
importance is greater than satisfaction; increased recourses need to be invested to improve satisfaction.<br />
<strong>The</strong> area designated Z 12 means that importance is less than satisfaction; recourses invested in these<br />
attributes should be decreases to prevent waste. If the random variable I denotes importance and J<br />
denotes satisfaction <strong>of</strong> each attribute, the indices <strong>of</strong> importance and satisfaction are defined as follows:<br />
(4)<br />
Where,<br />
P I = index <strong>of</strong> importance,<br />
Ps = Index <strong>of</strong> performance,<br />
µ I = mean importance,<br />
µs = mean performance,<br />
min = the minimum value <strong>of</strong> k scale i.e. 1,<br />
R = the full range <strong>of</strong> the k scale i.e. 5 (five point Likert scale).<br />
J=2<br />
1<br />
(5)<br />
Satisfaction (P s )<br />
Z 12<br />
Z 22<br />
0.5<br />
J=1<br />
Z 11<br />
Z 21<br />
0<br />
i =1<br />
0.5<br />
i =2<br />
1<br />
Importance (P I )<br />
Figure 2 Performance matrix<br />
<strong>The</strong> two indices are clearly within the range 0 to 1. On a five point Likert scale, when importance or<br />
satisfaction exceeds 3, the corresponding index will exceed 0.5 and the integral average importance or<br />
satisfaction will be positive. On the other hand, if importance or satisfaction is below 3, indices will be<br />
below 0.5 and the integral average importance or satisfaction will be negative. <strong>The</strong> values <strong>of</strong> indices<br />
represent a convenient and efficient tool with which service providers can evaluate the effectiveness <strong>of</strong><br />
the improvement strategy. Applying the control chart method (Montgomery, 1991), the range <strong>of</strong><br />
performance matrix is limited to the area within two bold oblique lines to obtain an appropriate<br />
performance-control zone (APCZ) as in figure 3. Between these two lines is an oblique line<br />
representing the performance-control central line (PCCL). This line and the two oblique lines, the<br />
performance upper control limit (PUCL) and the performance lower control limit (PLCL) are<br />
established according to the coordinates that enable the objective diagnosis and judgment <strong>of</strong> the<br />
required improvements to be performed.<br />
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<strong>The</strong> service quality attributes are then mapped on to the performance control matrix. <strong>The</strong> attributes that<br />
fall into the bottom right zone i.e. zone A, or the insufficient resource zone, have greater importance<br />
than satisfaction; more resources must be invested in these items to improve satisfaction. Attributes<br />
that fall into upper left zone ie zone B or the misspent resource zone, have less importance than<br />
satisfaction; the investment <strong>of</strong> resources in these attributes should be decreased to prevent waste.<br />
Service providers should seek to improve only those attributes that are located outside the control<br />
limits. To map the attributes on to the performance control matrix, the performance control matrix<br />
index (PCMI) is defined as<br />
P S-I = P S – P I (6)<br />
In which<br />
P S-I = performance control matrix index<br />
P S = index <strong>of</strong> Satisfaction,<br />
P I = index <strong>of</strong> importance<br />
If PCMI has a positive value, this indicates that importance is less than satisfaction and fewer<br />
resources should be invested to prevent waste. If PCMI has a negative value, this indicates that<br />
importance is greater than satisfaction and more resources should be invested to improve satisfaction.<br />
Keeping the target value as zero, the performance matrix limits should defined appropriately,<br />
according to the resources. <strong>The</strong> closer the limits, the greater the number <strong>of</strong> attributes falling outside the<br />
performance limits. Since 99.73 percent <strong>of</strong> the observations fall within ± 3 standard deviations, PUCL<br />
and PLCL are defined as;<br />
UCL = T + 3 σ<br />
PCCL = T = 0<br />
PLCL = T - 3σ (7)<br />
PUCL = 0.10587<br />
J=2<br />
1<br />
Zone B<br />
Resources<br />
misspend zone<br />
Maintain<br />
Appropriate Performance<br />
Control Zone (APCZ)<br />
PCCL<br />
Satisfaction (P s )<br />
0.5<br />
PLCL = - 0.10587<br />
J=1<br />
Maintain<br />
Zone A<br />
(Resources<br />
Insufficient zone)<br />
0 i =1<br />
0.5 i =2 1<br />
Importance (P I )<br />
Figure 3 Performance- Control zone <strong>of</strong> performance matrix<br />
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Objectives <strong>of</strong> the Study<br />
<strong>The</strong> objectives <strong>of</strong> the study are summarized below.<br />
1. To identify the service quality factors / dimensions <strong>of</strong> selected commercial banks using<br />
SERVPERF scale.<br />
2. To Establish zone <strong>of</strong> tolerance using importance and satisfaction <strong>of</strong> service quality<br />
attributes.<br />
3. To explorer the service quality attributes which needs improvement.<br />
Methodology<br />
<strong>Research</strong> methodology is a blue print <strong>of</strong> the way in which the research is going to be conducted. It<br />
enlightens the methods to be followed in research activities. It includes research design, locale <strong>of</strong><br />
research, sampling framework, collection <strong>of</strong> data, framework for analysis and limitations.<br />
<strong>Research</strong> Design<br />
<strong>The</strong> present study describes the importance <strong>of</strong> each item <strong>of</strong> service quality dimensions, perceived<br />
service quality and the overall satisfaction <strong>of</strong> each attribute / item <strong>of</strong> service quality dimensions <strong>of</strong> the<br />
selected commercial banks. <strong>The</strong> mean importance and the mean satisfaction are used to identify the<br />
attributes / items <strong>of</strong> the service quality dimensions to be improved using importance-satisfaction (I-S<br />
model) model.<br />
Locale <strong>of</strong> <strong>Research</strong><br />
<strong>The</strong> present study is conducted in Bellary city including the suburban areas <strong>of</strong> the city. As no exclusive<br />
study on service quality in commercial banks is carried out in this area and the customer belonging to<br />
this area may reveal their opinions on service quality which are versatile in nature, this area is selected.<br />
More over the researcher is familiar with the culture, language, local dialect and infrastructure<br />
facilities available in this area, which is highly essential for the response on the questionnaire.<br />
Sampling Procedure and Data Collection<br />
<strong>The</strong> relevant literature and survey developed by the past studies provided the basis for<br />
development <strong>of</strong> self administered questionnaire. After review <strong>of</strong> the literature twenty two variables /<br />
attributes <strong>of</strong> service quality (Parasuraman et al., 1885, 1988, 1994; Cronin and Tailor, 1994) were used<br />
to develop questionnaire (given in appendix). Methodologically the SERVPERF scale represents<br />
marked improvement over the SERVQUAL scale. Not only is the scale more efficient in reducing the<br />
number <strong>of</strong> items to be measured by 50 percent, it has also been empirically found superior to the<br />
SERVQUAL scale for being able to explain greater variance in the overall service quality measured<br />
through the use <strong>of</strong> single-item scale (Sanjay and Gupta, 2004). Also when applied in conjunction with<br />
SERVQUAL scale, the SERVEPERF measure has outperformed the SERVQUAL scale (Babakus and<br />
Boller, 1992; Cronin and Taylor, 1994; Dhabolkar et al., 2000). <strong>The</strong> present study adopted<br />
SERVPERF scale to measure the service quality.<br />
<strong>The</strong> questionnaire consists <strong>of</strong> two sections: Demographic pr<strong>of</strong>ile <strong>of</strong> the customers and Twenty<br />
two questions about five dimensions service quality for assessing perception <strong>of</strong> customers and<br />
importance <strong>of</strong> each item. For each statement, the respondent indicates his or her opinion on a five point<br />
Likert-scale ranging from “ trongly Disagree” (1) and “ trongly Agree” (5) for importance,<br />
perception. <strong>The</strong> customers are also asked to give their opinion on overall satisfaction.<br />
Pretesting <strong>of</strong> the questionnaire was conducted on a random sample <strong>of</strong> 50 bank customers. <strong>The</strong><br />
pretest was conducted to obtain feedback to improve the content <strong>of</strong> questions, instructions, clarity and<br />
layout <strong>of</strong> the questions. Furthermore, pretesting <strong>of</strong> the questionnaire also assessed the reliability and<br />
the likely response rate. Some minor wording modifications to the questionnaire were made as a result<br />
<strong>of</strong> this process.<br />
<strong>The</strong> Convenient sampling was adapted to collect the data. Data from five hundred customers <strong>of</strong><br />
five public sector banks namely State bank <strong>of</strong> India, State bank <strong>of</strong> Mysore, State bank <strong>of</strong> Hyderabad,<br />
Canara bank and Syndicate bank, and five private sector banks namely Axis bank, ICICI, SUCO bank,<br />
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Ing. Vysya and Karnataka bank, arriving to the banks from 10-30 A.M to 5.00 A. M from Monday to<br />
Friday and from 10-30 A.M to 5.00 A. M on Saturday are collected.<br />
Data Analysis, Findings and Discussion<br />
It is very important to categorize the respondent’s demographic pr<strong>of</strong>ile because it gives a broad<br />
picture and helps bankers to analyze the demographic factors which influence and are associated with<br />
satisfaction level. 60.8 percent <strong>of</strong> the respondents are males and 39.2 percent <strong>of</strong> the respondents are<br />
females.23 percent <strong>of</strong> the respondents are below 35 years age, 47, 30 percent <strong>of</strong> the respondents are 35<br />
to 55 year and above 55 years respectively. 70.4 percent <strong>of</strong> the respondents are from urban and<br />
29.6percent from rural.19.8 percent <strong>of</strong> the respondents have studied up to 7 th standard, 63.2 percent <strong>of</strong><br />
the respondents have education between 7 th standard to PUC, 36.8 percent <strong>of</strong> the respondents are<br />
graduates and above. 23.6 percent <strong>of</strong> the respondents have annual income <strong>of</strong> less than 1 lakh, 64.2<br />
percent <strong>of</strong> the respondents have annual income between 1 to 5 lakh and 35.8 percent <strong>of</strong> the respondents<br />
have annual income <strong>of</strong> more than 5 lakh. 15.2 percent <strong>of</strong> the respondents are employees, 50.6 percent<br />
<strong>of</strong> the respondents are businessman and others accounts for 34.2 percent.<br />
<strong>The</strong> important service quality factors are identified using twenty two variables/attributes <strong>of</strong><br />
service quality with factor analysis. Before conducting factor analysis, validity <strong>of</strong> data for factor<br />
analysis is examined with the help <strong>of</strong> Kaiser-Meyer-Olkin measure <strong>of</strong> sampling adequacy and Bartletts<br />
test <strong>of</strong> sphericity. <strong>The</strong> KMO measure <strong>of</strong> sampling adequacy (0.649) reported in table 1 is greater than<br />
the minimum required (Nunnally, 1978). <strong>The</strong> Chi-square is significant even at zero level. <strong>The</strong>se two<br />
confirm the validity <strong>of</strong> data for factor analysis.<br />
<strong>The</strong> factor analysis results in five factors known as service quality dimensions. <strong>The</strong>se are<br />
termed as Tangibles (E 6 to E 10 ), Reliability (E 17 to E 22 ), Responsiveness (E 1 to E 5 ), Assurance (E 11 to<br />
E 14 ) and Empathy (E 15 to E 16 ). <strong>The</strong>se five factors account for 72.6% <strong>of</strong> variance given in table 3.<br />
Table1 Demographic Pr<strong>of</strong>ile <strong>of</strong> Respondents<br />
S. No Characteristics Numbers Percentage<br />
1 Gender Male<br />
Female<br />
Total<br />
304<br />
196<br />
500<br />
60.80<br />
39.20<br />
100<br />
2 Age (years) Below 35<br />
35 to 55<br />
Above 56<br />
Total<br />
3 Nativity Urban<br />
Rural<br />
Total<br />
4 Education Below 7 th standard<br />
7 th std to PUC<br />
Degree and above<br />
Total<br />
5 Annual income (Rs.) Below 1 lakh<br />
1 to 5 Lakh<br />
Above 5 Lakh<br />
Total<br />
6 Occupation Employee<br />
<strong>Business</strong><br />
Others<br />
Total<br />
115<br />
235<br />
150<br />
500<br />
352<br />
148<br />
500<br />
99<br />
217<br />
184<br />
500<br />
118<br />
203<br />
179<br />
500<br />
76<br />
253<br />
171<br />
500<br />
23.00<br />
47.00<br />
30.00<br />
100<br />
70.40<br />
29.60<br />
100<br />
19.8<br />
63,2<br />
36.8<br />
100<br />
23.60<br />
40.60<br />
35.80<br />
100<br />
15.20<br />
50.60<br />
34.20<br />
100<br />
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Table 2 KMO and Bartlett's Test<br />
Kaiser-Meyer-Olkin Measure <strong>of</strong> Sampling Adequacy. .649<br />
Bartlett's Test <strong>of</strong> Sphericity Approx. Chi-Square 10651.056<br />
Degree <strong>of</strong> freedom 231.000<br />
Significance. .000<br />
<strong>The</strong> factor loading <strong>of</strong> the variables is reported in table 4. <strong>The</strong> reliability is tested using coefficient alpha<br />
(Cronbach, 1951). On analysis the alpha values are found greater than (0.7), the cut <strong>of</strong>f recommended<br />
by Nunnally (1978). Hence the reliability analysis predicted the trustworthiness <strong>of</strong> the data obtained<br />
from the questionnaire<br />
Factor<br />
Table 3 Total Variance Explained<br />
Initial Eigen values<br />
Extraction Sums <strong>of</strong> Squared Loadings<br />
Total % <strong>of</strong> Variance Cumulative % Total % <strong>of</strong> Variance Cumulative %<br />
1 5.685 25.843 25.843 5.444 24.744 24.744<br />
2 4.589 20.858 46.701 4.390 19.957 44.701<br />
3 2.678 12.172 58.873 2.206 10.025 54.726<br />
4 1.590 7.229 66.102 1.320 6.001 60.726<br />
5 1.431 6.504 72.606 .976 4.436 65.162<br />
Extraction Method: Principal Axis factoring<br />
Variables<br />
Table 4 Rotated Factor Matrix a<br />
Factor<br />
1 2 3 4 5<br />
E1 .590<br />
E2 .512<br />
E3 .838<br />
E4 .657<br />
E5 .580<br />
E6 .849<br />
E7 .894<br />
E8 .907<br />
E9 .873<br />
E10 .867<br />
E11 .477<br />
E12 .548<br />
E13 .732<br />
E14 .952<br />
E15 .678<br />
E16 .669<br />
E17 .899<br />
E18 .931<br />
E19 .929<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 105
E20 .891<br />
E21 .876<br />
E22 .395<br />
Extraction Method: Principal Axis Factoring.<br />
Rotation Method: Varimax with Kaiser Normalization.<br />
a. Rotation converged in 5 iterations.<br />
From the mean importance (µ I ) and mean satisfaction (µ s ) <strong>of</strong> each service quality attribute, the index <strong>of</strong><br />
importance and the index <strong>of</strong> satisfaction are then computed using equations 4 and 5. Using theses<br />
indices, the performance control matrix index (PCMI) is calculated using equation 6. <strong>The</strong> results are<br />
given in table 5. <strong>The</strong> standard deviation <strong>of</strong> performance matrix is found to be 0.0352. <strong>The</strong> PUCL and<br />
PLCL are then computed using equation 7 and are worked as PUCL = 0.10587 and PLCL = - 0.10587.<br />
Attribute /<br />
Item<br />
Mean<br />
Importance<br />
(µ I )<br />
Table 5 Relative Performance-Satisfaction values<br />
Mean Index Index Index<br />
Satisfaction<br />
(µ S )<br />
P I<br />
P S<br />
P SI<br />
Remarks<br />
E1 3.36 2.86 0.5900 0.4649 -0.1250 Needs improvement<br />
E2 3.33 2.87 0.5825 0.4675 -0.1149 Needs improvement<br />
E3 3.34 2.87 0.5850 0.4675 -0.1174 Needs improvement<br />
E4 3.33 2.86 0.5825 0.4649 -0.1175 Needs improvement<br />
E5 3.32 2.86 0.5800 0.4649 -0.1149 Needs improvement<br />
E6 3.31 2.85 0.5775 0.4625 -0.1149 Needs improvement<br />
E7 3.30 2.85 0.5750 0.4625 -0.1124 Needs improvement<br />
E8 3.27 2.85 0.5675 0.4625 -0.1049<br />
E9 3.26 2.86 0.5650 0.4649 -0.0999<br />
E10 3.27 2.87 0.5675 0.4675 -0.0999<br />
E11 3.21 2.86 0.5525 0.4649 -0.0875<br />
E12 3.22 2.87 0.5550 0.4675 -0.0875<br />
E13 3.19 2.87 0.5475 0.4675 -0.0799<br />
E14 3.20 2.87 0.5500 0.4675 -0.0825<br />
E15 3.22 2.87 0.5550 0.4675 -0.0875<br />
E16 3.19 2.88 0.5475 0.4700 -0.0775<br />
E17 3.18 2.87 0.5450 0.4675 -0.0775<br />
E18 3.18 2.82 0.5450 0.4549 -0.0900<br />
E19 3.19 2.82 0.5475 0.4549 -0.0925<br />
E20 3.27 2.86 0.5675 0.4649 -0.1025<br />
E21 3.22 2.87 0.5550 0.4675 -0.0875<br />
E22 3.20 2.87 0.5500 0.4675 -0.0825<br />
It is observed fro table 5 that attribute 1, 2, 3, 4, 5, 6 and 7 fall outside the PUCL and PLCL, bottom<br />
right zone. <strong>The</strong> importance <strong>of</strong> these attributes is greater than satisfaction; hence more resources must<br />
be invested to improve satisfaction. If there are abundant resources, the satisfaction <strong>of</strong> all these<br />
attributes is possible. If the resources are limited and only few attributes can be improved, some<br />
attributes have to be selected as priorities based on the highest values <strong>of</strong> index P SI . <strong>The</strong> priorities are<br />
given in table 6 indicating the ranking <strong>of</strong> the attribute, the order in which the service quality attributes<br />
are to be improved<br />
www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 106
Table Improvement priorities <strong>of</strong> attributes<br />
Item No Item Index Ranking<br />
1 Prompt service -0.1250 1<br />
4 Respond to customer request -0.1175 2<br />
3 Always willing to help customer -0.1174 3<br />
2 Communicate what is to be served -0.1149 4<br />
5 Never being too busy to respond to -0.1149 4<br />
customer’s request<br />
6 Clarity <strong>of</strong> facilities -0.1149 4<br />
7 Decoration <strong>of</strong> facilities -0.1124 5<br />
Conclusion<br />
<strong>The</strong> identification <strong>of</strong> service quality dimensions influencing customer satisfaction can help the service<br />
providers understand their relative importance and propose improvement plans where sufficient<br />
resources are not focussed enough. <strong>The</strong> present study has integrated two scientific approaches-an I-S<br />
model and the control chart. <strong>The</strong> Importance-Satisfaction model is a useful tool for selecting the most<br />
efficient improvement plan for customer satisfaction so that the resources <strong>of</strong> the organization are<br />
optimally utilized to maximize efficiency. Based on twenty two attributes <strong>of</strong> service quality, this study<br />
identifies five service quality dimensions namely Tangibles, Reliability, Assurance, Responsiveness<br />
and Empathy. <strong>The</strong> importance and satisfaction <strong>of</strong> these twenty two items were used to determine the<br />
zone <strong>of</strong> tolerance (ZOT) with performance control limits PUCL and PLCL.<br />
Based on the results obtained by Importance-Satisfaction model, it is observed that no service quality<br />
attribute outside PLCL. This indicates that there is no service quality attributes for which resources<br />
needs to be reduced. It is also found that the first seven service quality attributes namely Prompt<br />
service, Communicate what is to be served, Always willing to help customer, Respond to customer<br />
request, Never being too busy to respond to customer’s request, Clarity <strong>of</strong> facilities, Decoration <strong>of</strong><br />
facilities were found to lie outside PUCL, this indicates that resources should be increased for these<br />
service quality attributes to promote satisfaction. <strong>The</strong> order in which these service quality attributes are<br />
to be talked is Prompt service, respond to customer request, always willing to help customer,<br />
communicate what is to be served, never being too busy to respond to customer’s request and<br />
Decoration <strong>of</strong> facilities. In general few <strong>of</strong> the attributes <strong>of</strong> service quality dimensions Tangibles and<br />
Responsiveness needs additional resources to enhance the customer satisfaction.<br />
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Name<br />
E1<br />
E2<br />
E3<br />
E4<br />
E5<br />
E6<br />
E7<br />
E8<br />
E9<br />
E10<br />
E11<br />
E12<br />
E13<br />
E14<br />
E15<br />
E16<br />
E17<br />
E18<br />
E19<br />
E20<br />
E21<br />
E22<br />
Appendix<br />
Service quality variables/items<br />
Service Quality Variable<br />
Prompt service<br />
Communicate what is to be served<br />
Always willing to help customer<br />
Respond to customer request<br />
Never being too busy to respond to customer’s request<br />
Clarity <strong>of</strong> facilities<br />
Decoration <strong>of</strong> facilities<br />
Efficacious work environment<br />
Visually appealing equipments<br />
Complementary equipments<br />
Feeling <strong>of</strong> security<br />
Knowledgeable employees<br />
Friendliness <strong>of</strong> employees<br />
Consistently courteous with customers<br />
Individual attention, understand customer specific needs<br />
Customers best interest in heart<br />
Services as per the promise<br />
Provide right service at first time<br />
Precision in filing system<br />
Absence <strong>of</strong> error in service delivery<br />
Sincere in solving problems<br />
Precision in account statements<br />
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