28.09.2015 Views

Research Journal of Economics & Business Studies - RJEBS - The ...

Research Journal of Economics & Business Studies - RJEBS - The ...

Research Journal of Economics & Business Studies - RJEBS - The ...

SHOW MORE
SHOW LESS
  • No tags were found...

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 2


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 3


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 4


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 5


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 />

REFERENCES:<br />

1. Ali, J. et al (2010) “Buying behaviour <strong>of</strong> consumers for food products in an emerging economy”,<br />

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 />

3. Banerjee .M, Dasgupta .R(2010), “Changing Pattern <strong>of</strong> Consumer Behavior in Kolkata with<br />

Advent <strong>of</strong> Large Format Retail Outlets”, <strong>The</strong> IUP <strong>Journal</strong> <strong>of</strong> Marketing Management, Vol. IX, No. 4.<br />

4. Belwal R and Belwal S (2009), “Hypermarkets in Oman: A study <strong>of</strong> Consumer Behavior towards<br />

Store and Shopping Preferences”, Fifth Asia Pacific Retail Conference, 2009.<br />

5. <strong>Business</strong> Monitor International (BMI) India Retail Report available at www.ibef.org.<br />

6. Buss, D. (1990), Evolutionary social psychology: Prospect and pitfalls. Motivation and Emotion,<br />

14, 265-286.<br />

7. Cottet P, Litchtle M C, Plichon V (2006), <strong>The</strong> role <strong>of</strong> value in services; a study in retail environment,<br />

<strong>Journal</strong> <strong>of</strong> Consumer Marketing, Vol 23 No 4, pp. 219-227.<br />

8. Darden, W.R. & Ashton, D. (1974), “Psychographic Pr<strong>of</strong>iles <strong>of</strong> Patronage Preference Groups”,<br />

<strong>Journal</strong> <strong>of</strong> Retailing, 50, winter, 99-112.<br />

9. Darden, William R. and Reynolds, Fred D. (1971), "Shopping Orientations and Product Usage<br />

Roles", <strong>Journal</strong> <strong>of</strong> Marketing <strong>Research</strong>, Vol. 8, pp. 505-508.<br />

10. Goswami, P. and Mishra, M.S (2008) “Would Indian consumers move from kirana stores to organized<br />

retailers when shopping for groceries?” Asia Pacific <strong>Journal</strong> <strong>of</strong> Marketing and Logistics, Vol.<br />

21, No. 1, pp 127-143.<br />

11. Goyal, B. and Aggarwal, M. (2009) “Organized retailing in India- An empirical study <strong>of</strong> appropriate<br />

formats and expected trends”, Global journal <strong>of</strong> <strong>Business</strong> <strong>Research</strong>, Vol. 3, Issue 2, pp 77-83.<br />

12. Hafstrom, Jeanne, Jung Sook Chae, and Young Sook Chung (1992), "Consumer Decisionmaking<br />

Styles: Comparison between United States and Korean Young Consumers", the <strong>Journal</strong> <strong>of</strong><br />

Consumer Affairs, Vol. 26 (1), pp. 146-158.<br />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 7


13. Hiu A, Siu N, Wang C, Chang L. (2001), "An Investigation <strong>of</strong> Decision-Making Styles <strong>of</strong> Consumers<br />

in China", <strong>The</strong> <strong>Journal</strong> <strong>of</strong> Consumer Affairs, Vol. 35(2), pp.326-345.<br />

14. Jain, R. and Bagdare, S. (2009) “Determinants <strong>of</strong> Customer Experience in New Format Retail<br />

Stores”, <strong>Journal</strong> <strong>of</strong> Marketing & Communication, Vol. 5, Issue 2, pp 34-44.<br />

15. Kaur, P. and Singh, R. (2007) “Uncovering retail shopping motives <strong>of</strong> Indian youth”, Young<br />

Consumers, Vol. 8, No 2, pp 128-138.<br />

16. Kiran R and Jhamb D, (2011) “A strategic framework for consumer preferences towards emerging<br />

retail formats”, <strong>Journal</strong> <strong>of</strong> emerging knowledge on emerging markets, Vol. 3, pp 436-453.<br />

17. Lastovicka, J.L. (1982), “On the Validation <strong>of</strong> Lifestyle Traits: A Review and Illustration”,<br />

<strong>Journal</strong> <strong>of</strong> Marketing <strong>Research</strong>, 19, February, 126-138.<br />

18. Lumpkin, James R. (1985), "Shopping Orientation Segmentation <strong>of</strong> the Elderly Consumer",<br />

<strong>Journal</strong> <strong>of</strong> Academy <strong>of</strong> Marketing Science, Vol.13 pp. 271-289.<br />

19. Malhotra, N.K. (2006) Marketing <strong>Research</strong>- An Applied Orientation. 5e. New Delhi: Prentice-<br />

Hall India (P) Ltd.<br />

20. Mishra, M.S. (2007) “<strong>The</strong> consumption pattern <strong>of</strong> Indian Consumers: choice between traditional<br />

and organized Retail” http://ssrn.com/abstract=994238<br />

21. Moschis, George P. (1976), "Shopping Orientations and Consumer Uses <strong>of</strong> Information", <strong>Journal</strong><br />

<strong>of</strong> Retailing, Vol. 52 (summer), pp. 61-70.<br />

22. Nargundkar, R. (2003), Marketing <strong>Research</strong> - Text and Cases. 2e. New Delhi: Tata McGraw-<br />

Hill Publishing Company Ltd.<br />

23. Ravindran .S, Ram HariSundar.G, Reji Kumar.G, (2009), IMS Manthan - Volume IV, No. 2.<br />

24. Schiffman, L.G., Kanuk, L.L. (2004), Consumer Behavior. Prentice Hall, Pearson Education<br />

International, pp. 517-540.<br />

25. Singh, H. (2007) “Consumer Awareness and Consumption Pattern <strong>of</strong> Food products in Haryana”,<br />

<strong>Journal</strong> <strong>of</strong> IMS group, Vol.3, No 1, pp 24-33.<br />

26. Sproles.G & Kendall. E. (1986), “A Methodology for Pr<strong>of</strong>iling Consumers’ Decision-Making<br />

Styles”, <strong>The</strong> <strong>Journal</strong> <strong>of</strong> Consumer Affairs, 20(2), 267-279.<br />

27. Sproles, G. & Sproles, K.E. (1990), “Consumer Decision-Making Styles as a Function <strong>of</strong> Individual<br />

Learning Styles”, <strong>The</strong> <strong>Journal</strong> <strong>of</strong> Consumer Affairs, 24(1), 134-147.<br />

28. Stone, Gregory P. (1954), "City Shoppers and Urban Identification: Observations on the Social<br />

Psychology <strong>of</strong> City Life", American <strong>Journal</strong> <strong>of</strong> Sociology, Vol. 60, pp. 36-45.<br />

29. Swar, B.N. (2007) “Challenges and Opportunities <strong>of</strong> Organized Retailing in India”, <strong>Journal</strong> <strong>of</strong><br />

IMS group, Vol. 4, No 2, pp 53-61.<br />

30. Yesilada .F and Kavas .A, (2008), sletme Fakültesi Dergisi, Cilt 9, Sayı 2, 2008, 167-185.<br />

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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 13


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 14


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 15


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 16


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 19


<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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 20


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 21


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 22


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 23


<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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 24


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 25


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 26


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 27


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 28


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 29


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 30


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 31


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 32


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 33


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 34


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 35


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 36


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 37


[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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 38


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 39


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 40


Mapping Potential Customers<br />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 41


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 42


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 43


<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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 44


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 45


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 46


<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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 47


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 48


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 49


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 50


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 51


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 />

References:<br />

Kawadia Ganesh and Ahuja Kanahiya(2007)“Development <strong>of</strong> Environmental Issues”Amballa<br />

Kant,Associate Publishers.<br />

Gnath Katharina “<strong>The</strong> WTO and environment: …more words than deeds?<br />

On the relationship between the WTO and the environment: overview, latest developments and<br />

assessment.”<br />

Brack, Duncan (ed): Trade and Environment: conflict or compatibility? RIIA 1998.<br />

Brack, Duncan and Kevin Gray: Multilateral Environmental Agreements and the WTO. Report<br />

RIIA 2003.<br />

Brack, Duncan: Trade and Environment after Seattle. RIIA Energy and Environmental<br />

Programme Briefing Papers No. 13. April 2000.<br />

Cottier, Thomas: <strong>The</strong> WTO and Environmental Law: Some Issues and Ideas. 1997.<br />

Esty, Daniel C.: “Greening world Trade” in: Jeffrey Schott (ed.): <strong>The</strong> World Trading System:<br />

Challenges Ahead. Institute for International <strong>Economics</strong> 1996.<br />

Fontagné, Lionel et al: A first assessment <strong>of</strong> environment-related trade barriers. 2001.<br />

Fontagné, Lionel: Protection(ism): “<strong>The</strong> Environment and the WTO” in: La lettre du CEPII.<br />

November 2001.<br />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 52


2003.<br />

<br />

2000.<br />

Frankel, Jeffrey: <strong>The</strong> Environment and Globalization. NBER Working Paper 10090. November<br />

Krueger, Anne O.: <strong>The</strong> WTO as an International Organization. University <strong>of</strong> Chicago Press<br />

Liebig; Klaus: “<strong>The</strong> WTO and the trade-environment conflict” in: Intereconomics 34(2) 1999.<br />

Morici, Peter: “Reconciling trade and the environment in the WTO”. Economic Strategy<br />

Institute 2001.<br />

Nordström, Håkan and Scott Vaughan: WTO special report: Trade and Environment. 1999.<br />

Olsen, Figueres et al: “Trade and environment at the WTO: the need for a constructive<br />

dialogue” in: GP Sampson: <strong>The</strong> Role <strong>of</strong> the World Trade Organisation in Global Governance. United<br />

Nations University Press 2001.<br />

Oxley, Alan: Environment - the trade issue for 2003? APEC 2003.<br />

Reardon, Thomas A. and S. A. Vosti: “Links between rural poverty and environment in<br />

developing countries: Asset categories and 'investment poverty.'” in: World Development 23(9). 1995.<br />

Runge, C. Ford: Freer trade, protected environment: Balancing trade liberalization and<br />

environmental interests. 1994.<br />

Tay, Simon: Trade, the Environment and Labor: Texts, Concepts and Institutions. 1999.<br />

WTO Public Symposium 2003. Center for International Development at Harvard University.<br />

Doha Round Briefing Series on Trade and Environment by ICTSD and IISD. August 2003.<br />

“Bridges”- WTO weekly trade news digest. 22 April 2004 and 23 June 2004.<br />

Anderson, Sarah: “Environmental and Labor standards: what Role for the WTO?” in Krueger:<br />

<strong>The</strong> WTO as an International Organization. University <strong>of</strong> Chicago Press 2000.<br />

Bhagwati, Jagdish and T. N. Srinivasan: "Trade and the Environment: Does Environmental<br />

Diversity Detract from the Case for Free Trade?" in Bhagwati and Hudec (eds.): Fair Trade &<br />

Harmonization, Vol. 1: Prerequisites for Free Trade? Economic Analysis 1996.<br />

Bown, Chad P. and Rachel McCulloch: „Environmental issues in the World Trade<br />

Organization“. Brandeis University July 2002.<br />

Brack, Dunacn and Thomas Branczik: Trade and environment in the WTO: after Cancun.<br />

Royal Institute <strong>of</strong> International Affairs (RIIA) Sustainable Development Programme Briefing Paper<br />

No. 9. February 2004.<br />

Webliography<br />

www.greennature.com www.ciobinternational.org<br />

www.economictimes.indiatimes.com<br />

www.indiadaily.cqm www.economywatch.com<br />

www.trade-india.com<br />

Www.American.EdufTedfClass Www.Ciesin.OrgITglPi(frade<br />

Www.Europa.Eu.Int www.Environment.About.Com<br />

Www.lie.ComjPublications www.Cid.Harvard.Edu<br />

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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 54


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 55


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 56


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 57


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 58


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 62


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 63


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 64


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 65


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 66


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 />

REFERENCES:<br />

Ahren, C. S. (2009), Detangling the unique effects <strong>of</strong> co-curricular engagement on self-reported<br />

student learning outcomes. Doctoral Dissertation, Indiana University, Department <strong>of</strong> Educational<br />

Leadership and Policy <strong>Studies</strong>.<br />

Benn, S., and Dunphy, D. (2009). Action research as an approach to integrating sustainability into<br />

MBA programs: An exploratory study. <strong>Journal</strong> <strong>of</strong> Management Education, 33(3): 276 –295.<br />

Bringle, R.G. and Hatcher, J.A. (1995). A service learning curriculum for faculty. Michigan <strong>Journal</strong> <strong>of</strong><br />

Community Service Learning, Fall, p.112–122.<br />

Dweck, C. (2000) Self-<strong>The</strong>ories; <strong>The</strong>ir Role in Motivation, Personality and Development. Lillington,<br />

NC: Psychologists Press.<br />

Emmer, E.T., & Gerwels, M.C. (2006) Classroom management in Middle and High school classrooms.<br />

In C.M. Evertson & C.S. Weinstein, (Eds.) Handbook <strong>of</strong> classroom management. (pp. 407-437).<br />

Mahwah, NJ: Lawrence Erlbaum Associates.<br />

Johnson, D. W., & Johnson, R. (1974). Instructional goal structure: Cooperative, competition, or<br />

individualistic. Review <strong>of</strong> Educational <strong>Research</strong>, 44, 213-240.<br />

Johnson, D. W., & Johnson, R. (1989). Cooperation and competition: theory and research. Edina,<br />

MN: Interaction Book Company.<br />

Johnson, D. W., & Johnson, R. (1999). Learning together and alone: Cooperative, competitive, and<br />

individualistic learning. Boston: Allyn & Bacon.<br />

Johnson, D. W., & Johnson, R. (2006). Conflict resolution, peer mediation and peacemaking. In C.M.<br />

Evertson & C.S. Weinstein, (Eds.) Handbook <strong>of</strong> classroom management. (pp. 803-832). Mahwah, NJ:<br />

Lawrence Erlbaum Associates.<br />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 67


Kohn. A. (1986) No Contest: <strong>The</strong> Case Against Competition. Houghton Mifflin<br />

Keen, C., & Hall, K. 2009. Engaging with difference matters: Longitudinal student outcomes <strong>of</strong> cocurricular<br />

service learning programs. <strong>The</strong> <strong>Journal</strong> <strong>of</strong> Higher Education, 80(1): 60 –79.<br />

Lam, S., Law, J. and Cheung, R. (2004) <strong>The</strong> effects <strong>of</strong> competition on achievement motivation in<br />

Chinese classrooms. British <strong>Journal</strong> <strong>of</strong> Educational Psychology, June pp. 281-296(16)<br />

Pianta, R.C. (2006) Classroom management and relationships between children and teachers:<br />

Implications for research and practice. In C.M. Evertson & C.S. Weinstein, (Eds.) Handbook <strong>of</strong><br />

classroom management. (pp. 685-709). Mahwah, NJ: Lawrence Erlbaum Associates<br />

Parsloe, E. (1992) Coaching, Mentoring, and Assessing (London: Kogan Page).<br />

Porter, T., and Cordoba, J. (2009). Three views <strong>of</strong> systems theories and their implications for<br />

sustainability education. <strong>Journal</strong> <strong>of</strong> Management Education, 33(3): 323–347..<br />

Rands, G. P. (2009). A principle-attribute matrix for sustainable management education and its<br />

application: <strong>The</strong> case for change-oriented service-learning projects. <strong>Journal</strong> <strong>of</strong> Management<br />

Education, 33(3): 296 –322.<br />

Rusinko, C. A. (2010). Integrating sustainability in higher education: A generic matrix. International<br />

<strong>Journal</strong> <strong>of</strong> Sustainability in Higher Education, 11(3): 250 –59.<br />

Rusinko, C. A., and Sama, L. M. (2009). Greening and sustainability across the management<br />

curriculum: An extended journey. <strong>Journal</strong> <strong>of</strong> Management Education, 33(3): 271–275<br />

Reeve, J., & Deci, E.L.(1996) Elements <strong>of</strong> the competitive situations that affect intrinsic motivation.<br />

Personality and Social Psychology Bulletin, 22, 24-33.<br />

Spencer, G., and Golden, C. “Mentors: Making a Difference for Tomorrow’s Leaders,” EDUCAUSE<br />

Quarterly, vol. 26, no. 2 (2003), pp. 51–53<br />

Scott, W., and Gough, S. 2006. Sustainable development within UK higher education: Revealing<br />

tendencies and tensions. <strong>Journal</strong> <strong>of</strong> Geography in Higher Education, 30(2): 293–305.<br />

Vockell. E. (2004). Educational psychology: a practical approach. Purdue University. Retrieved on<br />

10/17/08 from http://education.calumet.purdue.edu/Vockell/EdPsyBook/<br />

Walker, H. L., Gough, S., Bakker, E., Knight, L., and McBain, D. (2009). Greening operations<br />

management: An online sustainable procurement course for practitioners. <strong>Journal</strong> <strong>of</strong> Management<br />

Education, 33(3): 348 –371.<br />

Webster, S and Mitra, S. (2008), Competition in remanufacturing and the effects <strong>of</strong> government<br />

subsidies, International <strong>Journal</strong> <strong>of</strong> Production <strong>Economics</strong>, Volume 111, Issue 2, February 2008, Pages<br />

287–298.<br />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 68


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 69


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 70


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 71


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 72


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 73


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 74


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 75


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 76


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 77


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 86


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 87


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 88


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 89


<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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 90


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013<br />

Page 91


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 92


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013<br />

Page 93


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013<br />

Page 94


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013<br />

Page 95


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 96


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 98


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 99


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 100


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 101


<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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 102


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 103


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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 104


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 />

References<br />

Babakus, and Boller, G (1992) “An mpherical assessment <strong>of</strong> RV UAL scale”, journal <strong>of</strong><br />

business research 24(3), 253-68.<br />

Babakus E. and Mangold, G (1989) “Adapting the RV UAL scale to hospital services: An<br />

empirical investigation’, Health service research, 26(6), 767-80.<br />

Beerly, A. (2004), “A Model <strong>of</strong> Customer Loyalty in the Retail Banking Market”, European <strong>Journal</strong><br />

<strong>of</strong> Marketing, 38(1/2): 253-275.<br />

Bolton, R. N., and Drew, J. H., (1991), “A Multistage Model <strong>of</strong> Customers Assessment <strong>of</strong> ervice<br />

uality and Value”, <strong>Journal</strong> <strong>of</strong> Consumer <strong>Research</strong>", 17(March), pp. 375-385.<br />

Brady, M K, Cronin, J and Brand, R. R, (2002), “ erformance-Only Measurement <strong>of</strong> Service Quality:<br />

A Replication and xtension,” <strong>Journal</strong> <strong>of</strong> <strong>Business</strong> <strong>Research</strong>, 55(1), 17-31.<br />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 107


Brown T J and Churchill, G A and eter, J (1993); “Improving the Measurement <strong>of</strong> ervice<br />

uality”, <strong>Journal</strong> <strong>of</strong> retailing, 69(1), 127-39.<br />

Brown T J and Churchill, G A and eter, J (1993); “Caution in the Use <strong>of</strong> Difference cores in<br />

Consumer <strong>Research</strong>,” <strong>Journal</strong> <strong>of</strong> Consumer <strong>Research</strong>, 19 (March) 655-62.<br />

Buttle F, (1998), “ RV UAL: Review, Critique, <strong>Research</strong> Agenda”, uropian <strong>Journal</strong> <strong>of</strong> Marketing,<br />

30(1), 8-32<br />

Chiu, H. C and Lin, N, P (2004), “A Service Quality Measurement Derived from the <strong>The</strong>ory <strong>of</strong><br />

Needs”, <strong>The</strong> ervice Industries <strong>Journal</strong>, 24(1), 187-204<br />

Cronbach, L. J, (1951), “Coefficient Alpha and the Internal tructure <strong>of</strong> Tests”, Psychometrica, Vol.<br />

16, No. 3, pp. 297-334.<br />

Cronin J and Taylor, A (1992), “Measuring ervice uality: A Re-Examination and Extension,<br />

<strong>Journal</strong> <strong>of</strong> Marketing, 56 (July), 55-67<br />

Cronin J and Taylor, A (1994), “ RV RF versus RV UAL: Reconciling erformance-Based<br />

and Perception Minus xpectations Measuring <strong>of</strong> ervice uality”, <strong>Journal</strong> <strong>of</strong> Marketing, 58 (Jan),<br />

125-31.<br />

Dabholkar, , A, hepard, D C and Thorpe, D I, (2000), “A Comprehensive Framework for ervice<br />

Quality: An Investigation <strong>of</strong> Critical, Conceptual and Measurement Issues through a Longitudinal<br />

tudy,” <strong>Journal</strong> <strong>of</strong> Retailing, 76(2), 137-73.<br />

Deming . (1986), “Out <strong>of</strong> the Crisis”, Cambridge, MA: MIT ress<br />

Finn, D and Lamb C (1991). “An valuation <strong>of</strong> the RV UAL cale in a Retailing etting”,<br />

Advances in Consumer <strong>Research</strong>, Provo UT: Association <strong>of</strong> Consumer research, 480-93.<br />

Granroos, C (1982), Strategic Management and Marketing in the Service Sector, Finland: Swedish<br />

School <strong>of</strong> <strong>Economics</strong> and <strong>Business</strong> Administration.<br />

Haerdley D. , Choi C. (1992), “Achieving ervice Quality through Gap Analysis and a Basic<br />

tatistical Approach”, <strong>Journal</strong> Of Service Marketing, 6(1), 5-24.<br />

Jain, an ay K and Guptha, G (2004), “Measuring ervice uality: RV UAL versus RV RF<br />

cales”, Vikalpa, Volume (29), April-June, 25-37.<br />

Kotler P, Armstrong G (2012), Principles <strong>of</strong> Marketing, 4 th edition, Pearson Education Inc, New Jersy,<br />

USA<br />

Lee M. C (2003), “<strong>The</strong> Determinants <strong>of</strong> erceived ervice uality and it’s Relationship with<br />

satisfaction”, <strong>Journal</strong> <strong>of</strong> Services Marketing, Vol (14), No (3), 217-231<br />

Lee M. C. Hwan I. . (2005), “Relationship among ervice uality, Customer atisfaction and<br />

r<strong>of</strong>itability in the Taiwanese Banking Industry”, International <strong>Journal</strong> <strong>of</strong> Management, 22(4), 635-<br />

648.<br />

Macdonald J (1995) “ uality and Financial ervice ector”, Managing Service Quality, 5(1), 43-46<br />

Mensah (2010), “Customer Satisfaction in Banking Industry: a comparative Study on Spain and<br />

Ghana”, Unpublished hD Dissertation<br />

Mersha, Veena, Tigine and Adlaka (1992), “Attributes <strong>of</strong> service quality: <strong>The</strong> Customer’s<br />

erspective”, International <strong>Journal</strong> <strong>of</strong> service industry management, Vol (3), No(3), 34-45.<br />

Montgomery, D. C (1991), “ tatistical quality Control (2 nd edition)”, John Wiley and Sons, New York<br />

Nunnally, J. C. (1978) “Psychometric <strong>The</strong>ory”, McGraw-Hill.<br />

arasuraman A, Berry, L and Zeithaml, V A (1985), “A Conceptual Model <strong>of</strong> ervice uality and<br />

Implications for Future <strong>Research</strong>”, ournal <strong>of</strong> Marketing, Fall (49).<br />

arasuraman A, Berry, L and Zeithaml, V A (1988) “ RV UAL: A Multiple Item cale for<br />

Measuring Consumer erception <strong>of</strong> ervice uality,’’ <strong>Journal</strong> <strong>of</strong> retailing, spring 64(1) 12-20.<br />

arasuraman A, Berry, L and Zeithaml V A (1988) “ RV UAL: a Multiple item scale for<br />

Measuring Consumer erceptions <strong>of</strong> ervice uality”, <strong>Journal</strong> <strong>of</strong> retailing, Spring 64.<br />

arasuraman A, Berry, L and Zeithaml V A (1994) “Alternative cales for Measuring ervice quality:<br />

A Comparative Assessment based on sychometric and Diagnostic Criteria”, <strong>Journal</strong> <strong>of</strong> retailing, 70<br />

(3).<br />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 108


igala M. and Cristou, . (2006), “Global Trends and Challenges in ervices”, Managing Service<br />

Quality, 16(4), 345-348.<br />

Spreng, R A, and ingh, A K (1993), “An mpirical Assessment <strong>of</strong> the RV UAL cale and the<br />

Relationship Between ervice uality and atisfaction,” in peter D , Cravens, R and Duckson (eds),<br />

Enhancing Knowledge Development in Marketing, Chicago, IL: American marketing association.<br />

ulieman (2011), “Banking ervice rovided by Commercial Banks and Customer atisfaction’,<br />

American <strong>Journal</strong> <strong>of</strong> Scientific <strong>Research</strong>, 27(2011), 68-83<br />

utapa, I, Togar . and an aitan, “ election <strong>of</strong> nvironmentally Conscious Manufacturing<br />

Program using Multi-Criteria Decision Making”, <strong>The</strong> 11 th Asia Pacific Industrial Engineering and<br />

management systems Conference, Melaka, December,2010.<br />

Teas, K R (1993), “ xpectations, erformance valuation and Consumer erception <strong>of</strong> uality,”<br />

<strong>Journal</strong> <strong>of</strong> Marketing, 57 (Oct), 18-34.<br />

Teas, K R (1994), “ xpectation as A Comparison tandard in Measuring ervice uality: An<br />

Assessment <strong>of</strong> Reassessment,’ <strong>Journal</strong> <strong>of</strong> Marketing, 58 (Jan), 132-39.<br />

Ting D. H, (2004), “ ervice uality and atisfaction erceptions: Curvilinear and Interaction ffect”,<br />

<strong>The</strong> International <strong>Journal</strong> <strong>of</strong> Bank Marketing, 22(6), 407-420<br />

ang (2003), “<strong>The</strong> Antecedents <strong>of</strong> ervice uality and roduct uality and their Influences on Bank<br />

Reputation: vidence from Banking Industry in China”, Managing ervice Quality, 13: 72-83.<br />

Yang C, C (2003), “Improvement Actions Based on Customers atisfaction urvey”, Total Quality<br />

Management, <strong>Business</strong> Excellence, 14(8) 919-930.<br />

Zahoor (2011), “SERVPERF Analysis in the Banking Services”, Unpublished Master’s <strong>The</strong>sis, Karachi<br />

Institute <strong>of</strong> <strong>Economics</strong> and Technology<br />

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 />

www.theinternationaljournal.org > <strong>RJEBS</strong>: Volume: 02, Number: 08, June-2013 Page 109

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!