ISSN – 2277 3789
JOURNAL OF GLOBAL MANAGEMENT OUTLOOK
Volume-I Issue-XI Bi-Annual January – June 2017
DEPARTMENT OF BUSINESS MANAGEMENT
TELANGANA UNIVERSITY ACCREDITED BY
NAAC B+ GRADE
DICHPALLY, NIZAMABAD – 503 322
( TELANGANA STATE )
All correspondence concerning contribution, book review, advertisements, orders and other information regarding the journal should be addressed to Executive Editor. The Journal does not undertake to return manuscripts unless accompanied by stamped and self-addressed envelope. The responsibility ‘for statements of facts, quotations given and opinions expressed in the articles and book reviews published in the journal’ is borne entirely by the respective authors.
Printed at:
AK Art Printers
Subash Nagar
Karimnagar.
Editor-in-Chief
Prof. T.SATYANARAYANA CHARY
Dean, Faculty of Business Management
Executive Editor
Dr. KHYSER MOHD Principal, Univesity College of Commerce & Business Management,
Head, Department of Business Management
Telangana University, Dichpally, Nizamabad – 503 322
Executive Committee Members
Dr. V. RAJESWARI
Department of Business Management
Dr. ANJANEYULU
Department of Business Management
Dr. K. APARNA
Department of Business Management
Dr. G. VANI
Department of Business Management
EDITORIAL BOARD MEMEBERS
Dr. SHAKEEL AHMED
Deputy Secretary, UGC
New Delhi
Prof. K. SUDDARSHAN Indian Institute of Management, Kozikode
Dr. SELVARANI SHANKAR, Dean, Department of Management, Osmania University,
Prof. RAMESH BHATT,
Research Fellow, (Harward) (Former Chairman Finance area IIM, Ahmedabad)
Govt. of India
Prof. G.P. SHITOLE,
Head and Director, Department of Commerce and Business Management
Prof. GOPU VENKATASWAMY,
Ph.D (ACTM), Netherlands Advisor-
MTC-Global
Sndt Women’s University, Mumbai
Prof. RAJAN BAL, Dean and Head,
Prof. JAIN HSIN CHOV (Ph.D Professor), Department of Risk Management and Insurance
National Kaosiung First University of Science and Technology
Department of Management, University of Orissa
Prof. N.M. PANDAY,
NEHU, Shillong
Dr. HASAN BULENT KANTARCI,
Kocaili University,
Kocaeli,
Turkey
AIM OF JOURNAL
The Journal of Global Management Outlook is a biannual journal brought out by the
Department of Business Management, Telangana University, Nizamabad, Telangana State.
The journal aims to encourage Research Scholars, Academicians and Practicing Managers to
publish applied research in all functional areas of management.
REVIEW PROCESS
The Journal of Global Management Outlook invites manuscripts that provide managerial
insight in any of the core business functions. The findings should be supported by either
empirical data or a well-justified theoretical model and well written. All papers submitted to
the Journal of Global Management Outlook goes through a preliminary review at the editorial
desk and those considered appropriate are been published. In some cases the manuscript may
be returned without review if it is judged to be inappropriate for publication.
Contents
Sl.No. Title Page No.
1 ROLE OF ISLAMIC FINANCEIN GLOBAL INCLUSIVE GROWTH
* Abdul Samad M ** Safiuddin SK 01
2
PRODUCTIVITY BARGAINING PRACTICES AT SINGARENI COLLERIES
COMPANY LIMITED
* Dr.V.Rajeshwari ** G. Usha Sree
08
3
HR OUTSOURCING SERVICES AND JOB SATISFACTION
– AN EMPIRICAL STUDY ON SELECT INDUSTRIES
*Sreekanth.Putha
17
4
THE SUCCESSFUL CASE STUDIES OF SELECT YOUNG ENTREPRENEURS
IN INDIA
*P. Meghashyamala
33
5
CAPITAL MAREKT FINANCING FOR SMEs - A STUDY
(With specific reference to SME Platform of BSE)
*Pardhasaradhi Madasu
40
6 IMPACT OF MOBILE ADVERTISING ON CONSUMER BUYING INTENTIONS
*Dr. I.Anand Pawar 53
7
ETHICAL ISSUES IN THE ORGANIZATION AND ROLE OF EMPLOYEES AS
STAKEHOLDERS
*Dr. P. Lakshmi Prasanna
62
8 THE AUDIT PRACTICES OF AN AUTOMOBILE FRANCHISE- A CASE STUDY
*Dr. K. Bhavana Raj 70
9 EFFECTIVE LEADERSHIP- A PATHWAY FOR ORGANIZATIONAL SUCCESS
*Dr. Srinivas Kolachina 76
10
CUSTOMER SERVICE AS A FORCE MULTIPLIER IN MANUFACTURING
COMPANIES
*Ch Srinivas Rao
85
11
IMPORTANCE OF CONSUMER BEHAVIOUR – ACASE STUDY OF MAGGI
NOODLE, NESTLE INDIA
*Dr. EnnalaDeepa
89
From the Editor-in-Chief
Dear Readers,
I am very glad to present the Eleventh Issue to you. The Journal is being moved ahead
with improved quality, fruitful contributions and passing the light through current trends in
the domain of Management.
The present issue is all about various aspects of Management that helps a lot the
scholars cum teachers and practitioners in analyzing methodically the ins & outs of
managerial practices. It is beyond doubt that India’s growth is marginalized unless it is geared
up by various alternative strategies. The Industrial growth and its impact on Economic growth
will not move ahead as expected. So there is a need to move on the development of
competencies which is application of knowledge as a skill with a right attitude because
competency can transform the deficiency into efficiency. At the end I hope that India Inc. can
move from pillar to post in marching towards Excellency.
I hope the Journal like a drop in the water of the sea will contribute a lot in such
Development process in a swift manner and in a gigantic way.
Date: 08.12.2017 ( Prof. T.Satyanarayana Chary )
From the Editorial
Dear Readers,
The Journal of Global Management aims to encourage the scholars and academicians
for their priceless contributions in the research world. As we know that the global market is
marching towards excellence in management theory and practices. Still the lacunas in the
implementations pave the way for paradigm shift with new strategies, techniques, tools and
methods. Research is the buzz word today, as the market driven economy demands the
industrial sector to think globally and act locally whereas technology driven markets demands
the researchers to think and act globally with a view integrate the global market with local
market. Current Issue focused on the following:
1. The authors, Abdul Samad M and Safiuddin SK in their research paper entitled ‘ROLEOF ISLAMIC
FINANCEIN GLOBALINCLUSIVE GROWTH’ have analyzed the Inclusive Growth and Role of Islamic
Finance in it for the sustainable development.
2. In the research paper entitled ‘PRODUCTIVITY BARGAINING PRACTICES AT SINGARENI
COLLERIES COMPANY LIMITED’, the authors, Dr.V.Rajeshwari and G. Usha Sree evaluated the
Practices of Productivity Bargaining at Singareni Colleries Company Limited and suggested the improvements
in that.
3. Sreekanth.Putha, in his paper entitled ‘HR OUTSOURCING SERVICES AND JOB SATISFACTION –
AN EMPIRICAL STUDY ON SELECT INDUSTRIES’ focused his research study to identify the
implications of HR Outsourcing Services on Job Satisfaction of Employees in select sectors.
4. P. Meghashyamala, in her article ‘THE SUCCESSFUL CASE STUDIES OF SELECT YOUNG
ENTREPRENEURS IN INDIA’ focused on strategies implemented in entreprises by the young
Entrepreneurs as a Benchmark to the followers.
5. Pardhasaradhi Madasu, in his paper entitled, ‘CAPITAL MAREKT FINANCING FOR SMEs - A STUDY
(With specific reference to SME Platform of BSE)’ examined the Small and Medium Enterprises and the
method of capital market financing for them thoroughly.
6. The author, Dr. I.Anand Pawar in his paper entitled, ‘IMPACT OF MOBILE ADVERTISING ON
CONSUMER BUYING INTENTIONS’ studied the importance of Consumer Behaviour and Impact of
Mobile Advertising on it.
7. In the research paper entitled, ‘ETHICAL ISSUES IN THE ORGANIZATION AND ROLE OF
EMPLOYEES AS STAKEHOLDERS’, the author Dr. P. Lakshmi Prasanna focused his study on the
relationship between Ethics and Role of employees as Stakeholders.
8. Dr. K. Bhavana Raj, in her article entitled ‘THE AUDIT PRACTICES OF AN AUTOMOBILE
FRANCHISE- A CASE STUDY’ critically reviewed the scenario of Hypothetical Company and Audit
Practices of an Automobile Franchise in detail.
9. Dr. Srinivas Kolachina, in his research article entitled,‘EFFECTIVE LEADERSHIP- A PATHWAY FOR
ORGANIZATIONAL SUCCESS’ attempted to study the performance and the role of an Effective Leader as
direct contribution towards organizational success.
10. The author, Ch Srinivas Rao in his article entitled ‘CUSTOMER SERVICE AS A FORCE MULTIPLIER
IN MANUFACTURING COMPANIES’ studied the performance of manufacturing companies and the
impact of customer services on that.
11. In the paper entitled, ‘IMPORTANCE OF CONSUMER BEHAVIOUR – ACASE STUDY OF MAGGI
NOODLE, NESTLE INDIA’, the author Dr. Ennala Deepa studied the significance of Consumer Behaviour
by a Case of Study of Maggi Noddles.
DATE: 11.12.2017
Dr.KHYSER MOHD.
1
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
ROLE OF ISLAMIC FINANCE IN GLOBAL INCLUSIVE GROWTH
Abdul Samad M Prof. (Finance Area) AUC, Director IIEFS, Hyderabad, TS, [email protected].
Safiuddin SK
Asst Prof, DBM, MANUU, Hyderabad
Abstract
Inclusive growth of a nation means that on a wider spectrum the development issues
related to abject poverty (BPL), inequality in distribution of a nation’s wealth are resolved
properly. All sections of society being able to enjoy the fruits of the development of the country
and the needs like health and education are all taken care off. The conventional finance the main
tool for financing development activities has miserably failed in achieving in its goals. The
present day financial system is plagued with financial crime and fraud, therefore needs a total
cleansing of the whole financial system. The scrutiny the financial services industry has never
been as intense as the way we see it today. With increased aggressive action against banks,
insurers and funds market and now even going to the extent of individual level. The key
challenge to Islamic Finance (IF) has been to get a foothold in the mainstream financial world,
due to its uniqueness and unfamiliarity to the common masses. But things have changed a lot IF
industry is on upward trajectory growing from mere US$ 700 billion in 2005 to an expected
figure of US$ 3 trillion in 2020 with a promised inclusive growth. The most commonly faced
hassle for IF is to how mobilize the resources and to optimally implement them to get fruitful
outcomes and benefits from the exercise. IF can play a very critical role in the present scenario of
headwinds of financial and economic crises, as it has become all the more important to explore
alternative and complimentary innovative financing mechanism which is based on ethics.
Keywords: Inclusive Growth, Financing Development, Innovative Financing Mechanism,
Conventional Finance
Introduction
A financial model should be developed that balances between the free market liberty with
greed motivation of individuals. There should be a mechanism that fine tunes the risk and reward
factor along with reliable fairness and transparency in the working financial structure. IF relates
to financial transition that seeks real life economic wellbeing instead of new financial products
with virtual accomplishments. IF in practical terms helps in stimulating economic and financial
2
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
activity and entrepreneurship towards solving inclusive growth problems and ensure economic
stability leading to social harmony. The conceptual development and breeding of IF products is
such that they lead to comprehensive human development and a fair deal to all stakeholders. IF
services industry may not be envogue in India due to political unwillingness in launching the IF
products or due to ignorance of it being a boon rather than a topic to divide the people.
Islamic Finance in India
Increased Islamic conscious among Muslim masses along with crusade of Islamic
scholar’s towards conventional financial products has forced corporates to offer Muslim oriented
financial products. One can imagine the mental framework of the Muslim community from the
past IF experiences, in the name of IF the investors from the cities of Mumbai, Hyderabad states
of UP, Karnataka and others have lost upto the tune of Rs. 7,000 crores1 till recent times starting
from Al Falah and Charminar Cooperative Bank and so many other firms who were big
fraudsters in the name of Islamic Finance in India. Islamic Finance in India needs quiet some
time to gain the trust in the community and also to have the Islamic scholars and other stake
holders to come on to one platform to support the cause of Islamic Finance. The problem is that
Muslim community in India has been literarily molested in the name of Islamic Finance by so
many fake and rogue companies. The attitude towards such company’s can be summarized in the
saying that comes true in present scenario ‘once bitten 100 times shy’.
Islamic Finance is of interest to the top corporates, to name a few like TATA AIG,
Reliance Capital, Bajaj Allianz, Taurus Ethical Ethical Fund, BenchMark ETF and Secura and
endless list of other interested entities like Tokio Marine, Shri Ram Life Insurance, Basix Micro
Finance and so on. Well all these corporates may have thought that by using the name
Islamic/Islamic Finance it would be a cake walk for them to get business, but things are not so as
expected. One of the biggest problems of Indian corporates has been the half hearted approach of
the corporates by not involving the Islamic scholars fully from the idea inception stage to finally
selling the product to the customer. The corporates were very keen and in hurry to get the Islamic
certification without totally and fully developing proposed Islamic based products. But surely
sales will start trickling in for Islamic Finance products after some duration and not from the day
one.
____________________
1 As per statistics given by Regional Head of Bombay Mercantile Bank, Hyderabad Branch.
3
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
Suggestions by Indian Bank Customers2:
Charter of Customer Rights need to be implemented within strict timeframe - (i) Right to
Fair Treatment; (ii) Right to Transparency; Fair and Honest Dealing; (iii) Right to
Suitability; (iv) Right to Privacy; and (v) Right to Grievance Redress and Compensation,
Digital Payments – adoption of the best practices to protect consumers.
Bank Account Number Portability - portability of bank accounts (like number portability
in telecom sector) is a good anti-dote to several restrictive practices followed by banks.
Unfair agreements - one-sided terms and conditions by banks like in their loans
agreements with details buried in the fine print are bleeding customers.
Charges - new charges introduce like billing customers through stealth opt-out clauses
that are not noticeable should be stopped immediately (new charges for use of ATMs).
Faulty Systems - wrong emails being tagged by faulty algorithms of banks that are
leading to emails sent to customers who have no borrowing leading to harassment of
“Cusht-Se-Mar”.
Master Circular Changes - changes made by RBI require other banks to make changes in
their core banking systems leading to high IT costs, that are ultimately passed on to
consumers.
Islamic Finance to Indian Corporates
India is a country wherein people would like to see the evidence of the services before
purchasing the same. Let it be a purchasing of bus ticket, people would like to see whether the
bus service has established itself in providing the services. If this is the case for tangible services,
then the expectations for the intangible products like financial products will be far higher. Hence,
if an Islamic Financial Advisor explains the need for the Islamic financial product to the Muslim
customer, the first question that crop’s up the mind of the Muslim customer will be the reliability
and image of the company.
Muslims head count would be around 175 million with majority being less than 25 years
which is mostly urban based. Assuming switch over and India’s growth in insurance sector, the
Islamic Insurance (Takaful) potential could be 13% of conventional insurance i.e. US$ 6.6
billion while having a growth rate of 20% from 2010 to 2015 that could reach to about US$ 15.9
__________________________
2 Sucheta Dalal , Trustee Moneylife Foundation.
4
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
billion. But 26% of urban population lies below poverty line in India of which Muslims
constitute 38%. In the years to come India needs approximately US$ 700 billion to fund its
growth story and is seriously considering all possible avenues for the funds. The Middle East is
the only place in the world to have surplus money to the tune of US$ 800 billion according one
estimate, in spite of turbulence in global oil prices. And if this money were to be channelled into
Indian projects then that would be big advantage for the development of the country. According
to RBI research Muslims control huge amount of assets forecasted to be in tune of few hundred
crores and with a growth rate of 15% in India that goes totally untapped in suspended bank
accounts due to lack of Islamic Finance avenues for Muslims to invest.
It is very pathetic that a model for Islamic (Interest Free) banking that was developed in
India way back in 1930 by Mr. Anwar Iqbal Qureshi and further taken forward by Dr. Nejatullah
Siddique has not been in contemporary. And with all big names at IDB Jeddah being from India,
still a breakthrough has not been achieved in India for launch of Islamic Financial products due
to lack of political will and seriousness on the part of Government of India, regulators and the
bureaucracy.
Financial exclusion of Muslims - the agony is that half of the Muslim population is
clueless about opportunities and services of the financial sector. While in countries like Malaysia
Islamic Finance has been thriving at breakneck speed which includes many non Muslims also, a
story which can be replicated in India. There are already many efforts that are being carried out
by the non-governmental organizations in India, like the SIES Education Assistance Trust that
provides Interest free education loan up to 90% of the cost of studying the degree course. There
are so many NGOs offering help to needy on interest free basis, some IF opportunities are listed
below:
1. Optimum use of estimated charity funds of Rs 20,000 crores that finds its way into
Mosque Trusts, Awqaf and Zakah institutions as charity.
2. Islamic Leasing can be good option to start off for corporates.
3. According to research 30% of Islamic complaint companies in Bombay Stock Exchange
(BSE) have 68% of the market capital3 which speaks of performance of Islamic
complaint companies and opportunity to invest in India’s Islamic finance market.
4. First 200 companies out of the 500 plus Islamic companies have 70% of market capital.
5. Indian Islamic funds have mopped about Rs 525 crores by March 2010 in 3-4 years4.
6. In India yearly Rs 637 crores5 are lost by the Muslim community due to non participation
in the conventional financial sector.
5
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
7. Just 1%, i.e., 10- 15 million of total population of India’s population deals with the stock
market, meaning high level of potential exists.
8. Around 175 million Muslims in India offer good uncharted territory for Islamic Finance.
9. The Average credit deposit ratio in India is 74% where as for the Muslim community it is
37%5, while the projected lost to the banking industry is Rs 117 billion due non
availability of Islamic Banking provision in India.
10. Average Indian willing to deposit is 67% in the urban areas, while same for Muslim
community it is just 20%.
11. A mere 13% Muslims are aware of full Banking facilities while 57% are totally unaware
of any banking facility, while the rest (30%) are partially aware of banking activity.
12. Wakf Properties worth Rs, 4,00,000 crore are there in India out of which Rs 2,00,000
crore are encroached and the rest are highly underdeveloped.
13. HNIs have grown by 51% in 2009 in India with GDP growth rate of 7% and the possible
growth rate in 2010 is estimated around 8.1% and in 2011 it would be 8.5%, but these
a. cannot be the criteria’s for total financial inclusion for all Indians which is the
ultimate goal of IF in India.
14. Global Muslim population of 1.6 billion approximately is a huge market for Indian
corporates.
15. The IF industry has demonstrated consistent annual growth between 15%-20% inspite of
global financial meltdown.
Islamic Finance Suggestions
1. Sharp focus on Islamic requirements.
2. Independent and Transparent Islamic body to lead the way.
3. Offering of Islamic Finance products in comparison with conventional products
depending upon Islamic compliancy.
4. Encourage philanthropy and financial inclusion among all sections of society.
5. Design the product on basis of Islamic rather than Economic/Legal viability.
6. Focussing advertising and promotion activities in Muslim catchment area.
7. Rather than asking the Islamic scholars to look for a way out for compliancy bottle
necks, the companies should try to change the product design.
Islamic Finance Promotional Activities
1. Local Ulema certification is a must for promotion of the Islamic product.
2. Advertising activities to be initiated.
_______________________ 3Econmic Times, March 13, 2010. 4MI, Issue April 2011. Hyderabad. 5Keyur Shah, KPMG, Mumbai
6
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
3. Latest copy of Fatwa, product performance details and other details need to be made
easily available on net.
4. Hoarding and newspaper advertisements campaigned to be carried out strongly.
5. Distributors and other middle men need to be encouraged and motivated on long-term
benefits as the commission on Islamic products is less comparatively.
6. Company should directly carry out is promotion activities rather waiting for the Muslim
distributors or professional bodies to help in activities.
7. Actively participating in community seminars, conferences, gatherings or any other
platforms is a must and the benefits will be long term and virtually realistic.
Conclusion
The global Islamic finance industry has sustained impressive double-digit growth in 2013
despite challenging global economic conditions. Islamic Finance is against the ‘Great Divide’
that has been created by the conventional financial system which can be fragrantly seen in the
America’s unequal society. If we diagnose the reasons for inequality, it is the choice and
cumulative result of unjust policies and misguided priorities. The world economy pays a very
heavy price for the irresponsible policies, deregulations, tax cuts, and tax breaks for the elite
which is leaving many people’s dreams farther and farther beyond and turning the total financial
inclusion dream into an ever more unachievable myth. IF has a formidable and a accessible
economic insight, that includes to embrace real solutions, by increasing taxes on corporations
and the wealthy; offering more help to the children of the poor; investing in education, science,
and infrastructure; helping out homeowners instead of banks; and, most importantly, doing more
to restore the economy to full employment. IF argues against the tide of unnecessary, destructive
austerity that is sweeping across the globe and IF offers choice between growth and fairness.
With the right policies of IF we can have both, and confront world’s economic inequality as the
political and moral issue and reinvest the capital in the people and pursue the other policies that
can live up to the shared dream of a more prosperous, more equal inclusive global society.
The global ethical finance industry has reached a significant market size, growing by
11.9% CAGR. In the UK, it is projected to add economic value of approximately worth USD 17
billion by 2020. The Islamic assets are set to grow at a rate of 19.7% by 2018 as per a study by
EY. The increasing demand for responsible financial services is largely driven by changing
public perception and prompted by the effects of the past financial crisis. Such increased interest
7
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
presents new opportunities for the industry and in order to capitalize on these opportunities, there
is a growing need for convergence and collaboration among the various subsets of ethical
finance. A Global Shift towards Responsible Finance The Global Financial Crisis dramatically
shifted attitudes about the role of the financial sector and set in motion dramatic changes in the
popular perception of responsible finance. Sectors (Anexxure1) of the financial industry which
were previously niche sectors (Islamic finance and socially responsible investing) became the
foundation for a rethinking of how the financial sector should relate to people, the natural world
and the real economy.
References
1. Abdul-Majid, Mariani, David S. Saal, and G. Battisti, 2010, Efficiency in Islamic and conventional banking: An
international comparison, Journal of Productivity Analysis 34, 25-43.
2. Aggarwal, Rajesh K. , and Tarik. Yousef, 2000, Islamic banks and investment financing, Journal of Money,
Credit and Banking 32, 93-120.
3. Beck, Thorsten, Asli Demirgüç-Kunt, and Ouarda Merrouche, 2010, Islamic vs. Conventional banking business
model, efficiency and stability, (The World Bank, Washington DC).
4. Beck, Thorsten, Asli Demirgüç-Kunt, and Ouarda Merrouche, 2013, Islamic vs. Conventional banking: Business model, efficiency and stability, Journal of Banking and Finance 37, 433-447.
5. Chapra, Mohammad Umer, 2008, The global financial crisis: Can Islamic finance help minimize the severity
and frequency of such a crisis in the future? IDB (Jeddah).
6. Chong, Beng Soon, and Ming-Hua Liu, 2009, Islamic banking: Interest-free or interest-based?, Pacific-Basin
Finance Journal 17, 125–144.
7. El-Gamal, Mahmoud A., 2000, An economic explication of the prohibition of Riba in classical Islamic
jurisprudence, 3rd Harvard University Forum on Islamic Finance.
8. Hasan, Maher, and Jemma Dridi, 2010, The effects of the global crisis on Islamic and conventional banks: A
comparative study (International Monetary Fund, Washington DC).
9. Imam, Patrick, and Kangni Kpodar, 2010, Islamic banking: How has it diffused?, (International Monetary Fund,
Washington DC).
10. Siddiqi, Mohammad Nejatullah, 2006, Islamic banking and finance in theory and practice: A survey of state of the art, Islamic Economic Studies.
11. Sundararajan, Vasudevan, and Errico, 2002, Islamic financial institutions and products in global financial
system: Key issues in risk management and challenges ahead, IMF Working Paper.
12. Zaher, Tarek S., and M. Kabir Hassan, 2001. A comparative literature survey of Islamic finance and Banking
(Blackwell Publishers, MA, USA).
Anexxure-1
8
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
PRODUCTIVITY BARGAINING PRACTICES AT SINGARENI COLLERIES
COMPANY LIMITED
Dr.V.Rajeshwari Associate Professor, Telangana University, Nizamabad
G. Usha Sree
Research Scholar, Kakatiya University, Warangal Abstract
The public sector has emerged as an important level of economic growth in India. It has
changed the industrial face of the country and has been instrumental in bringing socio-economic
revolution. But the performance and profitability of most public companies is not that
satisfactory. The actual result is much behind the target and they are operating much below the
installed capacity. Productivity bargaining through collective bargaining is one of the very
important parameter to improve the Productivity of the organization particularly in SCCL.
Employees being the main source of production, the success or failure of an organization
depends to a considerable extent on its employees. Productivity bargaining practices acquires
special meaning in coal industry due to variety of factors. This article presents the Productivity
bargaining practices in company specially concentrating on performance, promotion, training
methods and identification of employee, welfare measures, medical facilities, compensation and
union involvement in the organization on the practice.
Keywords: Organization, Employees, Productivity Bargaining Practices, Welfare Measures,
Productivity.
Introduction
Productivity bargaining through collective bargaining is one of the very important
parameter to improve the Productivity of the organization particularly in SCCL. Collective
Bargaining in terms of i) Negotiations about working conditions & terms of Employment
between an employer, a group of employers or one or more Employers or one or more
Employers organizations on the one hand & one or more representative workers organizations on
the other with a view to reaching agreement. ii) The term bargaining refers to evolving an
agreement using methods, like negotiations, discussions, exchange of facts and ideas rather than
confrontation. iii) The negotiations are between the Employers and the Employee without a third
party intervention.
Productivity bargaining through collective bargaining where one group representing the
employers and the other representing employees sit together to negotiate terms of Employment.
9
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
Both the management and the Union groups go through several intra-organizational bargaining
to improve the productivity.
The management will have to settle a set internal policy issues, relating to the
concessions they would make, the wages they would pay and the changes that they would like to
affect as obviously. There should be the balance between viability of the firm, in terms of profits
& labor costs need to be reconciled.
To lessen the cost of factors of Production, obviously to improve the productivity, the
various groups/categories, such as skilled, semiskilled and unskilled workers has to work
dedicatedly with determination. Formulation of policies, selected norms and processes also
includes in productivity bargaining to encourage the employee towards the work with zeal. The
firms' capacity to pay and its constraints. The Union demanding wage increases to meet the
increased cost of living of expectations of workers in the changed socioeconomic context as well
as the increases agreed to by the other firms. A method of wage fixation also improves
productivity.
Productivity usually refers to output in physical units per man hour of work. It is a
measure of the relationship between the volume of goods produced and one factor of input-
labour time.
To get productivity bargaining practices come through more efficient utilization of fuel,
more economical material, technical improvements in machines, in organization processes, the
skill and effort of the workforce , the efficiency of management and increased ability to pay and
therefore industries with high or increasing productivity are generally able to pay high wages.To
improve the productivity not only to concentrate on wage matters, collective agreements cover a
wide range of aspects of employment from recruitment to retirement.
Productivity bargaining through collective bargaining agreements covers issues like bonus ,
overtime, paid holidays, paid sick leave, safety wear, production norms, hours of work,
performance appraisal, workers participation in management , hiring, fixing of job evaluation
norms and modernization. Productivity bargaining through plant-level bargaining is the common
practice in manufacturing and commercial establishments whereas industry wise bargaining
occurs in SCCL.
In a competitive business environment growth of any business organization would
entirely depend upon employees' appreciation and loyalty, it can command. These can be
10
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
ensured, only by offering products and services of high quality on a durable basis. Therefore,
continuous enhancement of quality on a sustaining basis has become essential for the prosperity
of any business organization at present and in future as well as.
Productivity bargaining is important both for manufacturing and service organizations.
For most business organization today, superior quality is at the core of their business strategy.
Attaining near-perfect quality of products/services is seen as a principal means of capturing
market share and profitability in global competition. Achieving superior product or service
quality with in a business requires a long term process of changing the fundamental culture of the
organization. Today, managers and staff may manufacture and service organizations have
overhauled the structure of their organization, changed their organization climates and redirected
their product/service programmes towards becoming global quality leaders through an effort that
is known as productivity bargaining.
At the heart of productivity bargaining, this means that every organizations activity
should be evaluated and analyzed to determine if it contributes to meeting employees' needs and
expectation. Productivity increases through employees' involvement, improvement in team, and
other group efforts are used to ensure that an employee's understand the importance of
productivity bargaining practices.
Review of literature
1. Kaaru Ishikawa developed the quality circle, which are used to trace back employees and
customers complaints are all responsible for production operation problems.
2. John.R.Dew stated seven basis steps to strategic planning. The process state with
principle of employees' satisfaction and customer satisfaction are the center of origin
future.
3. Kerth Dawis identified three models organization behavior autocratic, custodial,
supportive etc.
4. Likert mentioned the pattern and study of manager for three decades.
5. R.Karlgard stated a philosophy of Management that is driven by the constant attainment
of employee satisfaction through the continuous improvement of all organization process.
Objectives of the study
1. To examine the Productivity bargaining practices and its effectiveness in SCCL with
the help of certain identified variables.
2. To examine existing working conditions in SCCL.
3. To examine worker's participation in management in SCCL.
11
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
4. To offer suggestions to improve the productivity through Productivity bargaining
practices in SCCL, Kothagudem Area.
Scope of the Study
The scope of the present study is confined to the productivity bargaining practices in
SCCL in relation to selected criteria. A dedicated discussion on each criterion has been given to
the extent disclosed by the undertaking. The present study covers the entire corporation in
overall manner. However for the purpose of detailed examination unit level practices are task
from Kothagudem Area. Huge investment, vast-man power, product and the productivity
bargaining practices of the organization have influenced to select the zone.
Methodology
The methodology adopted in the present study regarding selection of sample period of
study, data sources analysis and interpretation of data, Primary data is collected through
questionnaires personal discussions with officials, executives and nonexecutives of the SCCL.
Secondary data is collected from the annual reports of the SCCL, other official records and
documents relating to Productivity bargaining practices, books and related journals.
Sample selection
In order to evaluate the Productivity bargaining practices implementation in SCCL,
Kothagudem Area has been chosen. SCCL is leading coal Sector Company as state owned
corporation with 108 coal generating units. The sample of employees is tentatively fixed as 200
which include all departments' executives and all cards of employees in every level of
management.
Tools of Analysis
While analyzing the Primary and Secondary data using various statistical techniques like
Mean, co-relation t-test, and chi-square test have been computed and used.
Hypothesis
Unconformities with objectives of the study, certain hypothesis have been formulated
after careful and in depth – examination of the existing literature relating to the implementation
of Productivity bargaining practices.
The following broad hypothesis are formulated and tested:
12
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
1) There is not only lack of employee participation and active involvement in the continuous
improvement of employees, products and process but also absence of team work among
the employee to generate productivity bargaining practices consciousness in SCCL.
2) There are no well-defined Productivity bargaining practices in SCCL to indicate the
Employee Satisfaction Measurement which improves productivity.
Limitations of the Study
1. Secondary data was sometimes gathered from more than one source, which in turn lacks
uniformity, consistency and regularity information taken from internal records suffers
from limitation (non-availability).
2. The questionnaire used for the purpose of collecting the Primary data from the
respondents also due to different level of perception interpretation and behavior of
sample respondents.
3. Employees' perception also not gathered since they are widely spread over. Hence, the
study reflects the views of selected category of organization members only.
Variables contributing to PBP Implementation and Effectiveness
Identification of variables contributing to PBP implementation is done in the following
methodology. In order to measure the implementation of PBP, they are seven variables, thirty
five statements have been designed in such a way which ever all required and relevant aspects
about PBP implementation, Twenty Eight out of thirty-five statements are designed in positive
sense to reflect the implementation of PBP as more effective. Remaining Seven Statements have
been formed in negative sense to reflect the implementation of PBP as less effective.
TABLE-1
DATA VARIABLE STATEMENTS SL.NO Date of Variable Statements No. of Positive
Response
No. of Negative
Response
Total No.
Statements
1. Working Conditions 4 1 5
2. Industrial Relation 4 1 5
3. Pay Structure 4 1 5
4. Welfare Facilities 4 1 5
5. Personal Growth 4 1 5
6. Employee Training and
Development
4 1 5
7. Workers Participation in
Management
4 1 5
TOTAL 28 7 35
An analysis made from the table -1, it is observed that form the thirty five statements have been
designed in such a way, which covers all required and relevant aspects about PBP
implementation. Twenty Eight out Thirty Five Statements are designed in posit ive sense to
13
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
reflect the PBP implementation as more effective, remaining seven statements have been framed
in negative sense to reflect the PBP implementation as less effective.
TABLE-2
DISTRIBUTION OF EXECUTIVE AND NONEXECUTIVE ACCORDING
EFFECTIVENESS OF PBP IMPLEMENTATION
Respondents Level of Effectiveness Total
Effective Ineffective
Executives 30 (15)
106 (56)
136 (68)
Non-Executives 16
(8)
48
(24)
64
(32)
Total 46
(23)
154
(17)
200
(100)
Source: primary data
It is clear from the Table :2, that the perceived PBP implementation and it's effectiveness differs
significantly between executives and non-executives of SCCL. A relatively high percentage of
executives perceived the implementation of PBP as more effective, in case of non-executives the
percentage of those who feel PBP implementation as more effective is less than those who
perceived it as less effective.
TABLE-3
CONTRIBUTION OF WORKING CONDITIONS VARIABLE TO THE PBP IMPLEMENTATION AND
ITS EFFECTIVENESS
Contribution Factors Level of Effectiveness Total
Effective Ineffective
Working
Conditions
(Executives)
96
(48)
44
(22)
140
(70)
Non-Executives 24
(12)
36
(18)
60
(30)
Total 120
(60)
80
(40)
200
(100)
Source: primary data
Note: Numbers in parentheses in indicates percentage.
Observed Value =7.14
Degree of Freedom =(2-1)(2-1)=1
Expected Value at 1% level=6.635
Expected Value at 5% level=3.48%
14
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
It is perceived from the table 3 that a majority of respondents 60 percent perceived PBP
implementation as effective. Among these 80 percent of respondents perceived that working
conditions variables, contributes to effectiveness and 20 percent perceived that working
condition contributes to PBP implementation is effectiveness. The percentage of respondents
those who perceived it as ineffective is 40 percent, among these 55 percent felt that in spite of
working conditions contribution it is in-effective and 45 percent perceived that working
condition does not contribute hence it is in-effective. It can be concluded that majority 80
percentage of respondents perceived that leadership variable contributes to TQM implementation
is effectiveness. Further, it is tested with the chi-square. Since, the observed value greater than
the expected value at both the levels the hypothesis rejected. Hence, it can be concluded that
majority of the respondents felt that the TQM implementation is effectiveness in due to working
conditions contribution. This is inconformity with the conclusion drawn earlier.
Welfare facility vis-via PBP implementaitn and its effectiveness:
To examine the relationship between the level of effectiveness of PBP implementation and
contribution of Welfare Facilities variable, the distribution of respondent over the ‘effective' and
‘in-effective' category is shown in the Table 4.9
TABLE -4
CONTRIBUTION OF WELFARE FACILITIES VARIABLE TO THE PBP IMPLEMENTATION AND ITS
EFFECTIVENSS
Contribution Factors Level of Effectiveness Total
Effective Ineffective
Welfare Facilities
(Executives )
56
(28)
48
(23)
102
(56)
Non- Executives 18
(9)
80
(40)
98
(49)
Total 74
(37)
126
(63)
200
(100)
Source : Compiled from the Questionnaire data
Note: Numbers in parentheses in indicates percentage.
Observed Value =15.913
It is obvious from the table that majority of respondents i.e. 63 percent are from the category of
in-effective and only 37 percent of respondents are from effective category. Among the in-
effective category 64 percent perceived that the in-effectiveness in due to non contribution of
15
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
Welfare Facilities variable and 36 percent perceived that in spite of variable contribution it is in-
effective. Among the effective category 75 percent respondent perceived that the variable
contributes to effectiveness and only 25 percent perceived that is does not contribute to PBP
implementation and effectiveness.
TABLE 5
CONTRIBUTION OF WORKERS PARTICIPATION IN MANAGEMENT VARIABLE TO PBP
IMPLEMENTATION AND ITS EFFECTIVENESS
Contribution Factors Level of Effectiveness
Total
Workers Participation
in Management
Effective Ineffective
Executives 72
(36)
64
(24)
136
(68)
Non-Executives 50
(25)
14
(7)
64
(32)
Total 122 (66)
78 (39)
200 (100)
Source: Compiled from the Questionnaire data
Note: Numbers in parentheses in indicates percentage.
Observed Value = 7.135
An observation of Table 5 indicates that there is marginal difference between percentages of
respondents who perceived PBP implementation as effective and ineffective with regard to
contribution of Workers Participation in Management Among 61 percent who perceived that
effective category 36 percent perceived that a WPM result contributes to effectiveness and 25
percent perceived that the variable does not contributes. Among those who perceived it as in-
effective 32 percent perceived that WPM contribute to PBP implementation and only 7 percent
perceived that the variable does not contributes. To test statistically, chi-square test is applicable
the calculated value of X2 (7.135) is more than the table value. Hence, the hypothesis is rejected
thus, if can be concluded that there is relation between the level of effectiveness of PBP
implementation and Workers participation in Management.
Conclusion
Spearmen rank correlation has been calculated to know the extent relationship between
the ranks of average scores of perception of executives and non-executives with regard to various
16
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
contributes to PBP implementation. According to the calculation of Spearmen rank correlation, it
is understood that hypothesis is rejected.
Therefore it can be stated that in SCCL workers are participating in management
activities, there is smooth relationship between workers and management. There is well-defined
productivity bargaining practices in SCCL.
It is clear that the perceived PBP implementation and its effectiveness differ significantly
between executives and non-executives of SCCL. A relatively high percentage of executives
perceived the implementation of PBP as more effective, in case of non-executives the percentage
of those who feel PBP implementation as more effective is less than those who perceived it as
less effective.
Sugesstions
1. There is necessary to strengthen the effectiveness of executive cadre, in workers
participation in management.
2. There is necessity to strengthen the effectiveness to develop Non-executive Cadre.
3. There is necessity to strengthen Productivity bargaining practices in order to contribute
more effectively for main industrial Relations.
References
1. Lee M.Ozely and Judith S.Ball, Quality of Work Life, “Initiating successful efforts in labour management
organization”. The personal administrator. Vol 27, No.5 May, 1982, P.27.
2. “Quality of Work Life, Cataching”. Business Weak, Sept 21, 1981,P.80
3. Edward Lawler III, “The New Plant Revolution”, Organizational Dynamic, Vol.6, No.3 Winter 1978 P.3
4. David W.Eiving,”What Business thinks about Employees Rights,' Harvard Business Review, Vol55.
No.5Sept.Oct. 1977, P.84.
5. Mahoney, Francisx: “Team Development, Part4: work Meeting”, Personnel, Vol.59, No.2, March-April, 1982,
PP.45-55.
6. Mitcheel Lee marks et al, “Employee Participation in a Quality Circle Program, impact on Quality of Work Life
Productivity and Absenteeism,” Journal of Applied psychology, Feb, 1986, P.P.61-69. A discussion of options for various levels of participation is in C.Philip Alexander, “Voluntary Participation”, Quality Digest, Oct,
1994,P.P40-52
7. Copper Lylews “Profit Sharing” Encylopedia of social science Vol XII, the Mach Million Co., New Yord,
1934,P.387
8. Scott Clother and Spriegal, Personnel Management P.173.
9. Key ton and Spring Ston, “Redefining Cohesiveness is groups, “Small group research, May 1990, P.234-259.
10. Invancecis Jon Mand Michal T.Matteson, (1989) Stress at Work, Fore Man Glenview PP.59.
17
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
HR OUTSOURCING SERVICES AND JOB SATISFACTION
– AN EMPIRICAL STUDY ON SELECT INDUSTRIES
Sreekanth.Putha
Ph.D Research Scholar, Royalaseema University, Kurnool. email id:[email protected], Program
Manager Lead, Microsoft, Hyderabad – 32.
Abstract
This paper investigates the implications of HR outsourcing services on the employee job
satisfaction in the select IT companies as well as Pharmacy Companies in Hyderabad. The world
of human resource management is changing more rapidly than we can imagine. Recognizing
these challenges of the select industries, it has opened the space for the assessing the employee’s
satisfaction and willingness towards outsourcing of facilities, services, and amenities to meet
their job related needs. The tools applied in the study are; SRT, KMO Bartlett Test, t test. This
paper also suggests certain possible solution to the above said problem where the employees
resist to outsourcing. Overall, a positive overview was observed in the following areas of typical
HR outsourcing practices; welfare activities, cost factors, impact on HR function, human capital,
SPs, individual efficiency, service quality, reduction of overheads, improvement in vendor
relationship.
Key words: Administrative burdens, Cronbach's Alpha, Employee satisfaction and engagement,
Implications of HR Outsourcing, KMO and Bartlett's Test, service quality, and technical
expertise.
Introduction
Human Resource Departments are primarily concerned with the management of people
within organizations, focusing on policies and systems. They handle multiple areas related to
recruitment, training and development, performance management, rewards, compensation
benefits etc. HR today has come a long way from the personnel management and industrial
relations days when there was more focus to balancing of organizational practices with
requirements arising from collective bargaining and governmental laws to understanding the
needs of employees and delivering programs accordingly to enhance employee satisfaction and
engagement.
As the scope of HR widened, organizations are choosing to outsource practices like
recruitment, payroll, benefits administration, training etc., to companies who hold a core
competence in it. It also proves to be cost effective. At the same time the companies have to
18
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
assess the implications of outsourcing on the employee’s satisfaction. Unless understanding the
overview of select industries in terms of business growth and development apart from HR
concepts, it is difficult to assess the implications of HR outsourcing services in employee’s
satisfaction perspective.
The Pharmaceutical industry and the IT industry are two fast pace growing industries,
Pan India, hence the reason to be chosen for the study.
Pharmacy Industry: The Indian pharmaceuticals market is the third largest in terms of volume
and thirteenth largest in terms of value, as per a report by Equity Master. It enjoys an important
position in the global pharmaceuticals sector. The country also has a large pool of scientists and
engineers who have the potential to steer the industry ahead to an even higher level. And its
market is expected to grow over 15 per cent per annum between 2015 and 2020. The interesting
point is that the global pharmacy industry growth rate (which is 5%) is less than Indian
Pharmacy industry growth rate.
IT Industry: India is the world's largest sourcing destination for the information technology (IT)
industry, accounting for approximately 67 per cent of the US$ 124-130 billion market. The industry
employs about 10 million workforces. More importantly, the industry has led the economic
transformation of the country and altered the perception of India in the global economy. Indian IT
companies are providing IT services with cost effectiveness and which is approximately 3-4 times
cheaper than the US. However, India is also gaining prominence in terms of intellectual capital with
several global IT firms setting up their innovation centers in India. The Indian IT sector is expected to
grow at a rate of 12-14 per cent for FY2016-17 in constant currency terms. The sector is also expected
triple its current annual revenue to reach US$ 350 billion by FY 2025.
Concepts of the Study
1. What is HR Outsourcing? Human Resource Outsourcing (HRO) is a sustainable and
competitive method to manage costs and allow a company's core resources to focus on
strategic initiatives rather than managing transactional activities in HR operations.
2. What HR functions typically outsourced? Payroll, benefits administration, recruitment
and tasks related to risk management sit on the top of the list of HR functions commonly
outsourced.
3. What are HR Practices? ‘Any practice that deals with enhancing competencies,
commitment and culture building can be considered an HR practice. The practice can
19
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
take the form of a system, a process, an activity, a norm, a rule, an accepted or expected
habit.
4. What is employee’s satisfaction? In this study the employee’s Satisfaction factors were
clubbed as: welfare facilities, happiness and engage at work. For an individual, job
satisfaction would mean that something within him reacts favorably to the job and its
environment. We can also say that it is a sense of personal growth most often measured
by the extent of new challenges and learning situations experienced.
Review of Literature
The following recent studies in HR practices have been reviewed in Indian Context
Ramesh T (2005) studied the changes occurring in the field of human resource management in
today’s era. In his study, he observed that HR functions are concerned with a variety of activities
that significantly influence almost all areas of an organization. The success of an organization
depends to a large extent on the existence of a favorable HRD climate a combination of various
factors such as openness, team spirit, trust, autonomy, cooperation, integrity, recognition,
participation, fair compensation, counseling, problem solving, valuing the assets, and respect for
the individual. It is the human intellect, human energy and human inventiveness, which
accomplish excellence for the firm. If a company wishes to make purposeful trade–off, it must
create radical decentralization and give autonomy to the employees. A good HR leader can
always turn the worst to the best because he/she can really get the employees to work and
motivate them to perform better.
Emmah Nyarangi (2017) The study’s findings revealed that outsourcing temporary staff is more
economical than handling them in house. Outsourcing did give time for the human resource
department to concentrate on their core activities and improved overall organizational
performance.
Baltes, B. B., Zhdanova, L. S., & Parker, C. P. (2009). Their study advances our understanding
of the psychological climate construct by addressing a generally ignored issue of frame of
reference through measuring psychological climate with an organizational referent (PCo) and an
individual referent (PCi). PCo reflects employee perceptions of their organizational environment
in general; whereas, PCi reflects employee perceptions of their own experiences within an
organization. This study found that a) there are mean level differences between the two types of
psychological climate, b) the two types of psychological climate uniquely predict job
20
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
satisfaction, and c) a discrepancy between the two types of psychological climate is found to
relate to job satisfaction.
Ferrer, J. (2005). They outlined the territory of employee engagement and explore the
relationship between employee engagement and concepts of employee commitment.
Objectives
1. To understand the issues related to HR outsourcing in the select industries i.e. Pharmacy
and IT.
2. To identify implications of Typical HR Outsourcing services that are against the
employee’s satisfaction at work in select industries
3. To explore overall impact on the employees satisfaction.
4. To give suggestions and recommendations for the improvement of employees satisfaction
of the select industries.
Limitations of the Study
This study confined to Pharmacy and IT industry in around the Hyderabad city only. The
respondents include different grades of employees of Pharmacy and IT companies.
Methodology
A study was conducted for exploring the implications of typical HR out sourcing services
on employee satisfaction in Pharmacy and IT companies in and around Hyderabad area. It has
been focused on the Pharmacy and IT companies of Hyderabad area in Southern India.
Sample design and sample method: The sampling method used in the study is convenience
sampling technique. Sixteen Pharmaceutical units were selected from Hyderabad area. These
units include: Novartis, Raje Retail Pvt. Ltd, Bayer Pharmaceutical Pvt. Ltd , Abbott Healthcare,
Inogeat Laboratories Pvt. Ltd, Dr Reddy’s, DIVIS Laboratories Pvt. Ltd, Hetro Drugs, Therdose
Pharmaceutical Pvt. Ltd, Shanthabiotech Pvt. Ltd, Arobindo Pharmaceutical Pvt. Ltd, Natco
Pharmaceuticals, Arch Pharmaceutical Laboratories, Vasudha Pharmaceutical Pvt. Ltd, Neoland
Laboratories Pvt. Ltd and Synthous. Twenty three IT units were selected which include; CA
Technologies Ltd, Oasis Ltd, Live Apps Solutions, Verizon Data Services, Infosys, Subhasni
Software Solutions, Bally, CSE, Vamainfo, Pegasystems, Serco Pvt. Ltd, Sri Technologies, IBM,
Amazon Developers, Accenture, Deloitte, Beam, Dell Computers, TCS, CTS, Capgemini
Technology, Microsoft, JP Morgan Chase and Mc Graw Hill Financial.
21
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
Sample size: This is a qualitative research study which provides an empirical evidence to
approve and disprove the hypothesis formulated. The population (IT and Pharmacy employees)
of the study is finite. The area of the study is Hyderabad city. The sample units include; different
grades of employees. The sample size of respondents for Pharmacy and IT companies are 150
and 170 respectively. The sample size for the study was determined using the following formula
developed by Yamane (1967).
n= 𝑁
1+𝑁(𝑒)2
n denotes sample size, N indicates the population size and e is the level of
precision. For this study, level of precision is presumed as 0.056. According to
https://www.quora.com, the total workforce of Software companies is about 200000 employees
and the workforce of Pharmacy is about 100000 in Hyderabad. Therefore the population size for
the study is 300000 employees. By substituting these values in the above equation; the required
sample size becomes approximately 320.
Data Collection: The scaling technique used for the sample variables is Likert scale ranging
from 1 to 5 points. Period of study is 2015-2016. For the purpose of this research, both primary
and secondary data has been collected to present a comprehensive overview of the employee’s
satisfaction in both Pharmaceutical and IT industry in the select region. Primary data through
questionnaire and secondary data through published sources. The statistical techniques and tool
used in the study are mean, standard deviation, mean deviation, independent t-test, scale
reliability test (SRT), KMO and Bartlett's Test. The internal consistency of the set of variables is
measured with Cronbach's Alpha. It is also called scale reliability test (SRT). It is expressed as a
number between 0 and 1.
Table 1
Reliability Statistics
Cronbach's Alpha N of Items
.832 15
Source: Author calculation through SPSS20v.
Reliability estimates the amount of measurement error either in scale or in a test. It can be
interpreted as the correlation of test with itself. Squaring this correlation and subtracting from
22
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
1.00 produces the index of measurement error. In accordance with Nunnally (1978), the
Cronbach’s α value of any item should be at least 0.70 for being selected. Notwithstanding this
fact, any item having Cronbach’s α value more than 0.60 will be acceptable (Malhotra, 1993).
The range of alpha for internal consistency is between 0.70 to 90. If it is above 0.90 may suggest
redundancies and show that the test length should be shorten. From the table, the reliability of the
test is 0.832. The random error in the scale is 0.307 (0.832×0.832 = 0.693; 1.00 – 0.693 = 0.307).
As the estimate of reliability increases, the fraction of a test score that is attributable to error will
de-crease.
Table 2
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .804
Bartlett's Test of Sphericity
Approx. Chi-Square 2439.637
df 136
Sig. .000
Source: Author calculation through SPSS20v.
From the table 2, it is found that KMO value is more than 0.60. Therefore the given sample will
support the validity of the interpretations derived from sample data analysis.
Analysis and Discussion
Welfare activities: Employee welfare activities offered by the HR outsourcing provider includes
various facilities, services and amenities provided to workers for improving their health,
efficiency, and social status. Welfare activities include everything that is offered for the comfort
and improvement of employees. Welfare helps in keeping the morale and motivation of the
employees high so as to achieve productivity. Employee welfare includes monitoring of working
conditions, health benefits and insurance against accident for the workers and their families. The
collected data pertaining to the additional employee welfare activities offered by the HR
outsourcing provider was processed and furnished the information in the table 3.
Table 3
Showing the statistical results of employees satisfaction regarding welfare activities
Between it and pharmacy industry
t-test for Equality of Means
t df p-value MD
Employee welfare
activities Equal variances
assumed -7.249 318 0 -0.68784
Source: Questionnaire using IBMSPSS 20v.
23
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
H0: Employee’s satisfaction pertaining to activities between IT and Pharmacy industries is same
H1: Employee’s satisfaction pertaining to activities between IT and Pharmacy industries is
significantly differentiated.
From the table 3, it has been observed that the given t value and p-value are; -7.249 and 0.000
which is less than 0.05 which means that the null hypotheses has been rejected and alternate
hypotheses is accepted. Therefore, it can be inferred that there is a significant difference in the
satisfaction level of the employees with respect to welfare activities between two select
industries.
Gaining technical expertise of the vendor company: Organizations sometimes might be
lacking the technical expertise to perform the functions. Acquiring the infrastructure for in-house
technical expertise may be a budgetary constraint for the organization. In this case, organizations
outsource HR Functions to the service provider. The collected data pertaining to the gaining the
technical expertise of the vendor company of both Pharmacy and IT companies was processed
and furnished in the table 4.
Table 4
Showing the statistical results of gaining technical expertise between IT and Pharmacy industry
t-test for Equality of Means
t df p-
value
MD
Gaining technical expertise of the
vendor company Equal variances assumed -0.96 318 0.339 -0.1357
Source: Questionnaire using IBMSPSS 20v.
H0: Both industries are equally gaining the technical knowledge from their respective vendor
company.
H1: Both industries are not equally gaining the technical knowledge from their respective vendor
company.
From the table 4, it has been observed that the given t value and p-value at 318 degrees of
freedom with mean difference of 0.1357 are;-0.96 and 0.339. The calculated ‘p’ value is more
than the critical value (0.05) which means that the null hypotheses has been accepted and
alternate hypotheses is rejected. Therefore, it can be inferred that there is no significant
difference company between two select industries in gaining the amount technical expertise from
their respective vendors.
24
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
Reduction of cost factors: Reduction in cost factor is considered as one of the important and
prime factor in HR outsourcing. By outsourcing HR Functions the organization would be saving
costs. Data is collected related to reasons for HR outsourcing from pharmacy and IT
Organizations. The collected data pertaining to the gaining the reduction of cost factors was
processed and furnished in the table 5.
Table 5
Showing Reduction of cost factors between IT and Pharmacy industry
t-test for Equality of Means
t df p-value MD
Reduction of cost Equal variances assumed 0.608 318 0.544 0.08118
Source: Questionnaire using IBMSPSS 20v.
H0: There is no significant difference in reduction of cost factors of the vendor company
between IT and Pharmacy industries
H1: There is a significant difference in reduction of cost factors of the vendor company between
IT and Pharmacy industries
From the table 5, it has been observed that the given t value and p-value are0.608 and 0.544
which is more than 0.05 which means that the null hypotheses has been accepted and alternate
hypotheses is rejected. Therefore, it can be concluded that there is no significant difference in
the reduction of cost factors between two select industries.
Table 6
Correlations between cost and technical knowledge
Cost
reduction
Gaining technical
expertise
‘p’ value
Reduction of cost Pearson Correlation 1 .654**
0.00 Gaining technical
expertise Pearson Correlation .654** 1
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Questionnaire using IBMSPSS 20v.
From the table 6, it has been noticed that the person correlation between cost and technical
knowledge is 0.654 and ‘p’ value is 0.00 at 1 percent level of significance. In other words the
employee’s opinion with respect to cost reduction and technical knowledge is moderately
correlated.
Minimizing risk factors: Handling HR functions is associated with risk .Employees issues
have to handle with great diligence. If the organizations are concentrating on these issues they
lose track of the main core competencies and business objective. Pharmacy and IT organizations
25
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
are outsourcing certain HR Functions which are associated with risk factors as they are dealt
effectively by the specialists, so that they can be relieved of tension related to risk and
concentrate on their main business objective. The collected data pertaining to the minimizing risk
factors have been processed and furnished in the table 7
Table 7
Showing Minimizing Risk factors between IT and Pharmacy industry
t-test for Equality of Means
t df p-value MD
Minimizing risk
factors Equal variances assumed .962 318 .337 .13647
Source: Questionnaire using IBMSPSS 20
H0: There is no significant difference of opinion in terms of minimizing the risk factors between
IT and Pharmacy industries
H1: There is a significant difference of opinion in terms of minimizing the risk factors between
IT and Pharmacy industries.
From the table 7, it has been observed that the given t value and p-value are .962 and .337 which
is more than 0.05 which means that the null hypotheses has been accepted and alternate
hypotheses is rejected. Therefore, it can be concluded that there is no significant difference of
opinion in terms of minimizing the cost factors between two select industries.
1.12 Eliminating Administrative Burden: HR functions are routine and repetitive. They incur
lot of time and effort. If the organizations can outsource these repetitive and routine functions to
a specialist HR service provider, they can be relieved of the administrative burden and they can
be assured of guaranteed service. Data is collected from the IT and Pharmacy companies was
processed and the following results were shown in the table 8.
Table-8
Eliminating Administrative Burden t-test for Equality of Means
t df p-value MD
Eliminating
Administrative
Burden Equal variances assumed 1.265 318 .207 .13647
Source: Questionnaire using IBMSPSS 20v.
H0: There is no significant difference of opinion in terms of eliminating administrative burden
between IT and Pharmacy industries
26
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
H1: There is a significant difference of opinion in terms of eliminating administrative burden
between IT and Pharmacy industries
From the table 8, it has been observed that the given t value and p-value are 1.265 and .207
which is more than 0.05 which means that the null hypotheses has been accepted and alternate
hypotheses is rejected. Therefore, it can be concluded that there is no significant difference of
opinion in terms eliminating administrative burden of between two select industries.
1.13 Employee Productivity: When routine and repetitive HR functions are outsourced in an
organization, employees are relieved and can concentrate on the core competency and contribute
to the productivity to the organization. Data is collected from IT and Pharmacy companies and it
is processed and the results were shown in the table 9.
Table-9
Showing Increase in Employee Productivity
t-test for Equality of Means
t df p-value MD
Increase in Employee
productivity Equal variances assumed .688 318 .492 .11451
Source: Questionnaire using IBMSPSS 20v.
H0: There is no significant increase in Employee productivity by HR outsourcing functions
between IT and Pharmacy industries
H1: There is a significant increase in Employee productivity by HR outsourcing functions
between IT and Pharmacy industries
From the table 9, it has been observed that the given t value and p-value are .688 and .492 which
is more than 0.05 which means that the null hypotheses has been accepted and alternate
hypotheses is rejected. Therefore, it can be concluded that there is no significant difference of
opinion in terms of employee productivity between two select industries.
Overall Satisfactions of HR Outsourcing Activities: By outsourcing HR functions, there was
overall satisfaction related to organization perspective, Employees perspective, policy
perspective. Different dimensions for overall satisfaction of various parameters have been
studied in Pharmacy and IT companies. The collected data pertaining to the overall satisfaction
of various parameters was processed and results were shown in the table 10.
27
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
Table-10
Showing Overall Satisfaction of Various Parameters of Employees About HR Outsourcing Between IT and
Pharmacy Variables t-test for Equality of Means Decision
t df p-value MD
Impact of outsourcing on HR
Function
Equal variances
assumed -3.2 318 0.002 -0.3357
Rejected
Impact on Human capital
Equal variances
assumed -2.45 318 0.015 -0.2722
Rejected
Impact on Standardized practices
Equal variances
assumed -3.45 318 0.001 -0.3788
Rejected
Improvement in Individual
efficiency & effectiveness
Equal variances
assumed -2.26 318 0.024 -0.2769
Rejected
Improvement in Service Quality
Equal variances
assumed -2.82 318 0.005 -0.331
Rejected
Reduction in direct costs
Equal variances
assumed -1.72 318 0.087 -0.2
Accepted
Reduction in Indirect costs
Equal variances
assumed -2.39 318 0.017 -0.2604
Rejected
Ability to manage effective vendor
relationship
Equal variances
assumed -4.12 318 0 -0.4392
Rejected
Overall impact on the Organization
Equal variances
assumed -0.11 318 0.916 -0.0149
Accepted
Source: Questionnaire using IBMSPSS 20v.
The research hypotheses of overall satisfaction of employees in various perspectives have been
tested with independent t-test and the results of the same were furnished in the table 10.
H0: There is no significant difference in the overall satisfaction of employees in terms of
reduction in direct costs and overall impact on the organization between IT and Pharmacy
industries
H1: There is a significant difference in the overall satisfaction of employees in terms of
reduction in direct costs and overall impact on the organization between IT and Pharmacy
industries
From the table 10, it has been observed that the given t value and p-value for reduction in direct
costs and overall impact on the organization are; -1.72 and 0.087, -0.11 and 0.916 which is
more than 0.05 which means that the null hypotheses has been accepted and alternate
hypotheses is rejected. Therefore, it can be concluded that there is no significant difference in
the overall satisfaction of employees in terms of reduction in direct costs and overall impact on
the organization between two select industries.
H0: There is no significant difference in the overall satisfaction of employees in terms of Impact
of outsourcing on HR Function, Impact on Human capital, Impact on standardized practices,
Improvement in Individual efficiency & effectiveness, Improvement in Service Quality,
Reduction in Indirect costs, Ability to manage effective vendor relationship between IT and
Pharmacy industries
28
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
H1: There is a significant difference in the overall satisfaction of employees in terms of Impact
of outsourcing on HR function, impact on human capital, impact on standardized practices,
improvement in Individual efficiency & effectiveness, improvement in service quality, reduction
in indirect costs, ability to manage effective vendor relationship between IT and Pharmacy
industries
From the table 10, it has been observed that the given t value and p-value for Impact of
outsourcing on HR Function, impact on human capital, impact on standardized practices,
improvement in individual efficiency & effectiveness, improvement in service quality, Reduction
in indirect costs, ability to manage effective vendor relationship are; -3.2 and 0.002 , -2.45 and
0.015, -3.45 and 0.001, -2.26 and 0.024, -2.82 and 0.005, -2.39 and 0.017, -2.39 and 0.019, -4.12
and 0.000 which is less than 0.05 which means that the null hypotheses has been rejected and
alternate hypotheses is accepted. Therefore, it can be concluded that there is a significant
difference in the overall satisfaction of employees in terms of Impact of outsourcing on HR
function, impact on human capital, impact on standardized practices, improvement in individual
efficiency and effectiveness, improvement in service quality, reduction in indirect costs, ability
to manage effective vendor relationship between two select industries.
Level of Freedom You Have With Your HR Outsourcing Vendor: Freedom here refers to the
comfort levels of the employees in disclosing the information to the HR outsourcing service
provider. When the employees are asked to give the details of their experience, achievements and
accomplishments and other particulars for career decisions like promotions, transfers, increments
and other fringe benefits. The data is collected from the respondents of Pharma and IT
companies pertaining to the level of comfort they have with the HR outsourcing provider. The
collected data pertaining to the level of freedom of employees with HR outsourcing vendor has
been processed and furnished in the table 11.
Table-11
Showing Mean value with respect to level of freedom of employees with HR outsourcing vendor between IT
and Pharmacy
Variable
Company N Mean Std.
Deviation
Level of freedom for sharing personal & workplace issues Pharmacy 150 2.7733 1.05644
IT 170 3.3294 1.17557
Source: Questionnaire using IBMSPSS 20v.
29
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
From the table 11, it has been observed that the given mean value and SD for level of freedom of
employees with HR outsourcing vendor in the pharmacy industry is 2.7733 and 1.05644 at 5%
level of significance where as in IT industry it is 3.3294 and 1.17557 which means that there is a
good range of freedom for employees with HR outsourcing provider in IT industry when
compare to Pharmacy industry.
Table-12
Showing t and p values with respect to level of freedom of employees with HR outsourcing vendor between IT
and Pharmacy
t-test for Equality of Means
t df p-value MD
Level of freedom for sharing personal &
workplace issues Equal variances assumed -4.43 318 0 -0.5561
Source: Questionnaire using IBMSPSS 20v.
H0: There is no significant difference in the level of freedom of employees with HR outsourcing
vendor between IT and Pharmacy industries.
H1: There is a significant difference in the level of freedom of employees with HR outsourcing
vendor between IT and Pharmacy industries.
From the table 12, it has been observed that the given t value and p-value for level of freedom of
employees with HR outsourcing vendor are; -4.43 and 0.000 which is less than 0.05 which
means that the null hypotheses has been rejected and alternate hypotheses is accepted.
Therefore, it can be concluded that there is a significant difference in the level of freedom of
employees with HR outsourcing vendor between two select industries.
Level of involvement in the HR Outsourcing Function: Level of involvement refers to the
extent to which the HR outsourcing service provider permits the employees of the organization
to be a part of the HR outsourcing process. The HR outsourcing process can be a participative
process or Tell and sell process. Participative process refers to the situation where the HR service
provider and the employee are equally involved in the process. Tell and sell process refers to the
situation where the HR service provider just communicates the decision already taken by him
and the employee has no role in the outsourcing process.
The collected data pertaining to the level of freedom of employees with HR outsourcing vendor
has been processed and furnished in the table 13.
30
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
From the table 13, it has been observed that the given mean value and SD for level of
involvement of employees with HR outsourcing vendor in the pharmacy industry is 2.48 and
1.21909 at 5% level of significance where as in IT industry it is 3.3059 and 1.07718. Which
means that there is a greater involvement for employees with HR outsourcing provider in IT
industry when compare to Pharmacy industry.
Table-13
Showing Mean value with respect to level of involvement of employees with HR outsourcing vendor between
IT and Pharmacy
Variable
Company N Mean
Std.
Deviation
Level of involvement In Hr Outsourcing Functions Pharmacy 150 2.48 1.21909
IT 170 3.3059 1.07718
Source: Questionnaire using IBMSPSS 20v.
Table-14
Showing t and p values with respect to level of involvement of employees with HR outsourcing vendor
between IT and Pharmacy
t-test for Equality of Means
t df p-value MD
Level of involvement In Hr Outsourcing
Functions Equal variances assumed -6.43 318 0 -0.8259
Source: Questionnaire using IBMSPSS 20v.
H0: There is no significant difference in the level of involvement of employees with HR
outsourcing vendor between IT and Pharmacy industries.
H1: There is a significant difference in the level of involvement of employees with HR
outsourcing vendor between IT and Pharmacy industries.
From the table 14, it has been observed that the given t value and p-value for level of
involvement of employees with HR outsourcing vendor are; -6.43 and 0.000 which is less than
0.05 which means that the null hypotheses has been rejected and alternate hypotheses is
accepted. Therefore, it can be concluded that there is a significant difference in the level of
involvement of employees with HR outsourcing vendor between two select industries.
Conclusion
The focus of this research work is to understand the implications of HR outsourcing
services on employee’s satisfaction in selected pharmacy and IT companies. The analysis reveals
that there is significant difference in the satisfaction level of employee’s with respect to HR
outsourcing services; welfare activities, cost factors, HR function, human capital, standardized
31
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
procedures, individual efficiency, service quality, reduction of overheads, and improvement in
vendor relationship between select industries. The satisfaction level of software employees is
more in the outsourcing of welfare activities, level of freedom with vendor and level of
involvement in the outsourcing functions, is excelled over the employees of pharmacy
companies which was evidenced from their respective ‘t’, ‘p’ and ‘MD’ values. The satisfaction
level of pharmacy companies employees is more in the outsourcing areas of cost factors, HR
function, human capital, standardized procedures, individual efficiency, service quality,
reduction of overheads, improvement in vendor relationship over the employees of IT companies
which was evidenced from their respective ‘t’ , ‘p’ and ‘MD’ values.
Recommendations for improving HR outsourcing practices in pharmacy and it companies
understudy
1. There was a deep observation regarding the welfare activities which were outsourced by
the sixteen pharmacy companies under study, it was analyzed that the welfare activities
are not conducted as per statutory requirements mentioned in The Factories Act 1948,
The Industrial Disputes Act 1947 and some other relevant acts. Hence, Pharmacy
companies must insist the vendors about the 100 % compliance of welfare activities.
2. The IT companies must insist the vendors to take care of HR functions, human capital,
standardized procedures, individual efficiencies, service quality, and vendor
relationships.
3. The IT companies must conduct familiarization sessions to build healthy relations
between its employees and vendors.
4. For the Training and Development of the employees, HR managers must plan out specific
Management Development Programs (MDPs) and workshops to make them as human
capital for the IT companies.
5. The HR functions of IT companies which include pay rolls, benefits are not encouraging
neither pool up the skillful candidates nor broaden the talent pool to increase diversity.
Hence, the IT companies insist the vendors to take care of the employee’s satisfaction
with regards to HR functions.
Scope for further Research
This study explores the implications of the HR outsourcing on the employees’ satisfaction of two
specific sectors viz Pharmacy and IT in around the Hyderabad. It did not consider the other
sectors where the HR outsourcing happening significantly. Through this research work areas can
be identified for further research.
1. The present study evaluates the implications of HR outsourcing services on employees
satisfaction in one state. A comparative study including more states may be undertaken.
32
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
2. Further the impact of these HR outsourcing services may be studied on the employee
motivation level.
3. In order to gain a competitive advantage in the pharmacy and IT industry in the post
economic reform scenario these HR outsourcing services can be further, independently
studied in the global context to understand their individual impact on employee’s
Satisfaction.
References
1. Arbaugh, J.B. (2003), “Outsourcing Intensity, Strategy, and Growth in Entrepreneurial Firms” , Journal of
Enterprising Culture, Volume.11, No.2. 2. Baltes, B. B., Zhdanova, L. S., & Parker, C. P. (2009), Psychological climate: A comparison of organizational
and individual level referents, Volume: 62, issue: 5, pp. 669-700.
3. Boninelli, I., & Meyer, T. (2004), Building Human Capital: South African Perspectives. Knowledge Resources.
4. Cook, M. & Gildner, S (2006) Outsourcing Human Resource Functions: How, why, when and not to contract
for HR services; Society of Human Resource Management.
5. CR Kotari, (2008) ‘Research Methodology’, New Age International Publishers, New Delhi.
6. Emmah Nyarangi (2017), ‘Assessment of Role of HR Outsourcing on Employees’ Satisfaction on
Organizational Performance in Multinational Companies’, Journal of Human Resource and Leadership, Vol.1
No. 4.
7. Ferrer, Justine (2005) Employee Engagement: Is it Organizational Commitment Renamed? Working Paper.
Victoria University, Melbourne, Australia. 8. Kodwani, A.D. (2007), Human Resource Outsourcing: Issues and Challenges. The Journal of Nepalese
Business Studies. Vol. 4, Issue No. 1.
9. Mohsen Tavakol, Reg Dennick.” Making sense of Cronbach’s alpha” International Journal of Medical
Education. 2011.pp. 52-55.
10. Ramesh T. and Kumar Sanjay I. (2005), “Human Resource Management In The New Era”, Human Resource
Management, SEDME Vol. 32, No. 2, June, pp 31 -36.
11. Ruchi Goyal (2012) “A Study of HRPractices and Their Impact on Employees Job Satisfaction and
Organizational Commitment in Pharmaceuticals Industries” International Journal of Business Trends and
Technology, Volume.2, No.3,pp.23.
12. https://www.quora.com/How-many-software-employees-are-currently-in-Hyderabad.
33
----------------JGMO / Volume – I / Issue –XI / January – June, 2017 / ISSN 2277 3789----------------
THE SUCCESSFUL CASE STUDIES OF SELECT YOUNG ENTREPRENEURS
IN INDIA
P. Meghashyamala
Teacher, Mathrusri High School,Parkal
Abstract
No doubt, entrepreneur creates the employment and the sky is not the limit for
entrepreneurs. In this era, entrepreneurs are like backbone of the nation’s development. In a
recent research that India is about to reach its peak of 64 per cent by the year 2021with most of
the citizens lying in the age group of 25-30 years. Our country is now the third largest nation in
terms of startup to reach the top rank. There are bundle of opportunities to become an entrepreneur
to meet the society needs and simultaneously the organizational objectives. Therefore, in this
study many young entrepreneurs have been encouraged by Government of India and among
them I selected on five (5) successful case studies of young entrepreneurs.
Key words: Young Entrepreneurs, Opportunities, Organizational Objectives.
Introduction
With definition of entrepreneurship there are often linked topics like self-employment, small
business management, stages of development models and family business issues (Davidsson, 2005).
Usually when we hear a term “entrepreneurship”, in the first moment it leads us to term
“entrepreneur”, who is not only the creator and main actor of business ideas but usually also honored
with the greatest hopes of the development and future of the business. Term “entrepreneur” is derived
from the French verb "entreprendre" which means to undertake, to attempt, to try in hand, to contract
for; or, to adventure (Girard, 1962). To understand entrepreneurs, who should look at three areas:
namely how entrepreneurs act (i.e., what it is they do); what happens when entrepreneurs act (i.e.,
what are the outcomes of their actions); and why people choose to be entrepreneurs (i.e., what
motivates them to be entrepreneurs) (Douglas and Shepherd, 2002).
Review of literature
It provides new jobs to compensate for employment problems created by corporate
restructuring and downsizing; and to enhance economic flexibility and growth as said by Mueller
and Thomas, (2000).Considerable amount of literature is present where attempts have been made
to understand the critical factors responsible for entrepreneurial success. Studies on the
relationship between such factors and entrepreneurial success have been clearly explained in
many current researches of Makhbul and Hasun, 2011; Pun (2011); Rusu et al. (2012).
34
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
According to Casson, (2003); Fisher et al. (2014) entrepreneurial success is a construct that is not
defined properly, although there is a conformity that the society benefits from successful
entrepreneurship phenomenon, and hence it is important to understand the concept.
Entrepreneurs have been given a number of definitions by various authors due to their
research focus, such as the research aims, motivation, and stage of enterprise development
(Misra & Kumar, 2009; Nasution et al., 2011; Rusu et al., 2012). There are various reason why
entrepreneurs exist including economic freedom, personal development, family requirements,
and environmental pressures (Langevang et al., 2012; Perri & Chu, 2012), while age and the
sizes of firm are important factors (Coombs et al., 2009).
The development of the Slovak economy as well as countries that belong to Central and
Eastern Europe or even the entire European Union is below a tempo to ensure the desired growth
of living standards. The slow rate of economic growth is additionally accompanied by relatively
high unemployment rate, especially among young people (Eurostat, 2015). On this subject, there
has been prepared many scientific studies and a variety of solutions have been proposed. The
most important solution is the preparation young people for their future careers.
One possibility how to face the economic challenges in the European Union is to support
talented students, young entrepreneurs and start-ups. This support will help to create new jobs,
more competition in the market, the emergence of innovative products and solutions to a greater
growth. In addition to these macroeconomic benefits it can help young people to develop their
skills and personal qualities and abilities that will be useful for them throughout their lives.
Greater support for young entrepreneurs is promoted by the European Commission, whether it is
an internship for young entrepreneurs in the foreign company through Erasmus program or
COSME – support program for SMEs, or program for promoting science and innovation,
Horizon 2020 or the Enterprise Europe Network, which can help in finding finance, business
partners or acquire new technologies (Chrenek, 2014). There are projects and initiatives to help
young people like Youth Guarantee as new approach to tackling youth unemployment which
ensures that all young people under 25, whether registered with employment services or not, get
a good-quality, concrete offer within 4 months of them leaving formal education or becoming
unemployed. Or project I SEE YOU (Initiative to Foster Social Entrepreneurship Experience of
Youth) offers the opportunity for young unemployed people from seven European countries (also
35
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Slovakia) to get an insight into the creation of their own business, developing a social enterprise
and then apply this knowledge in their own community (European Commission, 2015).
Need of the study
India is the second largest population country in the world and there is a huge possibility to
meet tremendous various demands to satisfy the consumer needs because of their increased
income levels on a continuous basis.
Objectives
To study the opportunities for young entrepreneurs
To know the successful young entrepreneurs
Scope of the study
“No entrepreneur no development" entrepreneurship activity is an important to develop the
nation’s economy. An entrepreneur plays an important role, making the country to move from
creeping state to walking stage towards the development state. This entrepreneurship activity
fulfils the needs and desires of society simultaneously to meet their organizational objective.
Methodology
The present study is a case method over selected five entrepreneurs’ cases. As the study
largely depends on secondary data, the required data was collected from Websites, Text books,
Journals, etc.
Entrepreneurship: An Opportunity
Entrepreneurship gives young people an opportunity to work on their own skills and
interests and in the process, creating their own employment. Encouraging entrepreneurship in
young people is an important way of harnessing their enthusiasm, energy and ambition to
contribute to economic development. It is generally accepted that entrepreneurs “create jobs,
increase innovation, raise competition and are responsive to changing economic opportunities
and trends. Young entrepreneurs can also act as role models for their peers and, encourage
others.
According to the World Bank’s World Development Report 2013, around 600 million new
jobs will be required in the next 15 years to support a growing workforce. It is important to note
that in most emerging economies, 9 out of 10 jobs are created by the private sector, which is the
foundation of any thriving economy. In the coming years, developing countries must rebalance
36
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
their economies towards greater domestic consumption, import demand and higher value
business activity and hence, entrepreneurship is vital to the future of developing countries.
Government of India must help the entrepreneurs to achieve their full potential as they
hold the key to solving our youth unemployment problem. Their key concern areas are, “they
need training, need help with access to funding and need innovative funding, and need their
contribution to be recognized, need society to tolerate failure, need a streamlined tax and
regulatory system”. They also need a supportive culture in which their contribution is properly
recognized and their success is celebrated. Even if there are failures, it should be considered as a
valuable source of knowledge and learning.
We need a culture which is more inclusive, opening the door for everyone to come,
explore, and contribute. Of the young entrepreneurs surveyed in the EY G20 Entrepreneurship
Barometer, 84% believed that raising awareness of their role as job creators improves public
attitudes, and it can encourage others, from all walks of life.
In order to engage young people to choose entrepreneurship as a safe career choice, the
perception of entrepreneurs in the media is very important especially in the digital media. Media
should display high-profile programs showcasing entrepreneurs’ success stories more frequently
to motivate these youngsters as they are the driving force for any nation to grow. We need
flexible policy environments and funding to stimulate and build the framework of an
entrepreneurial ecosystem and more importantly, a ‘culture’ of interaction and collaboration.
Government can play a major role in bringing together stakeholders to create an ecosystem
which gives boost to entrepreneurship at the national, regional and local levels.
As per reports shared by Accenture, Young entrepreneurs are the driving force behind job
creation in the G20 countries like India, Australia, China, Indonesia, Japan, Saudi Arabia, United
Kingdom, and United States amongst others. Indeed, new Accenture research concludes that 10
million more youth jobs could be created in G20 countries if existing barriers to entrepreneurship
were lifted.
Entrepreneurship: an Innovation
In today’s competitive environment, Innovation is of utmost important to the long-term
success and survival of any business. In the absence of new ideas, an enterprise finds it difficult
to grow and eventually they do a persistent struggle to sustain in the business.
37
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
There are several reasons why innovation is critical to business success. Innovation helps to
discover what opportunities exist now or will appear in future. It will help you stay ahead of
your competitors. Innovation is not only about designing a new product or service but can also
be implemented on existing business practices to improve efficiency, cut down on waste and
increase profits. If a company doesn’t adapt to its changing environment by constant reinvention
of its products & processes, it will soon be surpassed by its competitors.
Innovation beyond being an engine of profitable growth for companies, it plays a pivotal
role in increasing the vitality of an industry and society by creating jobs and raising the standard
of living. Indeed, in Accenture’s survey of entrepreneurs across G20 countries, 83% said
innovation is vital to grow their business and create jobs.
Government Initiatives
Indian government recently launched “Startup-India” campaign with a scooping amount
of INR 2000 crores allotted to the same. Under the leadership of our honorable Prime Minister
Mr. Narendra Modi, the Indian government also plans to render the budding entrepreneurs
different benefits such as rendering legal advice for filling patents, low cost for filling patents fee
etc. All these have been provided to encourage the entrepreneurship spirit in India.
With government supporting startups at this scale, idea makers of India should really grab
this opportunity to mark their presence in this yet to be discovered sea of innovation and passion.
Just imagine if our government is so supportive and is encouraging startups and entrepreneurship
at this scale, how many more successful startups can emerge in the coming five years or so. Sky
is the limit.
Successful Case studies
Case 1: Name: King Siddharta , Age:22
Popular As: An Entrepreneur, Artist, Designer and Public Speaker.
The Journey: King Siddharta was creative since childhood. At an early age of 11, he used to
organize events at his locality. He identified with entrepreneurship and the passion kept growing.
During his 10th standard, he came up with the idea of an online magazine – Friends that brought
together like-minded people at one place. In no time, he developed interest in film making, and
he pursued this hobby by shooting videos along with his friends. By the time he reached the 11th
standard, he got well-acquainted with development and designing of websites. Presently, is an
author, speaker and a magazine publisher, and organizes ‘Createens’ – a conference that aims at
38
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
teaching young students about entrepreneurship and blogging. His e-magazine, Friends is
extremely popular among teens. Also, he has written a book, ‘Bhagvad Gita and The Law of
attraction’ that explains the connection between science and spirituality. In the year 2010, he was
listed among World’s Top 25 Young Entrepreneurs.
Case 2: Name: Ritesh Agarwal, Age: 21
Popular As: Founder and CEO of OYO Rooms
The Journey: Ritesh is known to be one of the youngest CEO in the Indian hotel industry,
besides; he is also the first resident Indian to be awarded with Thiel Fellowship. His dream of
getting into the entrepreneurial world started at the tender age of 17. After his 12th standard, he
enrolled in Indian School of Business and Finance, Delhi, but after a little while, he dropped out
of the college to start his own venture. He formed Oravel Stays at the age of 18, which
eventually led to the creation of OYO Rooms, the largest network of Indian branded hotels.
Today, his business operates in more than 100 Indian cities and for the same; he has been
presented numerous awards, one out of which is the ‘Business World Young Entrepreneur
Award’. He is often seen attending various institutes and entrepreneurial conferences as a guest
speaker.
Case: 3 Name: Arjun Rai, Age: 22
Popular As: COO of Odyssey Ads
The Journey: When kids’ lives center on toys and mischief at 7, this boy started showcasing his
entrepreneur skills. He started his garage sale, and started selling the gears that he found around
his house. Later, he set up his shop where he sold wedding leftover wildflower necklaces. By
2010, he became the COO of an online advertising company, and later he set up his own venture,
odyssey Ads.
Case: 4 Name: Farrhad Acidwalla, Age: 21
Popular As: CEO of Rockstah Media
The Journey: At an early age of 16 years, he borrowed $10 from his father and bought an
internet domain name. Using this, he built a web community dedicated to aero-modeling and
aviation. Once it became successful, he sold the community for higher returns. Today, he is the
CEO of Rockstah Media, an advertising, branding and marketing company. Also, he has been
listed as ‘The Most promising young Indian entrepreneurs of 2012′ by India TV.
39
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Case: 5 Name: Sabirul Islam, Age: 25
Popular As: Entrepreneur, motivational speaker, author
The Journey: He spent his early years in a crime-ridden borough of London. His cousin let him
knew what entrepreneurship was all about, when at an early age of 13, he offered him a job. Few
weeks later, Sabirul’s cousin was fired, and this was when he decided to run the operations all by
himself. When he was all of 14, he along with 6 of his friends, started a website design company
– Veyron Technology, and earned around $1000 within the first 2 weeks of the company’s
inception. By the time he was 17, he published his first book, ‘The World at Your Feet’, which
got sold out at a rapid pace. Next, he launched ‘Teen-Trepreneur’, a board game, started his own
publishing company and now attends a number of events as an eminent guest speaker.
For some people a 9-to-5 job is satisfying, while some realize that the only way they can
become happy is by being their own boss. However, true potential cannot be bound by age, and
these young entrepreneurs have certainly proved the same.
Conclusion
Entrepreneurship is an activity. It is through entrepreneurship we can put new business
ideas into practice. In doing so, it creates jobs that facilitate personal development and economic
growth. It’s a worthy pursuit to consider pass it to the next generation. Innovation ecosystem
plays a key role as it supports and helps entrepreneurs to translate their ideas into marketable
products and services fostered by business-friendly government policies which bring these
innovators profit and success. Moreover, it is the responsibility of entrepreneurs to sustain the
atmosphere to future generation also while producing the product and rendering the services.
References
1. Entrepreneurship Development, Prof. A. Shankaraiah, Rudra saibaba and ponagati, Kalyan publishers.
2. Entrepreneurship; Robart, Michael and Dean A shepherd, 6th edition; Mc Graw Hill.
3. https://in.thehackerstreet.com/india-needs-successful-entrepreneurs
4. https://www.researchgate.net/publication/265397271_Entrepreneurship_and_entrepreneur_A_review_of_li
terature_concepts
5. http://ac.els-cdn.com/S2212567115016627/1-s2.0-S2212567115016627-main.pdf?_tid=6c917f92-9b52-
11e7-8dfa-00000aab0f27&acdnat=1505616577_3f1bc5bbb3f256114fc31f74a2694851
6. http://www.youngindians.net/entrepreneurship_n_innovation.php
40
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
CAPITAL MAREKT FINANCING FOR SMEs - A STUDY
(With specific reference to SME Platform of BSE)
Pardhasaradhi Madasu
Associate Professor (Finance Area), Siva Sivani Institute of Management – Kompally, Hyderabad Email – [email protected]
Abstract
The global financial crisis of 2008 has unpacked both strengths and weaknesses of the
financial markets all over the world. In a way, the capital market financing route for SMEs got
most awaited focus only after the said global crisis. Lack of access to capital market financing is
considered as one of the major impediment for growth of SMEs. Near to 30 economies are
actively promoting separate platforms/boards/exchanges for SMEs. In 2012, India has also taken
a major step of promoting SME platforms at both the leading stock markets i.e. BSE and NSE.
As of now BSE, is the clear market leader with respect to attracting SMEs for both listing and
trading. The stock markets of advanced economies such as Canada (TSX Venture) could be
considered as World’s leading exchange for growth stage/SME companies because 2,183
companies have been listed on this exchange.BSE Emerge is performing well and would be soon
reaching (by end of 2017) the milestone of 200 listings on its board. In this backdrop the present
paper assesses the progress of SME platforms in India.
Key Words: SMEs, Capital Market Financing, BSE, NSE and Emerge Platform
Introduction
The role of SMEs1 is no doubt very crucial to the well-being of the nation as a whole.
From a very long period the SMEs are providing much needed support by providing employment
to much needed masses as well as by contributing to growth Gross Domestic Product (GDP) of
the nation2. SMEs or MSMEs have become the integral part of the manufacturing sector in both
developed and emerging economies.Even when looked from the framework of fostering
entrepreneurship, the said sector has provided favorable results. SMEs account for nine out of ten
businesses globally. They provide more than 60% of overall employment world-wide and
1There is no single definition of SMEs that can be applied globally. In general countries categorize companies based
on a combination of factors, such as the number of employees, their turnover and/or the size of their balance sheet.
The thresholds to define each category are highly dependent on the size of the economy and thus vary greatly from
country to country. 2 It is an acknowledged fact that the MSME sector can help realize the target of the proposed National Manufacturing Policy of raising the share of the manufacturing sector in GDP from 16% at present to 25% by the
end of 2022 (CII - PWC, 2013).
41
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
roughly 80% of jobs in the developed world. SMEs contribute approximately 50% of global
Gross Value Added (GVA), and an even larger percentage in developed countries (Calvey,
Peterhoff, & Romeo, 2014).In this backdrop, policy makers all around the World are involved in
encouraging SMEs/MSMEs. The recently launched ‘Make in India’ initiative is one classic
instance where the Government of an emerging economy wants to promote SMEs in general and
manufacturing sector in specific.
Even though the need and importance of SMEs is realized by all the stakeholders, a lot is
still pending to be done with respect to the obstacles that are hindering the growth of SME. The
SMEs face multi-facet problems such as lack of required technology, non-availability of skilled
manpower and above all an organized channel for procuring funds throughout the growth stage
of SMEs. Access to finance is widely recognized as one of the main impediments for growth and
development of the small and medium enterprises (Sestanovic, 2015). The financial needs and
the financial options available to SMEs changes depending on the lifecycle. The level and the
type of demand for financing throughout an SME´s life cycle depends on its stage of growth, as
each stage requires a different financing strategy(OICU - IOSCO, 2015).
The SMEs are now-a-days getting more capital from alternative sources rather than
purely depending on promoter’s contribution and bank lending. The change in the sources of
capital formation for SMEs can be one-way attributed to the Global Financial Crisis of 2008
which made banks cautious with respect to lending to SMEs. The crisis of 2008 has double
shock for SMEs and Entrepreneurs: the first one being the drastic drop in demand for goods and
services and the second shock being the tightening credit terms which have affected cash flows
of SMEs and Entrepreneurs. Governments are responding generally by three types of measures
aimed at: i) supporting sales and preventing depletion of SMEs’ working capital; ii) enhancing
SME’s access to liquidity; iii) helping SMEs to maintain their investment level. The present
report brings to the attention of governments recommendations to tackle the long-standing
deficiencies in the SME financial environment, as well as to prepare SMEs and entrepreneurs for
a phase of innovation-led growth (OECD, 2009).
The role SMEs play in the economic development of any nation makes it a relevant
subject for conducting focused examination from all the stakeholders especially the
academicians for gaining more insights. Keeping the saidessence in mind, the present paper is
conceptualized to appraise the progress that Indian financial markets has made with respect to
42
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
the capital market financing solutions available to SMEs. To be more specific, the study focuses
on the evolution of capital market route for listing and trading of SME stocks at BSE.
Review of Literature
The SMEs would not prosper only on bank financing but require an alternative financing.
While bank financing will continue to be crucial for the SME sector, there is a broad concern that
credit constraints will simply become “the new normal” for SMEs and entrepreneurs. It is
therefore necessary to broaden the range of financing instruments available to SMEs and
entrepreneurs, in order to enable them to continue to play their role in investment, growth,
innovation and employment (OECD, 2015). Recent years have seen the emergence of numerous
SMEs exchanges or listing programs, and they are playing an increasingly significant role in
investment markets, not only in North America and Western Europe but also in many developing
economies of the world. More than 50 SME alternative markets, stock exchanges, boards of
trade, lower tier exchanges are thriving across the world (MCX-SX, 2006).
The importance of SME platform or exchange was felt in Indian context also and many
initiatives were taken in this regard. In a bid to address the issue of alternative funding for SMEs,
the Prime Minister’s Task Force recommended the establishment of a dedicated Stock Exchange/
Platform for SMEs in January 2010. The Bombay Stock Exchange (BSE) and the National Stock
Exchange (NSE) launched their SME trading platform in March 2012. To be eligible for listing,
an SME must have paid up capital of Rs. 10 crore. Its paid up capital post issue must not exceed
Rs. 25 crore. If it goes beyond the Rs 25 crore limits, there will be a compulsory transfer of the
SME to the main exchange (Bang, 2012). By the time BSE and NSE has launched dedicated
exchanges for SMEs, India has experimented with the launch of OTCEI in 1992.
Research Gap
Raising finance is a critical and complex job both for large companies as well as small
and medium sized companies. Relatively SMEs face lot of hardship when trying to get funds
during the growth stage of their life-cycle. Due to the studies conducted by many financial
market regulators, it was well documented fact that providing access to the capital market route
of financing would solve the fund raising problems of SMEs. All that was wanted by the
governments and regulators was that the SMEs should be able to contribute more to the GDP and
employment of any nation. Some emerged economies have started creating separate platforms
for small and medium firms from the mid-1990s itself. However, the stimulus for a well-
43
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
regulated SME exchanges or platforms has come from the beginning of year 2000. In India, from
2005 onwards the idea has gained attention of the policy makers and by 2012 the idea has
materialized. Even after roughly five years of full-fledged operations, the SME platforms did not
get the required research attention as it deserves. Lot of academic research is being still focused
on the main boards of the stock exchanges. For giving a real push to the SME sector as well as
the ‘Make in India’ initiative it would be worthwhile to indulge in engrossed exploration of the
performance of these SME platforms. The present paper is an attempt towards this aim.
Methodology
The paper is by nature a descriptive study and tries to describe the existing status of the
performance of SME platforms in India. The study draws the data from the secondary sources
such as the official website of SEBI, BSE and NSE. For the purpose of the study the data has
been collected for the period of March 2012 to May 2017. The reason for choosing this time
frame is self-explanatory i.e. the SME platforms started functioning in India from March 2012
onwards. The data collected includes variables such as BSESME IPO Index values, No. of
Listings (year-wise), No. of Companies that have migrated to main-board etc... Simple statistical
tools such as averages, growth-rates and percentages have been used to analyze the data and get
some meaningful interpretations.
Importance of Capital Market Financing for SMEs
Small and medium enterprises (SMEs) have a major role in contributing towards long-
term economic growth and employment. However, SMEs often face limited access to financing
due in part to the relatively higher risks associated with investing in them. Therefore, it has
become crucial to examine possible alternative financing channels for SMEs. Raising funds by
way of an organized, transparent, orderly functioning and reliable capital market could provide
an important alternative source of finance for SMEs.(OICU - IOSCO, 2015). SMEs have been
forced to alter their funding mix as the cost of finance has risen while economic conditions have
remained poor. SMEs predominantly use short-term funding options including overdrafts, lines
of credit and bank loans. Such sources can be valuable in the start-up stage but they do not
provide the long-term financing required as companies mature or seek growth. Capital markets
are the obvious alternative to bank lending (Calvey, Peterhoff, & Romeo, 2014).
44
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Relatively, SMEs in emerging market economies (EMEs) 3 when compared to Advance
Economies (AEs) face further problem in assessing finance from capital markets. Many reports
and surveys have examined the situation and stated that the traditional funding sources such as
bank lending are not sufficient to fuel the growth of SMEs4 . The usage of capital market
instruments was recommended for funding the growth of SMEs. It was felt that providing SMEs
the access to capital market platforms would also attract institutional investors towards funding
of SMEs5. As it is common to see that institutional investors are not only interested in higher
returns, lower risk but are also interested in liquidity of their investments. Capital market
instruments provide the desired liquidity to the investors. It was found that there are two
potential ways in which capital markets can help SME financing: (i) by providing SMEs access
to capital via issuances in the market, and (ii) by providing a refinancing facility to SME lenders.
Both banks and capital markets have a fundamental role to play in providing access to finance
and supporting growth(WBG, IMF and OECD, 2015).
The ever increasing funding gap for SMEs have made many financial regulators around
the world put their best foot forward to examine the challenges the SMEs are facing while
obtaining finance from organized channels6. In the process, the concept of capital market funding
for SMEs gained lot of prominence because of various factors such as transparency and
distribution of investment risk over large investors etc. Recognizing the crucial role of capital
markets in this regard, the then Emerging Markets Committee, (known as the Growth and
Emerging Markets (GEM) Committee since 2013) of the International Organization of Securities
Commissions (IOSCO)7 established a Task Force in 2013 to examine SMEs’ access to capital
3 Here EMEs include both emerging and developed economies. 4 Despite showing a robust growth rate of over 10% over the last 5 years, the MSME sector is beset with
operational problems due to size and nature of business. In 2010, the Prime Minister of India appointed a
task force set up under the chairmanship of the Principal Secretary, to consider various issues raised by MSME associations, discuss with the stakeholders and chalk out an action agenda. The key issues were
identified by the task force, and subsequently taken up by the Planning Commission in the 12th plan (CII
- PWC, 2013). 5 Institutional investors: pension funds, insurance companies, and collective investment schemes (CIS). 6 OECD Working Party on SMEs (WPSMEE) has always been one of the leading international bodies in
conducting research with respect to issues related to SMEs and Entrepreneurship. In June 2004, the theme
of the research was Financing Innovative SMEs in a Global Economy and in March 2006, the theme was Better Financing for Entrepreneurship and SME Growth. The WPSMEE has been pursuing research in
this area and carried out the work in 2007 -2008 on Financing Innovative and High Growth SMEs. 7The International Organization of Securities Commissions (IOSCO) is the international body that brings together the world's securities regulators and is recognized as the global standard setter for the securities
45
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
markets, and explore possible measures to develop and enhance regulations to improve their
access to capital market-based financing (OICU - IOSCO, 2015).
SME Exchanges and Platforms
In simple terms, the SME exchanges or SME platforms give access to the SMEs to obtain
funds through ‘Equity’ route. In a way, this equity route helps the SMEs to reduce their huge
dependency on the debt and the related financial risk. The other side of the story viz. for the
investors, the SME exchanges or platforms provides a route to invest in highly potential small
companies which have high probability for growth. If separate exchanges and platforms are
provided to the SMEs, the investors would also find it safer to invest due to the liquidity that is
available due to the trading facility available.
Capital markets solutions available to SMEs could be divided into three broad categories
such as a) SME Equity Platforms, b) SME Debt Platforms and c) Alternative Listing Venues
(Without trading). SME-focused equity platforms have been established across the globe,
offering an alternative to main listing boards on national stock exchanges. Equity platforms
provide SMEs with the opportunity to go in for IPO once they have become well-established.
SME equity platforms are best suited to the largest SMEs (i.e. the medium segment) given the
initial cost and ongoing listing requirements most platforms demand. Apart from the equity
platforms, the debt platforms for the SMEs are also gaining importance and are suited for larger
or medium SMEs. Further, alternative listing venues have emerged that allow non-banks to lend
directly to corporates and individuals. Such venues are suitable for SMEs in their early
development stage and most support the smaller SMEs8. The growth and stable functioning of
SME exchanges and platforms would be helping other fund suppliers (such as VCs) to find an
exit route for their investments.
Exchanges can do more for SMEs than providing a venue for the trading of their
securities. They can also connect SMEs to different types of investors (such as angel investors,
VC and private equity) and help them gain access to ancillary professional services. These
services could include stakeholder coordination and management, due diligence and prospectus
sector. IOSCO develops implements and promotes adherence to internationally recognized standards for
securities regulation. It works intensively with the G20 and the Financial Stability Board (FSB) on the global regulatory reform agenda. 8 Examples of these Alternative Listing Venues are Peer-to-Peer (P2P), Peer-to-Business (P2B), Business-
to-Peer (B2P) and Business-to-Business (B2B) lending.
46
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
writing, investment case development, IPO roadshow support and financial PR and marketing
services. The exchange can also connect companies to professional services such as accountants
and legal advisors. This would prove valuable not only to the SMEs but, by increasing the
quality of their financial reporting, would be valuable to investors considering SMEs (Calvey,
Peterhoff, & Romeo, 2014).
Global Scenario
The trading platforms or venues around the world are referred by various names such as:
Alternate Investment Markets (AIMs) or Growth Enterprises Market (GEMs) or SME Boards.
Stock exchanges in many economies have preferred to create separate platforms for SME stocks
instead of creating dedicated stock markets for SME stock listing and trading.The well-known
markets for SMEs are AIM (Alternate Investment Market) in UK, NSX Alternative Exchange of
Australia, TSX Ventures in Canada, GEM (Growth Enterprise Market) in Hong
Kong, MOTHERS (Market of the high-growth and emerging stocks) in Japan, Catalist in
Singapore and the latest initiative in China is ChiNext.
The list of top 10 SME markets is presented in Table 1.For appreciating the difference
between dedicated SME exchanges versus platforms it would be resourceful if operations of
AIM or MOTHERS are compared to GEM. Unlike AIM or MOTHERS, GEM is a separate
dedicated stock exchange for SMEs. GEM functions on the philosophy of ‘buyers beware’ and
‘let the market decide’ based on a strong disclosure regime. The rules and requirements are
designed to foster a culture of self-compliance by the listed issuers in the discharge of their
responsibilities (Jain, Shukla, & Singh, 2013)
The SME markets or platforms vary greatly in terms of size of operations, number of
listed companies and market capitalization. Globally more than 40 exchanges provide dedicated
equity market offerings with differentiated admission requirements. These markets range in size
from just one listed company to over 2,000 listed companies with an average market
capitalization from as low as US$4 million to over US$1.5 billion. The number of companies
listed on these dedicated markets has grown from less than 5,000 in 2002 to nearly 9,000 in 2015
representing a 91.5% increase in 12 years. Over the same period, the number of companies listed
on main boards or exchanges without dedicated SME markets grew by 13.5% (WFE, 2016). The
vast difference in parameters relating to the SME platforms or exchanges could be due to the
non-existence of a universally accepted definition of SMEs. SMEs in EMEs are generally
47
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
smaller than those in advanced countries and not all alternative markets necessarily have the
same objectives. It also highlights the fact that most exchanges do not prevent a company from
listing on a dedicated SME market even if they meet the main board listings requirements, nor in
most instances do they compel or (or even allow) ‘graduation’ to the main board. Thus, in some
jurisdictions, companies of significant size are listed on the SME Exchange(WFE, 2015).
Table I: Top 10 Global SME Stock Markets (As at end of 2015)
Rank Exchange Name of the Stock
Market Country
*Listed
Companies
**Domestic
Market Cap.
1 TMX Group Inc. TSX Venture Canada 2183 16896
2 Korea Exchange Kosdaq Korea 1152 171891
3 LSE Group AIM London 1044 108342
4 Japan Exch. Group,
Inc. JASDAQ Japan 792 69172
5 Shenzhen Stock Exch. SME Board China 776 1601998
6 Shenzhen Stock
Exchange ChiNext China 492 861735
7 Intercontinental Exch.
Inc. | NYSE NYSE MKT USA 262 23639
8 Hong Kong Exchanges
and Clearing
Growth Enterprise
Market Hong Kong 222 33312
9 Japan Exchange
Group, Inc. Mothers Japan 221 27139
10 Nasdaq Nordic
Exchange First North Europe 216 9796
* Number of Listed Companies includes Domestic and Foreign Companies.
** Market Cap. Is in USD Millions.
Source: WFE Annual Statistics for Alternative & SME Markets 2016.
SME Platforms in India
The need for having a separate exchange / platform for SMEs was also discussed during
the 32nd Annual Conference of IOSCO held in April 2007 in Mumbai and it was felt that the
same would be necessary for the focused development of the SME sector. In fact, the need for an
alternative stock exchange for SMEs has been so acutely felt in the countries that the
International Organization of Securities Commissions (IOSCO) has identified promotion of such
exchanges as one of the areas for mutual cooperation. In this backdrop the NSE has conducted a
48
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
study during 2012 and came out with positive response for starting dedicated platforms for SMEs
in India.
The big leap towards the SME platforms occurred in the year 2012 when both BSE
(BSESME) and NSE (EMERGE) have started their operations of listing and trading SME stocks.
It was considered a landmark decision for boosting the SME sector. Both the platforms were
launched after many small and medium firms have shown lot of interest for capital market route
of funding. The progress of BSE-SME as at end of September 2017 is depicted in Table 1.
Table II: Status of Listing and Trading at BSE-SME as at 30th September 2017
Particulars Number
No. of Companies Listed on SME 197
Mkt Cap of Cos. Listed on SME (Rs.Cr.) 17,403.34
Total Amount of Money Raised (Rs. Cr.) 1,545.75
No. of Companies Migrated to Main Board 33
No. of Companies Listed 164
No. of Companies Suspended 4
No. of Companies Eligible for Trading 160
No. of Companies Traded 69 Mkt Cap of BSE SME Listed Cos. (Rs.Cr.) 10,594.42#
# Crossed 10,000 mark on 12th December 2014 (82 listed and 28 Actively Traded)
Source: BSE-SME Database
The point that requires specific mention is that, the initiative of starting separate platforms for
SMEs at BSE and NSE may be historical in its own way but few unsuccessful attempts were
already made before March 2012. Efforts in the form of OTC Exchange of India (OTCEI) which
was set up in 19909 and the IndoNext platform of BSE which was launched in 2005 are two good
examples in this regard10. The launch of separate platforms at BSE and NSE has drawn lot from
experiments of OTCEI and IndoNext. The main reason for the not-so-successful attempt in the
form of OTCEI was lack of liquidity and trading volumes11. Both BSE and NSE have from the
beginning wanted to tackle the major issue of low liquidity and lack of trading volumes. To
9 OTCEI was incorporated as Public Limited Company under section 25 of Companies Act, 1956 and was recognized as a stock exchange under the provisions of section 4 of the Securities Contracts (Regulation)
Act, 1956. 10IndoNext was an alternate national platform for SMEs jointly promoted by BSE and Federation of
Indian Stock Exchanges (FISE). The platform was meant for raising equity and debt by old and new SMEs. The SMEs listed at Regional Stock Exchanges (RSEs) were allowed to raise fresh capital along
with new SMEs. IndoNext was supported by 20 RSEs. Lot of thought process went into framing
eligibility norms for trading under IndoNext, however, the platform was not able to pick-up. 11 OTCEI got approval from SEBI to exit from operations on 10th December 2015.
49
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
achieve this end of creating more liquidity in the SME platforms, market-making concept was
well deliberated12.
Data Analysis and Findings
Capital Market financing being on of the most favored route for long-term financing of
SMEs has got a big boost from EMERGE platforms both at BSE & NSE. Table 3 details te
progress made by BSE-SME platform from the inception. The table clearly reveals that the
number of listings and the amount raised have seen considerable increase from 2012 to 2017
(CAGR of 30% in listed companies and CAGR of 35% in amount raised). The average issue
price and the issue size have moved in opposite direction. As the premiums on the issues are
moving northward, the issue sizes have moved southward 13 . The main reason for higher
premiums for SME-IPOs is that many institutional investors of national repute have started to
look at SME-IPOs as high return earners and the SMEs are treated as ‘Growth Companies.’
Many of the SME-IPOs have been oversubscribed.
Table II reveals that 33 companies have migrated from SME Board to Main Board of BSE.
Majority of the companies that have migrated to main board are performing well. Many of these
migrated companies have given better returns of 3-200% to the investors as compared to 1-131%
while listed on SME platform. The major reason for better performance of migrated companies
on main board is the increase in retail participation14.The interest of Banks and Mutual Funds
also has been positive towards the SME-IPOs15.
The performance of SME platform at BSE could also be assessed by comparative analysis of
SME-IPO index with board market IPO index of BSE. Companies that are listed at BSE-SME
board represent 15 states and 20 major sectors with a total MCap. ofRs. 17,268 Crores.
12 Market-makers provide liquidity to the stocks traded at SME platforms. It is a known fact that investors do not intend to invest in those stocks which have thin trading volumes and this is where the role of
market-maker gains importance. SEBI has compulsorily mandated market making for all scripts listed and
traded on the SME exchange to provide liquidity to the Scripts. Market-makers are the registered
member’s brokers of the stock exchange. 13 Average SME IPO size has gone up to INR 11 Crores in 2017 when compared to INR 6 Crores in 2016. 14 Business Standard newspaper dated 22nd August 2016, article titled “SME stock performance improved
after migration to main board.” 15 Reliance MF is the first MF that started to invest in SME-IPOs from October 2016 onwards.
50
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Table – III: Year-Wise Data on Public Issues at BSE-Emerge
Year No. of
SME
IPOs
Total
Capital
Raised*
Average
Capital
Raised*
Average
Issue
Size**
Average
Issue Price
Average
Premium
Max.
Premium
2012 12 833 69.40 36.94 20.36 20.36 30
2013 14 1320 94.28 36.57 26.86 16.86 30
2014 38 2603 68.49 31.25 28.87 18.87 115
2015 37 2285 61.76 22.20 28.58 18.58 110
2016 43 3754 87.30 22.83 43.58 33.58 210
2017 44 3695 83.98 21.51 47.00 36.80 350
CAGR 30% 35% NA NA NA NA NA
* Millions of Rupees: ** Lakhs of Shares issued
Source:Compiled from SME IPO Data of BSE Emerge
The S&P BSE SME IPO Index was launched in August 2012 with a base of 100, is today at a
close of 1,490, an astounding return of 1,390 per cent and it has outperformed the Benchmark
S&P BSE Sensex more than 13 times in the period of 2012 – 2017. BSE-SEM-IPO index
comprises of 45 stocks with a mean market capitalization is Rs41.75 crore while the largest
market capitalization is Rs184.89 crore. Table IV depicts the comparative analysis of IPO
indices of BSE. Table IV has been split into three segments.
Table IV (a) gives board details of the market capitalization of both BSE main board IPO index
and SME board index. Table IV (b) depicts the returns generated by both the IPO indices and in
majority of cases BSE-SME IPO index has performed better than its counterpart. Over a five
year period the SME IPO index as generated three times of the returns when compared to its
counterpart. Table IV(c) reveals the details of the market ratios for the two IPO indices.
Generally, a low P/E ratio indicates under-valuation of the indices or stocks. A close observation
of the market ratio indicate that as of now the SME-IPO index is undervalued but shows
potential to grow.
51
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Table IV: Comparative Analysis of IPO Indices at BSE
Data as at end of October, 2017
Particulars S&P BSE-SME IPO S&P BSE IPO
Launch Date 14-Dec-12 29-Aug-09
Number of Constituents 45 28
IV (a)- Constituent Mkt. Cap. (INR Crore)
Mean Total Market Cap. 37.42 10713.36
Largest Total Market Cap. 175.63 67251.29
Smallest Total Market Cap. 3.00 495.78
Median Total Market Cap. 27.58 4302.86
Weight Largest Constituent (%) 10.10 17.20
Weight Top 10 Constituents (%) 51.80 79.70
Index Level 1475.52 4619.26
IV (b) - Returns (%) - Part B
1 Month -3.05 -2.72
3 Month 5.33 1.64
YTD - Year-to-Date 37.79 38.06
I Year (Annualized) 48.36 33.10
3 Year (Annualized) 18.00 20.91
5 Year (Annualized) 70.24 23.23
IV (c)- Market Ratios - Part C
P/E (Trailing) 28.78 42.86
Price-to-Book 2.99 5.98
Price-to-Sales 0.63 3.27
Price-to-Cash flow 12.36 -44.41
Dividend Yield 0.19% 0.62%
Source: Asia India Private Limited
Chart of Co-Movement of BSE-IPO indices (along with linear trend lines) show a positive
growth in both the IPO indices. In last one year the in SME index was 52% when compared main
board IPO index which was 42%. When compared to main board IPO index, the SME-IPO index
reveals consistency during the study period. The higher R2for both indices indicates that the past
trend is very strong for projecting the future trends.
52
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Conclusion
The present paper is aimed analyzing the progress of SME platform of BSE. The study
has been initiated to understand the progress of SMEs with respect to equity financing through
sme platforms. Both BSE and NSE has introduced the SME equity trading at the same time but
the BSE is the clear leader in this segment of capital market. The progress till-date and the
expected future growth of capital market route of financing SMEs is very strong in Indian
context. Many SMEs have got benefited from the SME platforms of NSE and BSE, the proof of
SMEs getting benefited could be found from the SMEs migration to main-board. The topic of
this nature would require future focused research both from academic point of view and also
from practicing manager’s point of view. The present paper is preliminary analysis of the current
state of progress of SME platforms.
References
1. Bang, N. P. (2012). SME Exchanges: The Need of the Hour. ISB, Insight
2. Calvey, P., Peterhoff, D., & Romeo, J. (2014). Towards Better Capital Markets Solutions for SME Financing. Oliver Wyman - Financial
Services.
3. CII - PWC. (2013). Financing for MSMEs - The Eastside Story. PricewaterhouseCoopers Private Limited (PwCPL).
4. Jain, R. k., Shukla, A. K., & Singh, K. (2013). SME Financing Through IPOs - An Overview. RBI. Reserve Bank of India.
5. OECD. (2009). The Impact of the Global Crisis on SME and Entrepreneurship Financing and Pollicy Responses. Centre for
Entrepreneurship, SMEs and Local Development - OECD.
6. OECD. (2015). New Approaches to SME and Entrepreneurship Financing: Broadening the Range of Instruments .
7. OICU - IOSCO. (2015). SME Financing Through Capital Markets. International Organization of Securities Commissions.
8. Sarthi Capital Advisors Private Limited. (August, 2014). SME Exchanges Worldwide. SME - Capital Market Watch.
9. SEBI. (2013). Listing of Small and Medicum Enterprises (SMEs) and Start-Up Companies on SME Platform witout making an IPO.
10. Sestanovic, A. (2015). SME Stock Exchanges - Should They Have a Greater Role? Zagreb, Croatia: EFFECTUS - College of Finance and
Law.
11. SME_MCX-SX_White_Paper. (n.d.). Financial and Risk Management Challenges of SMEs. MCX -SX.
12. Thankur, V. S. (2016). BSE SME EXCHANGE and NSE EMERGE Exchange Platforms in India and a Comparisonn Between Them.
IJLTEMAS.
13. WBG, IMF and OECD. (2015). Capital Market Instrumetns to Mobilize Institutional Investors to Infrastructure and SME Financing in
Emrging Market Economies. WBG, IMF and OECD.
14. WFE. (2015). WFE Report on SME Exchangfes. WFE - In Collaboration with World Bank Group's Finance and Markets Global Practice.
15. WFE. (2016). SME Financing and Equity Markets. World Federation of Exchanges.
16. World Bank Group. (2015). SME Exchanges in Emerging Market Economies - A Stocktaking of Development Practices. Finance and
Markets Global Practice Group.
y = 0.6386x - 26094R² = 0.8081
y = 1.699x - 68804R² = 0.8819
0
5000
10000
16-Aug-12 16-Aug-13 16-Aug-14 16-Aug-15 16-Aug-16 16-Aug-17
Chart - Co-Movement of SME IPO Indices
BSE SME IPO INDEX BSE IPO
Linear (BSE SME IPO INDEX ) Linear (BSE IPO )
53
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
IMPACT OF MOBILE ADVERTISING ON CONSUMER BUYING INTENTIONS
Dr. I.Anand Pawar
Associate Professor & Head
Dept. of Commerce, Dr.B.R.Ambedkar Open University, Hyderabad-500033 (TS)
Email: [email protected] Mob: 9885848800
Abstract
Consumer buying intentions are changing very fast and marketing companies also
catching with the direct marketing. With the trend toward direct, one‐to‐one marketing, more
attention is being paid to the use of the mobile channel as a means of effectively reaching
(advertising) to consumers. Indian mobile market is one of the fastest growing markets due to the
increase in the number of middle-income consumers. Marketing organizations are trying to reach
millions of users with low cost. Thus, research on mobile advertising would impact greatly on
the way business is done. This study examines the impact of mobile advertising on consumer
buying intentions in Hyderabad city. Mobile advertising applications which have been
introduced or about to be launched in the near future when companies understand the importance
of mobile advertising and invest more in developing and adopting mobile marketing
applications. To make it more precise, this study aims to explore the relationship between the
mobile advertising and attributes of customers who use mobile phone and their behavioural
intentions. Also find out the customer reactions towards mobile advertisements A sample of 109
valid responses was analyzed from the mobile users in Hyderabad city. The results revealed that
there exists a positive relationship between the attributes of customers using mobile phones and
their behavioural intentions i.e., there is an impact of mobile advertising on consumer buying
intentions. Ultimately, earning attention is the key to mobile advertising success.
Keywords: Attributes of mobile customers, behavioural intention, mobile advertising.
Introduction
Mobile marketing has been considered to be a modern form of marketing and provided
new opportunities for companies to do businesses. Marketing activities conducted via mobile
devices enable advertisers to directly communicate with potential customers in a fast speed and
regardless the geographical location. Mobile advertising has been recently referred as one of the
best means to cut through the clutter and interact directly with the consumer. Hence, with the
trend toward direct, one to one marketing, more attention is being paid to the use of the mobile
channel as a means of effectively advertising to consumers. Indian mobile market is one of the
fastest growing markets due to the increase in the number of middle-income consumers, and is
54
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
forecasted to reach millions of users in the next decade (Barnes & Scornavacca, 2004). In this
regard, marketers should take into consideration of consumers’ needs for security and privacy
when designing a marketing plan. The marketers should maintain a balance between engaging
consumers in their marketing mix and achieving the objectives of their marketing plan. In order
to achieve this objective, the marketers must understand the factors, such as incentives and
consumer attitudes, which affect consumer acceptance of advertisements via mobile phone
(Barnes, 2002).
Carter (2008) defined mobile marketing in a different way, i.e. “the systematic planning,
implementing and control of a mix of business activities intended to bring together buyers and
sellers for the mutually advantageous exchange of products”. Here, the key contact point with the
intended consumers is their mobile phones. Balasubramanian, Peterson and Jarvenpaa (2002)
described that m-commerce is a form of communication which involves “either one-way or
interactive, between two or more humans, between a human (or humans) and one or more
inanimate objects or between two or more inanimate objects (e.g., between devices)”. Mobile
advertising is more flexible and convenient for a customer to get information about a product or
a service, and to make a purchase of such product or service via his/her mobile, provided that the
seller does provide such mobile applications phone (Balasubramanian et al., 2002; Altuna and
Konuk, 2009). Although some marketing activities are not available via mobile technologies,
space and time are considered constraints to consumers living in a world without mobile
technologies. It is because of growth trends in mobile usage.
Altuna and Konuk (2009), Plavini and Durgesh (2011), described the mobile marketing
as the use of wireless technology to provide an integrated content regarding a product or a
service to the intended customers in a direct manner. Apart from reducing the gap caused by
time, distance, convenience, costless transportation and interactive channel of communication,
customized information is another special feature which makes mobile marketing (m-marketing)
emerge as an important and innovative marketing tool (Friedrich et al. 2009). A study by Robert
Turner (2008), many advertisers are ready to invest in m-marketing. This survey has been
conducted among 50 international brands, and the findings revealed that the number of brands
looking to spend a greater proportion of their marketing budget on mobile campaigns in the
future has been increased. About 71% of respondents would spend up to 10% of their budget on
m-marketing. Research has shown that m-marketing can be integrated with traditional marketing
55
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
instruments to promote products and services of brands, and thus such combination of marketing
tools will be able to improve the effectiveness and efficiency of the total marketing plan. Mobile
devices have been considered one of the optimal options for communicating marketing
information for the following reason. Apart from being cost effective and providing easy access
to the target segmentation of consumers most of customers carry their mobile phones nearly 24
hours per day (Robert Turner, 2008; Altuna and Konuk, 2009).
New media in the digital economy has created potentially powerful tools for direct and
interactive marketing. Traditional marketing communication strategies have been based on the
interruption logic (Godin, 1999). Permission marketing was introduced as a new managerial
approach in marketing communication. It has been argued that firms benefit from getting
consumers’ permission to be contacted (Marinova, Murphy and Massey, 2002). Permission from
the consumer would resolve the difficulties to get access to the consumer.
Growth of Mobile Usage
According to Telecom Regulatory Authority of India, there were 858,370, 000 mobile
subscribers in India as of July 2011, and the mobile penetration rate is around 71% (Palvini &
Durgesh, 2011). The estimated value of E-commerce in India in 2011 was around US$10 billion.
Of which nearly 67% of the revenue came from mobile devices alone. If we examine the latest
data, the number of Indians mobile users has been registering 1.16 billion in February, 2017 and
sharing a monthly growth rate 1.17% and it is a growth of 1.36% over the previous quarter. This
reflects year-on-year (Y-O-Y) growth of 5.05% over the same quarter of last year. If we see the
mobile connectivity in urban India with 692.15 million, growth rate was 1.16% whereas rural
connectivity was slower at 0.56% according to TRAI data. This growth indicates that the more
than 80% Indian population using mobile phones and it highest in the number when compared to
any other media such print or electronic in reaching the large number of customers by the
corporate companies for promoting their offers . These details show that the revenue generated
from mobile phone sales and usage is huge, and hence it is important for mobile companies to
conduct research on consumer’s usage on mobile phones and consumer attitudes towards mobile
advertising. This study examines the attitudes of consumers in Hyderabad city (India) toward
mobile advertising applications which have been introduced or about to be launched in the near
future when companies understand the importance of mobile advertising and invest more in
developing and adopting mobile marketing applications.
56
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
In order to safeguard consumers’ interest, the Telecom Regulatory Authority of India
(TRAI) has made the Telecom Consumers’ Protection and Redressal of Grievances Regulations,
2007, covering all service providers, including BSNL and MTNL. Also, there is the National Do
Not Call/ Disturb Registry (www. ndncregistry.com), which ensures that a consumer needs to
register with the respective telecom service provider to stop all unsolicited communication. It is
illegal for a telemarketer to call anybody who is in the Do Not Call list. TRAI has proposed a
‘Scrubbing Module’ which will filter consumers’ numbers from the telemarketers’ database
(Shalini & Masood, 2008).
Mobile Advertising
As competition in the market has become more intensive given new tools of marketing,
getting a bigger market share and retain existing customers as well as attracting new customers
have always been a vital issue to the survival of brands. Buyer bargaining power has become
stronger over the time as options and substitutes of similar products/services in the market have
been significantly increased. Companies have been searching for new techniques and tools to
create their core competencies in order to differentiate themselves from competitors. Channels of
communication with customers have also increased in number. Thus, choosing the right time and
the right tool to send the right message to customers certainly helps brands to gain competitive
advantage. In this case, customized advertisements are more noteworthy and becoming a
powerful marketing tool in this mobile era (Altuna and Konuk, 2009). According to Ayanwale,
Alimi and Ayanbimipe (2005), and Chowdhury et al. (2006), mobile advertising has been
recognised as one of the most common tools of mobile marketing. Traditional advertising is
usually produced for the mass, i.e. it is non-personal and applicable only via mass media, such as
on the newspapers, radio, television, etc. On the contrary, mobile advertising is more interactive
and convey a more personal touched message when informing and persuading potential
customers to buy a product or a service (Hanley and Becker, 2008).
Mobile Advertising and Consumer Buying Attitudes
Attitudes towards an advertisement are defined as “a learned predisposition to respond in
a consistently favourable or unfavourable manner toward advertising in general” (Mehta and
Purvis, 1996). In this case, it is essential to note that attitudes towards advertising via mobile
devices refer to consumers’ attitudes towards this mode of advertising in general. It does not
refer to consumers’ attitudes towards a particular advertisement. Generally, attitudes are mental
57
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
states used by individual consumers to shape the way they perceive the external environment,
and such mentality guides the way they respond to it (Aaker, Kumar and Day, 1995). Bauer and
Greyser (1968) and Altuna and Konuk (2009) observed that there was a strong correlation
between customers’ general attitudes towards mobile advertising and customers’ responses to
specific advertisements.
Significance of the Study
The popularity of mobile advertisements is growing in India, and it is therefore relevant
for marketers to consider this new form of marketing. This is a current concern of market
research of many companies. Although many research studies have been conducted world-wide
to examine consumer attitudes towards a product or service, there has been insufficient research
on customer attitudes towards mobile advertising, especially in India. This research study aims at
exploring the behavioural intentions of consumers towards mobile advertisements in the city of
Hyderabad, India. This is significant as there has not many similar studies on this field of
marketing. The findings provide better insights to companies on how to use mobile phones as
one of the powerful tools to market their products. Since mobile marketing is able to reach
individual consumers in a more personal and interactive manner than other traditional marketing
forms, many companies have been invested in developing mobile marketing applications. Such
applications, namely mobile marketing platforms and international wireless systems, allow
companies to interact with consumers faster with more personalized and customized
advertisements (Altuna and Konuk, 2009).
Objectives of the Study
The objectives of this research paper are: (i) to study the impact of mobile advertising on
the consumer buying intentions in Hyderabad City in terms of (i) consumer attitudes; (ii)
customer reactions towards mobile advertisements and (iii) buying intentions which determine
the purchase decision of the consumer.
Methodology
The research design chosen for the study (cross-sectional descriptive design) is
conclusive. A survey instrument was developed based on previous studies on consumer
perceptions of mobile advertising. The research is basically focused on the understanding of the
consumer attitudes among mobile ads and their behavioural intentions. For this study both
primary and secondary data has been used, a quantitative research has been conducted with the
58
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
help of a structured questionnaire, and it was tested and verified statistically. Convenient
sampling approach has been used to select the samples, based on accessibility and availability of
the respondents. A total of 109 valid responses have been analyzed which include male and
female customers have been selected to avoid gender imbalance but, those holding a mobile
phone and reside in the area of Hyderabad city. The mode of data collecting from the sample
respondents was via electronic media (through Face book) and in person. Thus, this study
focused on the antecedents of consumer attitudes towards advertising via mobile devices In
general. In this study, customer attitudes towards advertising via mobile devices have been
measured using various dimensions. It indicates the various components of the framework for
further discussion, with “attitude toward advertising via mobile devices” as the dependent
variable. They include: (i) informative; (ii) credibility; (iii) enjoyment; and (iv) irritation.
Results and Discussion
In order to gain an insight into consumer reactions towards mobile advertising, the study
was aimed at reveal not only about consumer attitudes about mobile ads but also about their
behavioural intentions. The result of the study reveals that there is a significant positive
relationship between consumer attitudes and behavioural intentions. It means the more the
consumers’ attitudes are positive toward the mobile advertisements, the more affirmative are
their behavioural intentions.
Table- 1
Mobile Advertising and Consumer Buying Attitudes
Factors Positive Neutral Negative Total
Consumer attitude towards mobile
advertisements
69 (63) 10 (09) 30 (28) 109 (100)
Consumer buying intention towards
mobile advertisements
72 (66) 15 (14) 22 (20) 109 (100)
Relationship between enjoyment and informative content
58 (53) 12 (11) 39 (36) 109 (100)
Relationship between credibility and
irritation
45 (41) 13 (12) 51 (47) 109 (100)
Relationship between consumer
attitudes and behavioural intentions
77 (71) 13 (12) 19 (17) 109 (100)
Average 64 13 32
Source: Field data Note: Figures in parentheses are percentages.
Customer Reactions towards Mobile Advertisements: In order to examine the customer
reactions towards mobile advertisements, it was found that irritation (22%), followed by
indifference (18%) and then confusion (17%), were the three most important reactions. Hence,
we can safely assume that respondents (having a paucity of time) reacted with irritation and
59
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
indifference towards mobile advertising. Also, the respondents apparently got confused, on being
bombarded with a plethora of advertisements from various sources. It can thus be inferred that
mobile advertising in its current format is unacceptable to customers and requires inclusion of
certain attributes so that the relevance and utility value of such marketing messages, increases
their overall acceptance by consumers.
Table-2
Customer Reactions towards Mobile Advertisements
Reactions Percentage (%)
Usefulness 14
confusion 17
Awareness 16
satisfaction 13
Indifference 18
Irritation 22
Source: Field data
Table- 3
Summary of Results
Factors Results
Consumer attitude towards mobile advertisements Positive
Consumer buying intention towards mobile advertisements Positive
Relationship between enjoyment and informative content Positive
Relationship between credibility and irritation Negative
Relationship between consumer attitudes and behavioural intentions Positive
The findings of the study are as follows:
1. The study found that the customer attributes tend to be positive for all the eight factors
and the consumer attitudes towards mobile advertisements are positive.
2. Customer behaviour intentions tend to be positive and it is interpreted that the behaviour
intention of people towards mobile advertisements is positive, i.e. more the respondents
get the advertisements, the more their behaviour intention tends to be positive.
3. There exists a mixed response among the customer attributes towards different mobile
advertisements. There exists a positive correlation among the enjoyment and
informative content.
4. In case, the relationship between credibility and irritation found negative correlation
among credibility and irritation.
5. Regarding the relationship between customer attitudes and behaviour intentions, there is
a positive correlation among attributes on mobile advertisements on consumer attitudes
and their behavioural intentions. The more the attributes tend to be positive, the more
the behaviour intentions of the respondents tend to be positive.
60
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
6. It can thus be inferred that mobile advertising in its current format is unacceptable to
customers and requires inclusion of certain attributes so that the relevance and utility
value of such marketing messages, increases their overall acceptance by consumers.
Suggestions
1. The overall attitudes of the respondents in Hyderabad city are positive towards mobile
advertisements. They considered informativeness to be the most significant factor when
receiving mobile advertisements. Therefore, companies should invest in developing
applications which can help them advertise their products and services in better way
through mobile to reach the consumers beyond the study area.
2. Since informativeness is the most significant determinants of a mobile advertisement,
advertisers should provide or highlight the information aspect of their advertisement in
order to be successful in their marketing campaign.
3. The behaviour intent seems to be on the positive side, companies have to make sure that
their mobile advertisements do not divert customers’ intention.
4. The mobile advertisers should make sure that current and potential customers do not get
irritated due to receiving so many mobile advertisements, and they should ensure that the
advertisement is designed in an informative way. As expected before conducting the
research, there is a direct co-relation between customer attitudes and their behavioural
intentions regarding mobile advertisements.
5. This positive relationship may provide a novel means to build core competencies and
achieve a competitive advantage for those companies which invest in mobile applications
to enhance the positive attitudes of customers towards mobile advertisements. This can
be done via sending innovative, informative and entertaining content to intended
customers.
6. At the same time, companies should find a way to reduce the level of disruption and
irritation due to the frequency and the content of mobile advertisements.
7. In order to increases their overall acceptance by consumers, the respondents should not
get confused, on being bombarded with a plethora of advertisements from various
sources.
Limitations
1. The main issue in this study is that this research only focused on the attitudes towards
mobile advertisements in general and it confined to Hyderabad city only. It did not
include specific product categories as one of the variables which may affect the attitudes
of customers towards such products and mobile advertisements.
2. The data was collected on the basis of convenience sampling so the result can be
optimized by including more sample from the city. If the scale for measuring the attitudes
i.e., exclusively developed for analyzing the attitudes towards mobile advertisements in
the near future and the results may be generalized to the whole population in the city.
61
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Conclusion
This study reveals that the consumer attitudes towards mobile advertisements are
positive. In formativeness has been found to be the most significant factor in mobile advertising
and other variables can be considered as some key indicators of the marketing mix plans. M-
marketing and mobile advertisements can also be considered as most effective marketing mix
components. This finding has significant implications for companies in terms of marketing their
offers. Since Hyderabad city is developing as a global city, the rate of technology usage is high,
and so is the acceptance of new technological applications. Thus, this city would seem to be a
promising market regarding mobile applications to many companies. However, the results show
that the respondents’ attitudes are not only correlated with the technological infrastructure but
also with other cultural variables. However, “Good advertising does not just circulate
information. It penetrates the public mind with desires and belief”. — Leo Burnett.
References
1. Aaker, D. A., Kumar, U & Day, G.S. (1995). Marketing Research (5th ed.). New York: John Wiley. 2. Altuna, O. K & Konuk, F. A. (2009). Understanding Consumer Attitudes Toward Mobile Advertising And Its Impact On
Consumers' Behavioral Intentions: A Cross-Market Comparison of USA And Turkish Consumers. International Journal of
Mobile Marketing, Vol. 4(2), pp. 43-51. 3. Ayanwale, A.B., Alimi, T., Ayanbimipe, M.A (2005). The Influence of Advertising on Consumer Brand Preference: Journal
of Social Sciences, Vol. 10 (1), pp. 9-16. 4. Balasubramanian, S., Peterson, R.A. & Jarvenpaa, S. L (2002). Exploring the Implications of M-commerce for Markets and
Marketing: Journal of Academy of Marketing Science, Vol. 30 (4), pp. 348-362. 5. Barnes, S J (2002). “Wireless Digital Advertising: Nature and Implications,” International Journal of Advertising, Vol.
21(3), pp. 399-419. 6. Barnes, S J and Scornavacca, E (2004). “Mobile Marketing: The Role of Permission and Acceptance,” International Journal
of Mobile Communications, Vol. 2(2), pp. 128-139.
7. Bauer, R. A., & Greyser, S. A (1968). Advertising in America: The Consumer View, Boston, MA: Harvard University, Graduate School of Business Administration.
8. Carter, E (2008). Mobile Marketing & Generation Y African-American Mobile Consumers: The issue & opportunities. International Journal of Mobile Marketing. Vol. 3(1), pp. 62-66.
9. Chowdhury, H. K. Parvin, N. Weitenberner, C. & Becker, M. (2006). Consumer Attitude toward Mobile Advertising in an Emerging Market: An Empirical Study, International Journal of Mobile Marketing, Vol.1 (2), pp. 33-42.
10. Friedrich, R., Grone, F., Holbling, K. & Peterson, M. (2009). The March of Mobile Marketing: New Chances for Consumer Companies, New Opportunities for Mobile Operators. Journal of Advertising Research, Vol. 49(1), pp. 54-61.
11. Godin, Seth (1999). Permission Marketing: Turning Strangers into Friends, and Friends into Customers, New York: Simon & Schuster.
12. Hanley, M & Becker, M. (2008). Cell Phone Usage and Advertising Acceptance Among College Students: An Analysis. International Journal of Mobile Marketing, Vol. 3(1), pp. 67-80. 9.
13. Marinova, A; Murphy, J and Massey, B L (2002). “Permission E-mail Marketing and Targeted Promotion,” Cornell Hotel and Restaurant Administration Quarterly, Vol. 43(1), pp. 61-69.
14. Plavini, P. and Durgesh, P. (2011). Attitude towards Mobile Advertising: A Study of Indian Consumers. Paper presented at the International Conference on Management, Economics and Social Sciences (ICMESS'2011) Bangkok.
15. Robert Turner (2008). Effective mobile advertising. European Outdoor Advertising. Issue.499, pp.46-48. 16. Shalini N Tripathi and Masood H Siddiqui (2008). Effectiveness of Mobile Advertising: The Indian Scenario. Vikalpa, Vol.
33 (4) October – December, 2008, pp.47-59.
62
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
ETHICAL ISSUES IN THE ORGANIZATION AND ROLE OF EMPLOYEES AS
STAKEHOLDERS
Dr. P. Lakshmi Prasanna Associate Professor (Department of Business Management)
K L University – e-mail id: [email protected]
Abstract
In the context of business, “ethics” may be defined as the study of good and bad, right and wrong
or just and unjust action of the business men and the corporations.Business ethics is the study of
business situations, activities, and decisions where issues of right and wrong are addressed. It is
believed that the best way of promoting high standards of business practices is through self
regulation. Business should be conducted in a manner that earns the goodwill of all concerned
through quality, efficiency, transparency, and good values. The paper addresses the ethical issues
in the organization considering employees as the main stakeholder .Every business endeavor has
to be characterized by objectivity and commitment of its practitioners. Business must understand
and respect the needs, concerns and welfare of the employees. It should use knowledge and
experience for up gradation of the quality of life of its internal stakeholders. Business therefore,
has to maintain the highest standards of behavior so that its actions and decisions result in overall
benefit to industry, employees and society in general. The author enlightens in detail the ethical
issues in the firm and role of employee as stakeholders, ethical problems between rights and
duties, discrimination, employee privacy, due process and layoffs, associations, working
conditions, fair wages, right to work, employing people worldwide and the ethical challenges of
globalization, considering national culture and moral values, some yardsticks for ethical
decision making and how world is moving towards sustainable employment-Re-humanized work
places, and work-life balance.
Key words: Ethical issues, Employees, Firm, Stakeholders, Discrimination.
Introduction
Dealing with employees is probably the area where all of us at some stage are most likely
to encounter ethical issues and dilemmas. Whether it a question of fair wages and conditions,
sexual harassment in the workplace, or simply taking advantage of company resources such as
phone or internet for personal use, employee related ethical problems are unavoidable for most
managers. Such problems can run from the most everyday questions of how to treat disabled
workers appropriately to fundamental questions of human rights.
63
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Like shareholders, employees take on a particular role among stakeholders as they are
closely integrated into the firm. Whereas shareholders basically own all material and immaterial
asserts of the firm, employees, in many cases even physically, ‘constitute’ the corporation. They
are perhaps the most important production factor or ‘resource’ of the corporation, they represent
the company towards most other stakeholders, and act in the name of the corporation towards
them. This essential contribution, as well as the fact that employees benefit from the existence of
their employers, and are quite clearly affected by the success or otherwise of their company, are
widely regarded as giving employees some kind of definite stake in the organization.
Objectives of the study
1. To discuss the specific role of the employees among the various stakeholder groups and
identify issues of concern for corporations.
2. To identify the core ethical topics of employees rights and duties.
3. To outline the ethical issues and problems faced in human resource management, by
focusing particularly on the different rights of employees.
4. To study the duties of the employees and the company’s involvement in enabling
employees to live up to their duties.
5. To examine basic issues and problems of managing employees in the different cultural
and national contexts necessitated by globalization.
6. To discuss the implications of sustainability for workplaces and for precise working
conditions.
Methodology
The present article is explorative and conceptual in nature.
1. The explorative part makes the journey towards the progression of examining the ethical
issues of employees across the globe. Broadly speaking, the ethical practices, which are
in vogue at different points in time has been examined in this study.
2. From conceptual viewpoint, the study has examined in detail, the purpose of employees
as stakeholders, their core principles, the cornerstones of employee philosophy and the
factors influencing the quality of ethics. It also spelt out in detail, the structures and
processes of ethical issues of employees generally envisaged for implementation as a
concept.
64
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Role of employee as stakeholders
They are one of the most important factors of production (resource),Consequently,
employees are subject to a strict managerial rationale of minimising costs and maximising the
efficiency of the ‘resource’, they represent the company towards most other stakeholders and
they benefit and get benefitted by the growth of the corporation.
Management of human ‘resources’: an ethical problem between rights and duties.
Legally there exists a contract that stipulates their rights and duties- sometimes subject
labour rules and government regulations. Ethical issues arise, when they are viewed as only
‘means of production’ or commodity. Not treated with dignity & when there lies a gap with
Rhetoric and Reality.
Rhetoric and reality in HRM
Rhetoric Reality
New Working Partners Part-time instead of full-time jobs
Flexibility Management can do what it wants
Empowerment Making someone else take the risk and responsibility
Training and development Manipulation
Recognizing the contribution of the individual Undermining the trade union and collective
bargaining
Team working Reducing the individuals discretion.
Now let’s take into consideration the Rights of employees as stakeholders of the firm.
Employee rights Issues involved
Right to freedom from discrimination Equal opportunities, affirmative action, reverse
discrimination, sexual and racial harassment.
Right to privacy Health and drug testing, work-life balance,
presenteesim, electronic privacy and data protection.
Right to due processes Promotion, firing, disciplinary proceedings
Right to participation and association Organization of workers in woks councils and trade
unions, participation in the company decisions.
Right to healthy and safe working conditions Working conditions, occupational health and safety.
Right to fair wages Pay, industrial action, new forms of work.
Right to freedom of conscience and speech Whistle blowing
Right to work Fair treatment in the interview, non-discriminatory rules for recruitment.
Now let’s observe duties of employees as stakeholders of the firm and the issues involved in a
nutshell.
Employee duties Issues involved
Duty to comply with the labour contract Acceptable level of performance , work quality and
loyalty to the firm.
Duty to comply with the law Bribery
Duty to respect the employers property Working time, un-authorised use of company
resources for private purposes, fraud, theft and
embezzlement.
65
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Discrimination- ethical issues
Discrimination in the business context occurs when employees receive preferential (or
less preferential) treatment on grounds that are not directly related to their qualifications and
performance in the job, example- race, gender, nationality, marital status, appearance etc. So
employers should be able to manage diversity which is a prominent feature of contemporary
business.
Sexual and racial harassment
Issues of diversity might be exploited to inflict physical, verbal, or emotional harassment.
Regulation reluctant could be: Blurred line between harassment on one hand and ‘joking’ on the
other and influenced by contextual factors such as character, personality, and national culture,
however companies across the globe have increasingly introduced codes of practice and diversity
programmes.
Equal opportunities and affirmative action
Currently the question to be discussed is how should organizations respond to problems
of discrimination? It can be addressed under two heads, namely, Equal opportunity programme:
Generally targeted at ensuring procedural justice is promoted. Affirmative action (AA)
programmes: deliberately attempt to target those who might be currently under-represented in the
workforce- may be racial minorities, disabled persons etc through: Recruitment policies,
example, job ads in media seen by under-represented groups, Fair job criteria- flexible work
hours for disabled, Training programmes for discriminated minorities and Promotion to senior
positions.
Reverse discrimination
Reverse discrimination is term referring to discrimination against members of a dominant
or majority group, including the city or state, or in favor of members of a minority or historically
disadvantaged group. Groups may be defined in terms of race, gender or other factors. This
discrimination may seek to redress social inequalities where minority groups have been denied
access to the same privileges of the majority group. It is intended to remove discrimination that
minority groups may already face. Reverse discrimination may also be used to highlight the
discrimination inherent in affirmative programs. Justification for reverse discrimination is,
66
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Retributive justice: past injustices have to be ‘paid for’. Distributive justice: rewards such as job
and pay should be allocated fairly among all groups. Further stronger forms of reverse
discrimination tend to be illegal in many European countries.
Employee privacy- ethical issues
Four different types of privacy we may want to protect namely, Physical privacy-
monitoring employee private activities, Social privacy- employees not allowed to bring disrepute
by indulging in immoral things outside office, Informational privacy- employers hiring private
security firms to make investigations against employees without reason and Psychological
privacy- controlling emotional and cognitive inputs and outputs, example, compelling employees
to smile and appear happy before the customers.
Further examining each one of the above mentioned point’s gives clarity of ethical issues.
1. Employee privacy is affected by: Health and drug testing, Two main ethical issues of drug
testing viz., Potential to do harm- particularly when drug test does not require for job
specification, Causes of employee’s performance- when employers seek details of causes of
underperformance. Despite these criticisms, such tests have increasingly come common in the
US.
2. Electronic privacy and data protection: Increasingly relevant as technology advances and
electronic ‘life’ becomes more important. Computer as a work tool enables new forms of
surveillance i.e., Time and pace of work, Usage of employee time for private reasons, E-mail
and internet, Issue of privacy in situations where data is saved and processed electronically &
Data protection.
3. Due process and lay-offs: Ethical considerations in the process of downsizing, right to know
well ahead of the actual point of the redundancy that their job is on the line, compensation
packages- packages employees receive when they are laid off, early retirement options etc. 4.
Employee participation and association: Recognition that employees might be more than just
human ‘resources’ but should also have a certain degree of influence on their tasks, job
environments, and company goals – right to participation, financial participation – allows
employee share in the ownership or income of the corporation, operational participation- can
include a number of dimensions: Delegation- for job enlargement or job enrichment, information
67
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
– about performance of the corporation, consultation- allows to express views on decisions taken
by employer and co-determination- common approach for decision making.
Working conditions- ethical issues
Right to healthy and safe working conditions- one of the very first ethical concerns for
employees. There are dense network of health, safety and environmental (HSE) regulations
implemented by many countries, however main issue is enforcement and implementation which
is not proper. Newly emergent HSE issues relate to changing patterns of work. Ethical issues in
the context are: Excessive working hours and presenteeism, flexible working patterns and work-
life balance distortion.
Excessive working hours and presenteeism
Excessive work hours thought to impact the employee’s overall state of physical and
mental health. ‘Presenteeism’ is phenomenon of being at work when you should be at home due
to illness or even just for rest and recreation.
Fair wages- ethical issues
The basis for determining fair wages is commonly the expectations placed on the
employee and their performance towards goals. Note discussion about excessive compensation
for executives after the stock market collapse of 2008. Problems of performance-related pay
(PRP) are: Risk- salaries and benefits become less secure, Representation - individualized
bargaining.
Freedom of conscience and freedom of speech in the workplace- ethical issues
Freedom of conscience and freedom of speech in the workplace is normally guaranteed
by governments. Situations in business where freedom of speech might face certain restrictions
such as: speaking about ‘confidential’ matters related to the firm’s R&D, marketing or
accounting plans, usually unproblematic, since most rational employees would find it in their
own best interests to comply with company policy. Some cases where those restrictions could be
regarded as a restriction of employee’s rights, example is when the employer asks the employee
to do ‘creative accounting’. The employee cannot seek outside help nor can violate the rules of
the firm. Whistle blowing – can involve considerable risk.
68
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Employing people worldwide-The ethical challenges of globalization
Different cultures will view employee rights and responsibilities differently, this means
that managers dealing with employees overseas need to first understand the cultural basis of
morality in that country. Raises the question of whether it is fair to treat people differently on the
basis of where they live. Relativism vs. Absolutism. Absolutism means ethical principle must be
applicable everywhere & Relativism means view of ethics must always be relative to the
historical, social and cultural context.
The ‘race to the bottom’ approach
Many critics argue that MNCs should play a role in changing standards in countries.
Globalisation allows corporations to have broad range of choice of location, developing
countries compete to attract foreign investment, and large investors tend to choose country with
most ‘preferable’ conditions, lowest level of regulation and social provision for employee, leads
to ‘race to the bottom’ in environmental and social standards, ethical argument is that MNCs
have a duty to promote minimally just social & political institutions where they operate if these
do not exist, because of duty to avoid harm.
Migrant labour and illegal immigration- ethical issues
Growing mobility of workers is a recent phenomenon of globalization. Workers can also
be attracted to particular industries in areas where there is no local labour (e.g. mining).
Numerous ethical issues are involved here. Examples: Migrant labour often leads to questionable
social phenomena (e.g. drug use, prostitution, pressure on social infrastructure), Migrants are
often from poor countries; willing to accept pay & working conditions normally unacceptable in
host country and Migrant workers are often enter in a country illegally and employing them is
against law (but a record of employment may later be the basis for legal residency).
Towards sustainable employment-Re-humanized workplaces
Sustainable employment is possible if the employees are gainfully employed, feel
respected as human beings, feel that their voice is heard for long-term sustainability of the
organization, companies support employees to maintain meaningful social relationships with
their families, neighbors and friends. Alienation’ of the individual work in the era of
industrialised mass production due to technology and division of labour .Brought tremendous
efficiencies and material wealth, but have also created the prospect of a dehumanised and
69
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
deskilled workplace. Attempts to re-humanize the workplace through: ‘empowering’ the
employees through, ‘job enlargement’- giving wide range of tasks, ‘job enrichment’- giving
employees a large scope for deciding how to organize the work and human-centred technology
as far as possible.
Towards sustainable employment-Wider employment
Large numbers of unemployed people becomes the norm in many countries due to
mechanisation. This threatens: Right to work, social fabric of particular communities and new
technologies herald the ‘end of work’? From sustainability perspective: Ensure that what work
exists is shared out more equitably, and reduce working time for individual worker by employing
more workers.
Towards sustainable employment - Green jobs
‘Green jobs’ are those that are available in industries making environmentally-friendly
products (example, cars on solar panels), workplaces & organizations where the job itself can be
organized environmental friendly like car-pooling, paperless office, video-conferencing rather
than business travel, home-based tele-working. Potential benefits are social, economic and
ecologic. Gained attention in late 2000s is part of broader debate on restructuring economies to
be more sustainable.
Conclusion
The article discussed the specific stake that employees hold in their organizations, and
suggested that although this stake is partially regulated by the employment contract, employees
are also exposed to further moral hazards as a result of the employee- employer relationship. The
article also discovers how deep the involvement of corporations with employee’s rights can be.
Nearly the entire spectrum of human rights is touched upon by the modern corporation, including
issues of discrimination, privacy, fair wages, working conditions, participation, association, due
process, and freedom of speech.
References
1. Andrew Crane & Dirk Matten, Third edition, - Business Ethics, Oxford University Press.
2. http://www.ethicalcorp.com
3. Environmental Justice Foundation. 2005. White gold: the true cost of cotton. London: Environmental
Justice Foundation.
70
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
THE AUDIT PRACTICES OF AN AUTOMOBILE FRANCHISE- A CASE STUDY
Dr. K. Bhavana Raj
Assistant Professor – Finance & Banking, Department of Management Studies, KL University Hyderabad (KLUH),
RVS Nagar, Aziz Nagar (PO), Moinabad Road, Hyderabad, R.R. Dist. – 500 075, Telangana, India. Ph: +91-
9959509996, E-mail: [email protected] , [email protected]
Abstract
One of the most important factors in a successful audit is a well-designed audit plan. The
audit plan is a comprehensive process determining how the audit will be executed. One of the
significant products of the audit plan is the audit program. It describes in detail the control and
substantive tests the auditors will perform during the course of the audit. Audit programs are
often designed by selecting specific steps from a standardized audit program that address the risk
tolerance for the audit of the current client. When that is not plausible, audit programs have to be
developed that address the unique accounting systems of the client. This case study uses
automobile dealerships, an industry with which almost everyone is familiar, to provide examples
of accounting systems that require unique methods to perform an efficient and effective audit.
Keywords: Audit, Automobile, Franchise, Risk Tolerance, Client, Dealership
JEL Classification: L00, L10, L20, L50, L60, L70, L80, L90
Introduction
Automobile dealerships have five distinct business functions – new vehicle sales, used
vehicle sales, finance, service, and parts. Some may have a sixth function, an auto body shop.
This case study provides the background for any unique features of the financial accounts used to
record the operation of these functions and then asks the students how they would plan to audit
each of those accounts. It is designed to broaden the student’s understanding of the audit process
and to provide a method for them to apply the audit methodologies they have learned to unique
situations.
The unique features of an automobile dealership’s financial accounts are focused on the
revenue, inventory, and payment cycles. This case study focuses on the portions of those cycles
that are unique. Those unique features provide the opportunity for a lively discussion among the
students as to how they should be addressed in an audit environment.
Objectives
The main objective of the case study is to understand the audit concept of working capital
management of the selected organization.
71
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Methodology
This is a hypothetical study based on one of the leading organization in the Indian industry.
The Revenue Cycle
Most businesses that extend credit to their customers have one account receivable which
is quite similar in characteristics to most other business’ accounts receivable. The primary
function of the audit tests of accounts receivable is to determine existence and collectability.
Automobile dealers have multiple accounts receivable whose characteristics associated with their
existence and collectability vary significantly. Below, each type of account and their origin and
characteristics are identified. The auditor can fully expect to get no response from any
automobile manufacturer for requests for confirmation details or the gross amount of any
account balances.
1. Vehicle Accounts Receivable
Once the documents for the sale of a vehicle are signed by the customer, the transaction
is recorded in the financial accounts of the dealership. Since there is generally a time lag between
the signing of the agreement and the delivery of the vehicle, the amount the customer will pay in
cash is recorded in the vehicle accounts receivable. Good internal control procedures at a
dealership would require that the receivable is collected prior to the actual delivery of the
vehicle.
2. Contracts in Transit
Although most customers obtain any required financing of the vehicle they purchased
through the dealership, very few dealerships actually finance the vehicles. Instead, they sell the
finance contract to the financing arm of their manufacturer or other financial institutions
(collectively financial institutions). Payment for the sale of the finance contract is generally
received within a few days.
3. Finance Receivables( Net)
When a dealership sells a finance contract to financial institutions they receive a
commission on the sale of the contract. The commission is determined by the value of the
difference between the interest rate charged to the customer and the interest rate charged by the
financial institution over the life of the finance contract. Payment of the commission is made
within a few days. If the customer pays off the finance contract in advance, a chargeback for the
finance income received and not earned is charged against the dealership account.
72
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
4. Rebates Receivable
There are two kinds of manufacturer rebates paid to the dealer for vehicles. The first is a
customer rebate. The customer is eligible to receive the rebate in cash but customer rebates are
almost exclusively used to reduce the cost of the vehicle. The second is a dealer rebate. This is an
amount given to the dealer as a sales incentive for a particular type of vehicle or model year. If
the dealer complies with the terms of the rebate, a payment will be made in the next monthly
dealer statement. Valid rebates are 100 percent collectible.
5. Holdback
For all domestic and many foreign vehicle manufacturers, included in the invoice price of
a new vehicle is the cost of the vehicle and a holdback amount. Usually, the holdback amount is
three percent of the invoice price. Holdback is recorded when the vehicle is placed in inventory.
Quarterly, the dealership is reimbursed for the amount of the holdback for all vehicles shipped
during that quarter. (This practice may seem strange, but it is believed that the reason for this
practice was to provide the dealership with money to pay their quarterly income tax installment).
The timing of when holdback is paid is not consistent across manufacturers or even
different dealers of the same manufacturer. For this case, assume that holdback is paid on March
10th, a date after the audit firm’s fieldwork, for vehicles shipped in December of the year under
audit and January and February of the subsequent year. The balance at December 31st consists of
the holdback for eighty-five vehicles that were received in December of the year under audit and
six that were received in the following January.
6. Service and Parts Receivables
These receivables generally result from providing service on fleet vehicles or other
commercial accounts or from the sale of parts to other repair shops. Rarely do dealerships offer
credit to individuals, their transactions are paid for in cash or with a credit card. Thus these
receivables have the characteristics of a typical wholesale establishment.
G. Warranty Receivables
Payments for service provided under the manufacturer’s warranty are reimbursed to the
dealership at rates established by the manufacturer. If the dealership complies with the
procedures established by the manufacturer for the reimbursement for service covered by the
manufacturer’s warranty, payment will be received in the next dealership statement. (Note that
existence requires that the warranty claim was made properly and the service for which the
73
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
dealership is requesting reimbursement is covered by the manufacturer’s warranty. If this is the
case the amount is 100 percent collectible.)
It is required to determine for each account the control or substantive tests which could
be used to determine the existence and collectability of the accounts receivable. Include in your
answer the impact of receivables older than their normal collection cycle.
II. Revenue Recognition
1. Recognition of Revenue, Vehicle Sales
The typical vehicle purchasing process at an automobile dealership is the customer is met
by a salesman, a vehicle is identified, the customer takes a test drive, the customer and the
salesman came to an agreement on a price, and the deal is signed by the customer. Based on
contract law, the offer and acceptance have been completed. Subsequent to that point, typically
financing arrangements must be finalized, the actual sales agreement is drafted, and final
preparation of the vehicle occurs.
It is required to determine whether to recognize revenue upon offer and acceptance or in
dealer speaks, when the vehicle crosses the curb, i.e. The customer drives the vehicle off the
dealer’s lot.
2. Amount of Revenue Recognized, Vehicle Sales
The majority of vehicle sales involve a trade-in, the customer’s current vehicle is
surrendered to the dealer and the value of that vehicle is used to offset a portion of the purchase
price of the vehicle the customer is buying. Typically, any discount the dealer offers on the cost
of the vehicle the customer is purchasing is included in the trade-in value of the vehicle being
surrendered. This is good for the customer for they feel they are getting top dollar for their trade-
in. It has no impact on the dealer for they are merely re-characterizing the sales price. It is bad
for the auditor, for any difference between the stated trade-in value for the vehicle being
surrendered in the sale and the actual value of that vehicle results in excess revenue on the
vehicle being sold and an overstatement of the inventory value of the trade-in. The dealer may
adjust the value of the trade-in to its proper value when the transaction is recorded or they may
not.
74
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
It is required to know how would the auditor determine whether excess revenue is being
recognized on vehicle sales where part of the purchase price is paid with a trade-in.
3. Recognition of Revenue, Finance Income
Finance income results from the sale of a finance contract to a financial institution. The
amount of the income is the difference between the amount of interest expected to be received by
the financial institution based on the interest rate in the finance contract and the amount of
interest based on the interest rate implicit in the sale of the contract.
Since the finance contract is for a loan of many years and the amount is not certain, it is
required to focus whether the dealership recognize all of the income at the time of the sale of the
contract or over the life of the contract. If one believes the revenue should be recognized over
the life of the contract and the dealership recognizes it immediately, it is to be focused how to
convince the dealer your accounting method is preferable.
III. Inventory Cycle
The primary function of the audit tests of the inventory cycle is to determine existence
and valuation. Automobile dealerships generally have three types of inventory, new vehicles,
used vehicles, and parts. They may also have small amounts of work in process in the auto repair
and body shops. Since vehicles can be identified by the vehicle identification number (VIN), for
new and used vehicles, the specific identification method is used for costing these inventories.
Parts are generally used replacement cost for inventory valuation. Work in process is recorded at
cost.
1. New Vehicles
All vehicles have vehicle identification numbers assigned by the manufacturer. These
numbers are engraved on the dashboard and the engine block. However, most dealerships
identify vehicles by a dealer assigned a number which is not derived from the vehicle
identification number. Valuation is based on invoice price plus the cost of any dealer installed
options.
2. Used Vehicles
Vehicle identification is the same as for new vehicles. Valuation is based on the price
paid for the vehicle. If the vehicle was purchased at auction or from a wholesale dealer, an
invoice will indicate the price paid. If the vehicle was obtained from a trade-in on the purchase of
75
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
another vehicle, valuation is more difficult. As described under revenue recognition above,
alternative methods for determining the true value of the used vehicle may be required.
3. Parts
Identification of a part can be determined by a part number contained either in the
packaging or as a label. Dealers maintain their parts inventory at replacement cost rather than
cost because the sales price for parts is determined by a standard markup on current replacement
cost. Updated replacement costs are provided to the dealership by the manufacturer on a regular
basis. The total impact of the difference between carrying cost and replacement cost is recorded
in a cost of goods sold account as a credit balance.
It is required, based on the characteristics of each class of inventory, identify the audit
procedures that should be used to determine existence and valuation of inventory.
IV. Payment Cycle
1. Line of Credit, Floor plan
Almost all automobile dealerships finance their new vehicle inventory and some also
finance their used vehicle inventory using a line of credit known as the floor plan. Each vehicle
financed is treated as an individual note. The collateral for the note is the vehicle itself. A
dealership can finance as many vehicles using these notes until they reach their credit limit under
the line of credit. Upon the sale of a vehicle, the amount of the note for that vehicle must be paid
to the lender. The lender provides monthly statements of all vehicle notes where each vehicle
financed is identified by their vehicle identification number. Dealer inventory listings include all
vehicles, their recorded cost, their vehicle identification number, and the amount of the floor plan
note for each vehicle.
It is required to identify the audit procedures that should be used to determine the
completeness and accuracy of the dealership’s floor plan debt.
.
REFERENCES
1. Wikipedia
76
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
EFFECTIVE LEADERSHIP- A PATHWAY FOR ORGANIZATIONAL SUCCESS
Dr. Srinivas Kolachina
Associate Professor-HR and Banking, Department of MBA, K L University, Hyderabad, 9949155244,
Abstract
The article aims to explore the role of effective leadership in the success of any business
organization. Emphasizing on the significance of leadership across, the article also provides
needful inputs like leadership styles, factors effecting leadership and latest trends with a brief
glance of the eminent leaders who have succeeded to be effective leaders.
The article aims at providing considerable insights for any business organization in need
of effective leadership. The author also examines how an effective leader can be instrumental in
the success of a business organization and equally elevates the organization’s goodwill. The
concept of positive leadership is and its fruitful contribution towards the operational and
administrative efficiency of any business organization in the present dynamic and competitive
environment is also discussed.
Key Words: Leadership, Organization, Strategy, Challenge, Success.
Introduction
When Michael Wellin was writing his book on management of a personal contract, he
found almost twenty-eight thousand books titled on leadership. This is just a tip of the iceberg
wherein a numerous titled have been launched evidencing the considerable and potential
significance of the concept of leadership and its impact on the future of any business
organization. Here arises a question as to why leadership is so important?
Donnelly, Gibson and I Vacevich (1992, p. 407) explained “leadership is the ability to
persuade others to seek defined objectives enthusiastically”. Subsequently another question crops
up as to why do organizations treat leadership to be so significant that it can make or break the
fate of any business organization over a period of time of its operational journey.
Today many business organizations are unable to have the luxury of stability owing to the
continuous challenges arising from the periodic change in markets, customer preferences and
technology. They need to accept, adopt and implement changes in compatibility to their business
model according to changing trends. Further, we cannot neglect the constant threat of newcomers
to the core business of the organization who are having a different business paradigm. Hence the
77
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
organization cannot afford to depend upon a small team of senior executives to meet this
challenge.
To face the challenge the organizations are exploring for a potential intellectual source
with an optimum blend of innovation, skills, attitude, technical and managerial expertise and
enthusiasm towards achieving the success as a team. Of late a new concept and practice of
leadership has evolved, where a few line managers have taken over the leadership role along
with the top executive team with their small team of senior executives. The objective of the idea
is to make the line managers explore and enhance the inherent leadership skills that they have
within and be a prosperous and exemplary leader across.
Objective
The objective of the article is to bring out the significance of effective leadership in the success
of any business organization. We intend to emphasize on different approaches or styles of
leadership, factors effecting leadership, focus on latest trends with a brief discussion the success
stories of some exemplary and successful leaders.
Leadership being a strategic and potential skill for which corporates are eagerly waiting
for and even have been exploring across, it becomes imperative for everyone to have a
considerable awareness on the same. Hence the article deals with all the resourceful aspects to
attain the skill of effective leadership.
Methodology
The article is conceptual in nature. The framework focuses on providing some vital inputs
like significance of leadership in determining the success of a business organization, Leadership
styles and competencies, Challenges that can be encountered across with a motivational touch of
two success stories of dynamic corporate leaders who have been successful in leading corporate
giants.
Leadership: A vital determinant of organizational success
Leadership is one of the vital determinants of an organization success. It is an art of
influencing people to perform assigned tasks with increased willingness, efficiency and
competence. A line manager may not be an effective organizational resource if he/she is unable
to lead a team effectively and prove their efficiency across, thus transforming the potential into
reality. The vibes of a good leadership can be felt being spread across an organization vide the
structural clarity and transparency in communication.
78
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
A good leader never forces but contributes to the development of an organizational
culture that can be accepted by all. Communication is effective and open which helps everyone
to understand the vision and goals of the organization, and everyone can have their respective
contributions towards the improvement of the same. When people feel that they are being cared
and valued, the output will be the best of its quality accelerating the performance of the
organization. Such an organization can always enjoy a sustained success across.
Challenges in Leadership
Leadership is one of the significant attribute of any individual. When it comes to leading
an organization, a set of challenges may be encountered. Let us have a glance of three general
challenges that can be faced by the leadership team of any organization. The first challenge is to
provide a vivid picture of the vision and mission of the organization. Setting of objectives to
convert the strategic vision and directional course into specific performance outcomes for each
key area deemed important for success can be the second challenge. The third challenge is to
generate and develop a strategy that focuses on accomplishment of the set objectives. Strategic
direction is an imperative identification of a systematic intervention that provides a set of aspects
that the organization can be leveraged upon, as an organization cannot focus on everything
always.
A continuous search for good leaders has always been a crucial issue for every
organization. This is why the armed forces, for instance, put lot of efforts to train their officers
and why premier academic players other providers of executive development have thrived to
produce best of the best.
The team at Deloitte argues that “21st-century leadership is different”. Canwell and his
colleagues say: “Companies face new leadership challenges, including developing Millennials
and multiple generations of leaders, meeting the demand for leaders with global fluency and
flexibility, building the ability to innovate and inspire others to perform, and acquiring new
levels of understanding of rapidly changing technologies and new disciplines and fields.”
Inevitably, the problem is almost acute today. This can be a result of strengthening of the global
recovery, the desire on the part of the companies to explore new markets to expand their business
and increased number of older leaders choosing to retire.
79
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Leadership Styles
A leadership style is can be a unique approach adopted by a leader for providing
direction, implementing plans, and motivating people. There are numerous styles proposed by
different authors as exhibited by leaders in the political, business or other fields. Let us look at
some leadership styles that can prove to be strategically and operationally viable for many
business organizations.
The Authoritative Leader
•Always give direction, take a step back and watch the shaping success as employees put their own spin on producing their work
•Possess strong entrepreneurial spirit and inspires the employees to have an urge and eagerness towards success.
•True experts in their field, molding their employees into high-performers wherein employees feel confident of their growing abilities.
•Confidence and faith in leadership will be constant and a success-culture is developed in teh organization.
The Coaching Leader
•Find the greatest success in creative companies where employees can thrive under the right guidance.
•Coaching Leaders are often highly effective “big picture” people
•Lift employees up by providing them tools for success. and there will always be a constant flow of learning and doing, trying and growing.
•Appreciation and respect are traits all employees share for one another and a creative culture sustains across the organization.
The Coercive Leader
• In contrast to the an Authoritative Leader, the Coercive Leader gives concise direction to their employees.
•Entirely focused on compliance and productivity over everything else. With less flexibility allowed, employees yield to this executive who dictates plans and processes
•A natural problem solver, and knows very well how to keep employees in line and extinguish dilemmas whenever they arise.
•Can work well in a corporate structure only as support within one or more other models as may moderately lack the ability to bring out the innovative, critical thinking abilities of the employees.
The Group-Think Model
• One of the progressive types of leadership models and flips the traditional corporate hierarchy around.
• Employees are empowered to make decisions and the leadership team takes their cues from what the employees indicate is needed
• Well aware of negotiations orday-to-day problems that significantly affect operations to ensure the workplace functions properly.
• The employees feel responsible and tend toi be serious on their jobs
• Communication is the key and the listening capabilities of everyone are strongand thus there exists a shared-success culture at work.
The Democratic Leader
• Perhaps the most beloved leader with a blend of Authentic, Authoritative and Group-Think leaders .
• Focusses on feedback and promotes participation as a means to drive company unity around.
• Expertise in bringing a consensus among teams through constant communication and inspiring gestures.
• May not be the first choice in times of crisis as they focus on making decisions as a team which does not fit well in high-pressure situations
80
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
The dynamics of the changing world views have facilitated a huge variety and different
styles of leadership models in the business world. You can typically find these leadership styles
in companies led by innovative intellects.
Modeling the leadership after one (or two) specific types can help to design a specific
culture for any organization. Company’s goals, employee’s capabilities and desired workplace
culture can determine the leadership model to be adapted.
Competencies
WJM Associates, a recognized leader in providing impactful and practical solutions to
companies seeking to achieve measureable and lasting improvement in the performance of their
executives.
WJM was founded in 1996 by William J. Morin, an internationally renowned authority in
executive development and the former CEO of Drake Beam Morin, Inc., one of the world's
largest organizational consulting and career management firms.
A research work carried out work supporting senior executives in multiple industries
across multiple jobs, coupled with recent research around key leadership behaviors for the 21st
century has revealed that effective leadership requires competence in four main areas explained
by a model called WJM’s Executive Leadership Behavior Model as illustrated below
Leading Self
Self Management: To be composed under pressure, manage emotions and reactions besides
constructive and productive in facing challenges.
Self Awareness: To have accurate awareness of own strengths and weaknesses and their impact
on others.
Developing Self: To demonstrate commitment to personal development. An agile and
continuous learner approaching the situations with openness and intellectual curiosity.
Authenticity: Constant adherence to company’s stated values and vision across situations and
be a role model for personal integrity by keeping own word and promoting transparency.
Leading Self Leading Others
Leading Change Leading for Results
Leadership Effectiveness
81
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Leading Others
Connecting With Others: Building positive and effective relationships with stakeholders
at all levels.
Building Teams: Understanding the competencies required to succeed in key positions. Set high
standards for selection of team members and stay committed to their ongoing development.
Inspiring: Create strong morale and spirit in the team and shares success stories. Build trust,
commitment and alignment the team to organizational goals.
Developing & Communicating Strategic Vision: Clearly define and communicate the company’s
future in an optimistic tone of words and relevant nonverbal cues.
Leading Results
Global Perspective: Possess sophisticated knowledge of markets, customers and competitors
globally besides understanding the local context. Encourage cross-cultural learning opportunities
and provide a broader view of issues and challenges.
Decisiveness & Discernment: Make timely, strong and defensible decisions in a timely fashion,
especially in situations of crisis and uncertainty. Have a complete balance on bias for action with
thoughtful analysis and seasoned judgment.
Strategic & Systems Orientation: Maintain long-term and systemic perspective and go beyond
analyzing events, to look for patterns, underlying interrelationships and root causes.
Leading Change
Fostering Innovation: Create an encouraging environment that facilitates innovation and
creativity.
Adaptability & Resilience: Demonstrate personal flexibility in challenging or ambiguous
scenarios and comfortably shift gears in line with emerging priorities.
Courage: Identify and acts upon appropriate and calculated risks and accordingly encourage and
support others in managing such risks.
The above behavioral attributes may help companies to have a clear idea on the selection
criteria for senior executives and/or create strategic development plans for further expansion of
roles and job performance. Great leaders are hard to find and even harder to retain.
Exemplary and Successful Leaders
Ratan Tata: A Visionary Corporate Leader
82
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Ratan Tata is the most prominent Indian leader whose values and actions demonstrate an evolved
higher level of responsible leadership.
With the launch Tata Nano, Ratan Tata and his group have held their bigger purpose of
Nation building and employment close to their heart besides driving operational efficiency and
profitability. The purpose statement of Tata says “At the Tata group we are committed to
improving the quality of life of the communities we serve”. The meaning of this purpose
statement can very well be understood by everyone who visits Jamshedpur and it would be a
great learning to observe how well this statement is expressed and executed there.
Evidently India needs more Ratan Tatas and Indian companies that follow the Tata’s footsteps
for social responsibility and conscious capitalism. All the seasoned corporate leaders of this
country have to align businesses with long term sustainable practices and social contribution.
Ratan Tata’s retirement from active business role should lead to his spending more time on
helping organizations to articulate and operate for a higher purpose always.
Mr. Kishor Chaukar, Managing Director of Tata Industries says “Ratan Tata was a 'terrific
combination' of the four necessary leadership characteristics -- character, commitment,
competence and courage.
He further said: "Additionally, he is an amazing indefatigable individual. I have never seen him
say, "I am tired, we'll do this tomorrow. Be it with technical stuff, finance, business matters or
anything else, he is able to bring tremendous energy levels to the job. He has this immense
persistence in always moving closer to his goal, even if this goal keeps shifting,"
Finally he adds “The courage bit is partly yours and substantially that of the organization you are
with. If it had not been for Ratan Tata, I don't know whether I, as an individual, would have had
that courage”.
Indra Nooyi-A Woman entrepreneur with inherent internal values.
Indra Nooyi has been at Pepsi Co, currently the biggest food and Beverage Company in
North America for 17 years. She holds the reins as CEO managing a corporate family of over
300,000 employees which makes her a valued and influential leader in the business world.
She explains that she has held to her 5 C’s Model of Leadership throughout her career.
Her five C’s of leadership are competency, courage, confidence, communication skills and
compass (Blog Her 11 Event Interview). She also occupies a respectable slot in Top 10 on
Fortune’s 50 Most Powerful Women in Business list.
83
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
There are three consistently noticeable qualities in her leadership that have enabled her to
grow as a leader and succeed across and the qualities under discussion are
Communication
In Indra’s words “You cannot over-invest in communication skills.” In addition to listing
communication as a key skill for leadership she maintains a blog at Pepsi where she talks to her
employees via posts every other week (Blog Her 11 Event Interview).
Relationship Building
Regards to relationships, Indra says “If you only want people to help you when you need
them and not have an ongoing relationship with them, they don’t know you, they don’t know
where you come from, and they are doubtful whether you really are interested in the issue, or are
you just trying to skate over a current problem?” (CNN). Relationship building has been one of
her strengths that made her to be in-tune with consumers needs for healthier snack and drink
options and even brought about a transformation in Pepsi’s product line.
A Moral Compass
Indra values and lives by moral codes. She emphasizes that every corporation owes
society care. Indra points out that many companies are bigger than small countries.
Organizations need to help society reach goals and solve problems. She has turned to her moral
compass and exercised strong emotional intelligence in making leadership decisions in many
instances.
Indra Nooyi, PepsiCo’s CEO recently published a note on LinkedIn which is going for
viral for its meaningful message. Nooyi, one of the Forbes World's 100 most powerful women
has a very important advice for students who could be the future leaders of the world.Her seven
point lessons show how you can hone your leadership skills and excel at your career.
1) Everyone needs a vision
2) Think long term
3) Importance of persuasion
4) Always listen more and talk less
5) Keep learning
6) The team and its people are everything
7) You’re A CEO in the office, but not at home
84
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Conclusion
Indra herself had confessed that leadership is not easy. She says “Leadership is hard to
define and good leadership even harder. But if you can get people to follow you to the ends of
the earth, you are a great leader”.
A worthy struggle can certainly yield a return of building a better world. Leaders who
explore and analyze methods of leadership and build communication skills will always be on a
track for success.
There are three characteristics that can be noticed in leaders that make them conscious,
responsible and effective
1. Leader has a bigger, higher purpose for you and your organization that expresses
responsiveness to community.
2. Leader uses creative tendencies than reactive tendencies to get results.
3. Leaders operate from higher order values.
4. Robert Kegan, a professor at Harvard Graduate School proposed a range of “orders” of
the mind and of the need for leaders to scale their abilities to the higher orders so they can
solve complex problems and create personal transformation.
Richard Barret, author and expert on values talks about seven levels of consciousness–a
model he developed as an extension of Abraham Maslow’s hierarchy of human needs. While
survival, selfish wealth creation, power, greed, status, being liked can be considered as lower
order values; self actualization, service, trust, honesty and Integrity can be considered as higher
end values.
Most leadership theories focus on three outer aspects of leaders such as powerful Vision,
Alignment of every stakeholder around the vision and Execution excellence. Such leaders with
an optimum mix of the said attributes can potentially contribute towards the organizational
success of any business enterprise.
References
1. https://alistemarketing.com/blog/types-of-leadership-models/
2. https://www.wjmassoc.com/insight/leadership-model/
3. http://www.centerforworklife.com/leadership-qualities-indra-nooyi/
4. https://www.indiatimes.com/culture/who-we-are/7-great-leadership-lessons-from-pepsico-s-ceo-indra-nooyi-
327387.html
5. Blog Her 11 Event Interview, Indra Nooyi.
6. http://www.dnaindia.com/money/report-ratan-tata-responsible-leadership-conscious-capitalism-1782230
7. Rediff.com » Business » The qualities that make Ratan Tata a born leader
8. https://in.finance.yahoo.com/news/why-ratan-tata-is-a-role-model-for-india-inc-101918923.html
85
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
CUSTOMER SERVICE AS A FORCE MULTIPLIER IN MANUFACTURING
COMPANIES
Ch SrinivasRao
Research Scholar, Bharatiar University, Coimbatore. E Mail: [email protected]
Abstract
This paper discusses the importance of the customer service in manufacturing companies.
The paper discusses about the fast changing market place for manufactured products, the need
for differentiation of the brand and the traditional perception of customer service. Subsequently,
the paper discusses about the changing role of customer service and its application as a force
multiplier to retain existing customer base and also expand the customer base. The paper also
discusses about the factors which are driving the customer service in manufacturing and
concludes that customer service, both pre sales and post sales, are emerging as a competitive tool
in the armoury of manufacturing companies.
Keywords: Customer Service, Manufacturing, Perception, Force Multiplier, Customer Base
Introduction
In a highly competitive world, a company can survive only if it is able to beat
competition with its products and practices. With new products and new players hitting the
market at a fast pace, it is a marketing nightmare to keep the customers happy and continue to
sell products.
The manufacturing segment is no exception to this development. Manufacturers are
becoming more concerned about client retention and also have realized that introduction of new
technology or new products alone is not going to solve their marketing challenges. There is a
need to go beyond new products and technology.
Hence successful manufacturing companies have also shifted their strategies from pure
product offerings to products and service. This in marketing parlance is known as product
experience at the customers end.
Product Vs Commodity
It is important to understand what differentiates one brand with respect to its competitors.
This is especially true in the case of products which have become commodities like Cement,
Steel, Asbestos etc. In most of these commoditized products, the specifications, design , features
and other product parameters are almost the same thus making it difficult to compete in product
terms.
86
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
One way to differentiate is to offer a lower price to the customer to gain market share.
Lower selling price of the product has implications on the profitability and long term viability of
the company. Lower profitability in turn implies lower investments, lower incentives and lower
promotional activities which ultimately leads to the decline of the company. Lower price also
sends a signal that the products are unreliable products or of lower quality.
Another way of differentiating a manufactured product from its competitors is to offer
high quality customer service.
Objectives
Generally the manufacturing sector considers maintaining the quality of the product of
utmost importance for success. Due to several developments in the manufacturing sector, there
are other factors which are becoming important for success in the market place. The objective of
this paper is to analyze the importance of customer service in manufacturing sector.
Methodology
The paper is an empirical study based on study of literature and observed market
practices. The data sources are several journals and company practices. The study covers several
sectors of manufacturing like Cement, Fertilizers, electrical and electronic products.
Customer Service in Manufacturing
In a highly competitive manufacturing industry, customers will have to be given more
than the product and that is the customer service.
Customer service encompasses two areas – pre sales and post sales.
Pre sales customer services revolves around enlightening the customer with the product,
its uses, its limitations and how to best use the product to get maximum mileage. In short Pre
sales customer service offers advice on the suitability and use of the product.
Post sales customer service revolves around resolving customer issues like usage, testing,
technical advice, trouble shooting etc.
Customer service in manufacturing not only means dealing with the end customer but
also with intermediaries like distributors / dealers. Any dissatisfaction at the dealer/distributor
level means loss of several customers ,since the dealer / distributor is generally the first point of
advise for the customer.
Reasons for Customer Service in Manufacturing companies
Some of the drivers of the customer service in manufacturing are:
87
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Better informed customers: In the past, customers were mostly ignorant of information about
the product and whatever the intermediary or salesmen told were taken as gospel. But today,
with the explosion of social media and also other digital channels, sharing of information is
becoming easy. Customers can easily comment on their satisfaction levels or otherwise and post
it for viewing by millions of people, who could be potential customers.
Expectations: With increasing awareness of their rights and also product regulations, the
expectations of the customers have soared high. It would be impossible for most of the
manufacturers to meet the product expectations of the customer. Customer service in such times
would greatly help by educating the customers about the suitability of the product for their
requirements.
Competitive Environment: Competition has gone global and intensified with many
manufacturers from different countries competing in terms of product features, product quality,
pricing etc. One area that is focused by major manufacturers is the customer service. It allows
companies to tightly integrate with the customer requirements and drive profitability.
With customer loyalty at a premium, it is imperative for manufacturing companies to
provide customer service in order to retain their customers. It is common knowledge in business
circles that it costs about 7 times to acquire a new customer than to retain an existing customer.
Changing Role of Customer Service: There was a time when customer service was considered
a cost centre and budgets allocated accordingly. Manufacturing companies considered customer
service as an complementary activity due to issues in quality control.
Today, the roles have changed for the customer service. The ‘2016 Connected
Manufacturing Service Report’ has shown that about 63% of the executives in manufacturing
companies believe that their customer service department plays a key role in their strategies and
that 66% of the executives believe that customer service departments are turning into revenue
generators than cost centers.
Part of Sales Force: In these changing times, Customer service department has become a part of
the sales force. Not only do customer service provide leads the sales force while educating the
customer on the suitability and use of the product, it also provides feedback of the customer to
the sales team to better equip the sales team in converting enquiries to closed deals.
88
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Conclusion
The above discussion leads to the conclusion that customer service can be used as a force
multiplier alongwith the marketing team to improve the marketing efforts of the company.
References
1. ‘2016 Connected Manufacturing Service Report’,https://www.salesforce.com/assets/pdf/industries/2016-
connected-services.pdf
2. Karnstedts Anders, Winter, Julia,’ Defining and measuring service quality in a manufacturing company’,
http://publications.lib.chalmers.se/records/fulltext/218424/218424.pdf
3. Onyeaghala, Obioma, (2016), ‘Servqual Model as performance evaluation Instrument for Small and Medium Sized Enterprises: Evidence from Customers in Nigeria’, European Scientific Journal, Vol 12, No.28, pp520-
540.
4. Murali.S, Pughazhendi.S, Muralidharan.C,(2015), Evaluation of performance of after sales service – A
comparative study involving home appliances manufacturing firms’, ARPN Journal of Engineering and Applied
Sciences, Vol.10, No.13,pp5614-5619.
89
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
IMPORTANCE OF CONSUMER BEHAVIOUR – ACASE STUDY OF MAGGI
NOODLE, NESTLE INDIA
Dr. EnnalaDeepa
Assistant Professor, Affiliated Address: R.V.S Nagar, Moinabad Road, Near AP Police Academy, Aziz Nagar,
Hyderabad, Telangana 500075, email address: [email protected] Abstrct
Consumer buyer behaviour is considered to be an inseparable part of marketing and
Kotler and Keller (2011) state that consumer buying behaviour is the study of the ways of buying
and disposing of goods, services, ideas or experiences by the individuals, groups and
organizations in order to satisfy their needs and wants. In today’s world, consumers’ product and
service preferences are constantly changing. Marketing managers must understand these desires
in order to create a proper marketing mix for a well-defined market. Understanding the customer
behaviour is very essential to design marketing strategies which influences the customer buying
behaviour. This paper focuses on the various factors to consider in order understanding the
customer behaviour. The importance of having loyal customers and building the same is shown
by taking Maggi as a case study. Based on the case study conclusion has been made of what are
the points to be considered
Keyword: Customer Connect, Customer Loyalty, Marketing Mix, Monopoly.
Objective
Marketing is identifying the customer needs, wants and meeting them. But in today’s
marketing world Customer behaviour plays an important role in defining the marketing
strategies. Hence this paper talks in-depth about the importance of customer behaviour analysis
for running a successful business by taking case study of maggi how post ban the product
survived based on customer loyalty.
Introduction
Present marketers strategies are built around the words customer connect, customer
loyalty, changing trends, society responsibilities etc., customer behaviour towards products and
services are changing, this change is due to various reasons break of social barriers, awareness of
other competitor products, no compromise and intolerance attitude, This era is of “new trends”
marketers have to continuously cope up with the changes. Hence now customer’s habits and
attitude matter more.
90
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Methodology
In the present paper will be focusing on customer behaviour which plays the crucial role
in designing marketing strategies. We will understand the factors that influence the customer
behaviour. In-depth analysis of the same will be done by taking into consideration of live
example. With the help of the example we can understand customer behaviour on introduction of
the product and customer behaviour of different level of product cycle.
Analysis
Firstly let’s understand what factors influence the behaviour of the customer. Culture
factors exert a broad and deep influence. Culture is the most basic cause of person’s wants and
behaviour. A person’s likes, dislikes, wants, desires etc., are built on his/her family. Next the
social class Upper, Middle, Working and Lower class. Social class is not determined by a single
factor, such as income, but is measured as combination of occupation, income, education, wealth
and other variables. Social Factors, word of mouth influence, the impact of the personal words
and recommendations of trusted friends, associates and other consumers on buying behaviour.
Marketers of brands subjected to strong influence must figure out how to reach opinion leaders.
Personal factors age, occupation, Economic situation, Lifestyle etc., a person buying choice can
be further influenced by Psychological factors motivation, perception, learning and beliefs and
attitudes.
Customer behavior enables companies to take appropriate marketing decision on
Marketing Mix the 6P’s Product, Price, Promotion, Packing, Positioning and Place of
Distribution.
Maggi instant noodles. Maggi 2minutes an instant food product, was introduced in 1982.
Maggi noddle’s is the leading brand of instant noodles in India enjoying market share of 79.3%.
In this product the marketers have created a want. In that time the Indian customers were very
conservative and did not expose themselves to any changes. Hence to get there product accepted
as a major challenge. The main marketing point was “instant noodles” this is first kind of food
category introduced in India. Based on its USP the working women were targeted but the
91
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
approach failed. To understand the cause of the failure Maggi conducted a study which revealed
that the Maggi taste was liked by children. Hence the targeted customers were children through
mothers.
Maggi was a Monopoly and later had competitors but to create the brand it followed the
STPD analysis. Segmentation: Maggi brand have segmented the market on the basis of lifestyle
and habits of Urban Families. Target: they targeted the kids, office going, and working woman.
Positioning: Maggi has positioned itself in the SNACKS category since Indians did not consider
noodles as proper food the Maggi have developed itself in instant food product with positioning
statements such as “2 minutes noodles” and “Easy to cook” “ good to eat”. POD: post of
differentiations, the brand differentiated they brand from its competitors in terms of taste flavors
and packing.
By introducing product like Maggi the need was created not identified. Smart companies
like Maggi try to understand the customer behaviour decision process. "The Buyer Decision
Process”
Let’s understand the customer behaviour. When evaluating the potential alternatives,
consumer used two types of information the first is the list of brands from which they plan to
make their selection and the secondcriteria from which they plan to make their decision. Beliefs
and attitude are acquired by experience and learning, Maggi has always provided its consumers
with something new time to time which has developed a good belief has helped them to choose
them from their alternatives. Customer behaviour depends on experience with the product, if
performance falls short of expectation the consumer is disappointed and if it meets the
expectation of the consumer is satisfied.
Following is the purchase based on age category:
1990 1995 2000 2005 2010 2015
Children 2-9yrs 169999 181521 187940 189211 184457 184376
Teenagers 10-14yrs 89781 100560 109302 114583 117137 114226
Teenagers 13-19yrs 120293 127645 142432 153781 160728 162495
Studying Age 18-22 80812 85918 92074 103179 110642 115126
Young Adult 15-29 230839 249149 270576 294103 319267 336193
Middle Age 30-59 243295 277343 316065 358164 398405 440655
Baby Boomers 40-59 134212 151646 174986 202754 232801 261349
Pensioners 60+ 57029 65643 75712 86585 99728 117168
92
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
Findings
By understanding the Maggi product we can say they have following strengths:
1. Family based advertising, high advertising share
2. Emotional relationship with the consumer
3. A strong distribution channel
The main point to focus on “Emotional relationship with the consumer” Customers are so used to
the product that it is identified by the following:
1. Yellow Packing
2. Tasty Snack
3. Sunday Breakfast
4. Fun in having
They created a Family Brand by providing taste and preference of consumers, they
closely watched consumers preferences they introduced Chicken maggi, wheat flour maggi.
They exceeded the expectation.
July 2015 Maggi was banned By (FSSAI) Food Safety and Standards Authority of India
calling it unsafe and hazardous for consumption. On June 8 post 3days after the ban the Maggi
share price went down to 5,539.8 lowest during that year
Consumption Before Ban
Age Everyday Thrice a week
Twice a week
Once a week
Once a month Never Total
15-25 1 5 8 6 4 1 25
25-35 0 4 5 4 4 0 17
35-45 0 2 2 3 1 0 8
Total 1 11 15 13 9 1 50
Consumption After Ban
Age Everyday Twice a week Once a week Once a month Never Total
15-25 1 2 5 14 3 25
25-35 0 1 3 10 3 17
35-45 1 1 3 1 2 8
Total 2 4 11 25 8 50
Maggi has maintained trust and confidence even after post ban period. A product’s
success/failure is the evaluation of consumer response to a particular marketing strategy. It also
indicates if the organization has been successful in fulfilling their wants and needs and their
93
----------------JGMO / Volume – I / Issue – XI / January – June, 2017 / ISSN 2277 3789----------------
impact on the society. To sum up all the arguments stated above, it is clear that better
understanding the consumer buying behaviour through studying and identifying their needs leads
to huge long term benefits to the businesses.
Conclusion
The points to be considered by marketers while designing the marketing strategies are the
psychology of how customer thinks and feels the brand product. What are his /her thought
process, behavior while purchase of the product in the market. Customer knowledge on the
product. Product importance for the consumer or ranking. How consumers are influenced by
their environment, culture, media. Limitations in consumer knowledge or information processing
abilities influence decisions and marketing outcome.
References
1. Mr Rahul .M.Mhabde , MrsRajeshri Son2 Analytical study on Consumer behavior towards “Maggi Instant noodle” in Mumbai –A post ban, Vol-3 Issue-1 2017 IJARIIE-ISSN(O)-2395-4396
2. https://www.slideshare.net/UtkarshVerma12/brand-loyalty-and-consumer-buying-behaviour-towards-maggi
3. https://www.slideshare.net/PraneshSharma/43379925-magginoodlesmarketingplan
SUBMISSION GUIDELINES:
• Manuscripts should be neatly typed Times New Roman font using a font size of 12 (MS
Word format). It must be prepared on a single space and single column with 1” margin set for
top, bottom, left and right of A4 size paper. It should be typed in 12 point Times New Roman
Font.
• Title: The title of the paper should be in a 12 point Times New Roman Font. It should be bold
typed, centered and fully capitalized.
• Author Name(S) And Affiliation: The author (s) full name, designation, affiliation, address,
and email address should be in 10 point Times New Roman Font. It must be centered
underneath the title.
• Abstract: Abstract should be in fully italicized text, not more than 250 words. The abstract
must be informative and explain the background, objectives, methodology, findings and
conclusion in a single Para.
• Keywords: Abstract must be followed by list of keywords, minimum of five to Six. These are
to be arranged in alphabetic order separated by commas and full stops at the end.
• Body of the paper should be well organized into logical sections, sequentially numbered with
all the sub-headings .The preferred order of contents should be as follows :
Headings: All the headings should be in a 12 point Times New Roman Font. These must be bold-
faced, aligned left and fully capitalized. Leave a blank line before each heading.
Sub-Headings: All the sub-headings should be in a 10 point Times New Roman Font. These must be
bold- faced, aligned left and fully capitalized.
Main Text: The main text should be in a 12 point Times New Roman Font, single spaced and
justified.
Figures and Tables: These should be simple, centered, separately numbered and self explained and
titles must be above the tables/figures. Sources of data should be mentioned below the table/figure.
Equations: These should be consecutively numbered in parentheses, horizontally centered with
equation number placed at the right.
• The list of references must be placed at the end of the manuscript and they are supposed to
follow Harvard Style of Referencing. The author (s) are supposed to follow the references in
the following styles:
For Journals: Ball R and Brown P (1968), “An Empirical Evaluation of Accounting Income
Numbers”, Journal of Accounting Research, Vol. 6, No. 2, pp. 156-178.
For Books: Barua S K, Raghunathan V and Varma J R (1972), “Portfolio Management”, Tata
McGraw-Hill, New Delhi, p. 256.
For Surveys: Gupta L C (1991), “Indian Shareholders”, A Survey, Society For Capital Market
Research and Development, p. 174.
For Online Sources: Sukanya Bose, “Regional Rural Banks: The Past and the Present Debate”,
http://www.macroscan.org/fet/jul05/pdf/RRB_Debate.pdf
• It is mandatory on the part of the corresponding author to furnish the following signed
certificate at the time of submission of the manuscript for publication:
DECLARATION LETTER
THE EDITOR
JGMO
Dear Sir/Madam
Please find my submission of Research Paper titled ___________________________
_________________________________________________________ for possible
publication in your journal. I hereby affirm that the contents of this paper are
original. Furthermore it has neither been published elsewhere in any language fully or
partly, nor is it under review for publication anywhere. I affirm that all author(s) have
seen and agreed to the submitted version of the paper and their inclusion of name (s)
as co-author (s). Also, if my paper is accepted, I agree to comply with the formalities
of JGMO and I give my consent to modify the paper if necessary, suitable for
publication.
NAME OF CORRESPONDING AUTHOR:
Designation:
Affiliation with full address & Pin Code:
Residential address with Pin Code:
Mobile Number (s):
Landline Number (s):
E-mail Address:
• Type-written manuscripts prepared using MS Word should be submitted by email to
Papers will be published in the Journal after peer-review process. Authors intending to submit
a paper for publication in the Journal are advised to strictly adhere to the guidelines as
mentioned. The papers not conforming to these guidelines may be rejected. Length of the
Papers should not exceed 10 pages.
==================================================================
SUBSCRIPTION
THE JOURNAL OF GLOBAL MANAGEMENT OUTLOOK (JGMO) is an unfunded
publication. However, JGMO seeks subscription at the following annual subscription rates.
SUBSCRIBER CATEGORY
SUBSCRIPTION
CHARGES
(INR)
SUBSCRIPTION
CHARGES ($)
COMPANIES 2500 80
UNIVERSITY/COLLEGE 1800 60
PROFESSIONALS/FACULTY 1600 50
RESEARCH SCHOLARS 1300 40
STUDENTS 600 20
For subscription, the payment can be made by a crossed demand draft in favour of “Journal
of Global Management Outlook” and send to Dr.Khyser Mohd, Associate Professor &
Executive Editor, Department of Business Management, Telangana University,
Dichpally, Nizamabad – 503 322, (Telangana State) India. You can also reach through E-
Mail: editor_ [email protected], Mobile No.9440979298/9440791831.