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From the Editor's Desk
In India, we are constantly exposed to witness two extreme conditions like highly educated vs Illiterate, economically wealthier vs economically weaker, super scientific reactions vs superstitious beliefs. While Defence Research and Development Organisation (DRDO) develops and launches Agni-V- an intercontinental ballistic missile, a number of people still sacrifices (Ritual Killing) animals to God as a means of appeasing or changing the course of nature. The elite classes of Indians are equipped with modern technical gadgets to access information, to have contacts and to enhance networking etc., whereas, a quantity of Indians are yet to get the basic electrification and communication systems at their home. When one state in India sweats out heavily for the dire need of electricity, another state is donating 600 mv electricity power to central government. R. Thangavelu in his article lays emphasis on Financial Inclusion that refers to a process that ensures the ease of access, availability and usage of the formal financial system for all members of an economy. The current globalised scenario has created lots of challenges for the Indian education system. It is vital to extend the concept of Capacity Building Process to assess the capability of educators to match the global standards in management education explains B. Sripirabaa and T. Sudha Maheswari in their article. Human Resource or intellectual capital is significant for the consistent development of a company proclaims G. Sudarsana Reddy in his articleThe research work of S.Jaya Bharathi, reveals that organizations today are looking for competent workforce and are willing to invest considerable efforts and money to retain talented employees. M. Lokanadha Reddy, P. Mohan Reddy and C. Sivarami Reddy throws lights on customer perception and satisfaction about internet banking. S.Usha in her article explains about implementation of 5S' that stand for Sort (seiri), Straighten (seiton), Shine (seiso), Standardize (seiketsu) and Sustain (shitsuke). Management Consultancy Services is one of the most rewarding careers for professionally qualified and equipped people stresses K.Anantharaman in his article. The applicability of Porter's Diamond Model to Tamil Nadu, India's Detroit written by Dr. Sukanya Ashokkumar is surely an informative reading for people who possess interest in automobiles. Benny J. Godwin's case study on evolution of Audi motors keeps us updated on automobile industry. This issue consists of articles laying emphasis on Financial Inclusion, Development of Indian Education System, Employee and Executive Commitment, HR Accounting, Internet Banking, Lean Manufacturing, Management Consulting and automobile scenarios. Hope this will arouse interest to read and digest. Pleasant Reading! L. GandhiEditor
Land Acquisition As A Factor Affecting State - Society Relations In India and China: Its Implications for Economic Development
Dr. Alagu Perumal Ramasamy1 and T.A. Varghese2
Dr. Alagu Perumal Ramasamy, Assistant Professor (International Business), Loyola Institute of Business Administration (LIBA), Loyola College, Chennai, Tamil Nadu. 2 Mr. T. A. Varghese, Global Head (Human Resources Infrastructure Services Unit), Tata Consultancy Services (TCS), Chennai, Tamil Nadu.
1
ABSTRACT
State expropriation of land can happen in direct and indirect ways. Direct acquisition of land occurs by the State when it uses its power of Eminent Domain to commandeer land that would become useful for the public good. Indirect acquisition occurs when the state colludes with vested interests who acquire land for private gain. Both forms of land expropriation has been seen in both India and China at various stages of their development; from their respective socialist- communist stages to market reforms and liberalization. This commonality has occurred in the background of the vastly different degrees of freedom within political institutions and differing judicial- media systems that have evolved in both countries. It is our postulate that despite irritants that indirect land acquisition can cause - the greater institutional freedoms of media, judicial appeal and relative divisibility between Party, State and Private sector that are available in India would lead to stronger and more stable state society relations in India as compared to China.
Introduction On the Need for the State Control Vs Harmony

Several alternate schools of thought exist on the rationale for the necessity of a State. One school argues that the State is the means to achieve progress and harmony in society. Another alternate view point is that the State is an end by itself, unmindful of the welfare of society. The latter viewpoint we have seen ends up in a repressive state being overthrown be it ancient Rome, the former European colonies, the fall of Romania, Czechoslovakia, Soviet Union and the more recent Arab Spring history is replete with such examples. China's Communist Party system however has survived these past sixty years despite a lack of democratic systems. Key reasons for these are the CPC's ability to create a strong sense of nationalism due to China's outstanding achievements in science, sports and commerce. A nother factor is the gradual accommodative and flexible nature of the CPC since Mao's era - in terms of liberalizing earlier rigid social and economic policies. The demands of the individual rights to property and freedoms are in contradiction to the Marxist - Maoist determinism of the old guard. However in the recent past, the need for social harmony that China values has meant that its approach to property, wealth creation and markets have increasingly embraced capitalistic tenets; additionally fueled of
course by its need to be accepted by the WTO. China has also shown recent flexibility in terms of changes to its legal system. Hence these flexible and stabilizing forces have kept the destabilizing centrifugal forces at check. However instability is always under the surface as seen by mass protests over land disputes that result in local and central governments, having at times, to take diametrically different viewpoints, creating mounting tensions and exposing the weaknesses and internal contradictions of the system. In this paper we discuss a particular instance of such a contradiction, namely the instance of land related expropriation and resultant conflict and we argue in our analysis by examining various factors - that in comparison to India - it will take much longer in China for State Society tensions to be ratcheted down.
The Right to Property & and the Use and (abuse) of Eminent Domain
Property is not merely dyadic power, but triadic power (Carruthers and Ariovich, 2004) in that it also affects the lives of those who do not have land. As we shall examine, in developing countries de jure rights are more the order of the day as opposed to de facto rights ownership as exhibited in developed countries Land, Labor and Capital are fundamental factors of production. The ideological differences over the
possession and distribution of these factors have defined the political landscape of the previous centuries. The possession of land in particular determined the social order of many feudalistic societies in the east and the west. Built on the premises of equality, the Chinese Communist state had retained the ownership of land to itself while it had leased usage rights to the citizens. The Indian Republic however which was built on the ideals of Socialist democracy of the British educated Indian elite built strong private property rights regime that protected the private individual against government. Land was less of an important factor as compared to capital as long as the government was a major player in economic development. But with rise of the private companies and globalization, land has competing seekers resulting in increased value of land. Governments are sought by private sector firms to keep the prices low while the government requires the investors for job creation. Not to mention the ulterior motives (bribery and profit seeking behavior) of government officials in sanctioning such transactions. In this context land has become a valuable factor of production in both China and India. Also we see the headlong trend of land being acquired by the State (Government) using discretionary powers such as Eminent Domain. Eminent domain, enshrined in the Land related laws of the State empowers the State to acquire lands for public use. Eminent Domain is the power of the State to appropriate any property within its territory, held by the State or privately by the citizens, either jointly or individually, to be put to use for the purposes of State building. A precise definition of Eminent Domain, as envisioned by the Courts of Law in the US is, The right which belongs to the society or to the Sovereign of disposing, in case of necessity, and for the public safety, of all the wealth contained in the State, is called the eminent domain. The necessity of Eminent Domain arises only when society as a whole would benefit through State action. Eminent Domain, in the due course of time, was used to authorize companies, privately or publicly funded, to appropriate property for public purposes. It would be evoked for laying railroads, constructing dams and waterways, highways, public halls, parks, government
buildings and other public utilities. An important development in the application of Eminent Domain was compensation. The owner of the property taken had the right to be compensated for the losses incurred due to the acquisition of the property. There have been many instances of abuse of Eminent Domain where the reference to public purpose is at best difficult to justify and resistance to this usage by the Government has led to opposition by the disaffected, because there are common features in the way both the Indian and Chinese governments, one being a liberal democracy and the other a Communist state, approach land. Both of them feel the need to use a) discretionary powers and b) use force to achieve development.
Background on the Political Economies of India and China

While India post independence took the liberal democratic path, and China post 1949 shunned electoral politics both countries had to emerge economically from the backdrop of feudalism and illiteracy. With the earlier colonial heritage creating the political need to be self sufficient and influenced by the Soviet economic model of state control and intervention, India's Oxford and Cambridge educated leaders adopted the middle socialist path with its stress on heavy industry and made the public sector command the heights of the economy. China under Mao followed a similar strengthening of the role of the State in industry and agriculture, albeit with far more restrictions on creation, ownership and usage of private wealth and enterprise. Predictably enough, the ensuing losses incurred by these State enterprises in both countries led to the expanding of the role of the private sector, with China starting its reform process a full 13 years ahead of India. What we have seen since is that China's totalitarian environment has enabled it to push infra structural and reforms process at a much quicker pace than India.
The Political System and Reactions to Land Acquisition Resistance in India

As compared to China, where the Government, Party and Judiciary originate from the all powerful CPC, in India, the separation of powers between the ruling party, judiciary and government and the opportunity for the people to electorally choose between multiple parties ranging from the centre left Indian National Congress
KPR International Journal of Management Vol.1, Issue.1, July 2012
(INC), the right wing Bharatiya Janata Party (BJP), the Communist Party of India (CPI) and the Communist Party of India (Marxist) - and coalitions thereof with various regional parties enable expression of people power through the multi - party pluralistic model and democratic institutional systems. The Nandigram and Singur agitations and multiple other land expropriations leading to the passage of the 2011 Land Acquisition Bill is an example. Such campaigns were the result of long simmering resentment over the the original Indian land acquisition bill of 1894, devised to cater to colonial requirements and which remained unaltered long after Indian independence. The increasing resentment among the dispossessed especially among the rural farmers has resulted in $ 98 billion worth of investment currently put on hold because of the inability to implement eminent domain (Mehul, 2008). Examples are numerous, ranging from steel to energy, with companies such as POSCO, Arcelor Mittal, Tata Steel, Tata Motors, GMR Energy, Jindal and Vedanta trying to work out feasible arrangements with recalcitrant villagers, who are faced with losses to their livelihood and indeed their very existence. This resistance (mostly organized and supported by several local self interest groups and NGOs) comes after notification and acquisition proceedings commencement by authorities. In India as there are only 10 Million of the population engaged in service industries (the famed software industry notwithstanding) and a staggering 550 million surviving on rural farm land it is always a media created perception that India lives only in the Metros and 2nd and rd 3 tier cities. What makes the rural resistance very strong also is the lack of transparency in valuation, replacement jobs, and compensation. Also for example in Orissa, no more than 5 acres of land can be compensated elsewhere, regardless of how many acres are acquired (Mehul, 2008). Some of the companies named above have created jobs, but also have simultaneously in the same areas created unemployment on a factor of 8:1. Issues of displacement and resettlement are left to government agencies which lag tremendously in finding equivalent domiciles and livelihood for the displaced. The Political System and Reactions to Land Acquisition Resistance in China Under the 1982 constitution, urban land was owned by the state and rural land is owned by the collectives. As
local and central governments administer the collectives, effectively all land is controlled by the State (Ye, China-Window.com). The 1988 amendment to the constitution created the Land Use Right (LUR) system whereby land use rights could be transferred. Land Use therefore became distinguishable from land ownership. Registration and transfers of land via land use rights are means by which urban property transactions take place. This LUR system is based on the Hong Kong model. LUR's are given for a period of 40-70 years with a lump sum payment and yearly rent paid by the lessee. The State Land Administration (SLA) and the Property Management Department (PMD) controls the issue of these LUR's. Various problems exist here. Property information is poor and town planning rules non existent. A rampant black market exists where free land allocated earlier - are sold above market rates. Government officials use public money to compete in auctions with private developers. PTF's (property taxes and fees) are very arbitrary and vary from state to state. No access exists to earlier transactions data. Under the LUR, pricing is based on negotiation and auctions. Bench mark data is used by government to set pricing. If on the other hand, land outside cities and towns were to be used for urban development, the local government must first acquire the land from the collective and then lease it to the land user. Collective ownership of rural land is subject to control by local government ie., party officials , via requisitioning collective land for public use (or eminent domain). Local governments are therefore able to sell cheap rural land developers and the ensuing revenues are used for urban development. Prior to 1998, land was not seen as an asset and there was no land market. Hence farmers who were dispossessed of their lands were relocated with jobs in SOE's and consequent hukou permits which in those days was more valuable than cash. Post 1998, with rapid urbanization and development, land acquisitions became the norm by local government. The Land Acquisition Law 1998 enabled acquisition of land via compensation according to certain norms (Ding, 2007) However what occurred in reality was that the eminent domain clause was used by Chinese municipalities to pressurize and obtain land from rural village collectives at significantly lower than market price. Though the
LAL specifies land acquisition to be used for public use, large scale commercial development of land was seen on land acquired by the government and sold to private developers. What was apparent is that it is the impact of globalization, most specifically the Chinese hegemony in manufacturing industry that is driving the ever increasing need for land by private and SOE enterprises. China manufactures 75% of all worldwide LCD and TV's, 1/3rd of the air conditioners, computer monitors, luggage, microwave ovens, 1/2 of the motor cycles, rd th 2/3 of DVD's, and 3/4 of all toys manufactured in the world. The Chinese government and Party are ardent supporters of this industrialization, realizing that they are at that stage in world history where the comparative advantage of the factors of production is currently to their advantage. This may change as we hear of Chinese jobs being considered to be shipped to lower cost countries in Vietnam due to the rising Chinese wage bill (Powell, 2011) but that is in the future. In any case the LAL of 1998 also did not fully address the issues of the transition from a planned to a market economy with issues of poor valuation, inadequate compensation, ignoring public interest as also no guarantees for replacement of livelihoods (Li, 2003) While fiscal revenues and urban facilities improved tremendously, inconsistent land compensation and inadequate resettlement subsidies resulted in heartburn among dispossessed farmers, some of whom were too old to take advantage of urban job offers. Cash compensations that replaced job offers were subject to inflation and poor investment opportunities available. Also this leads to grievances whereby peasant rights were sought to be addressed. Informal rights assertion or xinfang was the means by which rights assertion in legal rural disputes is exercised (Pils, 2008). However while these rights assertion may make its way through the upper reaches of the legal system i.e. the Supreme People's Court their direction to the local courts to render justice is not listened to. Central powers are therefore unable to control local authority. Even intermediate successes at the provincial court levels are not respected by the local government. Initially all requisitioned land was to be given for purposes of factory creation and jobs for the displaced, but mostly ended up as commercial developments including flats that peasants could not afford to buy.
Land valuation methods are also suspect as future commercialization determines rates. Promises of relocation, alternate jobs and Hukou registration did not materialize for displaced peasants. What was also observed was that the village groups in which collective ownership lies, was impotent in the face of demands of local party officials. This hybrid system of property laws i.e. - a socialist system with continuous changes to a market based future creates uncertainty for the rural population. The current system and its, supporting legal framework leads to undervaluing property and prevents the peasant from participating in China's economic prosperity. The average rural household makes just 1/3rd of the urban household in China and the gap is widening (James, 2007) . Land seizures have resulted in a loss of respect for the Party in the rural areas. To address the above issues, the Real Property Right's Law (RPRL) was passed in 2007 which was hailed to be a significant milestone in transition to a market e c o n o m y. H o w e v e r l a n d c o m p e n s a t i o n & expropriation are not yet resolved with the passing of RPRL. Why will it take longer in China to Stabilize? We suggest that unrest due to land expropriation would have a negative environment on the long term business environment in China as compared to India - due to the lack of corrective mechanisms in China such as an independent judiciary, media and Non-Governmental Organizations (NGOs). In the absence of such agents that highlight the deficit in governance, it will be very difficult for the State to address the issue. Lack of Judicial Independence Confucian ideology and mediation prevailed till 1949 after which a Marxist Leninist layer was added on to Confucianism and mediation. Post 1978 was when a legal system was introduced to deal with the demands of a growing economy. The growing business demands made a situation where business interests took precedence over civil law and individual freedoms. What is also significant is that in China the Communist Party is the ultimate authority. The State Council, Judiciary, Civil Society and the media are organs of the Communist Party that are mandated to execute the policies developed by the Party. The Judiciary, unlike
in India and the U.S., is under the control of the CCP. The lower level Courts come under the Provincial Party Secretaries who have significant control over the careers of the Judges. Judges are meant to promote the interest of the State. The CCP's Political and Legal Committee has the power to intervene in deliberations, and even to overturn verdicts issued. Secondly, funding for the Courts comes from the government. In many cases the Party orders the Courts which cases should and should not be heard by the Courts. Secondly, Constitutional law is less developed. The idea of Constitutional protection to the citizens has not gained enough currency in China. Particularly when Citizens assert their rights against the State, the Courts have been systematically toeing the line of the Party. In China, the concept of defendant lawyers itself is new. Lawyers are seen representing the State rather than representing their clients. Lawyers defending clients, particularly human rights activists, get rounded up and are imprisoned. Of the 120,000 lawyers in China, hardly any take criminal cases, let alone human rights cases. Only a few lawyers have taken it upon themselves to litigate sensitive cases. Licenses of lawyers get delayed for renewal as they were seen to have defended Tibetans, Falun Gong and other politically sensitive clients (Ford, 2009). Also the number of lawyers in China is inadequate in terms of their ability to service cases. The Center for Strategic and International Studies reports that there are 120,000 certified lawyers, 12,000 law firms, and 300 law schools. This is as compared with 2000 lawyers and 2 law schools in 1979. In addition, the infrastructure lacks capacity; for example, there is one lawyer per 10,000 people in China (the United States ratio is one lawyer per 550 people). Therefore lawyers, in the Chinese Legal System, represent the State and protect the interests of the State. However, the attitudes towards defendant lawyers are definitely changing. Nevertheless, tensions between the old and the new system are a reality. According to the US Congressional Executive Commission on China, by 2003, nearly 500 defense attorneys have been arrested. The provisions of Article 306 of the Chinese Criminal Law that prohibits evidence fabrication have been abused to charge defendant lawyers. In many cases the charges have been unjust and with criminal intention. Hence lawyers in China are not free to represent their clients
Thirdly and finally, judicial remedy is hard to obtain as the system works more from the perspective of completing the cases rather than resolving the issues. The Judiciary tends to give stringent punishments with the motive of maintaining peace and order rather than ruling on the causes of such behavior. Thus the common man in China finds the Judiciary opaque and unapproachable. Very importantly, the higher Courts, unlike in India or in the U.S., have very limited influence over the lower Courts. In fact, China's lack of an independent judicial system is the central lacunae in an environment where individuals have no effective recourse against the CCP, officials and government institutions. In India on the other hand, the judicial system is stratified into various levels. At the apex is the Supreme Court, which is followed by High Courts at the state level, District Courts at the district level and Lok Adalats at the Village and Panchayat Level. Judges in a High Court are appointed by the President of India in consultation with the Chief Justice of India and the governor of the state. Judges in the Apex Supreme Court and the lower High Courts are appointed by the President of India in consultation with the Chief Justice of India and the governor of the state (in the case of high court judges). Hence structurally the independence of the judiciary is ensured and freedom of lawyers are ensured. The defects are a slow moving system, large back log of cases and corruption at least at the lower courts. Lack of Meaningful Redress Systems In order to provide a channel to the citizens for expressing their grievances, the Chinese government instituted a petitioning system called the Xinfang system. Citizens were allowed to appeal either in person or through postal petitions to the higher authorities in the government their grievances. This system, although has been significant in creating the necessary channel for State Citizen interactions, and has been instrumental in keeping a check over the erring officials, has systemic drawbacks. This is due to the lack of legal and political avenues available to Chinese citizens to seek redress. A responsibility system that on one hand penalizes local party officials if mass protests and petitions occur and on the other hand - an awareness by local citizens that
this then is the way to attract the attention of higher party officials has led organized mass protests and an increase in petitioning (known as Xinfang). In fact the judicial system has seen the number of civil cases stagnant at 4 million cases since 1995, whereas the increase in petitions received at the Xinfang offices amid mass protests have increased exponentially. Exact figures are not available. It is reported that between 2003 and 2007 over 10 million complaints have been received. The quality of redress is however far from satisfactory. There are also reports of agents employed by governments to detect and chase out petitioners from reaching Beijing. There are instances of petitioners being kept in illegal detention, black jails, to discourage them from petitioning. Reliable information about the trend can be found from China Daily. In a report on 2nd October 2009 titled Complaint Bureau Busiest Office in Beijing, it is mentioned that the composition of xinfangs received have varied over time. During the late seventies most of the petitions were related to the excesses during Cultural Revolution. In the eighties the petitions have been related to economic issues. Over the nineties the petitions focused on enterprise reforms, land acquisition and environmental pollution. The Central government sees Xinfang as an important component in improving governance in the country. It is underlined by the statement made by Premier Wen Jia Bao, China is at a critical point in its development, in which certain problems may loom large. To build a harmonious society, we need to learn to resolve problems and turn negative situations into positive ones. For the system to be effective, it has to be robust in its capacity both to handle the complaints and to implement the system of fixing accountability and punishments. This seems to be lacking. This is because of many reasons: One, the procedure to be adopted for petitioning is cumbersome and has frustrated many petitioners. Secondly, petitioning in person has been found to be effective while postal petitions have more often been ignored. China, being a huge country, it will be difficult for aggrieved individuals to travel from far away distances to Beijing. This creates an administrative barrier for successful reforms. Secondly, fearing that Xinfang could go out of hand, the Government has instituted controls on collective appeals. The limit is not more than five people
should be involved in a collective appeal, although it is usual that collective appeals involving more than thirty people are common. The State tolerates such deviations from the rules in order to prevent an escalation of frustrations. However, the fear to prevent any mass organizing that could jeopardize the control of the Party is always there. Although none of the protests have the coordination and the network to overthrow the power of the Central government, the provincial government heads may not like to see the petitions reach the Central Government in Beijing. This is because their careers could be affected if the petitions are large in numbers. Therefore the local governments and the provincial governments sometimes adopt harsh measures to prevent petitioners from reaching the top echelons of the Party. The xinfang system has some similarities to the Right to Information (RTI) in India but the Xinfang system misses on the main elements of the RTI system followed in India. Importantly, the RTI Act allows the petitioners to sue the non-responsive government official in an independent Court. Indian Courts have in innumerable number of cases sided with the petitioners. But, in the case of China, xinfangs can be used to complain about a lower level official to a higher official, but the outcome of such petitioning need not be really meaningful because both the person against whom the complaint is made and the person to whom the complaint is addressed belong to the Party and higher officials may choose not to act because of vested interests. This is particularly so when the higher most members in the Central Committee are unreachable. The failures of the Xinfang system have encouraged street protests. Local strikes, demonstration and protests (i.e. mass incidents) have gone up from 74,000 to 180,000 in 2011 (Lafraniere and Wines, 2011). We predict that in 2006 and for some period thereafter, China's social order problems can be controlled within a certain sphere and level, and that macro-level social order can be held stable. But it should be observed that China's current overall level of stability has been achieved within a high-pressure environment of unceasing, tough public security measures [yanda], and that the foundation of social order is relatively fragile. What was also noted was that the central authorities in Beijing had called for more effective mechanisms to deal with the growing problem of mass incidents. The
number of such incidents had risen explosively in recent years: from 10,000 to 60,000 between 1993 and 2003 (those involved increasing from 700,000 to 3 million). The article's analysis of relevant Chinese sources suggested that mass incidents had three main features: first, they tended to erupt without warning and develop rapidly; second, they were characterized by tight organization and intense action; third, their origins tended to lie in action taken against the masses' vital interests (e.g., rural land requisition, demolition of urban housing, forced removal of residents, inadequate compensation for migrant resettlement). A Dagong bao article quoted Zhai Taifeng (Vice-Chairman of the Chinese People's Political Consultative Conference [CPPCC] Standing Committee) as saying that existing arrangements to deal with social disruption associated with mass incidents were inadequate. Hence Zhai's suggestion that a three-level national, provincial and city mechanism be put in place to anticipate, assess and address social problems in order to nip mass incidents in the bud. The urgency of such measures was highlighted in the increasing frequency and seriousness of social disorder against a background of widening income disparities and uneven distribution of interests (see also Dagong bao, 14 July, which noted that in Guangzhou alone, over 300 mass incidents had occurred since the beginning of the year, of which more than 200 were described as major incidents).
governments for a long time. Chen Guidi and Wu Chun Tao, reporting on the rapacious behavior of local officials and cadres in the villages of Anhui province, mention that taxes are collected from peasants on many trivial pretexts. For example peasants are charged for cooking at home, raising pigs, getting married and for having a bad attitude. Such discretionary behavior by village cadres has led to frustration and violent reactions from the peasants. It is not uncommon to find resistance in the form of mass mobilizations and resulting violence in many villages. Aware of rampant corruption at the village level, the Central government experimented with a uniform tax system in the 1990s and based on the success of the model in reducing the burden of the peasants, the uniform tax system was implemented in 2003 across the country. Farmers were to be taxed a total of 8.4% (7 % tax and 20% surcharge) across the country. Instituting a uniform tax code was one measure. Yet another measure was to institutionalize book keeping and periodic auditing. The Township governments were authorized to monitor book keeping at the village level and in some cases accountants were appointed by township governments and they were asked to report to the township government and not to the village committees. These measures reduced the burden on the peasants to some extent. In the province of Anhui, for example, the tax burden on the peasants reduced by 1.7 billion Yuan, or 31 percent. Such measures have reduced the discretionary powers of the village cadres and wasteful expenditures, particularly wining and dining, have been reported to have come down in some provinces. In 2006, realizing the enormous costs involved in collecting the Agricultural tax from the vast and remote stretches of the country, the Central government abandoned it. Needless to say, the peasants were relieved of their burden. But, this measure aggravated the dire financial situation of local governments both at the village and township levels. Village and Township governments that were generating revenues from peasants see that agriculture is not going to give the desirable revenues and in any case revenues from diverting the lands for real estate development is a lot more profitable. Revenues from real estate property development are probably a hundred times more
Fund generation for local governments

The local governments have been starved of funds. Agricultural and rural tax reforms, initiated by the Central government in Beijing, aimed at reducing the burden of peasants have limited the revenues available for the local governments. With revenue streams drying out, these fund starved local governments see land acquisition and development of industrial complexes as a profitable means of revenue generation. Adding to this scenario, there are many cases of collusion among corrupt Party officials and the businessmen which have put the peasants in a disadvantageous position. In the absence of an effective and innovative mechanism to address the financial distress at the local governments' level, the confrontations between the peasants and the government officials will continue and relationship strained. Peasants in China have been subjected to arbitrary tax collections by the village and township level
profitable than agricultural revenues and hence there is large diversion of agricultural lands for real estate, TVEs and other industrial uses. There are two other aspects that feed to the ongoing frenzy of land conversion. One, is the desire to push economic growth at the local levels. Targets are set by the Central government for infrastructure development, industrial development and contribution to the national GDP. These targets have to be met by the provinces, which distribute the burden to the local governments which in turn apply pressure on the local resources available. With traditional sources of revenue drying up, selling land at a premium to private firms or other entities has become a lucrative option. Second, is the career mobility of cadres. There is a positive relationship between economic performance of the provinces and the political mobility of the leaders from the provincial level to the Central level, i.e., the leaders at the provincial level who have brought more money to the coffers have a better chance to be move up to the Central Government level. Ambitious politicians try their best to generate revenue by employing all the means available to them. This adds to the confrontation with the peasants. To summarize, the local governments have a real incentive to promote industrial development, resulting in diversion of lands for non agricultural purposes. The peasants who had to bear the arbitrary fee collection, which only ate into their earnings, by the local officials are now faced with a greater threat of losing their land completely. This will no doubt push the peasants into organizing against the local government. This can be seen from the protests in Wukan, a village in southern China where the entire administration has been evicted out by the villagers.
the local populace. The Central government, realizing the magnitude of the problem, has set up a joint inquiry involving the Ministry of Supervision, Ministry of Land Resources, Ministry of Construction, Ministry of Finance and the National Audit Office. According to the statistics available, a slew of high ranking officials have been caught for illegal land related activities. Of the 1221 officials who were issued criminal charges from 2001 to 2006, 500 were charged in 2006 alone. Upto July 2011 about 30,000 illegal land use cases have been registered, an increase of 8 percent over the same period the previous year. Rural farm land is acquired at four times the average value of the produce in the preceding three years. Home owners compensation has been recently upgraded with the help of a national regulation. It provides, for instance, that compensation paid to homeowners should not be lower than the sum of the market price of the property, the cost of moving and temporary accommodation, and losses caused by suspension of business. Compensation and resettlement are generally described to be unsatisfactory. Up to 45 millions have been resettled in China till 2004. It is said that one third of them remained in poverty after resettlements. Since 1985, there has been renewed interest in resettlement and rehabilitation and the compensation level have become more realistic.
Lack of effective Media and NGOs

Generally the media in China is not free to report anything that will show the Party, the State, the People, the traditions and their beliefs in bad light. Any negative publicity is dissented and the government can resort to extreme measures to curtail press freedom. Imprisoning journalists for extended periods are not uncommon in China. While the newspaper media, television and all other information media belonged to the government some twenty years ago, the environment has changed considerably since the 1978 reforms with private players being accommodated in the market. Private news media is a favorite among the people that caused considerable tensions between the government and the media. The government, with its ability to use excessive force, has been acting on the media, with an intention to
Lack of Compensation
Chinese local governments, both in the urban areas and the rural areas, see land as a lucrative source of income. With GDP growth being the primary objective local governments use land deal revenues to promote their statistical figures in the GDP map. It was found through satellite imagery as much as 80 percent of all acquisitions in seventeen cities is illegal. Although the national average is around 22 percent, some regions have been heavily devoured of arable land causing concern for the central government and unrest among
control the media. There are strict codes of procedure for foreign correspondents. The local journalists face even stiffer regulations. Reporting on political matters, protests, corruption, outbreak of any diseases and even accidents have to be in line with the government's line of thinking. Government regularly issues directions to media about what news to print and what not to print. Essentially, the government is concerned that reports should not create a mass revolt against the government. Hence if the government sees any report that may provoke public protests, the journalists concerned and the media houses involved could face a violent retribution from the State. Apart from the traditional Government Media reporters' conflict, a new trend that is emerging is the media corporate conflict in which the State machinery colludes with the corporate. Thus when reporters carry information that show a particular corporate (which could be involved in land grabbing) the corporate use the police to threaten the reporters. Sometimes use of mercenaries is also reported. Apart from the media control, NGOs and related social service organizations that could provide relief to affected rural communities have also restricted freedoms. For example in 2008 there were 387,000 citizen social organizations in China. Even though the number may look impressive, the freedoms enjoyed by these organizations are quite limited. Unlike the Indian environment where NGOs are in fundamental understood to be functioning independent of the government, NGOs in China can only work in close relationship to the government. In 2010, regulations were passed whereby foreign funding for NGO's had to be notarized by SAFE (State administration for foreign exchange). Only certainly types of NGOs (GONGO's) that are found to be beneficial for the purposes of the government may be able to get the approval (Yuyi,). Board members will have to be approved by the government as well. However, there are regional disparities in the policy governing NGOs and hence some local governments may be more flexible towards NGOs. The fact however remains that in general NGOs in China face greater government pressure than India. Furthermore, many factors, such as the lack of control
on the indiscriminate use of power by state agents, an incomplete and ineffective legal system and constant fluctuations in government policies, have all contributed to an uncertain environment for NGOs. To operate in this environment, NGOs need to cultivate official patronage in order to gain access to bureaucratically-allocated resources and political protection.
Conclusion
We predict that social unrest in China - as triggered off by illegal land acquisitions and violations of eminent domain by local officials to take considerably longer to settle down as compared to the social unrest in India due to the same factor. In India on the other hand, avenues to resolve unrest due to land acquisitions exist. The courts are weighed down with a backlog of cases and a slow moving judicial bureaucracy, but it cannot be denied that justice can be hoped for- albeit after decades in some instances. However wherever land acquisition attains political overtones, political pressures can be brought to bear upon courts by increasingly non mainstream political parties which enable the legal system to move with uncommon haste to support the underprivileged. Also in India, we are seeing the Supreme Court i.e. the highest court in the land, routinely passing adverse remarks (strictures) against state governments when land acquisitions are done via violating the land acquisition act. This is because the Judiciary of India is an independent body and is separate from the Executive and Legislative bodies of the Indian Government. Independence of the Judiciary from the Executive has therefore been a hallmark of Indian democracy. Citizenry therefore undertake protests and demonstration to highlight the slow movement in case resolutions or corruption, but once this attention is picked up by the media and self seeking (at times) political parties, the redress system is believed to find solutions. The legal and political system in India though slow moving due to a high backlog of cases, are subject to public opinion through an active media which in turn forces the political parties provide support for the underprivileged. We see this in the case of POSCO mentioned earlier, in the case of the NOIDA lands
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acquired by eminent domain by the UP government and in the increasing grass roots NGO's that highlight oppression by local and state governments. NGO's or civil liberties organizations in India do not require vetting for political beliefs by government authorities unlike china. Adequately compensating land that is acquired by the government has become the trend and is now being institutionalized through the 2011 Land Acquisition bill. China therefore is in a critical stage of its economic liberalization. On the one hand this liberalization has raised per capita income to USD 3000 from USD 1000 from two decades ago (source) and has created urban jobs and phenomenal infrastructural development. Chinese companies export a wide variety of increasingly value adding export items. However the Chinese attempts at economic liberalization have also led to illegal land acquisitions, corruption and failure to pay back wages. A system where the local party officials controls the local courts and village committees, an inability for citizenry to channel their frustrations through either legal or political channels has resulted in an increasingly underground protest movement that is seen to have the potential for an organized opposition. While currently protests are aimed at local officialdom and not challenging the central status quo, increasingly it is being felt that unless effective participation of non party citizens in committees and government is sanctioned and party powers over institutional channels reduced, the bottled up resentments due to inequalities will keep leading to increasing social unrest that can pose a challenge to Party. Realizing this, China on the th 90 anniversary of the communist party is orchestrating a 'red campaign to extol the virtues of the party and this campaign is spearheaded by several prominent Party top brasses including Bo Xilai and the Mayor of Chongqing. In India on the other hand, the freedoms of media, relatively independent judiciary and a vibrant electoral system with increasingly fragmented vote banks create an environment where social protests are not seen as the only form of redress - as in China. Despite a lower per capita income, GDP rate of growth, lower FDI inflow and poorer infrastructure, we conclude that India due to its legal and political avenues of redress makes a more compelling case for long term business and economic stability vis a vis the unrest emerging out of expropriation and inadequate compensation of land.
References
1. 2. Carruthers and Ariovich, The Sociology of Property Rights, Annual Review of Sociology, Vol. 30, pp 23-46. U.S. Supreme Court, Pollard's Lessee v. Hagan, 44 U.S. 3 How. 212 212 (1845), Available online at http://supreme.justia.com/cases/federal/us/44/212/case .html Mehul, Srivastava, (2008) Why Indian Farmers are Fighting Nano, Business Week, Available online at http://www.businessweek.com/stories/2008-0827/why-indian-farmers-are-fighting-tatasnanobusinessweek-business-news-stock-market-andfinancial-advice 4 Ibid, 3. Ye, Xiannian, China Real Estate Market - Laws and Regulations Concerning Land and Real Estate, Available at http://www.china-window.com/china_market/ china_real_estate/china-real-estate-market--7.shtml Ding, Chengri 2007 : "Policy and Praxis of Land Acquisition in China," Land Use Policy, Vol. 24, No. 1: 1-13. Powell, Bill (June 2011), The End of Cheap Labor in China, Time Magazine, Available at http://www.time. com/time/ magazine/article/0,9171,2078121,00.html Li, Ping J.D. (2003), Rural land tenure reforms in China: issues, regulations and prospects for additional reform, Availableat http://www.landesa.org/wpcontent/uploads/ 2011/01/LP-RuralLandTenure Reforms.pdf Pils, Eva (2008), Peasant's struggle for land in China, World Justice Forum, Vienna, Available at http://www.lexisnexis.com/documents/pdf/200809240 43325_large.pdf
10 James, Benjamin (2007), Expanding the gap: How the rural property system exacerbates China's Urban Rural gap, Available at http://www.velaw.com/uploadedfiles/ vesite/resources/expandingthegap.pdf 11 Ford, Peter, (2009), China guts budding civil rights movement, The Christian Science Monitor, 28 May 2009, Available at http://www.csmonitor.com/ World/Asia-Pacific/2009/0528/p06s04-woap.html 12 Congressional Executive Commission on China, Defense Lawyers Turned Defendants: Zhang Jianzhong and the Criminal Prosecution of Defense Lawyers in China. 13 Complaint bureau busiest office in Beijing. China D a i l y, 2 0 0 7 - 0 9 - 0 2 , Av a i l a b l e a t : h t t p : / / w w w. c h i n a d a i l y. c o m . c n / c h i n a / 2 0 0 7 09/02/content_6142475.htm
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14 Lafraniere, Sharon, and Michael Wines (2011), Protest Over Chemical Plant Shows Growing Pressure on China From Citizens, The New York Times, Available at: http://www.nytimes.com/2011/08/16/world/asia/16dali an.html?pagewanted=all 15 Quarterly Chronicle and Documentation, July September 2005, The China Quarterly, 2005 16 Ibid, 15 17 Chen Guidi, Wu Chuntao, Will the Boat Sink the Water: The life of China's Peasants, Public affairs, 2007 18 Fubing Su and Dali L.Yang, Elections, Governance, and Accountability in Rural China in Discontented Miracle: Growth, Conflict and Institutional Adaptations in China, ed by Dali L. Yang, World Scientific Publishing Co. Ltd., 2007 19 Thomas P. Bernstein and Xiaodo L, Taxation without Representation: Peasants, the Central and the Local States in Reform China, The China Quarterly, 2000. 20 Tianfu Wang and Bobai Li, Resources and Strategies: Conflict and Their Consequences in the Chinese Real Estate market, in Discontented Miracle: Growth, Conflict and Institutional Adaptations in China, ed by Dali L. Yang, World Scientific Publishing Co. Ltd., 2007 21 Bo, Zhiyue (1996), Economic Performance and Political Mobility: Chinese Provincial Leaders, Journal of Contemporary China, Vol. 5. July, Issue 12, p 135. 22 Over 20 percent of land acquisitions in China's cities illegal, People's Daily Online, 27 7 2007, h t t p : / / e n g l i s h . p e o p l e d a i l y. c o m . c n / 90001/90778/6272123.html 23 China to scrutinize all land sales since 2005, people's Daily online, 14 August 2007, http://english. peopledaily.com.cn/ 90001/ 90776/6238838. html
24 Illegal land use poses major threat, People's Daily Online, 18 Sept. 2007, http://english.peopledaily. com.cn/ 90001/90776/90884/ 6264973.html 25 China Reports 30,000 Illegal land Use Cases in the First Half of 2011, People's Daily Online, 13 July 2011, http://english.peopledaily.com.cn/90001/90776/90882/ 7437999.html 26 China to further standardize land acquisition and compensation practices, People Daily Online, 15 July 2 0 11 , h t t p : / / e n g l i s h . p e o p l e d a i l y. c o m . c n / 90001/90776/ 90785/7440893.html 27 Chen Shaojun, Shi Guoqing, Zhu Wenlong and Xu Jiajun, Participatory resettlement: Issues and Processes in Resettlement in Xiaolangdi and Hexi , in Community Participation in China: Issues and Processes for Capacity Building (eds) By Janelle Plummer, John G. Taylor, Great Britain. Dept. for International Development, GHK International 28 Bennett Isabella, Media Censorship in China, Council for Foreign Relations, http://www.cfr.org/china/mediacensorship-china/p11515. Also see What Chinese Censors Don't Want You to Know, The New York Times, March 21, 2010. http://www.nytimes. com/2010/03/22/world/asia/22banned.html?_r=2&scp =30&sq=china+internet&st=nyt 29 Anger over attacks on Journalists in China, http://www.ftchinese.com/story/001033998/en 30 Civil Liberties in China, Xiaobing Li, Greenwood Publishing Group, Page 43. 31 Yuyi, (2008), NGO-State Relations in Contemporary China: The Rise of Dependent Autonomy, Taylor & Francis 32 Non-governmental Organizations in Contemporary China: paving the way to civil society?, Qiusha Ma, Routledge, 2006
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Dr.R.Thangavelu1
Financial Literacy is a Key to Financial Inclusion: An International Perspective

Dr.R.Thangavelu1
*Head & Associate Professor, Department of Business & Economics, Modern College of Business &Science, (Affiliated with University of Missouri, USA), P.O. Box 100, PC 133, Bhowser, Sultanate of Oman.
ABSTRACT
The former Union Finance Minister His Excellency Pranab Mukherjee said that Financial literacy is a prerequisite for effective financial inclusion, which will ensure that financial services reach the unreached and under-reached sections of the society. The global economic crisis though its origin from financial sectors of industrial countries, will likely shift the focus of future financial inclusion policies. Post crisis opportunities to promote financial inclusion hinge the risk posed by the transactions of the poor. Financial inclusion is the ability to access essential financial services at affordable costs to sections of disadvantaged and low income segments of society in an appropriate form. Such access is widely recognized as essential for social inclusion, and financial exclusion has been the subject of considerable research and policy activity in worldwide in recent years. Financial education is important to ensure that people are equipped with the necessary tools to be financially included. There has been an increase in the need for financial education because of the evolution of the banking industry. This is more important that the global is moving towards a more digital age where information exclusion can also lead to financial exclusion. The financial exclusion is a complex and diverse phenomenon and that the link of low financial literacy levels in people who are financially excluded is an explanation as to why exclusion occurs. A considerable body of research has been undertaken and information accumulated about financial inclusion and financial exclusion. The challenge is not about undertaking further research, but improving how information is shared, and ensuring more effective use of existing evidence through financial Literacy and education. The objective of this paper is to overview of Financial Literacy is a Key to Financial Inclusion: an international perspective by disseminating the information so gained through various research bodies to people. Keywords: Global economic crisis, Financial Literacy/ Education, Financial Inclusion.
INTR
Financial inclusion refers to a process that ensures the ease of access, availability and usage of the formal financial system for all members of an economy. An inclusive financial system has several merits. It facilitates efficient allocation of productive resources and thus can potentially reduce the cost of capital. In addition, access to appropriate financial services can significantly improve the day-to-day management of finances. Thus, an all-inclusive financial system enhances efficiency and welfare by providing avenues for secure and safe saving practices and by facilitating a whole range of efficient financial services. The importance of an inclusive financial system is widely recognized in the policy circle and recently financial inclusion has become a policy priority in many countries. Initiatives for financial inclusion have come from the financial regulators, the governments and the
banking industry. Legislative measures have been initiated in some countries.
Financial Inclusion in an International Perspective:

In the United States, the Community Reinvestment Act (1997) requires banks to offer credit throughout their entire area of operation and prohibits them from targeting only the rich neighborhoods. In France, the law on exclusion (1998) emphasizes an individual's right to have a bank account. In the United Kingdom, a 'Financial Inclusion Task Force' was constituted by the government in 2005 in order to monitor the development of financial inclusion. The banking sector has also taken a lead role in promoting financial inclusion. In India, the Reserve Bank of India (RBI) has initiated several measures to achieve greater financial inclusion, such as facilitating
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'no-frills' accounts and General Credit Cards for low deposit and credit. The German Bankers' Association introduced a voluntary code in 1996 providing for an 'everyman' current banking account that facilitates basic banking transactions. In South Africa, a low cost bank account called 'Mzansi' was launched for financially excluded people in 2004 by the South African Banking Association. The global economic crisis, despite its roots in financial sectors of industrial countries, would likely shift the focus of future financial inclusion policies. The fundamental rethinking of the role of government in finance triggered by the crisis has built huge momentum for regulatory change. Post crisis opportunities to promote financial inclusion hinge on the careful analysis of the risks posed by the transactions of the poor. There is growing interest in making more effective use of research to improve policy and practice in the UK. For example, the British Academy recently noted that: researchers need to recognize what they have to offer public policy, and look to enhance the ways in which their work can be better exploited, including ...networking and outreach to policy-makers. Policymakers say that they are often unaware of the research expertise that is available, because academic research teams are not effective at promoting what they have to offer. A considerable body of research has been undertaken and information accumulated about financial in/exclusion in the UK. The proposition is that financial exclusion is a complex and diverse phenomenon and that the link of low financial literacy levels in people who are financially excluded is an interesting explanation as to why exclusion occurs. Literature on financial exclusion has defined it in the context of a larger issue of social exclusion of certain groups of people from the mainstream of the society. Financial exclusion as referring to those processes that serve to prevent certain social groups and individuals from gaining access to the formal financial system. Thus the definitions on financial inclusion/exclusion, conceptual as well as functional, provide an indication that financial exclusion occurs mainly to people who are at the margins of the society. It has been observed
that even 'well-developed' financial systems such as those in the US and the UK have not succeeded to be 'allinclusive' and certain segments of the population remain outside the formal financial systems. A growing literature has evaluated both the state of financial literacy and the effectiveness of financial education programs aimed at improving financial decision making. Honorable Union Finance Minister Pranab Mukherjee said that Financial literacy is a prerequisite for effective financial inclusion, which will ensure that financial services reach the unreached and under-reached sections of the society. In recent years the Indian Government, particularly the Reserve Bank of India, has been aggressively working to increase the financial knowledge of the general population. The RBI has introduced Financial Literacy and Counseling Centers (FLCC) to provide consumers with the tools to make better credit choices (RBI 2007).
Concepts Financial Inclusion

Financial inclusion is the process of ensuring access to appropriate financial products and services needed by all sections of the society in general and vulnerable groups such as weaker sections and low income groups in particular at an affordable cost in a fair and transparent manner by mainstream institutional players. It is achieved by financial literacy and financial capability on the part of the consumer, and access on the part of financial product, services and advice suppliers. A Government Committee on financial inclusion in India defines financial inclusion as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as the weaker sections and low income groups at an affordable cost. Financial Exclusion Financial exclusion is the inability to access essential financial services in an appropriate form. Financial exclusion signifies the lack of access by certain segments of the society to appropriate, low-cost, fair and safe financial products and services from mainstream providers.
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Dr.R.Thangavelu1
Financial Literacy
Financial literacy is a popular topic in both developed and developing economies. Financial literacy is a broad concept that includes both information and behavior; it is relevant for all consumers regardless of their wealth or income. The National Foundation for Educational Research (UK) defined financial literacy as: the ability to make informed judgments and take effective decisions regarding the use and management of money. Financial literacy is the combination of consumers'/investors' understanding of financial products and concepts and their ability and confidence to appreciate financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being.
support livelihoods, economic growth, sound financial systems, and poverty reduction. Documentation from the United Kingdom, the United States, Australia, Canada, and the OECD reference many factors that make financial education increasingly important. Broadly speaking, the demographic profiles are changing, financial sectors are growing complex, personal savings are decreasing while personal indebtedness is increasing, and government resources are limited.
Financial Literacy in Developing Countries-An Overview

Margaret Miller (World Bank Group), Nicholas Godfrey (Department for International Development, DFID), Bruno Levesque (Organization for Economic Co-operation and Development, OECD), and Evelyn Stark (Consultative Group to Assist the Poorest, CGAP). (2009), in their project, The Case for Financial Literacy in Developing Countries, discussed the importance of financial literacy for consumers in developing countries, especially in the context of the current global financial crisis. It also reviews how leading international organizations are working to strengthen financial literacy throughout the developing world. There is widespread agreement that levels of financial literacy worldwide are unacceptably low, but relatively little objective and comparative data exist on this point. Studies and surveys conducted in Australia, Canada, the United Kingdom, and the United States have shown that, in many financial areas where consumers feel the most comfortable, but they are unable to solve basic problems or answer simple questions correctly. Developing countries have especially low levels of financial literacy. In India, for example, more than half of laborers surveyed indicated that they store cash at home, while borrowing from moneylenders at high rates of interest. This pattern of behavior (high-interest loans and no-interest savings, with the attendant high risk of theftor frittering awayof savings) worsens their financial situation. In Zambia and six other African countries, only 29 percent of adults have a bank account and 50 percent use no financial products at all. In South Africa, a recent
Financial Education
Financial education is the process by which financial consumers/investors improve their understanding of financial products and concepts and, through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being.
The Importance of Financial Education and Literacy

Financial education and literacy is especially important today for several reasons. The financial crisis would reduce access to credit and increase its cost in many developing country markets. Financial literacy could help to prepare consumers for tough financial times, by promoting strategies that mitigate risk such as accumulating savings, diversifying assets, and purchasing insurance. The joint note by the Organization for Economic Cooperation and Development (OECD), the U.K. Department for International Development (DFID), and the World Bank Group introduces the topic of financial literacy and discusses its relevance for developing countries. The OECD, DFID, and the World Bank are promoting financial literacy in developing and emerging markets because of the positive direct impact this can have on access to finance and savings, which in turn
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survey found that nearly 60 percent of the people surveyed do not understand the term interest. In the United States, an evaluation of the American Dream Demonstration's Financial Education Program found higher saving rates correlated with the number of hours of training received, up to 12 hours. The impact of financial literacy programs in developing and emerging markets is more limited, but promising new evidence is emerging. Financial education and financial literacy is important and required, but also recognized the fact that most of these impact evaluations have been performed on programs or courses offered in developed countries. The conclusion is that this is not a reason to slow efforts on this front in developing and emerging markets, as there is a pressing need to strengthen financial literacy and sufficient evidence to suggest that targeted interventions can be effective. It also suggests that efforts to promote networking and sharing of insights on what is and isn't workingboth within and across countrieswill pay high dividends. Clare Chambers (2009), Western the England, the study Financial Exclusion to online Financial Inclusion was conducted to explore the correlation between financial exclusion and financial education and whether it can be better tackled through online education. v Financial education has been found to be key of increasing the participation rates of financial inclusion and thus social inclusion. The best and most appropriate time for this education to take place is within the education sphere and to use advances in technology and use online educational tools.
Larry Orton ((2007), the research report, Financial Literacy: Lessons from International Experience, is an attempts made to analyze and compare how financial literacy is being addressed in the United Kingdom, the United States, Australia, and the OECD countries, and to identify work that has been undertaken in those countries with respect to evaluation of financial literacy programming. v Financial literacy concerns Canadians at all income levels and is sufficiently important that it deserves greater attention. Canada has taken important steps toward financial literacy, including the creation of FCAC, the provision of some funding for that agency to achieve its consumer education mandate, and plans to undertake a baseline survey. v As part of that work, Canada could establish a single national website that incorporated the best ideas that have already been developed in the United Kingdom, the United States, Australia, New Zealand, and elsewhere. Sumit Agarwal & four others (2009), Financial Literacy and Financial Planning: Evidence from India: The Literacy Questions: v Looking at the interaction between education and risk tolerance, slightly higher percentage of college graduates.
Investment Behavior: v Higher educated individuals seek out investments with higher returns.
Investment Goals: v Individuals with doctorates have fewer goals than graduate and post-graduates, but plan on spending the most of any education group.
Kimberlee Davis and Dorothy Bagwell Durband, (2008), in their research paper, Valuing the Implementation of Financial Literacy Education, reported the Texas Legislature passed H.B. 492 in 2005 which requires personal financial literacy education as a condition of graduation. Currently, the Texas Education Agency is working on the logistics of providing this mandated financial literacy education.
Financial Literacy and Financial Planning: v A vast majority of the respondents are financially literate there are significant variations across demographic groups. The young and the old tend to get more correct answers compared to the middle age group.
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Dr.R.Thangavelu1
Looking at risk tolerance by gender we see that men tend to be more oriented toward risk than females. The probability of getting all three literacy questions correct is lower for females
D. Australians Understanding Money and Women Understanding Money(2007,&2008) Most people view superannuation as insufficient to fund retirement. Reported superannuation fund membership varies with age.
Angelo Capuano and Ian Ramsay (2011) in their Financial Literacy Project titled, Financial Literacy and Financial Behavior was conducted to contribute to a broader understanding of the role of financial literacy and consumer behavior in Australia and other countries.
United States of America

A National Foundation for Credit Counseling 2010 Financial Literacy Survey The key finding of this survey was the risky financial behaviors engaged in by adult Americans. B Investor Education Foundation Financial Capability in the United States Making ends meet. Almost half of respondents reported difficulties covering monthly bills and expenses. Planning ahead. The survey found that many of the surveyed do not set aside funds for emergencies or predicable life events. Managing financial products. Few respondents, the survey found, appear to be knowledgeable about the financial products they own. A high aversion towards risk was noted in respondents. Financial knowledge and decision-making. The survey found that respondents self assessment of their financial literacy was overstated. Those with higher literacy were more likely to plan for retirement and to have an emergency fund. C. Jump$tart Coalition 2008 survey of the Financial Literacy of Young American Adults (High School & College students) Credit card use. Students with more credit cards (up to four) had higher financial literacy scores. Debt other than credit card debt. The costs of tertiary education in the United States which can include extremely costly tuition and relocation costs. Saving and investment behavior. Cheque account holders has significantly higher financial literacy (Most of the students had cheque accounts.)
Summary of Financial Literacy Surveys:

Financial literacy is a proficiency in the key competencies, in an environment that provides the opportunity to become proficient in the competencies, and to realize financial goals. The report summarizes 23 financial literacy surveys from the World Bank and a number of countries including Australia, UK, US, Italy, the Netherlands, Singapore, Japan, Austria, and Russia. The research report refers to further studies and surveys from these countries, as well as Canada and Iceland. The surveys shared some common features and findings.
Australia
A. ANZ Survey of Adult Financial Literacy in Australia (2008) The survey found that Australians are generally financially literate. Financial literacy was found to have a strong association with age, gender, education and socio-economic status. B. Mercer (2006) Financial Literacy and Retirement Readiness Study The Mercer's study found: An overreliance on superannuation funding in retirement, indicating a lack of awareness among Australians about the purpose of superannuation. C. Commonwealth Bank of Australia- Australian Financial Literacy Assessment (2006) Focused on high school students (year 9 & 10). Respondents failed to grasp key terms in bank statements.
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D. Bruine de Bruin et al (2010) The survey was web based and this survey tested financial literacy and its impact on inflation estimates. Overestimated inflation figures were recorded by women, people with low incomes, those with no tertiary education, and racial and ethnic minorities. United Kingdom A. Financial Services Authority - Levels of Financial Capability in the UK (2006) The study reported, the government funding would be insufficient to maintain a hoped for standard of living on retirement. Respondents to the survey were generally poor at choosing financial products. Many respondents did not read the terms and conditions of products carefully. Some respondents misunderstood the level of risk associated with particular products. Men performed better than women, and those from wealthy areas better than those from less wealthy areas.
Italy
A. Bank of Italy - Survey on Household Income and Wealth (SHIW). The found Question related to reading a bank account statement, which 50% answered correctly. Question related to the largest return on investment, only 27% of respondents answered correctly. Question related to mortgages, and their attributes, which was answered correctly by 47% of respondents.
Austria
A Oesterreichishe Nationalbank Financial Capability of Austrian Households (2004) Most of respondents meticulously kept track of finances; Approximately 90% of respondents prefer low-risk saving instruments;
Japan
A. Bank of Japan - Central Council for Savings Information (Shiruporuto) A. Public Opinion Survey on Household Financial Assets and Liabilities (2002) The more complex and riskier the financial product, the more Japanese households were willing to take responsibility for their selection. Over half of Japanese households want to check the financial health of institutions. B. Consumer Survey on Finance (2001) A large portion of respondents did not complain about products purchased online, because they did not know how to go about complaining.
Singapore
A. Monetary Authority of Singapore National Financial Literacy Survey(2005) The survey found that the majority of Singaporeans save, budget, monitor spending and investments and are responsible with credit. Terms and conditions of financial products were often misunderstood, ignored and too complex: Students, women categorized as housewives, people experiencing unemployment and people who are retired were more likely to score poorly in financial literacy.
The Neitherlands
Van Rooij, Lusardi and Alessie (2008) National Bureau of Economic Research: The results were that people with low levels of financial literacy tend to have lower stock ownership. People scoring higher in financial literacy tended to make efforts to learn more about financial products, and enter the stock market.
Russia
A. The State University, Moscow The Level of Financial Literacy of Russians (2010) Many of the Russian respondents, like many of the Australian, American, British, and Italian respondents in the above surveys, all overestimate their abilities in subjective self assessment questions, while scoring poorly on objective financial literacy questions.
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Dr.R.Thangavelu1
In relation to financial matters in which the Russian respondents feel education is required.
Table 2: Level of Financial Inclusion, Asia Percent of adult population or households included Level of financial inclusion High: > 50 Countries Thailand, Malaysia, Sri Lanka, Nepal, Mongolia
Financial Inclusion/Exclusion Trends

There has been significant but uneven progress toward financial inclusion around the world in recent years: Some countries in Asia, such as in India and Indonesia, have a long tradition of emphasizing access to finance. Philippines: mobile phone banking has expanded to serve to 4 million clients since 2002. India: access to credit among the poor is up from 7 percent in 2004 to 205 percent in 2009, as the micro finance sector added 9.9 million clients. Pakistan: Post Savings Bank, with 3.6 million accounts in 2006. However, despite this outreach, service quality is inferior, and most institutions depend on subsidies. Table 1 presents the financially excluded in Asia in millions of people and percentage, reported that China ranks first in the list nearly half of the total population of Asia, India and Rest of Asia has total 41%. This clearly shows that the highest financially excluded persons are in China and least financially excluded in Pakistan.
Intermediate: 30-49 India, China, Indonesia, Bangladesh, Viet Nam Low: < 30 Cambodia, Myanmar, Philippines, Papua New Guinea, Pakistan, Lao PDR, Timor Leste, Solomon Islands, Vanuatu, Samoa, Tuvalu, Kiribati
Source: Alfred Hanning and Stefan Jansen (2010) Conclusion Financial education is important to ensure that people are equipped with the necessary tools to be financially included. In developing countries the low levels of financial literacy exists. Terms and conditions of financial products were often misunderstood, ignored and too complex. The best and most appropriate time for Financial Literacy education to take place is within the education sphere and to use advances in technology and use online educational tools. The efforts to promote networking and sharing of insights on what is and isn't working both within and across countries will pay higher benefits. Develop international guidelines and standards for financial literacy initiatives and consumer protection frameworks in financial markets. Promote the exchange of information on financial literacy between public and private sectors and across institutions such as international donors, bilateral development agencies, NGOs, and financial institutions. Assist in developing model curricula for financial education that can be used in schools and workplace learning. Industry, national associations, and provincial governments and the federal government might work to create a national strategy. Assist in developing model curricula for financial education that can be used in schools and workplace learning.
Table 1: Financial Exclusion in Asia, in Million people

Countries China India Indonesia Pakistan Rest of Asia Total Source: Fernando (2009) Table 2 revealed that the level of Financial Inclusion in Asia at higher grade are Thailand, Malaysia etc, intermediate grade are India, China etc and low grade are Cambodia, Pakistan. Million People 263 110 30 22 110 535 Percentage 49.16 20.56 5.61 4.11 20.56 100.00
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We have warehouses of unused information through sound research activities at international level but the critical questions are unanswered and critical problems are left unsolved. Hence the unused information with regard to the financial literacy's role in financial inclusion is to be serious viewed by all the stakeholders. The challenge is not about undertaking further research, but improving how information is shared, and ensuring more effective use of existing evidence through financial Literacy and education.
Investor Education Foundation, Financial Capability in the United States (2010) Kimberlee Davis and Dorothy Bagwell Durband (2008),Valuing the Implementation of Financial Literacy Education, US. Larry Orton (2007), Financial Literacy: Lessons from International Experience Canadian Policy Research Report, Ottawa. Mandira Sarma and Jesim Pais (2008), Financial Inclusion and Development: A Cross Country AnalysisNew Delhi, India. Margaret Miller (World Bank Group), Nicholas Godfrey (Department for International Development, DFID), Bruno Levesque (Organisation for Economic Co-operation and Development, OECD), and Evelyn Stark (Consultative Group to Assist the Poorest, CGAP) (2009), A Case for Financial Literacy in Developing Countries. Monetary Authority of Singapore, First National Financial Literacy Survey Reveals Encouraging Findings About Singaporeans Approach to Money Matters (2005). Stepen Sinclain & others(2009), Understanding Financial Inclusion- Using Action Research and a Knowledge Exchange review ,UK. Sumit Agarwal & others (2008 &2009) Financial Literacy and Financial Planning: Evidence from India.
References
Alfred Hanning and Stefan Jansen (2010), (Financial Inclusion and Financial Stability: Current Policy issues, Asian Development Bank Institute, Japan. Angelor Capuano and Ian Ramsay (2011), Financial Literacy Project", Australia. Australian Securities and Investments Commission (ASIC), Australian Investors: At A Glance (Report 121, April 2008). Clary Chambers (2009), From Financial Exclusion to Online Financial Inclusion, England. Diana Coben, Margarat Dawes and Nirmala Lee (2005), Financial Literacy education and Skills for Life, National Research and Development Centre for Adult Literacy and Numaracy.
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Dr. B. Sripirabaa1 and Ms. T. Sudha Maheswari2
Enhancement of the Capability of Educators Through Capacity Building Process

* Associate Professor, GRG School of Management Studies, Peelamedu, Coimbatore 641004 ** Research Scholar, GRG School of Management Studies, Peelamedu, Coimbatore 641004
ABSTRACT
The current globalised scenario has created lots of challenges for the Indian education system. Educational institutions focus in designing curriculum in par with the industry requirements, devising and implementing new pedagogical tools for enhancing the effectiveness and efficiency of the teaching learning process, augmenting the capability of educators through a plethora of development programs, increasing the employability of students and effective utilization of their resources to compete in the current globalized educational scenario. This necessitates assessment of the capability of educators so as to achieve excellence in imparting the desired knowledge, skills and abilities to the students. The objective of the present study is to extend the concept of Capacity Building Process to assess the capability of educators using a developed and validated instrument SSECAT. The variables for the study were derived from literature reviews. The study subjects were 120 management educators selected at random from 18 institutions offering management programme in Coimbatore district. Capacity mapping was done by plotting the scaled scores on the GRID to identify the lack areas and strategies were devised to enhance the capability of educators. The research described here provides a new methodology for assessing and consequently enhancing the capability of educators through a perception-based, consensus-oriented assessment. Keywords: Management Educators, Capability enhancement, Capacity Building, Capacity Mapping, GRID
Introduc
If u r planning for a year, sow rice If u r planning for a decade, plant tress If u r planning for a lifetime, educate people -Chinese proverb (Sanjay Shin, 2007) Education is the process of imparting knowledge, skills and information from teachers to students. Teaching is a specialized skill that involves not only expertise in the given academic field but also the ability to create an environment for the learners to obtain optimal learning. Hangaraji (2009) in his article has stated that education enables people to 'build up their capabilities', thereby 'broadening their entitlements' and 'facilitating expansion of freedom' which in turn is the primary end and principal means of development. Education is perceived to be the driving force behind national development and integral to the region's efforts to produce knowledge-based societies. The primary function of the educational system is to transmit knowledge and skills that society regards as indispensable to survival and improvement. Education is the backbone of a country and especially for a developing country like India education has an important role. As a developing country, India needs to
increase the economic level of the country, which can be achieved only through good education system, since good education system will lead to creation of brilliant citizens to the nation. History of Indian Education The Indian education system has a rich heritage dating back to several millenniums. Early education in India commenced under the supervision of a guru. The gurus set up 'residential schools' in their own residences far away from the cities. Students dwelled with the teacher and his family and shared the daily household tasks of the teacher's family (Kuppusamy, 2009). At the gurukuls, the teacher imparted knowledge on various aspects of religion, art, architecture, painting, logic, grammar, philosophy, astrology, astronomy, history, literature, law and medicine and students were expected to follow strict monastic guidelines prescribed by the guru (Surya Prajnapti, 2005). Sanskrit was the language of the education and the texts were composed in this language. During the regime of Buddhist kings belonging to the Mauryan dynasty, India thrived with the establishment of exclusive institutions of learning. The Nalanda
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University in eastern India was the oldest universitysystem of education in the world where several religious gatherings were held. Taxila, now in Pakistan, became the place of learning where scholars journeyed to learn and become educated. The invasion by the northwest rulers brought Persian and Farsi languages. During the 19th and 20th centuries most of the Indian princely states fell under the British Raj. The British established schools to teach English and the sciences (Kuppusamy, 2009). In 1857, three federal examining universities on the pattern of London University were established in the three main British-controlled cities of Calcutta, Bombay and Madras. The existing colleges were affiliated to these universities. Over the next ten decades, more universities were founded and by 1947 there were 20 universities in the country. Soon after gaining independence in 1947, making education available to all had become the priority for the government. In 1964, the Education Commission started functioning with 16 members of which 11 were Indian and 5 were foreign experts (Sheetal Sharma, 2007). The present education system in India mainly comprises of primary education, secondary education, senior secondary education and higher education. The Indian higher education system in its vastness is the second largest after America (Gartia, 2009; Sobhana 2009). Pandit Jawaharlal Nehru having understood the importance of strengthening and developing our knowledge sector, paved the way for the development of science and technological education through premier institutions such as IITs and IIMs (Sivakumar, 2007) and Dr. S. Radhakrishnan provided a blue print for the development of apex bodies such as the UGC. There are basically two agencies in India regulating higher education - UGC (1956) and AICTE (1987). Through the UGC the government of India discharges its constitutional function of promotion and coordination of higher education in the country. It also facilitate for determining and maintaining standards of teaching, examining and carrying research in the Indian Universities (Gartia, 2009). India has a long and venerable history in the field of higher education which is based on quality, quantity and equality. Higher education in India has developed many folds since independence (Gartia 2009; Gnanasekaran 2010) and especially management education in the last three decades.
Management Education in India Management institutions in India are providing enormous enhancement in management education in India. The Andhra University aided management college in India was the first to start a full time management program in the year 1957. The All India Institute of Management and Social Welfare, Kolkata and Delhi University then followed it in 1958. It was in 1960 when the foundation of the first Indian Institute of Management in Ahmadabad was laid. Since then India has witnessed a gradual growth in this sphere of education. As a result, a large number of colleges offering management programmes have come up in various parts of India in the last three decades. Every year more than 1.10 lakh students aspire for and take admission in to management programme and its variants. Most of the management institutions in India provide education in the form of MBA (Master of Business Administration) and Post Graduate Diploma in Management/Business administration (PGDM or PGSBA or PGPM) and in other streams such as hotel management, insurance management, and foreign trade management (Gupta, 2011). India is becoming the global hub of 21st century knowledge based industry and the changing culture of globalized economy has made a deep influence in management education. This demands more number of management graduates which resulted in opening more number of management institutions in India. Currently there are more than 3600 plus institutions offering management and allied programmes across India. There are a variety of stake holders in the education system comprising students, employers, teaching and non-teaching employees, government and its funding agencies, creditors, valuators, auditors and assessors ( including professional bodies) (Burrows and Harvey 1992). Dr. S. Radhakrishnan has righty stated that right education comes through right educators and educators are the main stake holders of the education system, since educators are arguably the most important group of professionals for our nation's future. An educator is the person who shapes good education to the students. Educators' primary responsibility is to teach/educate the students, for which he/she should be capable enough. Educators are often likened to gardeners who sow seeds, graft plans and nurture them, since educators are those who open their students to a world of newer ideas, help
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them to understand those ideas, and ensure their germination through independent, creative and critical thinking. They are compared as potters because their basic functional role is to shape and mould young minds. According to Courtis Stuart (1984) 'an educator is an agent appointed to develop citizenship who can live successfully in the culture of the country', and Vadhel (2009) in his article has stated that educator is a creative artist as far as teaching is concerned, he is not a mere communicator of information. The growth in industry demands employable graduates with business management competencies to lead Indian industries ahead in the competitive globalized scenario. This necessitates the need for quality management educators to impart the required knowledge, skills and abilities within the young graduates through their creative abilities. Innovativeness is the essence of a true management faculty. Information can never lead a management student to enlightenment and excellence. Innovative methods generate participative response among students. The essence of management education is molding of character and development of creative thinking of students which would result from the innovative techniques and tactics of a teacher. Hence we aspired to assess the capability of management educators through Capacity Building Process and devise strategies to enhance their capability to mould students and make them good citizens of India. Literature Review Extensive reviews were carried out in areas of Capacity Building and the changing roles and responsibilities of educators. Capacity Building: Among the handful of tools available for capability assessment, Capacity Building is a tool that helps to enhance the country's human, scientific, technological, organizational, institutional and resource capabilities. The concept of Capacity Building was first applied by UNDP in early 1990's to assist developing countries in issues of primary concern focusing on community development. Shortly non-profit organizations, nongovernment organizations, community development agencies and other funding agencies, having been inspired by this concept started applying it to determine the effectiveness of the programs taken up by them. Later they adopted the concept to evaluate the extent of
service rendered to their client's, to devise customized programs to serve them better. Capacity building refers to activities that improve an organizations ability to achieve its mission. World Bank (1996) viewed Capacity Building as The combination of people, institutions and practices that permits countries to achieve their development goals', while UNDP (1997) as 'The process by which individuals, organizations, institutions, and societies develop abilities (individually and collectively) to perform functions, solve problems and set and achieve objectives'. Hailey and James (2003), in their article have studied the works of Sahley (1994), Eade (1997), James (1998), Lewis (2001), Smillie and Hailey (2001), James (2002) and stated that there is no one universally accepted definition of capacity building. Various definitions have evolved for Capacity Building (Kaplan and Soal, 1995; Eade, 1997; Taschereau, 1997; Makumbe, 1998) over the years with the increase in its contextual application. Hence, irrespective of the nature of the organization; Capacity Building could be viewed as a concept that helps assessment of the performance of a program or an organization and formulate action plans to achieve the set goals consistently with the effective utilization of all its resources. Reviews on Capacity Building activities carried out by Sripirabaa and Krishnaveni, (2007) indicate that Capacity Building process is pervasive in nature and has gained acceptance and prominence in the past two decades, both in the international and Indian scenario because of the demonstrable benefits derived from its use. Krishnaveni and Sripirabaa (2008a) have established that CB concept could be utilized by organizations to bring about sustainable organizational growth and achieve human resource (HR) excellence (Krishnaveni and Sripirabaa, 2008b). Among the tools used for capacity assessment, Participatory Organizational Evaluation Tool (POET) appears to be pervasive and repeatedly used tool (Krishnaveni and Sripirabaa, 2007). Review of the above tools indicated that organizations used a range of areas for capacity assessment depending on their requirement and criticality (Krishnaveni and Sripirabaa 2007). Hence we aspired to apply the prevalent concept of Capacity Building Process to assess and enhance the capability of educators.
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Significance of Educators: Researchers have perceived educators in different dimensions. Table 1: Views regarding educators Researcher Gnanasekaran (2010) Rowan and Zinaich (2003) Hopkins and Sullivan (1996) Definition The destiny of the nation can be shaped only in the classrooms. A good teacher can bring the entire world to the classroom. Educator is a person who teaches, evaluates and advises students collaborates with other professionals Efficient lecturing is a fine art. Lecturers are answerable for the message they put out and collision that it has. in the making of the nation. If the teachers are excellent, the nation will have excellent citizens (Parvez, 2009). The roles and responsibilities of the educators have many dimensions. Boud (1988) stated that educator's intellectual development goals, student's maturity levels and students' cognitive orientations influence the role of the educators. Review indicated the extensive research carried out elucidating the roles and responsibilities of educators
Roles and responsibilities of educators: Educators have varied roles and responsibilities namely; facilitator, knowledge provider, mentor, guide, researcher and role model. Murugavel (2009) quotes Ravindranath Tagore statement that A teacher can never truly teach unless he is still learning himself. The quality of education depends upon the quality of the teachers. Thus the role of the teachers is very important
Table 2: Views regarding roles and responsibilities of educators

Researcher Dolly (2011) Roles and responsibilities Honest in student appraisal and avoid favoritism, ready to adjust teaching styles to meet individual needs of students, actively involving in all staff meetings, educational conferences and college programs Updater with the latest developments in his/her subject, shift between a formal and an informal method of teaching like debates, discussions, practical activities, experiments and projects, plan, set and evaluate grade test, exams and assignments Imparting knowledge and skills, guiding students, supervising, always open to learn new things consistently Student facilitator, student developer, student advisor, student role model and student motivator Information provider, role model, facilitator , mentor, assessor, planner and resource developer Maintain a healthy relationship with all teaching and n on-teaching staff members, voluntarily participate in organizing sporting events and other excursions like camping trips, picnics, industrial visits, educational tours, etc., Instructor, expert, mentor, co-learner, reformer, facilitator, information provider, researcher and assessor
Geeta (2010)
Leena (2010) Mulford and Silins (2011) Murugavel (2009) Meenakshi Raman and Kumar Neeraj Sanchdev (2009) Karan Magro (2003)
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Researcher Minondo et al (2001) Diana Carroll (2001)
Roles and responsibilities Facilitator, monitor, researcher, motivator, role model and liaison role Teaching curriculum, facilitating social interactions between students, managing small as well as large groups and teaching good common behaviors and communication skills Student assessor, curriculum assessor, curriculum planner, course planner, resource material creator and study guide producer Knowledge provider, expertise, self- reflector, planner and assessor Teaching involves a wide range of more specific activities such as lecturing, instructing, drilling, encouraging, asking questions and eliciting responses, conduction seminars, testing, and providing information environment for teaching and learning, spending quality time in the classroom, providing adequate materials and supplies and providing more planning time, providing academic freedom to conduct their individual research and teach their own courses, encourage or motivate the educator to recognize the efforts of unit-wide achievements in teaching and curricular improvement, providing adequate funding for the enhancement of faculty teaching skills, recognize achievements in teaching, periodically review the reward system so that it reflects unit and individual contributions to the institution's overall mission of teaching, research and service (The university of Michigan academic affairs advisory committee, 2003).
Harden and Crosby (2000) Attwell (1999) Barrow and Milburn (1986)
Raviya (2009) in his article has defined the good characteristics of educators: being good human beings and lifelong learners, punctual, honest to their profession and to their learners, should not allow any of their personal biases or prejudices to color their perceptions and behavior pattern as teachers, treat all students equally and impartially, good communicator, ability to write ease and grace on any topic, being role models to students, self-reliant and self-confident, willing to take head-on the challenges that need attention both on the personal and the professional front, being excellent in oral and writing, adequate fluency in speech and appropriate diction, great sense of moral values, open mindedness, agility of mind, constantly developing a reflective and analytical mind, never feel distracted and disturbed, free from muddy thoughts, kind and respectful towards others, modesty, kindness and humbleness, attaining the final goal while teaching, checking assignments, completing courses, helping students overcome problems, identifying weak and strong students and guiding them.
Reasons for Capability Building for educators:

Education system and the roles of educators are undergoing continues changes in the process of globalization. Institutions must be adaptive, constantly changing and using world class strategies, regularly update their courses, curriculum and methods of teaching. Subhashini (2011) established that there is paradigm shift in teaching learning pedagogy. Educators have to change their way of teaching and give case studies, team projects, and interaction with leaders from different walks of life and many more depending upon their creativity and skills. Another important reason is cross border education. It is seen as a way to provide a more diversified, flexible education (Marginson and Wende, 2007). In order to welcome the international students the infrastructure in academic institutions should be strengthened and at the same time
Role of Management in Making Good Educators:

To become/being a good teacher, he/she should posses all those good characteristics. At same time management also has the responsibility towards making them a good educator. Management should always support and motivate their educators to improve their capabilities. O'Connor, (2004) has elucidated the responsibilities of management towards developing capability of educators and highlighted the important responsibilities of management as providing a safe
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educators' capability should also be enhanced. Kiran, (2006) in his article stated that Indian business is exposed to many challenges like global competition, technological up gradation, quality up gradation, cost consciousness, new combination of means of production etc. For facing these challenges the students' capability should be increased, which could only be achieved through capable educators. An unprecedented explosion of scientific and technological knowledge in current panorama has turned the world into a global village. Technology is changing day by day and in the context of education; it has taken an influencing role. Technological change provides new opportunities as well as challenges in the education sector as well as in the teacher career. Education system is turned to modern class room. To compete with this change the educators have to build their own capability (Sudhakar Babu, 2007). Because of globalization teaching methodology has turned from traditional method to modern method. Hangaraji (2009) highlights the paradigm shift from the traditional teaching pedagogy- Chalk and talk method, teachercentric approach in a conditional environment, more theoretical oriented, spoon feeding to the a modern teaching environment - a participative, interactive method, learner-centric method with flexibility in the setting a separate setup for passive and less interactive learners, more of application oriented, self paced learning and providing immediate feedback. To survive in this situation, the educators need to adapt themselves to the changes. Educators' knowledge of teaching and learning is considered as a valuable factor in connecting the students to their society in a number of powerful ways. Educational goals cannot be achieved without quality educators. Sarat Kumar Sahoo and Pratima Pradhan (2009) believe that for creating high-level of reflective learning students, highly skilled and intellectually able educators are needed. These reasons demand the assessment of the capability of educators and building their capability to compete with the changes. Consequently we aspired to apply the concept of Capacity Building process and POET the pervasive perception-based, consensus-oriented assessment tool to assess the capabilities of management educators in five significant dimensions derived from literature
reviews namely; qualities that are to be possessed by educators, ability in adopting contemporary teaching tools and methods, willingness and ability to take up academic and administrative responsibilities, aspiration for professional development activities and support rendered by the management.
Objectives of the Research

The objectives of the research were to measure the capability of educators to map the capability of the educators and identify the low capacity-low consensus areas to develop strategies for improving the capability in the areas identified
Methodlogy A questionnaire survey method was used to seek responses from educators teaching post graduate courses in management in Coimbatore, India. The variables included in the study tend to assess the capabilities of management educators in five critical dimensions. Each response was measured using a fivepoint Likert scale, ranging from 5 strongly agree to 1 strongly disagree. Data were collected from eighteen educational institutions offering post graduate courses in management. The study adopted purposive sampling in the first phase for the selection of institutions and later adopted random sampling for the selection of educators in each of the institutions. A total of 120 educators were included for the study. The data were collected during the months of June and August 2011 and all questionnaires were usable. Using a preliminary draft questionnaire, a pilot study was conducted with 40 educators from five institutions; these responses were excluded from the final study. The conduct of the study ensured criterion oriented validity through literature reviews (Yabroff et al., 1996 in Guellimin, 1995) and content validity through expert opinion (Hambleton and Rogers, 1991). Refinement of variables was achieved by examining the corrected-item total calculation (CITC) scores and deleting those items where the score were less than zero and items that produced a substantial or sudden drop in CITC scores (Cronbach, 1951). Reliability of the variables were ensured by examining the Cronbach's alpha () coefficient with an alpha value of >0.7 considered to be
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acceptable (Nunnally, 1978). All the variables had an value of >0.7, ensuring reliability of variables. Convergent validity was ensured using the partial least square (PLS) technique (Bagozzi and Fornell, 1982).
Instrument Validation
Convergent validity was assessed by checking that the AVE values of each variable was greater than 50 percent and the composite reliability greater than 70 percent (Diamantopoulos and Winklhofer, 2001).
Reliability
Validity
Internal Consistency
Criterion
Content
Construct
CITC,
Literature Reviews
Expert Opinion
Convergent
Figure 1: Validation of SSECAT The questionnaire was revised using feedback gained during the pilot study. The tool used to assess the capability of educators was named as SSECAT (Sripirabaa Sudha Educators Capability Assessment Tool). The apportionment of questions in each dimension in SSECAT is as follows: Dimensions Qualities of educators (QE) Ability in adapting contemporary teaching methods and tools (TMT) Ability and willingness to take up academic and administrative responsibilities (AAR) Professional development activities taken up by educators (PDA) Support provided by the management (SPM) Table 3: Reliability and validity scores of SSECAT Construct Qualities of educators Teaching methods and tools Academic and administrative responsibilities Professional development activities Support provided by the management Composite reliability 0.922079 0.850280 0.868375 0.911665 0.907082 AVE 0.530289 0.490980 0.525143 0.545634 0.486245 Cronbach's alpha 0.907066 0.799880 0.817036 0.889748 0.891346 Number of questions 16 11 6 20 11
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POET methodology was adopted to calculate the Raw, Standardized and Scaled Capacity and Consensus scores. The modus operandi for calculating these scores are 1. The average of the respondent's total score for a section gives the Raw Capacity Score for that section 2. The Raw capacity score multiplied by 100 and divided by the maximum points for the area gives the Standardized Capacity Score. Standardized Score Scaled Score Standardize Score Scaled Score Standardized Score Scaled Score 0 - 22 5 60 - 63 40 85 - 87 75 23 - 32 10 64 - 67 45 88 - 89 80
3. The standard deviation as a percentage of the range of scores for that area gives the Raw Consensus Score for that area 4. Raw Consensus Score multiplied by 2 and subtracted from 100 gives the Standardized Consensus Score. Standardized Scores are converted to Scaled Scores using the key given below
33 - 39 15 68 - 71 50 90- 92 85
40 - 45 20 72 - 74 55 93 - 95 90
46 - 50 25 75 - 78 60 96 - 98 95
51 - 55 30 79 - 81 65 99 - 100 100
56 - 59 35 82 - 84 70
The GRID was plotted with the scaled capacity score on the x-axis and the scaled consensus score on the y-axis. The plot shows the various capacity areas that fall into the quadrants indicating high/low capacity/consensus. The GRID shows the extent to which the educators possess the required capabilities in the five dimensions and the degree of agreement among the educators (consensus score). A dimension in which the educators possessed the required capabilities along with the consensus of their peers obtains a high capacity score and high consensus score. A dimension in which educators lack the required capabilities receives a low capacity score, and any dimension where agreement is lacking among the educators receives a low consensus score. After mapping the dimensions on the GRID, the
final step is to enhance the capability in those dimensions that have either low capacity or low consensus; i.e., moving all the capacity areas to the high capacityhigh consensus (HCHC) quadrant. This was accomplished through brainstorming sessions conducted with academicians. Analysis and Discussion Using the data collected from the educators the Raw, Standardized and Scaled capacity and consensus scores were calculated and GRID was plotted. Plot on the GRID portrayed the assessment dimensions that fell in the four quadrants. Table 4 gives the capacity and consensus scores of the educators and figures 2 the GRID.
Table 4: Capacity and Consensus Scores of educators

Dimension Qualities of educators Teaching methods and tools Academic and administrative responsibilities Professional development activities Support provided by the management Scaled Capacity Score 80 60 55 65 45 Scaled Consensus Score 65 50 35 55 30
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Figure 2: GRID for Management Educators Among the capability assessment areas of management delegating the academic and administrative educators dimension-Support provided by the responsibilities among the faculties and it was management has scored a low capacity and a low accomplished on a rotational basis. The heads of the Bconsensus score and dimension-willingness and ability Schools viewed that this approach would make their to take up academic and administrative responsibilities faculties gain exposure and expertise in the different has scored a high capacity and low consensus score. All areas of academic and administrative responsibilities the other three dimensions fell in the high capacity-high namely; placements, admissions, industry institute consensus quadrant. interface, curriculum design and delivery, programme administration, conducting value added programmes to Having identified a low capacity and two low consensus students, organizing faculty development programs and dimension, we sought to identify the reasons for the low conducting management development programs. capacity/consensus profile. We identified the reasons for the Faculties were given the privilege to decide and choose low capacity and consensus profile through discussions the areas of academic and administrative conducted with the heads of B-Schools and faculty. responsibilities and it was on a rotational basis changes We contacted 4 heads of B-Schools and 10 faculties. once a year/three years/five years depending on the Discussions with the heads of B-Schools and faculty institution and the prevailing situation. revealed that the management of not all the institutions The heads of the institutions believed that such an rendered financial assistance for their faculty of all approach would facilitate their faculties set goals and designations for upgrading their qualifications, for their accomplish their targets in their respective areas of professional development activities and participating in academic and administrative responsibilities and the conferences and seminars both in India and abroad. institution would achieve excellence in the above areas, Preference was given to faculties who have been in the since responsibilities are shared among colleagues and institution for atleast six years and who have established they normally work in teams. On the other hand consistence performance. In few institutions faculty in discussion with faculties revealed that though majority higher designations enjoyed these privileges irrespective of them appreciated the approach, but still they strongly of their tenure in the institution. Though it is a matter of believed that it is the prime responsibility of the heads concern for faculties who are in the initial stages of their of the institutions to take care of these activities, which career, the heads of the B-Schools and management could is a concern to be resolved. chart out action plans to resolve the concern. Conclusion The discussions for the low consensus profile of the dimension willingness and ability to take up academic and administrative responsibilities revealed that only few institutions adopted a decentralized approach in This research provides a new dimension for assessing the capability of educators through a perception-based consensus-oriented approach. The capability building
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exercise paved way for assessing the low capacity/consensus areas in five diverse dimensions and the reasons thereof. This capability building exercise paved way for identifying the areas for enhancing the capabilities of management educators in line with the requirement of the stakeholders. The discussions initiated with the heads of B-Schools and faculties provided thought provoking insights which need to be resolved. Individual B-Schools could take up such capability assessment and enhancement activities to explore the areas for capability enhancement for their faculties which would pave way for achieving excellence in the education offered by them. Achieving excellence in management education implies imparting the desired knowledge, skills and abilities among young management graduates who therefore gain competence in managing business with a global outlook. The above methodology of capability assessment could be applied to educators of Arts and Science, Engineering and Medicine streams also. References
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Dr. B. Sripirabaa1 and Ms. T. Sudha Maheswari2 Karan Magro (2002-03), 'Exploring teaching roles and responsibilities in adult literacy education: Do teachers see themselves as transformative educators?', Vol.1, No.1 Katherine A. O'Connor. (2005), 'Retain Teachers by Listening To Their Wants and Needs', East Carolina University Kiran Srivastava and Jai Narain (2006), 'Knowledge management and HE', University News, Vol. 44, No.47, Nov 20 26. Krishnaveni R. and Sripirabaa B. (2007) 'Tools for enhancing performance of organizations', Abhigyan, Vol. 25, pp.4453. Krishnaveni R. and Sripirabaa B. (2008) 'An insight into capacity building activities in India', ACRM Journal of Business and Management Research, Vol. 3, pp.2934. Krishnaveni R. and Sripirabaa B. (2008a), 'Capacity Building Process for HR Excellence', Vision, Vol.12, No.2, pp. 1-14. Krishnaveni R. and Sripirabaa B. (2008b), 'Capacity building as a tool for assessing training and development activity: an Indian case study', International Journal of Training and Development, Vol.12, No.2, pp.121-134. Kuppusamy S. (2009), 'Higher education in India: An overview', International Journal of educational administration, Research, India publications, Vol.1, No.1, pp. 51-58. Loveleena Rajeev (2010), 'Responsibilities of a Teacher', http://buzzle.com/articles, Retrieved on February 7, 2011 Makumbe (1998), Capacity Building Guide: A Manual for Non-profit organizations and Small Businesses, Written and Compiled by Envision 2020, Central Alabama. Marginson S. and Van Der Wende M. (2007), 'Globalization and HE', Paper prepared for Organization for Economic Cooperation and Development. Paris: OECD. Accessed 31 May 2007. Meenakshi Raman and Kumar Neeraj Sanchdev (2009), 'Educator in H.E Institutions: A Sketch for normative codification', University News, Vol. 47, No.14, Apr 6-12. MuthaMizhl Vendan Murugavel D. (2009), 'Multiple roles of teacher in HE', University News, Vol.47, No.16, Apr 20-26. Nunnally J. C. (1978), 'Psychometric Theory' New York NY: McGraw-Hill. Parvez M. (2009), 'Professional Development of Teachers in HE', University News, Vol.47, No.32, Aug 10-16. 40. POET http://www.comminit.com/ pdf/POET_Users Manual.pdf, Retrieved on February 11, 2007 41. POET http://www.comminit.com/ planningmodels/ pmodels/planningmodels, Retrieved on February 11, 2007 42. Radhaleanta Gartia (2009), 'H.E in India: a reality check', University News, Vol.47, No. 2, Jan 12 18. 43. Rowan John and Zinaich Tr. (2003), 'Ethics for the professions', Belmont, CA, and USA, Wadsworth. 44. Sanjay Shin (2007), 'Value orientation to HE: Integrating values in commerce education', University News, Vol.45, No.24, June-11-17. 45. Sarat Kumar Sahoo and Pratima Pradhan (2009), Empowering teachers for institutional development, University News, Vol.47, No.31, Aug. 3-9. 46. Sheetal Sharma (2007), 'HE in India: Hard- Pressed for quality and quantity of faculty', University News, Vol.45, No-20, May 14-20. 47. Sivakumar V. (2007), 'What ails our HE system', University News, Vol.45, No.35, Aug 27-Sep-5. 48. Sobhana N. (2009), 'Globalization of H.E. in India', University News, Vol. 47, No.4, Jan 26 Feb01. 49. Stacey Minondo, Luanna H. Meyer, and Joy F. Xin (2001), 'The role and responsibilities of teaching assistants in inclusive education: What's appropriate?', Syracuse University, Vol.26, No. 2, pp.114-119. 50. Subhashini Muthukrishnan (2011), 'Some issues in skill development HE', University News, Vol. 49, No.1, Jan 3-9. 51. Sudhakar Babu S. (2007), 'Technological Advances and Role of ICT in Teacher training and HE', University News, Vol. 45, No. 26, June 25 July1. Taschereau (1997), Capacity Building Guide: A Manual for Nonprofit organizations and Small Businesses, Written and Compiled by Envision 2020, Central Alabama. 52. UNDP (1997), Capacity Development, Technical Advisory II, in Capacity Development Resource Book, Management Development and Governance Division, UNDP, University of central England in Birmingham. 53. Vadhel V.G. (2009), 'Teacher: a dynamic innovator since ages', University News, Vol.47, No.35, Aug 31Sep6. 54. World Bank (1996), Partnership for Capacity Building in Africa. A Progress Report, World Bank. 55. Yabroff K.R., Linas B.P. and Schulman K. (1996), 'Evaluation of quality of life for diverse patient populations', Journal of Breast Cancer Research and Treatment, Vol.40, No.1, pp.87-104.
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Human Resources Accounting - A Tool for Business Growth
31

Dr. G. Sudarsana Reddy*
ABSTRACT
Business excellence of any organisation depends on the quality of the human resources. In the knowledge economy, knowledge human capital has become a new engine of corporate development. Intellectual capital has become the one and only competitive advantage of a firm. Companies have strived to differentiate their annual reports and make them attractive and easy to read by valuing and recording human resources. The study focuses on the impact of human resources accounting on business growth. The data for the study collected through distribution of questionnaire to the 50 select charted accountants in Bangalore. The sample was selected thorough the non-probability snow ball sampling. The study reveals that human resource occupies vital role in organisation and human resource accounting in necessary for organisational growth and maximizing shareholders' value. Key words: Accounting, business, excellence, human resource, value.
Success of any organisation purely depends on the quality resources available and methods and practices adopted in doing business. Internal resources help gain competitive advantage. Human resources play a vital role in the success of an organisation. In the year 1997 Stewart stressed the importance of human capital for companies by labeling it the most important asset, as the companies could not exist without human resources. In other words, human element is the most important input in any corporate enterprise. In the knowledge economy, knowledge has become an engine for business growth. In the knowledge economy knowledge and education are often referred to as "human capital". Human capital supports creation of knowledge, transfer and better utilisation to achieve organisation goals. But there is no doubt that successful companies tend to be those that continually innovate, relying on new technology, skills and knowledge of employees rather than assets such as plants or machinery. A growing number of academics, business professionals and corporate entities are acknowledging intellectual capital a major pivotal factor in value creation in the new knowledge economy, when compared to the physical capital. Pulic and Bornemann1, opine that in this new economy intellectual capital has become the one and only competitive advantage of a firm. Now-a-days many companies have been striving to differentiate their annual reports and make them informative, attractive and easy to read. On the other hand, most companies are still focusing almost exclusively on history and analyses of past
performance. But in to-days knowledge economy, as we have advanced into the Information Age, companies increasingly forced to measure intangible assets. Indeed, amongst users of financial accounting information there is a growing demand for more extensive corporate disclosures on intellectual capital matters. Taylor and Associates2, for example, reported disclosure of intellectual capital information ranked in the top ten information needs of users. Apart from investigating the amount of intellectual capital related information it is important to investigate factors that influence disclosure patterns on this issue. To date, research on intellectual capital disclosure patterns and factors affecting it are limited. Given the dramatic shift in the underlying production factors of a business within the knowledge economy has forced a paradigm shift in its valuation processes. Infact a business week (1999) article revealed that the valuation of Microsoft was superior to the sum total of the valuations of General Motors, Ford, Boeing, Lockheed-Martin, Deere, Caterpillar, Union Pacific, Kellogg etc. if we ask any Chief Executive Officer (CEO) as to what they think provides a cutting edge for their business, Nine times out of ten say that it is their Human Resource which are the companies that have been doing very well in the market. Hence, the traditional methods of valuing the company's assets has given way to valuation of its intangible but the most prized resource The Company's Human assets.
Intellectual Capital Concept

The Organisation for Economic Co-operation and Development (OECD)3 describes 'intellectual capital' as
1 KPR International Journal of Management Vol.1, Issue.1, July 2012
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Dr. G. Sudarsana Reddy
the economic value of two categories of intangible assets of a company: (a) organisational (structural) capital; and (b) human capital. Petty and Cuganesan 4 (2005) assert that the term 'intellectual capital' is often treated as being synonymous with 'intangible assets'. The definition offered by the OECD, however, distinguishes the two by locating intellectual capital as a subset of, rather than the same as, the overall intangible asset base of a firm. Over time, a broad consensus has developed that intellectual capital can be characterised in terms of a tripartite model comprising human capital, external capital and internal capital components (Edvinsson and Malone5, Stewart6, Sveiby7), where: Human Capital refers to the skills/competences, training and education, and experience and value characteristics of an organisation's workforce; External Capital comprises relationships with customers and suppliers, brand names, trademarks and reputation; and Internal Capital refers to the knowledge embedded in organisational structures and processes, and includes patents, research and development, technology and systems.
a body of facts; Skill: facility, developed through practice, with the means of carrying out a task; Talent: inborn facility for performing a task and Behavior: observable ways of acting that contribute to accomplishing a task. Approaches to Human Resource Valuation An effort was made by the researchers in this field over four decades, the real work regarding consideration of human resource as an asset had started only after the evolution of behavioral approach that is after 1960. Quite few models were suggested from time to time based on the three approaches of human valuation which is explained in chapter three in detail. A. Cost Based Approach: Capitalization of Historical costs method, replacement cost method and opportunity cost method B. Monetary Value Based Approach: Hermanson's Model; Lev and Schwartz Model; Eric Flamholtz Model; Jaggi and Lau Model; and Morse Model. C. Non-Monetary Value Based Approach Human Resources Accounting The Need Human resource accounting provides valuable information to the managers, financial analysts and employees. It helps: the management in employment, location and utilisation; transfers, promotion, training and retrenchment; planning of physical assets vis-a-vis human resources; evaluating the expenditure incurred on education and training, and its impact on the value of the firm; identify the causes of high labour turnover; taking preventive measures to contain labour turnover; locating the real cause for low return on investment; understanding and assessing the inner strength of an organisation and helps the management to steer the company well through most adverse and unfavorable circumstances; provides valuable information for persons interested in making long term investment in the firm; and employees in improving their performance and bargaining power. It makes each of them to understand his contribution towards the betterment of the firm vis--vis the expenditure incurred by the firm on him. Statement of the Problem From past twenty years valuation methods of companies have been changed, companies are putting
While there is a legal requirement for firms to disclose in their financial statements on certain types of purchased intangible assets (AASB 138 Intangible Assets), firms are currently not required by accounting standards or by law to report on most of their intellectual capital, however they may voluntarily elect to disclose such information. Human Capital Definition As a term, human capital suffers the same fate as many compelling and widely adopted metaphors broad acceptance but imprecise usage. Human capital comprises all the intangible assets that people bring to their jobs. It is the currency of work, the specie that workers trade for financial and other rewards. The term first appeared in a 1961 American Economic Review article, Investment in Human Capital, by Nobel-Prize winning economist Theodore W. Schultz. Economists, academics, and consultants have since loaded many notions into the human capital portmanteau. We propose that the best way of looking at human capital is to break it into four elements: Knowledge: command of
33
higher weight on the assets like knowledge competence, brands, and systems. Experts opine that intellectual capital has become the one and only competitive advantage of an organisation. Many companies have strived to differentiate their annual reports and make them informative, attractive and easy to read, but most still focusing almost exclusively on history and analyses of past performance. At the same time some companies are valuing and recording human resources in annual reports. If so, how companies determine value and record these in their annual report? What are the methods available for valuing and recording human resources? Which method is popular? Why companies slowly moving to adoption of HRA? Is HRA helps management in organisational growth? Is labour turnover affects value of human resources? Is HRA helps avoid labour turnover? Is HRA affects stock price and value of the firm? These are the some questions for which the study seeks answers. Scope of the Study The study covers select charted accountants in Bangalore city, and the opinion on human resource accounting. Therefore, the study excludes charted accountants practicing in other cities in India and accounting of other intangible assets like brand valuation, patents, trademarks, copy rights, trade secrets, and technical know-how. Objective of the Study The primary objective of the study is to know the charted accountants opinion on the impact of human resource accounting on organisational growth. Nevertheless, the study tries to know: human resource as primary source, role in
business growth, need to recognize as asset, and necessity of valuation, awareness about human resource valuation, the various methods available and the popular method, impact of human resource valuation on labour turnover, retention of employees and necessity of inclusion of human resources in annual reports, impact of human resource valuation organisational effectiveness, share price and value of the firm.
Methodology of the Study The study is purely based survey method and empirical in nature. Primary data collected by distributing the structured questionnaire to the select charted accountants. Population of the study comprises of all the practicing charted accountants in Bangalore. Researcher used non-probability method i.e., snow ball sampling for selecting 50 charted accountants. The study is limited to Bangalore city only. Analysis and Discussion: Opinion of Charted Accountants The basic purpose of the study is to have an empirical analysis on collective opinions from the Chartered Accountants. Human Resources Organizations have resources men, machines, material, copy rights, patents and the like. We can categorise them into two physical and intellectual. Table -1 portray the opinion of respondents on human resource as primary source, their role in business growth, need to recognize asset, and necessity of valuation.
Table -1 Human Resource Primary Source, Role in Business Growth, Need to recognize Asset, and Necessity of Valuation
Charted Accountants' Opinion Strongly Agree Frequency Human Resource (HR) is Primary Resource HR plays pivotal role in Business growth Need to recognize HR as an Asset Necessary of HR Valuation 25 18 11 39 % 50 36 22 78 Agree Frequency 20 23 33 08 % 40 46 66 16 Neutral Frequency 05 07 02 01 % 10 14 04 02 Disagree Frequency 00 01 03 01 % 00 02 06 02 Strongly Disagree Frequency 00 01 01 01 % 00 02 02 02
Source: Field Survey

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Table-1 reveals that 90 percent of the respondents opine that human resource is the primary resource when compared to the other resources. Without quality human resource organisation can not utilise the other resources efficiently for organisational success.
incurred and hence not to be deferred. An area which confers with the concept of acknowledgment of process and products which are not patented as yet hence proprietary right and hence assets.
Valuation of Human Resources

Organisations when preparing annual reports value all the resources and show them in the annual reports. Though organisations consider the human resources as primary resources when compared to other resources, but, they do not value and record the human resources in annual reports. To know the opinion of respondents a question is included in the questionnaire and the opinion of respondents is given in Table -1. From the Table-1 we can say that most of the (94 percent) respondents say human valuation is necessary. Only four percent did not agree with the statement and two percent are neutral. Therefore, human valuation is necessary they are the assets of the company like any other assets. They are the creators of the business, and in this knowledge based economy human resource valuation will be appreciating, since they add value to the organisation. Human resources valuation helps management in planning, managing human resources, measurement of standard cost of recruiting, selecting, hiring and training people and organisation can select a person with highest expected realisable value.
Role of Employees in achieving Target Performance

Organisation may have resources physical as well as intellectual. Human resource is one of the intellectual resources, without which we can not imagine any organisaion. Therefore, a question included in the questionnaire to know the opinion of respondents on the role of human resources in achieving organisational objectives. 82 percent of the respondents feel that the role of human resource is vital in achieving targets of organisation. As said above, whatever the quality of resources an organisation has, use of the available resources depends upon human resources. Human resource can not be easily imitated, and therefore it acts as a competitive advantage.
Recognition of Human Resource as an Asset

With emergence of knowledge and service base economy, it was generally accepted by the people that in the new economy the prosperity of an organisation are significantly influenced by its employees. This question was in every mind of the researchers that should an employee of an organization be considered as asset? But in fact human resources of the organisation are the value creators of the firm they are working in; they help in sustaining in this competitive market for a long run. Table-1 shows the opinion of charted accountants on the recognition of human resources as asset. 88 percent of respondents say that human resource should be recognized as asset, two percent of them are neutral and rest of them say no. It is found that assets are widely accepted as an asset by two aspects: ownership of the item, and possibility of valuation. As well as expenditures made on employees is in favorable effect upon future profits and which is also measurable. Thus, such expenses should be considered as deferred expenses and there by asset. In IAS-38 para 6(C) have stated that intangible assets generated internally are required to be expensed in the year the expenses
Awareness about HRA Models

An effort was made by the researchers in this field over four decades, the real work regarding consideration of human resource as an asset had started only after the evolution of behavioral approach that is after 1960. Quite few models were suggested from time to time based on the three approaches of human valuation which is explained in chapter three in detail. One, Cost based approach - capitalization of historical costs method, replacement cost method and opportunity cost method; Two, Monetary value based approach Hermanson's model, Lev and Schwartz model, Eric Flamholtz model, Jaggi and Lau model, Morse model; and Three, Non-monetary value based approach. Human resource accounting is a unique concept where much of the researchers or professionals itself are not aware of the concept. All the respondents are aware about the various human resources valuation methods. It helps the organisation to assess their employees in an effective way.
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Best Method of Valuing Human Resources There are number of methods available for the valuation of human resources - capital cost approach, economic
value approach, rewards, individual value, the present value of the future direct and indirect payment to employees and many more; but companies are using a specific method.
Table -2 Models of Human Resource Valuation

Charted Accountants' Opinion Strongly Agree Frequency Capitalization of historical costs Flamholtz model Jaggi and Lau Model Lev and Schwartz model Morse Model 03 02 00 15 04 % 06 04 00 30 08 Agree Frequency 01 15 01 25 06 % 02 30 02 50 12 Neutral Frequency 06 03 05 05 05 % 12 06 10 10 10 Disagree Frequency 28 14 20 02 15 % 56 28 40 04 30 Strongly Disagree Frequency 12 16 24 03 20 % 24 32 28 06 40
In response to the question awareness of HRA 20 respondents are aware of the HRA models where in 80 percent of the respondents support Lev and Schwartz Model, followed by Flamholtz model, Morse and Capitalisation of Historical Cost method and only two percent favoured Jaggi and Lau Model. Out of all available models, the Lev and Schwartz model seems to be more popular due to flexible which is based on the present value if the future direct and indirect payments of employees as a measure of human resources value. Most of the companies in India are also using Lev and
Schwartz model. It is done by setting common assumptions by Indian companies the pattern of compensation, normal career growth and weight age for efficiency of employees. Human Resources Valuation - Advantageous or Not Valuation of human resources is advantageous to organisation, but in what way? To know the benefit of human resource valuation a question is included in the questionnaire, and results of the primary survey are shown in Table-3.
Table 3 Human Resources Valuation - Advantageous or Not

Charted Accountants' Opinion Strongly Agree Frequency HRA benefits to Companies Labour turnover will not affect HRA Retention of Employees Necessity of inclusion HR in Annual Reports 15 16 08 13 % 30 32 16 26 Agree Frequency 30 25 17 25 % 60 50 34 50 Neutral Frequency 03 04 04 05 % 06 08 08 10 Disagree Frequency 01 03 13 03 % 02 06 26 06 Strongly Disagree Frequency 01 02 08 04 % 02 04 16 08
From the Table 3 we can say that 90 percent of the respondents agree that human resource valuation is advantageous to companies, six percent are neutral and remaining disagree with the statement. It is because when human are valued, it helps management in taking decisions regarding human resources. By knowing
value, management will be able to concentrate on appreciation of human assets, which can be done by providing proper training and development process to employees. It helps in bench marking of employees in the market with the competitors and helps in decision making.
36
Impact of Labour Turnover on Human Resource Valuation

Generally employees leave organisations and join other competitors' organisation. How does the labour turnover affect the human resource valuation? To know the impact of labour turnover respondents asked to give their opinion and the opinion is given in Table 3. 82 percent of respondents feel that labour turnover will affect human resource valuation, eight percent are in neutral opinion and remaining respondents say no for it. Therefore, turnover of an employer is said to have a high turnover relative to its competitors, it means that employees of that company have a shorter average tenure than those of other companies in the same industry. If skilled workers are often leaving company then it will affect the value of human assets, as expenses i.e. investment made by the firm on recruitment, selection, training and development program will be a loss as they invest in favour of expecting future returns. And these are the factors considered while valuing the human assets directly.
management in retaining them. The management can not own employee but it can only encourage them to improve their skills and talents, which helps to add value per employee and wealth of the organization.
Reporting Human Resources in Annual Reports

Generally annual reports disclose the financial statements - profit & loss account, balance sheet, cash flow statement, funds flow statement and schedules of various items shown in financial statements. Annual reports bring all the information about the various resources, but exclude human resources. A question is included in the questionnaire to know the respondents' opinion of the necessity of inclusion of human resources in annual reports and the results are given in Table 3. 76 percent (Table 3) of the respondents opine that including human resource valuation in annual reports and financial statement is necessary, 10 percent of them are neutral and 14 percent did not agree with the statement. When HRA is included in the financial statement helps investors as decision-making tool and by reporting it in financial statement it overcomes the shortcomings of the existing practices and also makes financial statement more reliable and comparable. i.e. it helps in maintaining the transparency of financial statement. Contribution of HRA in Organizational Growth and Effectiveness Organisation grows on the available resources, without resources there is no question of assuming organisation. Table 4 depicts the opinion of respondents about the contribution of HRA in organisational effectiveness.
Human Resource Valuation - Retention of Employees

As said in Table 3, human resource valuation helps management in managing human resources and concentrating in improving their value by training. Table 3 shows that half of the respondents opine that HRA helps in retaining employees, followed by eight percent of them are neutral and the rest disagree with the statement. Valuing human resources may help management to retain employees. HRA acts as motivational factors for the employees rather than help
Table 4 Contribution of HRA in Organizational Growth and Effectiveness

Charted Accountants' Opinion Strongly Agree Frequency HRA and Organisational Effectiveness Impact on Share Price Impact of HRA on Wealth Max. 15 13 06 % 30 26 12 Agree Frequency 26 26 24 % 52 52 48 Neutral Frequency 06 05 02 % 12 10 04 Disagree Frequency 02 04 06 % 04 08 12 Strongly Disagree Frequency 01 02 12 % 02 04 24
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When respondents were asked about the contribution of HRA to the organizational effectiveness 82 percent (Table 4) of the respondents have said HRA contributes to the organisational effectiveness, 12 percent are neutral, and remaining have disagreed to it. In this knowledge based economy human valuation as become necessary for the organization effectiveness. In spite of having identical physical and financial resources; business can only endure and grow on the talent and skill of the employees; and managing capacity of the people in absence of such strategic people, growth of the business cannot be thought of. Employees provide benefits to the business in the same manner as the other tangible and intangible resources. With the emergence of service and knowledge based economy the prosperity of an organisation significantly influenced by its employees. Hence, it is highly contributed to organisational effectiveness.
opinion of respondents' on the impact of HRA on wealth maximisation of value of the firm. Table 4 shows that 60 percent of the respondents have said that HRA and recording in annual reports definitely increases value of the firm in the eyes of shareholders and prospective investors, which will automatically increase value of the firm in stock market.
Findings of the Study

From the foregoing analysis we can bring out the flowing findings: 90 percent of the respondents opine that human resource is the primary resource when compared to the other resources. Without quality human resource organisation can not utilise the other resources efficiently for organisational success. And the role of human resource is vital in achieving target performance of organisation. Because, human resource can not be easily imitated, and therefore it acts as a competitive advantage. Majority (88 percent) of respondents say that human resource should be recognised as asset. And 94 percent of them opine that human valuation is necessary like any other asset, because they are the creators of the business, and in this knowledge based economy human resource valuation will be appreciating, since they add value to the organisation. Lev and Schwartz model is the popular among the respondents followed by Flamholtz model, Morse, Capitalisation of Historical Cost method and two percent favoured Jaggi and Lau Model. Lev and Schwartz model is the popular due to flexible which is based on the present value if the future direct and indirect payments of employees as a measure of human resources value. Most of the companies in India are also using Lev and Schwartz model. 90 percent of the respondents agree that human resource valuation is advantageous to companies, since it helps management in taking decisions regarding human resources. By knowing value, management will be able to concentrate on appreciation of human assets, which can be done by providing proper training and development process to employees. Most of respondents feel that labour turnover will affect human resource valuation. Half of the respondents opine that HRA helps in retaining employees, since it acts as motivational factors for the employees and help management in retaining them.
Impact of HRA and Recording in Annual Reports on Stock Price

Stock price reacts to the company performance. Stock price changes with the publicly available news like acquisition, merger, takeover, appointment of Chief Executive Officer (CEO), Chief Finance Officer (CFO), expansion, growth in sales and revenue, the earnings per share (EPS), dividends per share (DPS), return on investment, (ROI), issue of bonus share, and the like. How human resource accounting and recording in annual reports does affects values of the stock price. To know this, a question is asked the respondents and the result is shown in Table 4. From the Table 4 we can say that 78 percent of respondents opine that human valuation does not affect true value of financial statement, 10 percent of them are neutral and rest of them say yes. However, they say that it may increase stock price, since it shows the talent and skill available with the organisation. It also helps in maintaining the transparency and corporate governance of the organisation.
HRA and Wealth Maximization

The primary role of management of an organisation is to maximise or value of the firm or shareholders' wealth. Whether the decision is relating to marketing, finance, human resource, production or any other department, it has to maximise value of the firm. Table 4 portrays the
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76 percent of the respondents say that including human resource valuation in annual reports and financial statement is necessary and it help investors for decision making. When respondents were asked about the contribution of HRA to the organizational effectiveness 82 percent of the respondents have said HRA contributes to the organisational effectiveness. More th than 3/4 of the respondents opine that human valuation does not affect true value of financial statement, but it may increase stock price, since it shows the talent and skill available with the organisation. 60 percent of the respondents have said that HRA and recording in annual reports definitely have positive impact on the value of the firm in the eyes of shareholders and prospective investors. Conclusion Success or failure of any organisation depends on the human resources, because companies could not exist without human resources and they play a vital role. In the knowledge economy, knowledge human capital has become a new engine of corporate development and it is stressed by experts that it is necessary to value and record human resources. Companies have strive to differentiate their annual reports and make them informative, attractive and easy to read, most still take a rear-view-mirror approach, focusing almost exclusively on history and analyses of past performance. At the same time we can also see that companies are valuing, accounting and recording human resources in annual reports. The study reveals that human resource occupies vital role in organisation and HRA in necessary for organisational growth and maximizing shareholders' value, since it is helpful for management decisions about acquiring, allocating, developing and maintaining human resources in order to attain cost-effectiveness. Scope for Further Study As stated in the above scope of the study covers only the select charted accountants in Bangalore, and the opinion
on human resource accounting only. Therefore, there is scope for further study on the following areas: Coverage may be extended to the Karnataka or even for whole of India. The data may be collected not only from charted accountants, but also from stockholders, prospective investors, and executives at various levels in the select organisations. Evaluation of various human resource valuation methods used by select companies may be made. Pulic, A. and Bornemann, M. (1999). The physical and intellectual capital of Austrian banks. p.1. Available online: http://www.measuringip.at/Papers/Pubic/Bank/en-bank.html Taylor, S. and Associates, (1999). Full Disclosure 1998, Shelley Taylor: London, United Kingdom. Organisation for Economic Cooperation and Development (OECD), 1999, OECD Symposium on Measuring and Reporting of Intellectual Capital, Amsterdam, OECD, Paris. Petty, R., and Cuganesan, S., 2005, Voluntary Disclosure of Intellectual Capital by Hong Kong Companies: Examining Size, Industry and Growth Effects Over Time, Australian Accounting Review, 36, 32-48. Edvinsson, L., and M.S. Malone, 1997, Intellectual Capital, Piatkus, London. Stewart, T.A., 1997, Intellectual Capital: The New Wealth of Nations , Doubleday Dell Publishing Group, Inc., New York. Sveiby, K.E., 1997, The New Organizational Wealth: Managing and Measuring Knowledge Based Assets, Berrett-Koehler Pub. Inc., San Francisco.
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An Empirical Study on the Factors Influencing Organizational Commitment
39

Dr.S. Jaya Bharathi*
*Professor, Department of Management Studies and Research, Coimbatore institute of engineering and technology, Narasipuram, Coimbatore 641109
ABSTRACT
Organizational Commitment is an age-old concept which has now developed into the nomenclature of employee engagement. It is the willingness of an employee to remain and strive for an organization in the long run. Hence it is a crucial component for employee retention and organizations should necessarily concentrate on establishing and maintaining employee loyalty. This study details about organizational commitment of middle level executives in a large public sector organization in South India with special emphasis on the influencing factors. It suggests measures to improve the commitment of executives based on the studied factors. Keywords: Organizational Commitment, Middle Level Executives, Influencing Factors, Workplace Behaviour Extended Summary: Organizations today are looking for competent workforce and are willing to invest considerable efforts and money to retain talented employees. In this competitive era, it is important for organizations to possess a productive and committed work force. There is an increasing need for HR professionals to design practices that focus on employee development and a harmonious work place. Organizational commitment is the willingness of an employee to remain and strive for an organization in the long run. It is a desired quality expected from job aspirants as there is a huge problem of attrition in many industries. Commitment is a complex phenomenon as it is the degree to which an employee identifies himself or herself with the organization. It has gained significance for quite a long period and is much more in vogue today as attrition is a major issue for many organizations. This study explores the level of organizational commitment at middle level as they are crucial in executing the top management vision, mission and objectives. It lays more emphasis on dominant influencing factors of commitment as the factors play a prominent role in the design of employee development programmes. It throws light on the factors that should find place in HR policies and practices. It offers suggestions for improving organizational commitment at middle level based on the study findings.
Introduction
Commitment is a complex phenomenon as it involves the interaction of many factors. Organizational Commitment reflects the employee's belief in the mission and goals of the firm; willingness to expend effort in their accomplishment; and intentions to continue working there. It displays a psychological attachment of an employee towards the job. It is a job attitude that gives employees an involvement in their jobs and makes them satisfied with the organization as a whole. Commitment is usually stronger among longerterm employees, those who have experienced personal success in the organization, and those working amidst a committed employee group. Organizationally committed employees will usually have good attendance records, demonstrate a willing adherence to company policies, and have lower turnover rates. Organizational commitment is seen as an emotional
attachment to the organization when the individual strongly identifies with the organization, is involved in it and enjoys membership in the organization. There is an unwillingness to leave the organization in spite of attractive to do so. The extended concept of Organizational Commitment is Employee Engagement, which propounds that an engaged employee is fully involved in and is enthusiastic about his or her work. To cope up with the turbulent environmental changes today in the global business, organizations need a productive, competent and committed work force. This is a perquisite for business success in any sector of operation. Employee commitment cannot be neglected at any cost and organizations should focus upon suitable HR policies and practices to ensure active involvement and participation of employees. A better knowledge about various factor of organizational commitment may help
40
Dr. S. Jaya Bharathi
in increasing organizations effectiveness. This study highlights upon the extent of presence of organizational commitment at executive level in a large engineering firm located in southern part of India. It also brings out the factors that have influence over organizational commitment of executives.
Thus, many studies look at various aspects of organizational commitment and their correlates. The present study concentrates on organizational commitment per se focusing on the influencing factors at executive level.
Objectives of The Study

1. 2. To find the level of organizational commitment of executives To identify and study the various factors influencing organizational commitment of executives To study the association between personal factors and organizational commitment of executives To study the association between organizational factors and organizational commitment of executives To offer suggestions for improving organizational commitment of executives There is no significant association between age of executives and their level of organizational commitment There is no significant association between gender of executives and their level of organizational commitment There is no significant association between educational qualification of executives and their level of organizational commitment There is no significant association between monthly income of executives and their level of organizational commitment There is no significant association between experience of executives and their level of organizational commitment There is no significant association between trade union membership of executives and their level of organizational commitment
Review of Literature
There are many studies on organizational commitment as it is a long researched topic of research interest. Both organizations and individual employees have a keen concern towards this field of study because of the mutual benefits of possessing better organizational commitment. Some of the studies reviewed for this research are as below. Dick Gavin P.M. (2011) has studied the managerial, job and demographic variables that influence organizational commitment of police officers in U.K. and has found that experiences of the way the officers are managed had a strong influence than job related variables. Baek-Kyoo (Brian) Joo & Ji Hyun Shim (2010) have examined the influence of psychological empowerment on organizational commitment and the moderating effect of organizational learning culture on the relationship in a korean public sector organization. They have found that psychological empowerment, organizational learning culture, and demographic variables had a significant impact on organizational commitment. The moderating effect of organizational learning culture on the relationship between psychological empowerment and organizational commitment was found to be significant. Among the demographic variables, only educational level turned out to be significant. Aggarwal-Gupta et al (2010) have studied the influence of perceived organizational support (POS) and psychological wellbeing (PWB) on organizational commitment in two large Indian manufacturing organizations. Findings revealed that POS and PWB significantly influenced psychological well-being and organizational commitment. Eileen Appelbaum et al. (2000) compared traditional production systems with high performance systems that utlize high involvement practices and showed that employees in high involvement systems had more organizational commitment. Published research from Gallup Organization (1999) showed that engaged employees are more productive, more profitable, more customerfocused, safer, and less likely to leave their employer.
3. 4.
5.
Hypotheses of The Study
Organizational Commitment Organizational commitment goes beyond loyalty to include an active contribution to accomplishing organizational goals. Organizational commitment represents a broader work attitude than job satisfaction
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because it applies to the entire organization rather than just to the job. The employees who are committed to the organization will usually have good attendance records. They demonstrate a willing adherence to the company policies and have lower turnover intentions. According to Allen, organizational commitment is seen as an effective or emotional attachment to the organization when the individual strongly identifies with the organization, is involved in it and enjoys membership in the organization. There is an unwillingness to leave the organization in spite of attractive offers from other organizations. The major features of organizational commitment are support and acceptance of the organization's goals and values; willingness to exert considerable effort on behalf of the organization; and a desire to remain with the firm. Organizational commitment goes beyond loyalty to include an active contribution to accomplishing organizational goals. Organizational commitment represents a broader work attitude than job satisfaction because it applies to the entire organization rather than just to the job. Some of the characteristics of organizational commitment are A support of and acceptance of the organizations goals and values; A willingness to exert considerable effort on behalf of the organization; and A desire to remain with the organization.
Organizational Commitment and Workplace Behaviour A person's behaviour at the workplace is reinforced by the set of values and beliefs in an organization; vision, mission and policies; and ultimately its HR practices. Managers are interested in the relationship between organizational commitment and job behaviour because the lack of commitment often leads to turnover. The stronger an employees commitment is to the organization, the less likely the person is to quit. Stronger commitment also is often correlated with low absenteeism and relatively high productivity. Moreover, committed individuals tends to be more goal directed and waste less time while at work, which has a positive impact on productivity. The workplace behaviour that demonstrates strong commitment include conscientiously fulfilling work responsibilities and speaking supportively of the organization's vision and mission, enthusiastically supporting the activities of the organization and a willingness to make an all-out effort on behalf of the organization. Over time, organizational commitment tends to become stronger when Individuals develop deeper ties to the organization and their co-workers as they spend more time with them Seniority often brings advantages that tends to develop more positive work attitudes Opportunities in the job market may decrease with age, causing employees to become more strongly attached to their current job.
The behaviour that demonstrate commitment include conscientiously fulfilling work responsibilities and speaking supportively of the organization's vision and mission, enthusiastically supporting the activities of the organization and a willingness to make an all-out effort on behalf of the organization. It has been demonstrated that workers who have retained low level of organizational commitment are more likely to quit their job and that organizational units with the lowest average organizational units with the lowest average organizational commitment levels tend to have highest employee turn over rates. Organizational commitment is a factor which hindering the organization's effectiveness. A better knowledge about various factor of organizational commitment may help in increasing organizations effectiveness.
The antecedents of effective commitment fall in to four categories, personal characteristics, work experiences and structural characteristics. Work experience is antecedents are those experiences that fulfill the employer's psychological needs to feel comfortable with in the organization and competent in the workplace. Some of the organizational measures to build organizational commitment in employees are practicing fair and equitable HR practices; providing a feeling of job security; rewards and recognition for better performance; developing organizational comprehension; evolving a culture of trust; and motivating and developing employee involvement. In
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total, to increase organizational commitment, it is necessary to know and understand the beliefs and values that lie within employees; and design suitable work practices.
For the purpose of this study, the factors influencing Organizational Commitment are grouped as 1. 2. 3. Personal factors Work and Work Environment factors Organization factors
Factors Influencing Organizational Commitment

Initial commitment of employees is determined largely by their individual characteristics and how well their early job experiences match with their expectations. Later, organizational commitment continues to be influenced by job experiences, with many of the same factors that lead to job satisfaction also contributing to organizational commitment or lack of commitment like compensation; relationship with supervisors and coworkers; working conditions; opportunities for advancement and so on. The organizational commitment tends to become stronger when individuals develop deeper ties to the organization and their coworkers as they spend more time with them. Seniority often brings advantages that tend to develop more positive work attitudes. Also, opportunities in the job market may decrease with age, causing workers to become more strongly attached to their current job. Organizational commitment is measured in this study using factors like awareness of responsibility, awareness of different aspects of job, boredom in work, gladness to spent rest of the career in this organization, think the problems of this organization as one's own, feeling of belongingness, satisfaction of salary, thinking of quitting the job, safe working conditions, work environment, satisfaction of working hours, interpersonal relationships, promotion policies, career planning policies, leave only due to unavoidable circumstances, company policies, autonomy to work, team spirit, appreciation of good performance, support of the superiors, welfare facilities, positive attitude towards the organization, keeping up of work timing, not taking up extra responsibility, HR policies and procedures, not feeling stress at work, readiness to exert expected effort, functioning of trade unions, fringe benefits and belief over missions and Goals. These factors are derived from previous studies as well as discussion with academic and industry experts. The relativity among these factors are pronounced by classification in the domains of individual, work, work environment and the organization.
Personal Factors:
The following personal factors are considered for the study. They signify the antecedents of commitment from an individual perspective. Feeling of belongingness Ready to take up extra responsibility Think the problem of organization as one's own Gladness to spend rest of career in the organization Positive attitude towards organization Keeping up timings Taking leave only due to unavoidable circumstances Readiness to put expected efforts Awareness of responsibility
Personal factors are related to each other by their way of manifestation in individual respondents. The affective components of each person's attitude and the resulting behaviour reveal commitment towards the organization. An ownership feeling is the dominant link among these factors that leads to exhibit a committed behaviour.
Work & Work Environment Factors:

The following work and work environment factors are considered for the study. They signify the antecedents of commitment from a work related perspective. Thinking of quitting the job Not feel any stress at work Never feel boredom Autonomy Awareness of different aspects of the job Functioning of trade union Team spirit Support from superiors
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Interpersonal relationship Work environment
Work and work environment factors are related to each other by their way of manifestation in work settings. The affective components of individuals towards work and the environment reveal commitment towards the organization. The way of performing work also is equally important to work content. Ease in day to day activities leads to better commitment. An autonomy feeling is the dominant link among these factors that leads to exhibit a committed behaviour.
Organizational Factors:
The following organizational factors are considered for the study. They signify the antecedents of commitment from an organization's perspective. Promotion policies Fringe benefits Appreciation of good performance Career planning policies Company policies Human resource policies and procedures Welfare facilities Satisfaction with salary Safe working condition Working hours
random sampling method. The study utilises both primary and secondary data. Primary data was collected with the help of a questionnaire. The questionnaire included personal details of the respondents, questions on organizational commitment and the various factors of organizational commitment in a five point scale. Secondary data was collected from journals, magazines, websites and company records. The collected data is analysed with respect to the study objectives. It is edited, coded and entered in simple tabulations. Mean scores are used for comparison of the various factors of organizational commitment. The statistical tools like percentage, average and Chi-square test were used in the analysis to arrive at meaningful conclusions. Results and Discussions The study focuses mainly on the level and factors influencing organizational commitment of executives at the middle level of hierarchy. The level of organizational commitment and dominant influencing factors was identified using average scores. The total score for each group of factors are calculated by taking average of individual factor scores as shown below. The organizational commitment was measured using 5 point scale scores of the questionnaire statements on various tenets of commitment including all the influencing factors. The minimum score is 105 (105 X 1) and maximum score is 525 (105 X 5). Reverse scores were taken for questions with negative connotation. The overall average score is calculated by taking the total score of all the respondents for the three set of influencing factors put together. Overall average score of Organizational Commitment = 381 / 105 = 3.63 This indicates a moderate level of commitment among the executives. The average scores for factors are calculated in the same manner as above by segregating the factors into various groups and including the total score for each group of factors as shown below. Personal factors average score = Work and Work Environment factors average score = Organization factors average score = 410 / 105 = 3.9 392/105 = 3.73 375/105 = 3.57
Organizational factors are related to each other by their way of promoting recognition and motivation among individual respondents. The organization's philosophy on dealing with human resources, HR policies and practices decide the resulting commitment towards the organization. Creating an ownership feeling through recognition, reward, job security and motivation is the dominant link among these factors that leads to exhibit a committed behaviour. Research Methodology The research study is Descriptive in nature and Survey method is used for collection of data. A sample of 105 executives from a population of 334 middle level executives in the organization is selected using simple
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Table 1 - Average Scores of the Various Factors

Factors
Personal Work & Work Environment Organizational
Average Scores
3.90 3.73 3.57
This implies that organizations have to focus more on HR practices that enhance the commitment through satisfaction of personal and work parameters of employees. To find the association between the various factors and organizational commitment, Chi-square test was used as shown below. The respondents were classified into groups having low, moderate and high level of commitment to find the association between individual variables and organizational commitment. The organizational commitment scores of all the respondents are divided into three groups as low, moderate and high by following the mean 1 standard deviation method. The scores that fall below mean 1 standard deviation are considered as 'low', the scores that come above the mean + 1 standard deviation are considered as 'high' and the scores which come between the 'low' and 'high' categories are considered as 'moderate'.
It is found that personal factors are dominantly influencing organizational commitment of executives at middle level followed by work and work environment factors. Organizational factors score least in the category as shown in the graph below.
Graph1-Factors Influencing Organizational Commitment
Factors Influencing Organizational Commitment
4
3.9
3.8 Average Scores 3.7
3.6
3.5
3.4 Personal Work & Work Environment Factors Environment Organizational
CHI-SQUARE Calculations
Table 2 Association Between Age and Organizational Commitment
Sl. No. 1 2 Age group Low 35-45 Above45 Total 14 10 24 No. of respondents Moderate 30 25 55 High 10 16 26 54 51 105 Total
Ho : There is no significant association between age of executives and their level of organizational commitment Ha : There is significant association between age of executives and their level of organizational commitment Calculated chi- square value = 2.425 Degree of freedom = (2-1)(3-1)= 2 Table value at 5% significance with 2% degree of freedom is 5.991. Since table value is greater than calculated value, Ho is accepted. Hence, it can be concluded that there is no significant association between age of executives and their level of organizational commitment. Table 3 - Association Between Gender and Organizational Commitment Sl. No.
1 2 Total
Gender
Male Female 30
No. of respondents Low

16 14 50
Moderate
30 20 25
High
15 10 105
Total
61 44
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Ho : There is no significant association between gender of executives and their level of organizational commitment Ha : There is significant association between gender of executives and their level of organizational commitment Calculated chi- square value = 0.227 Degree of freedom = (2-1)(3-1)= 2 Table value at 5% significance with 2% degree of freedom is 5.991. Since table value is greater than calculated value, Ho is accepted. Hence, it can be concluded that there is no significant association between gender of executives and their level of organizational commitment. Table 4 - Association Between Educational Qualification and Organizational Commitment Sl. No.
1 2
Educational
Qualification Professionals Non-Professionals Total

15 18 33
Moderate
24 20 44
High
16 12 28
Total
55 50 105
Ho : There is no significant association between educational qualification of executives and their level of organizational commitment Ha : There is significant association between educational qualification of executives and their level of organizational commitment Calculated chi- square value = 0.8706 Degree of freedom = (2-1)(3-1)= 2 Table value at 5% significance with 2% degree of freedom is 5.991. Since table value is greater than calculated value, Ho is accepted. Hence, it can be concluded that there is no significant association between educational qualification of executives and their level of organizational commitment.
Table 5 Association Between Monthly Income and Organizational Commitment

Sl. No.
1 2
Monthly income Low

Less than 10000 10000 and above Total 14 10 24
No. of respondents Moderate

17 31 48
High
19 14 33
Total
50 55 105
Ho : There is no significant association between monthly income of executives and their level of organizational commitment Ha : There is significant association between monthly income of executives and their level of organizational commitment Calculated chi- square value = 10.72 Degree of freedom = (2-1)(3-1)= 2 Table value at 5% significance with 2% degree of freedom is 5.991. Since table value is lesser than calculated value, Ho is rejected. Hence, it can be concluded that there is significant association between monthly income of executives and their level of organizational commitment.
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Table 6 Association Between Experience and Organizational Commitment

Sl. No.
1 2
Experience (Year)
Less than 15 15 and Above Total

15 17 32
Moderate
14 30 44
High
17 12 29
Total
46 59 105
Ho : There is no significant association between experience of executives and their level of organizational commitment Ha : There is significant association between experience of executives and their level of organizational commitment Calculated chi- square value = 6.337 Degree of freedom = (2-1)(3-1)= 2 Table value at 5% significance with 2% degree of freedom is 5.991. Since table value is lesser than calculated value, Ho is rejected. Hence, it can be concluded that there is significant association between experience of executives and their level of organizational commitment. Table 7 Association Between Trade Union Membership and Organizational Commitment Sl. No.
1 2 Trade Union Membership Yes No Total

14 15 29
Moderate
22 22 44
High
20 12 32
Total
56 49 105
Ho : There is no significant association between trade union membership of executives and their level of organizational commitment Ha : There is significant association between trade union membership of executives and their level of organizational commitment Calculated chi- square value = 1.89 Degree of freedom = (2-1)(3-1)= 2 Table value at 5% significance with 2% degree of freedom is 5.991. Since table value is greater than calculated value, Ho is accepted. Hence, it can be concluded that there is no significant association between trade union membership of executives and their level of organizational commitment. Major Findings of the Study Majority of the respondents are male; belong to the age group of 35-45; are married; non-professionals; earn a salary of 10000-15000; and are members of trade unions The overall organizational commitment of executives is found to be moderate Personal factors are dominant than work, work environment and organization factors in influencing organizational commitment Among the personal factors, positive attitude towards the organization is found to have more influence on organizational commitment Among the work factors, autonomy is found to have to have more influence on organizational commitment Among the organizational factors, HR policies and procedures are found to have to have more influence on organizational commitment Among the work environment factors, support
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from superiors is found to have more influence on organization commitment There is no significant association between age, gender, educational qualification and trade union membership of executives and their level of organizational commitment There is significant association between monthly income and experience of executives and their level of organizational commitment Suggestions As the overall organizational commitment is moderate, the organization has to devise suitable programmes and practices to improve commitment of executives Since majority of the employees are middle aged HR polices and procedures should be tuned to such age group Since majority of the respondents are married there should be practices that help employees to balance between family and work life It is found that experience and salary has significant association with organizational commitment and hence these two factors have to be managed effectively to improve organizational commitment Majority are found to have moderate organizational commitment so the company has to take measures by concentrating on the influencing factors like positive attitude towards organizational attorney, salary and support from superiors to improve organization commitment It is found that there is no significant association between age, gender, educational qualification and trade union membership of executives and organizational commitment. Hence, HR policies and practices have to concentrate on other factors in personal, work, work environment and organizational It is found that all the factors viz. personal, work, work environment and organization have significant influence on organization commitment. Hence these factors have to be considered while developing HR policies and practices.
Recognition and reward schemes can be implemented to improve job satisfaction of executives Experienced employees have to be given proper promotion and appreciation as it is found to be a significant influencing factor. Satisfactory salary on par with industry standards can improve job satisfaction and in turn lead to better organizational commitment. Hence, organizations can devise a reasonable compensation plan and make relevant revisions to keep employees contented and thus more committed. Conclusion Today, organizations are in need of committed employees to survive in this competition environment, so it is necessary to be aware about various factors which have an impact on organizational commitment of employees. It has been demonstrated that workers who have retained low level of organizational commitment are more likely to quit their job and that organizational units with the lowest average organizational units with the lowest average organizational commitment levels tend to have highest employee turn over rates. Hence, studies on organizational commitment are increasingly finding place in research. This study probes into the personal, work, or organizational and work factors influencing organizational commitment at a large engineering firm in south India. It is found that all factors have profound influence, especially positive attitude, work autonomy, satisfaction with salary and support from superiors. Hence the HR policies and procedures of the company have focus on such factors to improve organizational commitment. References
1. Aggarwal-Gupta et al. (2010). Perceived Organizational Support and Organizational Commitment: The Mediational Influence of Psychological Well-Being. Journal of Business & Management. Vol. 16, Issue 2, pp.105-124. Armstrong Michael (2006). A Handbook of Human Resource Management Practice (10 t h ed.). London:Kogan Page Ltd. Aswathappa,K(2005).Organisational Behaviour: Text, Cases, Games(Sixth revised ed.). Mumbai:Himalaya Publishing House
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Dr. S. Jaya Bharathi Baek-Kyoo (Brian) Joo & Ji Hyun Shim (2010). Psychological empowerment and organizational commitment: the moderating effect of organizational learning culture. Human Resource Development International. Vol. 13, Issue 4, pp.425-441. Dessler, Gary(2005).Human Resource Management(tenth ed.).New Delhi:Prentice Hall of India private ltd. Dick, Gavin P.M.(2011).The Influence of Managerial and Job Variables on Organizational Commitment in the Police. Public Administration. Vol. 89, Issue 2, pp. 557-576. Ellen Ernst Kossek & Sharon A.Lobel (2001).HRM Transforming the workplace. New Delhi:Blackwell Publishers Ltd. Kothari, C.R(1985).Research Methodology Methods & Techniques(second edition). New Delhi:Wiley Eastern Ltd. 9. 10. Pareek, Udai (2004).Understanding Organisational Behaviour.New Delhi:Oxford University Press Robbins, Stephen P(1999).Organisational Behaviour: Concepts, Controversies and Applications(eighth edition).New Delhi:Prentice Hall of India Pvt. Ltd. We b s i t e s : h t t p : / / w w w. c i t e h r. c o m userwww.sfsu.edu/~nschultz/.../ organizational.commitment.pdf www.colorado.edu/ibs/PEC/workplacechange/papers/ WP_012.pdf ejournal.narotama.ac.id/.../jbam_7_3_1_or ganizationa l_commitment http://strategic-hcm.blogspot.com/2011/.../hrchallenges-2011-survey-results.html http://www.getsatisfaction.com/smutel/managerial_ski lls_competencies
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Customers' Perception on Internet Banking: A Study of State Bank of India
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M. Lokanadha Reddy* P. Mohan Reddy** and C. Sivarami Reddy***
*Research scholar, Department of commerce, S.V.University, Tirupati 517502 **Professor, Department of commerce, S.V.University, Tirupati 517502 ***Professor, Department of commerce, S.V.University, Tirupati - 517502
ABSTRACT
In the present day, total automation of banking operations is an imperative need for all banks to attract more customers, provide efficient services, and survive in the emerging new competition, apart from the profit motive which is the primary objective of the business. In order to achieve these goals of business, various e-channels have been developed through technology. 'Internet Banking' is one of the best alternative channels available to customers for quick, correct and efficient service at anytime and anywhere. Internet banking is still at infancy stage in the world. The development and the increasing progress that is being experienced in the Information and Communication Technology have brought about a lot of changes in almost all facets of life. In the Banking Industry, it has been in the form of online banking, which is now replacing the traditional banking practice. Online banking has a lot of benefits which add value to customers' satisfaction in terms of better quality of service offerings and at the same time enable the banks gain more competitive advantage over other competitors. This empirical research study mainly focus light on the major factors which influence online customers' satisfaction with the overall service quality of SBI. This study also enable in assessing the impact of these factors in the context of Online (Internet) banking and it would help the bank management not only in improving the level of customer satisfaction but also strengthening the bond between the banks and their customers, thereby helping them to retain and/or expand their overall customer base.
Keywords: Internet Banking/online Banking, Customers' perception, Information and Communication Technology Internet banking is the term used for new age banking system. Internet banking is also called as online banking and it is an outgrowth of PC banking. Online banking is a new phase in retail banking services. With the help of online banking several types of services through which customers can request information and carry out their banking transaction such as balance inquiry, transferring funds, paying bills, paying mortgages and purchasing financial instruments and certificates of deposits (Haque et al, 2009) request check book etc., via a telecommunication network or internet without physically visit the branches. (Daniel, 1999; Mols, 1998; Sathye, 1999). In future along with physical market competition the virtual market (market space) also going to take place (Rayport and Sviokla, 1994 a, b). Due to this fact more and more banking companies thinking about switching their businesses from the physical to virtual market (online technology). Today, the key success factor for the developing economies is Information (Kenny & Qiang, 2003, p. 14). As advancements in technology and information system are arising rapidly and different kinds of electronic banking systems are introducing by banks, where each system has a unique and systematic way that facilitate the user to interact with the bank in easiest way. The first online banking services based on the Internet were provided by Stanford Federal Credit Union (SFCU) in October 1994 (Business Wire, 1995). Online banking refers to the automated delivery of banking products and services directly to customers through electronic communication channels, most notably the Internet. Online banking is also called Ebanking or PC banking. (Pikkarainen, Karjaluoto, and Pahnila 2004) define Internet banking as an 'Internet portal, through which customers can use different kinds of banking services ranging from bill payment to making investments'. The Indian banking and financial sector has also welcomed this change. Today, more and more Indian banks are trying to differentiate themselves in a fiercely competitive industry. Not only this helps them align their offerings to the constantly evolving customer needs and developments in technology, it also serves to replace some of traditional bank functions, thereby reducing significant overheads associated with bank branches.
1 KPR International Journal of Management Vol.1, Issue.1, July 2012
52
M. Lokanadha Reddy1 P. Mohan Reddy2 and C. Sivarami Reddy3
In online business trust, security and safety are the most challenging issues for the banks. Beside them, to build and retain the customers' trust will also become a future challenge for banks especially in internet banking (Aladwani, 2001). Majority of the customers hesitate to use internet banking services because of security and privacy issues (Lee & Turban, 2001). The security problems have a large contribution to reduce customer satisfaction. The success of any new product and service is highly depending on customer acceptance and customer satisfaction. (Huang et al. 2004). In contrast the customer dissatisfaction and resistance is one of the major causes of market failure of innovation (Ram and Sheth, 1989). In online banking business the Automated Teller Machine (ATM) is the first popular system that was introduced to facilitate the users to access and carry out their banking transactions in minimum time. However, the evidences of various researches show that there is a high association between consumers' usage patterns of ATMs and their demographic profiles (Hood, 1979; Murphy, 1983). But in now a day's the relationship between ATM's usage patterns and consumer psychographic profiles is also found significant (Stevens et al., 1986). The Government of India enacted the IT Act, 2000 (Information Technology Act). This act came into effect from the 17th of October 2000. The purpose of this act, in context of banking, was to provide legal recognition to electronic transactions and other means of Electronic Commerce. The working group set by Reserve bank of India, has been working as a watchdog on the different aspect of the Internet banking. ICICI bank was the pioneer bank to use Internet banking for some of its services, in India. ICICI bank and a lot of other Indian banks use the Internet banking system to provide online banking solution. In the current scenario Indian customers are moving towards Internet banking, slowly but steadily. Most of the big Indian banks like SBI, BOB, and BOI etc., have started providing Internet banking services.
With the exception of cash withdrawals, Internet banking gives customers access to almost any type of banking transactions at the click of a mouse. The use of the Internet as a new alternative channel for the distribution of financial services has become a competitive necessity instead of just a way to achieve competitive advantage with the advent of globalization and fierce competition (Flavian, Torres, & Guinaliu, 2004; Gan, Clemes, (Rueangthanakiet Pairot, 2008) defined Customer's satisfaction as the company's ability to fulfill the business, emotional, and psychological needs of its customers. However, customers have different levels of satisfaction as they have different attitudes and experiences as perceived from the company. Customer's satisfaction is affected by the importance placed by the customers on each of the attitudes of the product/ service. Customer satisfaction measurement allows an organization to understand the key drivers that create satisfaction or dissatisfaction; and what is really driving their satisfaction during a service experience. Indeed the use of the internet as a new alternative channel for the distribution of financial services has become a competitive necessity instead of just a way to achieve competitive advantage with the advent of globalization and fiercer competition (Flavin, Torres, & Guinalu, 2004; Gan, Clemes, Limsombunchai, & Weng, 2006) . Banks use online banking as it is one of the cheapest delivery channels for banking products (Pikkarainen et al., 2004). Such service also saves the time and money of the bank with an added benefit of minimizing the likelihood of committing errors by bank tellers (Jayawardhena & Foley, 2000). As Karjaluoto et al. (2002) argued that 'banking is no longer bound to time and geography. Customers over the world have relatively easy access to their accounts, 24 hours per day, and seven days a week'. The author further argued that, with internet banking services, the customers who felt that branch banking took too much time and effort are now able to make transactions at the click of their fingers. Robinson (2000) believes that the supply of Internet banking services enables banks to establish and extend their relationship with the customers. There are other numerous advantages to banks offered by online banking such as mass customization to suit the likes of each user, innovation of new products and services, more effective marketing and communication at lower
Literature Review
(Pikkarainen, Karjaluoto, and Pahnila 2004) define Internet banking as an 'Internet portal, through which customers can use different kinds of banking services ranging from bill payment to making investments'.
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costs (Tuchilla, 2000), development of non-core products such as insurance and stock brokerage as an expansion strategy, improved market image, better and quicker response to market evolution (Jayawardhena & Foley, 2000). Customer Satisfaction and Online Banking The concept of Customer or User Satisfaction as a key performance indicator within the businesses has been in use since the early 1980s (Bailey & Pearson 1983; Ives, Olson, & Baroudi 1983). Similarly, the end user computing satisfactions have been studied since the 1980 (Bailey & Pearson 1983; Chin, Diehl, & Norman 1988; Ives et al., 1983; Rivard & Huff 1988). The user satisfaction can be seen as the sum of the user's feeling and attitudes toward several factors that affect the usage situation (Bailey et al., 1983). End user experience has become an important factor in internet-based businesses because the end user often pays for the majority of new products and services. Therefore, new product characteristics such as perceived ease of use, quality, aesthetics, appeal and value for money must be matched or exceeded with customer expectations toward the product (Wilson & Sasse 2004). Therefore, assessing customer satisfaction has become very important, especially for high tech products and services. In general, customer satisfaction has been measured using questionnaire scales for which either a Likert or a semantic differential scale have been used.
through interview schedule. In the questionnaire, various internet banking applications are included from previous research. In total 13 items are developed (4 for general perception and 9 for internet banking features) for the purpose of data collection. All items were measured by responses on a five-point Likert scale in agreement/ relevance with statements, ranging from 1= Strongly Disagree to 5= Strongly Agree. The source for all the tables base on field survey.
Empirical Analysis
Demographic Profile of the Respondents is presented in Table - A. S. No. 1 Demographics Age (years) : 25 or Under 26 -35 36-45 Above 45 2 Education Levels : Graduation Post-graduation Others 3 Employment Status : Self-Employment Wage-Employment Professionals Students/ Research Scholar 4 Monthly Income : 10,000 or Below 10,001 - 15,000 15,001 - 20,000 Above 20,000 Total 9 14 12 15 50 18.00 28.00 24.00 30.00 100 2 11 22 15 4.00 22.00 44.00 30.00 15 31 4 30.00 62.00 8.00 11 19 12 8 22.00 38.00 24.00 16.00 Frequency Percentage
Objective of the present paper

The present study aims at exploring the major factors responsible for internet banking based on respondents' perception on various internet applications. Study also tries to examine whether there is any relation with the demographic variable (e.g. gender) and respondents' perception about internet banking
Methodology
The present research investigation is limited to the customers of State Bank of India (SBI) confined to Tirupati and Chittoor towns. The researcher picked up 50 internet banking savvy customers of the bank in these two towns for an in-depth analysis. The study employs primary data as well as secondary data. Secondary data is collected from different published sources. Primary data is collected by personal survey
Source: Primary data.
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From Table A, the sample customers are mostly in the age group of 26-35 (38%). It is also evident from the table that 22% of the respondents are youngsters (below 25 years), 24% were between 36 and 45, and 16% are above 45. The respondents were predominantly postgraduates (62%) and graduates (30%). This implies that the respondents had high literacy levels. With regard to employment status, the respondents are a mix of Personal banking needs
students/Research scholars (30%), self-employed (4%), wage employed (22%) and professionals (44%). It is quite obvious that the employment level is high among the respondents. The study had a majority of the respondents earning above Rs. 20,000 (30%), while 18% of them had income less than Rs. 10,000 and 28% of them earning between Rs. 15001 and Rs. 20,000.
Table 1: Internet banking and Personal banking needs

Source: Primary data. Age Strongly Disagree Disagree Ultimate Agree Strongly Agree Total <25 0 0 0 0 1 -9.09 3 -27.27 7 -63.64 11 -100 26-35 2 -10.53 0 0 3 -15.79 8 -42.11 6 -31.58 19 -100 36-45 2 -16.67 0 0 2 -16.67 5 -41.67 3 -25 12 -100 Average Level of Satisfaction (%) Table-1 Shows internet banking and personal banking needs. It is evidence from the table that majority of the internet banking users strongly agreed that internet banking is compatible with their personal banking needs. In other words, IB is more useful to meet the individual banking needs. Another 18 sample respondent agreed with the statement. While 12 percent of sample respondent neither agreed nor disagreed, with >45 Total Scores 1 -12.5 0 0 0 0 3 -37.5 4 -50 8 5 -10 0 0 6 -12 18 -36 21 -42 50 50 4.55 68 3.58 43 3.58 71.67 33 144 5 35 25 15 20 60 4 12 32 20 12 64 3 3 9 6 0 15 2 0 0 0 0 0 1 < 25 0 26-35 36-45 2 2 >45 Total 1 5
-100 -100 4.13 2.88 82.5 57.6 90.91 71.58
the statement 10 percent of sample respondent strongly disagreed. It is further noted that the highest level of satisfaction (90.91%) is noticed in the case of respondents who fall below in the age of 25 years and least being (71.58%) in the age group of 26-35 years. On the whole the level of satisfaction is impressive in all the age groups of sample respondents.
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Easy to access
Table 2: Internet banking and easy to access Age
Strongly Disagree Disagree Ultimate Agree Strongly Agree Total
<25
1 -9.09 0 0 2 -18.18 3 -27.27 5 -45.45 11 -100
26-35
2 -10.53 0 0 4 -21.05 5 -26.32 8 -42.11 19 -100
36-45
1 -8.33 1 -8.33 2 -16.67 4 -33.33 4 -33.33 12 -100
>45 Total Scores

2 -25 2 -25 2 -25 1 -12.5 1 -12.5 8 -100 6 -12 3 -6 12 -24 13 -26 16 -32 50 -100 1 2 3 4 5
< 25
1 0 6 12 25 44 4.00 80.00
26-35 36-45
2 0 12 20 40 74 3.89 77.89 1 2 6 16 20 45 3.75 75
>45 Total
2 4 6 4 5 21 2.63 52.5 6 6 30 52 90 184 3.68 73.6
Average Level of Satisfaction (%)
Source: Primary data. Internet banking and easy to access is shown in table two it is obvious that majority of the sample users (16) have strongly agreed IB is easy to access while strongly disagreed by six respondent. Above 26% of sample respondents have agreed with the statement where us 24% of sample respondent are neutral. it is apparent that only 3 respondents has disagreed that IB is easy to access. It may be observed that majority of the sample respondents express their opinion that IB is easy to access for their banking operations. Further, it may be observed that the level of satisfaction is highest in the age group less than 25 years while lowest (52.50%) in the age group of more than 45 years. The level of satisfaction is 75% or more than in remaining age groups. It may be noted that higher the age group lower the level of satisfaction. In other words, the technology awareness is more in the case of lower age groups. Compatible with life style Table 3: Internet banking and Compatible with life style Age
<25
1 -9.09 0 0 2 -18.18 3 -27.27 5 -27.27 11 -100
26-35
0 0 1 -5.26 3 -15.79 5 -26.32 8 -36.84 19 -100
36-45
2 -16.67 1 -8.33 1 -8.33 4 -33.33 2 -50 12 -100
>45 Total Scores

1 -12.5 1 -12.5 2 -25 1 -12.5 1 -37.5 8 -100 4 -8 3 -6 8 -16 13 -26 16 -38 50 -100 1 2 3 4 4
< 25
1 0 6 12 20 42 3.82 76.36
26-35 36-45
0 2 9 20 32 78 4.11 82.11 2 2 3 16 8 45 3.75 75
>45 Total
1 2 6 4 4 28 3.5 70 4 6 24 52 64 193 3.86 77.2
Average Level of Satisfaction (%) Source: Primary data.
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Internet banking and compatible with life style is depicted in the table 3. It may be observed that majority of sample respondents are strongly agreed that IB is compatible with their life style. About 6% of respondents are disagreed IB is compatible with their life style. 8 sample respondents are neutral with their life style. 38% of the respondents have strongly agreed at the age group of 26 to 35 years. It may be observed that
majority of the respondents (70%) have agreed internet banking is compatible with their life style. Further, it may be noted that the level of satisfaction is highest (82.11%) in the age group of 26 to 35 years age group. While lowest (70.00%) in the case of above 45 years age group. The level of satisfaction is more than (75%) in rest of age groups. Finally, it may be concluded that 77.20 percent of total respondents have agreed IB is compatible with their life style.
Sign of modernity
Table 4: Internet banking and sign of modernity Age
<25
0 0 1 -9.09 2 -18.18 3 -27.27 5 -45.45 11 -100
26-35
0 0 1 -5.26 0 0 6 -31.58 12 -63.16 19 -100
36-45
0 0 1 -8.33 1 -8.33 5 -41.67 5 -41.67 12 -100
>45 Total Scores

0 0 0 0 1 -12.5 4 -50 3 -37.5 8 -100 0 0 3 -6 4 -8 18 -36 25 -50 50 -100 5 4 3 2 1
< 25
0 2 6 12 25 45
26-35 36-45
0 2 0 24 60 86 0 2 3 20 25 50
>45 Total
0 0 3 16 15 34 0 6 12 72 125 215
Average Level of Satisfaction (%) Source: Primary data. TABLE 4 shows Internet banking is a sign of modernity it obvious that more number of sample respondents (25) have strongly agreed and a less number of sample respondents (3) have disagreed using of internet banking is a sign of modernity 55% of the sample respondents have strongly agreed with the statement where as 8% of sample respondents are neither agreed nor disagreed. It is apparent that no one can strongly disagree with this statement. Majority of
4.09 81.82
4.53 90.53
4.17 83.33
4.25 85
4.3 86
the sample respondents expressed their opinion as a positive sign. It may be observed that the level of satisfaction is higher (90.53%) in the age group of 2635 when compared with other age groups. Lowest (81.82%) satisfaction as agreed in the case of less than 25 years age group. It may be noted that middle age groups expressed that internet banking is a sign of modernity with their life style.
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Security
Table 5: Security of internet banking services
Age
<25
3 -27.27 1 -9.09 2 -18.18 3 -27.27 2 -18.18 11 -100
26-35
2 -10.53 0 0 4 -21.05 7 -36.84 6 -31.58 19 -100
36-45
3 -25 2 -16.67 2 -16.67 2 -16.67 3 -25 12 -100
>45 Total Scores

1 -12.5 2 -25 1 -12.5 2 -25 2 -25 8 -100 9 -18 5 -10 9 -18 14 -28 13 -26 50 -100 1 2 3 4 5
< 25
3 2 6 12 10 33 3.00 60.00
26-35 36-45
2 0 12 28 30 72 3.79 75.79 3 4 6 8 15 36 3.00 60.00
>45 Total
1 4 3 8 10 26 3.25 65 9 10 27 56 65 167 3.34 66.8
Average Level of Satisfaction (%) Source: Primary data. Table 5 depicted the security of internet banking services. It is obvious that twenty six percent of the total sample respondents have strongly agreed that IB is a security service for their operations, whereas 14 respondents agreed to that it is a security. Equal number of respondents (9) is neutral and strongly disagrees on the security services. Another five respondents are disagreeing with the statement. Further, it may be
observed that the level of satisfaction is highest (75.79%) in the case of 26-35 age group respondents followed by less than 45 years age group (65.00%). It is noted that, an equal level of satisfaction (60.00%) in between the less than 25 years and 36-45 years of age groups. Finally, it is observed that overall 66.80 percent sample respondents are expressing their opinion internet banking services are secured.
Privacy
Table 6: Privacy of internet banking services Age
<25
2 -18.18 0 0 3 -54.55 6 -54.55 0 0 11 -100
26-35
3 -15.79 1 -5.26 9 -21.05 4 -21.05 2 -10.53 19 -100
36-45
2 -16.67 1 -8.33 5 -16.67 2 -16.67 2 -16.67 12 -100
>45 Total Scores

3 -37.5 2 -25 3 0 0 0 0 0 8 -100 10 -20 4 -8 20 -24 12 -24 4 -8 50 -100 1 2 3 4 5
< 25
2 0 9 24 0 35 3.18 63.64
26-35 36-45
3 2 27 16 10 58 3.05 61.05 2 2 15 8 10 37 3.08 61.67
>45 Total
3 4 9 0 0 16 2 40 10 8 60 48 20 146 2.92 58.4
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Privacy of internet banking services is shown in the table 6. It is evident from the table that majority of the sample respondents are neutral on the privacy of IB services. About 20 percent of the sample respondents have strongly disagreed and 40 percent of sample respondents neutral in privacy of IB services, whereas only four numbers of respondents strongly agreed about the privacy policies. In other words, 24 percent of
sample respondents are agreed IB services having the privacy. It may be observed that the level of satisfaction is highest sign in the case of less than 25 years age group followed by 36-45 and 26-35. More than 45 years of age group respondents did not believe the privacy of internet banking services. It may be noted that more than 58 percent of the respondents agreed internet banking privacy services.
Resolving the problem Table-7 shows the resolve the problems of customers. Table 7: Resolving the problem
Age
<25
1 -9.09 0 0 2 -18.18 3 -27.27 5 -45.45 11 -100
26-35
2 -10.53 2 -10.53 4 -21.05 5 -26.32 6 -31.58 19 -100
36-45
2 -16.67 1 -8.33 3 -25 3 -25 3 -25 12 -100
>45 Total Scores

1 -12.5 1 -12.5 3 -37.5 0 0 3 -37.5 8 -100 6 -12 4 -8 12 -24 11 -22 17 -34 50 -100 1 2 3 4 5
< 25
1 0 6 12 25 44 4.00 80.00
26-35 36-45
2 4 12 20 30 68 3.58 71.58 2 2 9 12 15 40 3.33 66.67
>45 Total
1 2 9 0 15 27 3.38 67.5 6 8 36 44 85 179 3.58 71.6
Average Level of Satisfaction (%) Source: Primary data. It may be observed that, majority of the sample respondents have strongly agreed that IB takes a long time to resolves their problem. Less than (4) respondents disagreed, which nearly 24 percent of sample respondents neither agreed nor disagreed with this statement. Above 50 per cent of respondents agreed that IB has taken a long time to resolve their problems. It may be observed that the level of satisfaction of sample respondents has a good sign. 80
percent of respondents less than 25 years age group users agreed, and more than 70 percent of 26-35 age group respondents are also accepting this statement. The age in between 36-45 years of sample respondents have recorded lowest level of satisfaction (66.67) when compared to remaining number of age groups. It may be noted that lower the age groups have recorded higher the level of satisfaction about the time taken to resolve the problem.
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Additional benefits
Banks offers additional benefits for IB users are depicted in the Table 8. Table 8: Banks offers additional benefits for IB users Age
<25
3 -27.27 1 -9.09 3 -27.27 4 -27.27 5 0 11 -100
26-35
4 -21.05 2 -10.53 5 -26.32 4 -26.32 6 -21.05 19 -100
36-45
2 -16.67 2 -16.67 3 -25 0 -25 3 -41.67 12 -100
>45 Total Scores

2 -25 0 0 1 -12.5 2 0 3 -37.5 8 -100 11 -22 5 -10 12 -24 10 -22 17 -24 50 -100 1 2 3 4 5
< 25
3 2 9 16 25 30 2.73 54.55
26-35 36-45
4 4 15 16 30 59 3.11 62.11 2 4 9 0 15 40 3.33 66.67
>45 Total
2 0 3 8 15 28 3.5 70 11 10 36 40 85 157 3.14 62.8
Average Level of Satisfaction (%) Source: Primary data. It is evident that the below table less number of respondents disagreed about the additional benefits, a close opinions are given by the all respondents, it means an equal percentage (24%) of employees have strongly agreed and are neutral. Only 20 percent of respondents are agreed with this statement. 22 percent of the respondents have strongly disagreeing with this statement. It may be observed that more than 45 years age group
respondents are registered highest level of satisfaction (70.00%). A less number of sample respondents of below 25 years age group are recorded less percentage of level of satisfaction (54.55). The respondents of age group of 26-35 years and 36-45 years have recorded more than 60 percent of level of satisfaction. It may be noted that the overall level of satisfaction is recorded at a good sign.
Transactions easier
TABLE 9: IB conducting banking transactions easier Age
<25
0 0 0 0 2 -18.18 6 -54.55 3 -27.27 11 -100
26-35
2 -10.53 1 -5.26 2 -10.53 5 -26.32 9 -47.37 19 -100
36-45
2 -16.67 0 0 2 -16.67 3 -25 5 -41.67 12 -100
>45 Total Scores

1 -12.5 1 -12.5 1 -12.5 2 -25 3 -37.5 8 -100 5 -10 2 -4 7 -14 16 -32 20 -40 50 -100 1 2 3 4 5
< 25
0 0 6 24 15 45 4.09 81.82
26-35 36-45
2 2 6 20 45 75 3.95 78.95 2 0 6 12 25 45 3.75 75
>45 Total
1 2 3 8 15 29 3.63 72.5 5 4 21 64 100 194 3.88 77.6
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Table 9 shows Internet Banking makes conducting banking transactions easier; it is obvious that most of the respondents have strongly agreed that banking transactions are easier. A less number of users (14 percent) have disagreed with this statement. Nearly 72 per cent of respondents agreed that internet banking makes conducting banking transactions easier. It may be observed that the level of satisfaction is higher (81.82%) in the case of less than 25 years age group respondents. When compared to rest age group respondents, 78.95 percent level of satisfaction is recorded at the 26-35 years of age group followed by remaining level of age groups. It may be noted that more than 75 percent of level of satisfaction is recorded in all the level of age groups excepting more than 45 years of age group.
Business Wire (1995). Stanford federal credit union pioneers online financial services. Business Wire, June 21, 1995. Kenny, C., & Qiang, Z.W. (2003). Information & communication technologies and broad-based development. In ICT & development: Enabling the information society. Washington, D.C.: The World Bank Group. Rayport, J. F., and Sviokla, J. (1994, a). Managing in the m a r k e t s p a c e . H a r v a r d B u s i n e s s R e v i e w, NovemberDecember, 1994, 141150. Rayport, J. F., and Sviokla, J. (1994, b). Exploiting the virtual value chain. Harvard Business Review, NovemberDecember, 1994, 7585. Pikkarainen, T., Pikkarainen, K., Karjaluoto, H., Pahnila, S. (2004). Consumer acceptance of online banking: an extension of the technology acceptance model. Internet Research, Volume 14 Number 3 2004 pp. 224235 Lee, M., & Turban, E. (2001). A trust model for consumer internet shopping. International Journal of Electronic Commerce, 6(1), 7591 Aladwani, A. (2001). Online banking: A field study of drivers, development challenges, and expectations. International Journal of Information Management, 21(3), 213225. Stevens, R.E., Carter, P.S., Martin, R.T., and Cogshell, D.(1986). A comparative analysis of users and nonusers of automatic teller machines. Journal of Retail Banking, Vol. 8 Nos. 1 and 2, pp. 71-8. Flavian, C., Torres, E., & Guinaliu, M. (2004). Corporate image measurement A further problem for the tangibilization of Internet banking services. International Journal of Bank Marketing. Vol. 32 No. 3, pp. 107-125. Gan, C., Clemes, M., Limsombunchai, V., & Weng, A. (2006). A Logit analysis of electronic banking in New Zealand. Discussion Paper No. 108, Commerce Division, Lincoln University, Canterbury. Pikkarainen, T., Pikkarainen, K., Karjaluoto, H., & Pahnila, S. (2004), Consumer acceptance of online banking: An extension of the technology acceptance model. Journal of Internet Research, Vol. 52 No. 2, pp. 67-83.
Conclusion
The present empirical paper revealed that banking needs, followed by Core Services, Problem Resolution, Convenience and Risk and Privacy Concerns are the major factors that strongly affect the overall satisfaction of online customers. On the other hand, Feature availability is found to be moderately affecting the overall satisfaction of customers using Internet banking services. On the whole the level of satisfaction is impressive in all the age groups of sample respondents. Higher the age group lowers the level of satisfaction. In other words, the technology awareness is more in the case of lower age groups. 77.20 percent of total respondents have agreed IB is compatible with their life style. Majority of the sample respondents expressed their opinion as a positive sign. Overall 66.80 percent sample respondents are expressing their opinion internet banking services are secured. In order to promote customer satisfaction, it is inevitable for banks to give due weightage to all the above-mentioned factors.
References
Ahasanul Haque et al (2009). Issues of E-Banking Transaction: An Empirical Investigation on Malaysian Customers Perception. Journal of applied Sciences. (Retrived from www.ebsco.com on 20 March 2009) Daniel, E. (1999). Provision of electronic banking in the UK and the Republic of Ireland. International Journal of Bank Marketing, Vol. 17 No.2, 1999 pp.72-82
Optimization of Layout And Implementation of 5s in Manufacturing Industries An Indian Perspective
61
Optimization Of Layout And Implementation Of 5s In Manufacturing Industries An Indian Perspective

Dr.S.Usha*
*Assistant Professor, Sardar Vallabhbhai Patel International School of Textiles and Management, Coimbatore
ABSTRACT
Lean manufacturing is a concept that originated from Japan and got its best in various firms of the world. Any organisation that has got its global footprint has utilized the lean manufacturing concept and its importance. In today's business, the concept of Lean manufacturing is the need of the hour and it is been practiced in developed and developing countries. This article mainly focuses on Layout design and its associated factors used in the Indian manufacturing firms. Layout design has a significant impact on performance of manufacturing system. These can help to increase productivity, reduce work in process and inventory, short production lead time, streamline the flow of materials, and reduce non value added activities from the production process of waiting and transportation, which make the factory meet customers' requirement quickly. A facility re-design is applied to bring order, efficiency, and optimize flow in the accumulator production line. Deliverables include a new layout that decreases product travel distances and increases productivity and overall process time. Using a newly designed fixture, modified process flow and layout, the results are compared with existing fixtures and process flow. Also the implementation of 5S reduces cost, improves quality and increases safety. Key words: Lean Manufacturing, Layout, Layout design, 5S, TPS,
Introduction
Indian economy is growing on a rapid phase with every year touching 7-8% of GDP and the requirement to upgrade the technology are ever mounting to the organizations. Organizations look to bridge the gap between planning and execution methodologies and they struggle a lot to bring down the factors that affect their profitability. When we analyse about profitability, certain factors speak much about the internal factors of an organisation that increase the production cost and plays a role in creating brand value amidst customers of the organisation. The five fundamental Lean principles are to specify value from the point of view of customer, identify the value stream, make the identified value flow, set the pull system which means only make as needed and finally perfection in producing what the customer wants and by when it is required in the right quantity with minimum waste. According to Karl Schultz, there are basically two definitions of Lean; it is a systematic approach to eliminating waste through continuous improvement, and it is a total business process not just manufacturing. Lean management in manufacturing sector is an important cause for today's improved productivity and performance of organizations. Lean management focuses on reducing the waste,
inventory and customer response time in the industry. This concept was initiated by John Krafcik, a researcher from Massachusetts Institute of Technology (MIT) during 1980, which mainly concentrated on best practices in Automobile Industry.
Lean Manufacturing and Its Associated Tools

Lean manufacturing is the process of analyzing the flow of information and materials in a manufacturing environment and continuously improving the process to achieve enhanced value for the enterprise. The concept of mass production resulted in increased production leading to a large number of wastage, increased inventory, time lapsing, producing more than what was required and moving of parts at each stage of production between the production facility and storage facility. These factors were analysed by the industrialists who started to look for alternatives, and led to the creation of Toyota Production system or Lean Production. Eiji Toyota and Taichi Ohno is the pioneers in creating the TPS concept and implementing in Toyota Automobile plant, Japan. TPS uses about half of what mass production used which includes human effort, production time, manufacturing space, defects in manufacturing etc. Concept of TPS made organizations to think and reinvent their manufacturing methodologies so that the
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Dr. S. Usha
entire organisation adds value by continuously removing waste and unwanted steps. There are many lean manufacturing techniques like poka-yoke (mistake proofing), Kanban (a signal, often a card attached to supplies or equipment that regulates pull by signaling upstream production and delivery), Kaizen (continuous improvement), kaikaku (radical improvement), Just In Time (delivering right item at the right time in right amount without any wastage), etc. All these ideas and tools are applied and utilized in different areas of manufacturing in different scenarios in different environments.
Types of Layout
Fixed Position Layout Process Layout Product Layout
Product or Line Layout

Machines and equipment's are arranged in one line depending upon the sequence of operations required for the product. The materials move from one workstation to another sequentially without any backtracking or deviation. Under this, machines are grouped in one sequence. Therefore materials are fed into the first machine and finished goods travel automatically from machine to machine, the output of one machine becoming input of the next. The raw material moves very fast from one workstation to other stations with minimum work in progress storage and material handling.
The 7 Lean Waste's

Ohno defines waste as all elements of production that only increase cost without adding value that customer is willing to produce. The wastes in the organization are: Overproduction: Producing more than needed. Waiting: Idle operator or machine time. Motion: Movement of people or machine that does not add value.
Inventory: Any supply in excess of required toProcess Layout Figure 1 produce product. Transportation: Any material movement that does not directly support value added operations. Defects: Making defective parts. Extra processing: Any process that does not add value to the product. Underutilizing people: Not taking advantage of people's abilities. Figure 1 Product layout Process Layout In this type of layout machines of a similar type are arranged together at one place. E.g. Machines performing drilling operations are arranged in the drilling department, machines performing casting operations be grouped in the casting department. Therefore the machines are installed in the plants, which follow the process layout. Hence, such layouts typically have drilling department, milling department, welding department, heating department and painting department etc.
Facility Layout
Facility layout problem is a multi criteria problem. Numerous factors, such as location of work centers, offices, computer centre, design and drawing section, tool-room, storage space, utilities, etc., are to be considered. The principles of good facility layout involve: Least material handling cost Worker effectiveness High productivity and effectiveness Group technology
Figure 2 Process Layout
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Fixed Position or Location Layout

In this type of layout, the major product being produced is fixed at one location. Equipment labor and components are moved to that location. All facilities are brought and arranged around one work center. This type of layout is not relevant for small scale entrepreneur. The following figure shows a fixed position layout regarding shipbuilding.
to systematically achieve total organization, cleanliness, and standardization in the workplace. A well-organized workplace results in a safer, more efficient, and more productive operation. It boosts the morale of the workers, promoting a sense of pride in their work and ownership of their responsibilities.
Figure 3 Fixed Position Layout
5S Concept and Utility Study

A 2010 Compensation Data Manufacturing survey revealed that 69.7 percent of manufacturing companies utilize lean in their manufacturing practices. Out of the practices used to implement lean 5S was the most prevalent at 69.2 percent. The 5S practice is a method that many companies begin to employ on their way towards creating a lean system is through implementing lean events. The kaizen event serves as the main vehicle behind lean implementation and is fundamental to the ideals of lean. The Japanese word, Kaizen, translates to continuous improvement. Within Kaizen are three major principles, 5S, standardization and the elimination of waste (muda) that contribute to errors defects and injuries. The 5S' stand for sort (seiri), straighten (seiton), shine (seiso), standardize (seiketsu) and sustain (shitsuke) with slight deviations in the names depending on the author and the translation. The 5S's characterize a continuous and never-ending methodology for creating and maintaining an organized, clean, and safe high-performance environment. 5S has the focus of waste reduction. The methodology is often characterized by a series of activities focused on making sources of errors, defects and injuries visible by the users of a particular work environment. The idea of the 5S is to run through each S in a systematic manner, spending a large portion of the time planning and noting what is muda or waste. The 2nd principle of Kaizen also, the 4th S, standardization is the stabilization of a process so that it can be easily analyzed. It is not rigid standard to be held to, but rather a method to facilitate waste discovery. The 5S Process, or simply "5S", is a structured program
Figure 4 5S
SEIRI
The first step of the "5S" process, seiri, refers to the act of throwing away all unwanted, unnecessary, and unrelated materials in the workplace. It is to ensure that everything left in the workplace is related to work. Even the number of necessary items in the workplace must be kept to its absolute minimum. Because of seiri, simplification of tasks, effective use of space, and careful purchase of items follow.
SEITON
Seiton, or orderliness, is all about efficiency. This step consists of putting everything in an assigned place so that it can be accessed or retrieved quickly, as well as returned in that same place quickly. If everyone has quick access to an item or materials, work flow becomes efficient, and the worker becomes productive. The correct place, position, or holder for every tool, item, or material must be chosen carefully in relation to how the work will be performed and who will use them. Every single item must be allocated its own place for safekeeping, and each location must be labeled for easy identification of what it's for. SEISO Seiso, the third step in "5S", says that 'everyone is a janitor.' Seiso consists of cleaning up the workplace and giving it a 'shine'. Cleaning must be done by everyone in the organization, from operators to managers. It would be a good to have every area of the workplace assigned to a person or group of persons for cleaning. No area should be left un cleaned. Everyone should see
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Dr. S. Usha
the 'workplace' through the eyes of a visitor - always thinking if it is clean enough to make a good impression.
VASI Has Developed Strong Presence In The Domestic OEM Segment:

Apart from being the primary supplier of the above components to Ford India (in line with its relationship with Ford globally), Visteon has also emerged as a key supplier to major domestic and multinational OEMs in India, like Maruti Udyog and Toyota Kirloskar Motors (TKML). The Company has developed a reputation for quality and has won several awards for defect-free supplies from its customers. TKML recognized VASI for Zero PPM (parts per million defective) during 2003 for the shipment of Toyota Corolla bumpers for assembly to Toyota Manufacturing in Asia Pacific. TKML also recognized VASI with the Best Quality Supplier Award, which is awarded to the supplier that achieves the highest overall score in several different quality categories. VASI has also been awarded both the Ford Motor Company Q1 Award and the Hyundai Motor 100 PPM award. Production of Accumulator The accumulator is one of the major components in airconditioning unit. In Visteon India Private Limited the accumulator is made for Ford Icon model cars. The entire child parts of accumulator are manufactured outside the company. Most of the child parts are bought from the sub-contractors and then they are assembled in the company. A sample from all type of incoming products is first checked for defects by the incoming testing lab and only they are sent for production. The accumulator production is accompanied by bending, brazing and welding operations and finally product is finished by gauging. The main parts of accumulator are: Top cup Bottom cup J tube Deflector Inlet tube Outlet tube Top and bottom brackets Existing Process Flow The tubes are cut down by automated machines according to dimensions and then they are bended manually.
SEIKETSU
The fourth step of "5S", or seiketsu, more or less translates to 'standardized clean-up'. It consists of defining the standards by which personnel must measure and maintain 'cleanliness'. Seiketsu encompasses both personal and environmental cleanliness. Personnel must therefore practice 'seiketsu' starting with their personal tidiness. Visual management is an important ingredient of seiketsu. Color-coding and standardized coloration of surroundings are used for easier visual identification of anomalies in the surroundings. Personnel are trained to detect abnormalities using their five senses and to correct such abnormalities immediately.
SHITSUKE
The last step of "5S", Shitsuke, means 'Discipline.' It denotes commitment to maintain orderliness and to practice the first 4 S as a way of life. The emphasis of shitsuke is elimination of bad habits and constant practice of good ones. Once true shitsuke is achieved, personnel voluntarily observe cleanliness and orderliness at all times, without having to be reminded by management.
Implementation of Layout and 5S in Manufacturing Industries Visteon Automotive Systems India Private Limited (VASI)
Established in March 1997 as a JV of Visteon Corp, USA, Visteon Automotive Systems India Private Limited (VASI) has established itself as a key player in the Indian automotive component market, in a short span of 5 years. Apart from VASI, Visteon Corp have two other manufacturing facilities in India and Climate Systems India. VASI and VPCSI are located at Maraimalainagar in Chengalpattu district, near Chennai, Tamil Nadu. Climate Systems India has its manufacturing facility in Bhiwadi, Rajasthan. The products manufactured at each of the three plants are given below:
VASI Climate control systems, instrument clusters, plastic components and complete cockpitassemblies Radiators
Climate Systems India
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Initially the J-tube is bended manually. Then the J-tube is brazed with the deflector. The top cup is welded with the deflector and bracket is also welded at the respective positions on the top cup manually. The bottom cup is also welded with bracket separately by manual welding. Next the inlet and outlet tubes are brazed separately with the top cup. Finally the assembly of top cup with bottom cup is done by automatic welding.
Drawbacks in the Existing Layout (With Respect to 7 Waste) Large work in-process inventory since the flow is not continuous as such it leads to more storage area. ( INVENTORY ) Total cycle time is high. This is due to waiting in different departments and longer material flow. ( WAITING ) Unevenness in utilization of machineries and Unbalanced Material Flow. Transportation distance between the assemblies is large. (TRANSPORTAION) Loading and unloading time is high because of poor fixture design. Misalignment of brackets while handling them. ( DEFECTS ) Increased Gauging time due to this misalignment. ( OVER- PROCESSING ) Inefficient use of labour skills Lack of 5 S's and Lack of Visual Controls. ( MOTION )
The finished product is gauged before dispatch.
Figure 5 Existing Process Flow Existing Layout
Figure 7 Drawbacks 5s Implementation Current State The scenario at this facility, specifically at the accumulator production department, is as follows, it was known that this department had no substantial exposure to lean. Key ideals were discussed but have not been implemented. Figure 6 Existing Layout Workers borrowing tools and office supplies from each other.
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Workers were spending time looking for materials. The semi-finished pieces and scrap pieces were scattered all over. Rejected Pieces were kept along with WIP materials. Fixtures were not arranged properly. The workspaces or break areas were in chaosold coffee cups, spills. Missing items, empty material bins, equipment were in the wrong location. Debris was accumulated around the welding station. The welding area is full of dirt and debris. Welding defects were huge due to insufficient knowledge of welders. Workers were searching for parts that were not in the right location. Fixtures were kept near welding m/c itself. The WIP containers were not arranged. Figure 8 Modified Process Flow OPTIMIZATION OF LAYOUT Optimized Layout I
Modified Process Flow The tubes are initially cut down by automated machines according to dimensions and then they are bended manually. Initially the J-tube is bended manually. Then the J-tube is brazed with the deflector. The top cup is welded with the deflector. Both the inlet and outlet tubes are brazed with the top cup. The top cup is assembled with the bottom cup by automatic welding. Now the Brackets are welded to the top and bottom cup simultaneously. The finished product is gauged before dispatch. Figure 11 Optimized Layout II Optimized Layout II
Figure 10 Optimized Layout I
Dr. S. Usha
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Table 1 - Time Taken for each Process

PROCESS Manual bending of J-Tube Brazing the tube to deflector MIG welding of deflector with top cup MIG welding of bracket with top cup MIG welding of bracket with bottom cup Brazing of top cup with inlet tubes Brazing of top cup with inlet and outlet tube Assembling of top cup and bottom cup Gauging the welded product Total Time TIME (Before) (sec) 15 60 20 15 15 45 45 40 30 285 TIME (After) (sec) 15 60 20 10 10 30 30 10 10 195
Benefits of Optimized Layout

" Since the inlet and outlet tubes are brazed simultaneously both the brackets are welded at the same time. Reduction of Set-Up or Changeover Time reduced since the fixtures are designed to hold multiple tubes. Misalignment of bracket is prevented since the bracket welding process is brought at the end; hence the gauging time is reduced. Available space is utilized effectively and efficiently since the machines are located so as to minimize distances between consecutive operations which also reduce material handling. Utilizes labor efficiently since multiple operations are performed by a single labour. Since the work from one process is fed directly into the next, small in-process inventories exists. Continuous flow production is followed were the value is constantly being added to the product for the time the product is in the plant. The overall process time has been reduced from 285 to 195 seconds. Since the Time consumption is drastically reduced, ultimately there is also reduction in the Money consumption.
SET IN ORDER
" " " A separate Rack is set for arranging all types of fixtures. Fillet materials and other tools are arranged in Tool boards. Locations were made easy enough to replace tools and materials.
" "
SHINE
" " Welding scraps are removed periodically into scrap bins. The entire assembly is cleaned regularly and inspected.
"
STANDARDIZE
" " " Locations are marked with outlines and labels. Tools are physically attached to a location. A clear cleaning process is created and scheduled which is written in the form of checklist.
" " "
SUSTAIN
" " " " Leaders at all levels should support the 5S process which makes it most effective. Difficult to maintain credibility when leaders don't practice what they preach. Managers' offices are kept in a highly refined state of 5S to set an example. 5S is one of the bedrocks of continuous improvement. Checklists, sign-off sheets, are effective in ensuring 5S is being maintained.
" "
5 S Implementation Future State SORT

" " Red tags should be used to visually identify items which were needed and frequently used. The semi-finished pieces are separated from scrap pieces and removed from that are.
Conclusion
Modern manufacturers are under intense, unrelenting pressure to find new ways to cut costs, improve quality, and boost customer satisfaction. These parameters are usually achieved through the implementation of lean manufacturing
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Optimization of Layout And Implementation of 5s in Manufacturing Industries An Indian Perspective F. E. Meyers, Manufacturing facilities design and material handling. New Jersey: Pearson Education, 2005, pp. 1-5. A Review of Theoretical Perspectives in Lean Manufacturing Implementation. Punnakititkashem, P., etal. s.l.: IEEE, 2009. IEEE IEEM. pp. 1204-1208. Compdata Surveys. Lean Manufacturing and Safety Help Manufacturers Survive Tough Times. Compdata Surveys. [Online] December 13, 2010. [Cited: February 14, 2011.] http://www.compdatasurveys.com/2010/12/13/leanmanufacturing-and-safety-help-manufacturerssurvivetough-times/. Liker, Jeffery K. The Toyota Way. New York City: McGraw Hill, 2004. Hafey, Robert B. Lean Safety. New York: Productivity Press, 2010. Gemba Academy Lean Enterprise Learning System Disc 2 The 5s. Gemba Academy, 2007. Journal of Operations Management - Defining and developing measures of lean production. Shah, Rachna and Ward, Peter T. 25, s.l.: Elsevier, 2007. Liker, Jeffrey K. Introduction: Bringing Lean Back to the U.S.A. [book auth.] Jeffery K. Liker. Becoming Lean. Portland: Productivity Press, 1997, pp. 3-41. Moving Beyond "Event Lean". Flinchbaugh, Jamie. November Nov 2007, SME Manufacturing Engineering, p. 176.
practices in their industries. The implementation of lean manufacturing system requires high degree of expertise to achieve it. This limits the application of lean within managerial executives possessing the high degree of literacy. The traditional practical knowledge is given inadequate representation in lean implementation. The lean techniques provide a formal procedure to meet out the practical requirements. From this case study it is inferred that Lean is an ideal tool to eliminate the waste and to identify improvement areas. In this study the effectiveness of lean principle is substantiated in a systematic manner with the help of VIP Plan opt and Implementation of 5S. The layout selected for the new assembly line has a better floor space utilization. The distance traveled is less as compared to the old assembly line. More space for Finished Goods is available. The results from this project shows that there is drastic reduction in Process time hence the overall process time has been reduced from 285 to 195 seconds. This helps the industry to reach their ultimate goal of sustainability and profitable growth in the future.
References
Shubin John A. and H. Madeheim, Plant Layout, New Delhi: Prentice Hall of India, 1986. J. A. Tompkins et al., Facilities Planning. New Jersey: John Wiley & Sons, 2003. T. Ertay, D. Ruan, and U. R. Tuzkaya, "Integrating data envelopment analysis and analytic hierarchy for the facility layout design in manufacturing systems," Information Sciences, vol. 176, pp. 237-262, February. 2006.
Management Consultancy Services
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K.Anantharaman*
*Management Advisor, Anantharaman Associates, Coimbatore
Management Consultancy Services is one of the most rewarding careers for professionally qualified and equipped people. Initially started, as provider of a second or an alternate opinion, consultancy services developed into a problem solving profession. In India, this development was rather slow, as the business community was rather reluctant to accept a solution from an outsider. In the initial stages of industrial development, many of the industrial units or groups depended on family members and near relations for policies and solutions, as they were the directors in their boards. In the western world, management consultancy services developed much earlier mainly due to specialists available from well known universities like Cambridge, Oxford, Harvard and MIT. The Indian business units saw such success stories abroad and decided to bring in management consultants into their thinking areas and teams. The need for consultancy services was mainly due to the business entities not having sufficient expertise in functional areas like marketing, finance, human resources, production management and strategies. It was also due to thinking from the management that they should find a solution or alternate suggestion from outside professionals. In some cases, the services required for a specific assignment like merger or due diligence for cases like public issue or for a short period of time like training of workers or officers. A number of organizations invited consultants for restructuring their organization setup and inducting additional managers or replace the existing ones whose performance was not up to the benchmarks. In the case of small and medium scale industries, professional services were required as they could not afford high paid executive staff required for firming up policies and strategies. They also required outside consultants for feasibility studies, evaluating project alternatives and arranging the necessary finances and marketing channels. If we trace the growth of management consultancy services, we will find the beginning somewhere in the
end of 60s in our country. In those years, the main areas for consultancy were tax planning and internal appraisals. In 70s, areas like management audit, restructuring, recruitment, training and project finance were covered. Services like redesigning of the organization, market research, expansion and diversification schemes and turnaround strategies were covered in 80s. With the liberalization process started in the beginning of 90s, public issue coordination, equity research, development of global markets and sourcing of foreign funds and technology became new areas for consultancy services. The end of the 20th century also saw management specialists taking up assignments like mergers and acquisitions, takeovers, reengineering of organization, marketing and finance functions and entry into global markets through exports and investments in manufacturing and service facilities close to global markets. With the economic slowdown spreading into countries like India, turnaround specialists were the most sought after consultants, as many of the CEOs and CFOs were good enough only for peace time operations and were not prepared to take up new challenges of consolidation and cost cutting. In the last 10 to 15 years, we find State Governments, their institutions and PSUs looking for well positioned and professionally qualified Indian and foreign consultancy firms for clear opinions and new strategies. The sunrise industries like IT, logistics management and food processing also wanted to appoint result oriented management consultants for setting up their facilities and helping to manage them in the first one or two years. This assistance was required mainly because the mistakes when made in the beginning of a business venture can become very fatal and difficult to correct. We have cases of inadequate technology, wrong product selection, unviable prices and even insufficient board of directors, mistakes by managements, in the initial stages itself. In the last 25 to 30 years, management consultants have contributed substantially for sourcing of funds, new
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K.Anantharaman
strategies in marketing, production and quality control, recruitment and training, mergers and acquisitions, monitoring of specific strategies, brand building and promotions and evaluating human resources, logistics and warehousing and distribution networks. Practically, all corporate functions where improvements are necessary can be covered by management consultants. In a way, their contribution has helped growth of industries and business units including export units in different parts of the country. The qualifications required for management consultants are worth analyzing. In the earlier days, we had this joke of unemployed people calling themselves consultants. This scenario changed in 60s and 70s. Professionals with qualifications from foreign universities like Harvard, MIT, Stanford and London School of Economics and Indian higher education institutes like IIMs were the first lot of experienced professionals who started management consultancy business. Later chartered accountants, cost accountants, company secretaries and chartered financial analysts also got into consultancy profession. Technology consultants from IITs and reputed engineering and science colleges and institutes like CSIR, Indian Institute of Science and National Chemical Laboratories, with adequate management orientation also started joining consultancy business. Simultaneously, industry specific consultants with specialization in industries like hotels, hospitals, textiles and food processing started setting up their own speciality management consultancy firms. This was largely due to sufficient business and income coming from specific industry groups. In India, A.F.Ferguson & Co., C.C.Choksey & Co., S.B.Billimoria & Co., P.C.Hansotia & Co, N.M.Raiji & Co., Varma & Varma (in Kerala) and Suri & Co. (in Chennai) were the beginners. Basically, these were audit and tax consultancy firms and occasionally they used to look into minor problems of their clients and give their opinions. In 70s, a few qualified professionals with adequate management exposure like Mr.S.K.Bhattacharya, Dr.K.K.Anand (K.K.Anand & A s s o c i a t e s ) a n d M r. K . A n a n t h a r a m a n (K.Anantharaman & Associates), all from IIM, Ahmedabad entered the consultancy field. They helped to substantially broadbase management consultancy by including new areas for consulting like restructuring,
management appraisal and project finance. They were also involved in monitoring the progress or lack of progress in the schemes suggested by them. In the present scenario, we have dominant global consultants like Deloitte, Ernst & Young, KPMG and Mc.Kinsey who are able to provide a global approach for many of the problems faced by Indian corporates. They have the advantage of better knowledge of global markets, are aware of legal systems in other countries and have sufficient exposure to management problems faced by multinational companies. Their knowledge and experience are much more than the consultants based in India. They are also in a position to source foreign funds through FIIs and FDIs, as they know the institutions who provide the funds. They are also in a better position to convince the fund providers due to their location advantages in areas like Europe and USA. Local consultancy firms in different parts of our country cater mainly to small and medium business units who could not afford very high fees demanded by global and leading Indian management consultancy firms. That brings me into the area of management consultancy fees. In the initial stages, the professional fees used to be Rs.200 to 500 per day. Later consolidated fees running into few thousands and even lakhs were charged by consultancy firms. With global firms coming into the scene, consultancy fees have shot up to Rs.2 to 5 crores per assignment. Towards the end of 90s, problem areas used to attract fees even upto Rs.10 crores per assignment. There are also cases where the consultancy fee is a percentage of the benefits accrued or the costs saved. Such high fees can be classified as success fees, payable only when the assignment is successfully completed. Competition has brought down some of the lumpsum fees in the recent past. The fee structure also depends on the visibility of the clients and their locations in the metros like Mumbai and Bangalore. Smaller cities like Coimbatore and Cochin pay much lower fees. In future, there may be some regulation on the fees to be charged, brought in either voluntarily or enforced by recognized institutes like ICAI or ICWAI. Before retaining a consultant, the client should make sufficient enquiries about the background and the success achieved by the firm or the individual. There is something called 'finder' which normally means a person or a firm which recommends a consultancy firm to a client. In such cases, there is
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finders fees of around 10% payable to such finders. IIMs, specifically in Ahmedabad, Kolkata and Bangalore and business schools like ISB in Hyderabad, Bajaj, NMIMS and S.P.Jain Institute in Mumbai and Great Lakes in Chennai allow their senior faculty members to take up consultancy assignments on an income sharing basis. There are specific advantages in senior professors with adequate industrial exposure taking up such assignments. Their knowledge of management practices in different industries and visits abroad from which they might have gathered more knowledge about management of well known corporates in countries like Japan, Korea and Germany, help the clients to understand updated practices and strategies. Technology tieups and buy back arrangements can be negotiated by such professionals. We have the case of Dr.C.K.Prahalad from Coimbatore attached to University of Michigan being appointed to a number of global companies. His advocacy of The Fortune at the Bottom of the Pyramid in different platforms has brought in a new chapter in consumer products marketing not only in developed countries but also developing countries like India and China. Such theories have opened up new markets in rural areas and have helped business units to expand their manufacturing and service facilities. Management consultancy services have attracted some
criticism from well entrenched CEOs and CFOs. Their argument is that the management consultants do not have accountability and that they could not be tied down to specific goals, achievements and results. There are also complaints that some of the suggestions and the strategies are not implementable and can be adventurous. Some of them say that the consultants lack practical approach and their solutions can be very expensive. There are cases where below par consultants have taken certain clients for a ride. This problem can be tackled by getting the consultants involved periodically during the implementation period. There is also a criticism that small and medium scale entities could not afford expensive consultants. At the same time, there are consultants who devote part of their time for NGOs and government sponsored schemes. There is an old saying 'Management consultants are people who borrow your watch to tell you the time and walk away with the watch'. This is not exactly true. They are like the story writers behind a movie production and whose contribution is very often, not even recognized, leave alone rewarded properly. However, overall assessment is that the management consultants have contributed substantially to India's economic development. In future also, their contribution will continue, as they have become a part of business development.
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Dr. Sukanya Ashokkumar
Porter's Diamond Model -applicability to Tamil Nadu, India's Detroit

*Management Advisor, Anantharaman Associates, Coimbatore
Introduction
The automobile industry in India is the ninth largest in the world and one of the fastest growing globally. Following Japan and South Korea, in 2010, India emerged as the third largest exporter of automobiles in Asia. According to SIAM (Society of Indian Automobile Manufacturers), in the year 2011 automobile exports from India stood at a staggering 22,39,333 units, registering a robust growth of 29.64%. Hyundai Motors (factory at Sriperambudur in Tamil Nadu) alone exported 240,000 made-in-India cars and Nissan Motors exported 250,000 vehicles manufactured from its Indian plant in the year 2011. Rapid urbanization, growing affluence of the middle class and better job opportunities due to the liberalization and globalization are some of the reasons for the growth of the automobile industry in the domestic market. Some of the well known international companies manufacturing their cars in India are Chevrolet, Fiat, Ford, Honda, Hyundai, MercedesBenz, Mitsubishi, Renault, Skoda, Toyota and Volkswagen. Several Indian automobile manufacturers (Indian MNCs) have spread their operations globally and have made a mark in the international market. The majority of India's car manufacturing companies are based around three clusters: the south, west and the north. The southern cluster consisting of Chennai and Bangalore is the biggest with 35% of the revenue share. Tamil Nadu, which is one of the industrially developed states of India, is at the forefront in automobile production so much so that it is nicknamed the 'Detroit of India'.
Tamil Nadu's emergence as India's Detroit With the introduction of the new industrial resolution policy in 1991, a comprehensive policy of liberalization, privatization and globalization was initiated by the Indian Government. The new policy abolished the license raj and also paved way for free entry of private and global players in almost all areas except for those where security concerns predominated. The automobile industry was one such industry that saw the entry of global players as a result of the economic reforms that were put into operation. Tamil Nadu Government's pro-industry policies had made the State a favorite destination for Foreign Direct Investment. Ford Motors of USA, Hyundai Motors of Korea and Mitsubishi of Japan were some of the early entrants. A large number of automobile ancillary industries with foreign collaboration have also come up to support the production of automobiles in the State. Tamil Nadu was always a leading player in the automotive and auto ancillary sectors. Even prior to the LPG era, the State of Tamil Nadu was fortunate to have leading automobile companies like Ashok Leyland, TAFE, ICF (Integral Coach Factory), Enfield and TVS Motors on its soil. Successive governments that headed Tamil Nadu had fostered a wonderful industrial culture and the state's auto sector attracted investments worth more than 4.5 billion. The State of Tamil Nadu produces all kinds of automobiles ranging from bicycles, two wheelers, commercial vehicles, passenger cars to even battle tanks. Over 100 large companies in the auto and ancillary industry are operating in the State. These companies adhere to strict quality control norms and standards like TQM and TPM. Brakes India of TVS group has been recognized for its manufacturing excellence and awarded the Prestige Deming award. At present Tamil Nadu's share in the production of automobiles in the country is considerable and the same may be verified from Table 1.
Objective
*Educational Consultant, Salem, Former Centre Head and Faculty member of ICFAI, Salem In this paper 'Porter's Diamond model of Comparative Advantage' has been applied to expound the emergence of Tamil Nadu as a leading automobile producing and exporting centre to reckon with, both at a national and possibly at an international level in the future.
Porter's Diamond Model - Applicability to Tamil Nadu, India's Detroit
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Rome was not built in a day and so has it taken years of nurturing and progressive development for Chennai in Tamil Nadu to emerge as a leading manufacturer of automobiles. Today, seven of the 20 top global automakers have set up production units in the outskirts of Chennai city resulting in the emergence of an automobile hub. The world's leading automakers like Ford, Hyundai, BMW, Renault and Mitsubishi, Daimler and Nissan have all set up factories here, making it a big centre for automobile production. Chennai already accounts for 42% of the production of passenger cars. These accomplishments have rightly helped Chennai and Tamil Nadu earn the 'Detroit of India' sobriquet.
industries) as illustrated in the chart. Their applicability to Tamil Nadu as an upcoming region in automobile production and exports has been examined and elaborated in the paragraphs below. Porter's Diamond model of comparative advantage (fig-1)
Firm Strategy, Structure and rivalry
Factor Conditions
Demand Conditions
Table I : Tamil Nadu's share in India's automobile production

Category Car Heavy Commercial Vehicles Auto Components Railway Coaches Source :ACMA and CMIE Share of Tamil Nadu in India 21% 33% 35% 50%
Related and Supporting industries
Factor conditions
Low real estate cost and availability of skilled and semi skilled labor at low cost were perhaps the primary reasons for Tamil Nadu emerging as a production centre for automobiles. The State also boasts of the largest number of engineering colleges in the country that churn out a good number of engineers year after year. Skilled manpower and a huge English speaking population have given the State a definite advantage as compared to other states. In a panel discussion (July 2005) on Can Chennai become the Detroit of Asia, Mr.C.Chandramouli, then Information Technology Secretary of the State Government commenting on the country's role in developing IT remarked, "We fuel most of the world's industries. We are a knowledge powerhouse ... the knowledge and the native wit is what will make us the Detroit of South Asia. Good transport network facility by both rail and road, besides the international airport and sea port has ensured accessibility to raw materials and also distribution of the produce to markets. The city's port is the second largest loading hub in India. Tamil Nadu state was power surplus when Ford set up its factory in Chennai in the year 1991, when Ms.Jayalalitha was the chief minister of Tamil Nadu. A world-class National Automotive Testing R&D centre at the cost of 450
Porter's Diamond model -applicability to 'Tamil Nadu', India's Detroit

Michael Porter's Diamond model of Comparative Advantage' offers an explanation as to why some nations or geographic regions are more competitive as compared to others in producing certain products efficiently. According to traditional economists like David Ricardo, inherited factors (land, labour, capital and organization) give a competitive advantage to a nation. Porter on the other hand, opined that emergence of 'clusters' or groups of interconnected firms, suppliers, related industries and institutions help create a competitive advantage. Michael Porter illustrated the determinants of National or Regional Advantage through a diamond shaped chart (ref- fig -1). According to Porter, competitive advantage of nations is the outcome of four interlinked factors (Factor conditions, Demand conditions, Firm Strategy, structure and rivalry and development of supporting
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crores is being set up in Tamil Nadu at Oragadam and this testing facility will provide vehicle manufacturers a range of facilities that would enable them to test design, safety emission and performance standards. Moreover, through this facility, manufacturers would be saved the trouble of travelling to Pune or other far off places to avail of such facilities. It is thus a cluster of factors: investment-friendly regimes, good infrastructure, proximity to a large port in Chennai, a structure of flexible and supportive industrial policies and incentives (particularly for mega integrated automobile projects investing over Rs 4,000 crores in 7 years) that have pitch-forked Chennai to a new orbit, point out sources both in industry and in the government.
exports from India rose by 49.59 per cent last year. Thus a sudden increase in domestic demand and increase in exports are the factors that have created favourable demand conditions.
Related and Supporting Industries

Even prior to the 1990s Tamil Nadu has been the home town for automobile companies like ICF (Integrated Coach Factory), Enfield, TVS motors and Ashok Leyland. Companies like PREICOL, BRAKES INDIA Ltd., that produce automobile accessories were catering to domestic industry's requirement and in addition, supplying to automobile manufacturers overseas. With the spurt in industrial activities since 90's, many supporting industries with foreign collaboration have sprung in and around Chennai and Coimbatore. Availability of quality infrastructure as compared to other states, availability of high density transport network facility both rail and road besides international airports and modern sea ports are an added asset to the State. Industrial park, industrial estates with state of the art infrastructure provide a favorable environment for growth. Modern world class communication facilities in the State offering value added services are a tremendous advantage. Major tyre manufacturing companies alone have committed investments around $5 billion in Tamil Nadu of which 90% are in and around Chennai. The table below gives details of the same. Table-II Investment by Tyre manufacturing companies
Company Apollo Tyres Bridgestone Dunlop JK Tyres Michelin MRF Plant Locations (crores of INR) Oragadam oragadam Ambattur Sriperumbudur Thervaikandikai Arakkonam, Tiruvottiyur (2 plants) 1000 11000 (4000 in Phase I till 2016) Investments 2100
Demand Condition
India is a developing country with a huge potential for growth. Economic reforms introduced in the early 1990's increased foreign direct investment and enhanced job opportunities for the population. A new found affluence coupled with increase in propensity to consume resulted in a spurt in demand for all commodities and automobile industry is the greatest beneficiary. Yezdi Nagporewala, head of automotive, KPMG India, cites reasons why the auto sector in India grew while the global automotive sector suffered; While developed countries have passenger vehicle penetration at 600-800 per 1,000 population, India is at an overall level of 10 per 1000 population. The low base combined with a growing middle class population has sustained India's growth. The demand determinants for automobiles are primarily affordability, product innovation, infrastructure and fuel price. Also Indian middle class consumers' fascination for small cars has attracted big players like Hyundai. Tamil Nadu and neighborhood states like Kerala and Karnataka which are economically developed have emerged as markets for cars thus making demand conditions conducive for automobile manufacturers. A huge local demand helps companies set up plants with high production capacity thus paving way for low costs through economies of scale. Tamil Nadu's proximity to other developing nations in South East Asia also facilitates exports. There is a huge demand for our exports in Europe with UK emerging as the major importer of Indian cars. The Society of Indian Automobile Manufacturers' statistics show that auto
1400
Porter's Diamond Model - Applicability to Tamil Nadu, India's Detroit
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About 31 auto and auto component companies of which Bharat Forge, Caterpillar, India Pistons, Wheels India, , Sundaram Clayton, Brakes India, Rane Madras, Takata, Ennore Foundaries are well known, have their manufacturing plants in and around Chennai. Apart from these Confederation of Indian Industry (CII), Tamilnadu Technology Development and Promotion Centre (TNTDPC), Auto Component Manufacturers Association (ACMA), Integrated Technologies are some of the agencies that work for the development of Automobile industry in Chennai Region.
Firm Strategy, Structure and Rivalry

While the government of India had a clear cut policy for the growth of the country, successive governments in Tamil Nadu too were instrumental in creating a conducive environment for the state's industrial growth. Ashok Leyland was the first to assemble 'Austin' cars even as early as 1948. Today however, Ashok Leyland has emerged as the leading manufacturer of trucks, buses and off road vehicles. The TVS group too set up a number of auto components manufacturing plants creating a strong engineering base. Due credit must be given to Mr.R.Venkataramn, the then Industries Minister of Congress regime whose pro-industry policies gave a big boost to the automobile industry in the state even in the mid-1960s. The DMK Government continued the industry friendly proactive trend in industrialisation. Since the economic liberalisation in 1991, AIADMK leader, J Jayalalithaa managed a coup, by getting Ford to invest in the state amidst stiff competition. . A policy of incentives to mega automobile projects over Rs.4000 crores during the last decade was also another factor that has helped the state to overtake other states and emerge as leading centre for automobile production. For the first 35 years after independence, the Indian car consumers were only familiar with three car brands, namely, 'Ambassador', 'Fiat' and 'Standard Motors'. 'Maruti Suziki', the first small car introduced in the early eighties, fascinated the minds of the Indian car consumer and then, India's fairly tale with small cars began. In a developing country like India where car is a luxury, a fuel efficient small car fits the budget of the consumer and suits the road conditions as well. The greatest competition posed to the foreign entrants like Hyundai
and Ford by Indian companies is in the small car segment. The low cost NANO has put further pressure on various companies to reduce costs and provide greater value for money. With the opening up of the Indian economy, global players like Hyundai, Ford, and Mitsubishi entered Indian market and set up factories in Tamil Nadu. Increase in inter-firm rivalry and competition have created a cluster of interrelated firms and supporting industries paving way for external economies of scale. With rivalry faced from foreign entrants, domestic firms were forced to set up joint ventures with foreign companies to overcome their shortcomings on the technology front. As the market for passenger cars matured, new consumer segments were identified by car manufacturers and new models were introduced in the market. It can be said that the growth of the passenger car market in terms of emergence of new market segments and the resultant positioning strategies adopted by firms, were as a result of the stiff competition between foreign entrants and domestic players. Thus the oligopoly market structure and rivalry amongst firms and the resultant strategies adopted by firms have significantly contributed to the growth of the industry.
Conclusion
It appears paradoxical that Tamil Nadu has earned the sobriquet 'Detroit of India', when the leading automobile players of Detroit, namely GM, Ford and Chrysler are facing problems in their mother country. The four contributing factors for emergence of a Regional cluster in Michael Porter's 'Diamond Model' have been examined in the context of Tamil Nadu, India's Detroit. A cluster of factors like good infrastructure, proximity to the port, a structure of flexible and supportive industrial policies, the emergence of related and supportive industries, strategy, structure and competition amongst firms, have all pitch forked Tamil Nadu to a new growth trajectory rightly earning it the 'India's Detroit' sobriquet. The power crisis that Tamil Nadu is witnessing at present is a matter of concern. The cost of skilled and semi skilled labour which was competitive even as compared to China has increased in recent times. The recent strikes witnessed in the Ford and Nokia factories are all a matters of concern. The congested roads and increase in
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population of the Chennai are critical factors that have been diverting FDI away from Chennai in recent times. It appears that other states like Gujarat and Gurgoan (Haryana) might pose a stiff competition to Tamil Nadu and sustaining the No.1 position at National level might be a challenging task for the State. Let us hope that the favorable factors and conditions that supported the growth of automobile industry in Tamil Nadu get further strengthened in the future and the State emerges as a major player to reckon with in the global arena. Economic Reforms of early 1990's-Liberalisation, Privatisation and Globalisation
www.gate4india.com/india www.businessandeconomy.org www.valuebased management.net/methods_porter_diamond_ model.html www.quickmba.com/stragtegy/global/diamond www.hindu.com/2005/07 www.hindu.com/2005/07 Business.rediff.com Wikipedia.org/wiki/automotive_industry_in_chennai www.deccanherald.com
Evolution of Audi Motors Case Study
77

Benny J. Godwin*
*Research Scholar, Hindusthan College of Arts & Science, No. 25-G IB Apartment, Chinnammal Street, K K Pudur, Coimbatore 641038
Abstract: Audi Motors is a fast growing brand with sporty, progressive and sophisticated cars that embody technological perfection. On the back of the company's year-on-year record growth at a global perspective, the company needs to position itself to manage its future growth. As part of this growth management, Audi recognized it needed to take its dealer communications to the next level to further support dealers and facilitate the launch of new cars into the market as it does in Indian market. Key words: Audi Motors, technological perfection, global perspective, communication
Introduction
The driving force of growth and the pearl of the crown within Volkswagen group is the leading brand Audi. It was considered as the poor man's Mercedes and Bavarian Motor Worksuntil the mid-1990s. Since the introduction of head-turning TT and A4 in the 1996, Audi positioned itself as a brand with the promising style image and quality. Audi has innovative efficient turbocharged engines, Four Wheel Quattro Drive, Chassis with aluminum space frame and the advanced transmissions. Later during 2005s, Audi has become a strong premium brand competing Mercedes Benz and Bavarian Motor Works. The history of Audi begins with August Horch, the founder of the Company called Horch & Cie in the year 1899. August Horch with the help of 15 fellow workers invented his first automobile in the year 1901. This car was established at the maximum speed of 32 Km/h. Owing to the major issued with the commercial management and the supervisory board, Horch had to leave the company. In the year 1909, he instituted another company called Audi. Horch was intended to establish his company under his name. As Horch was registered for the previous company, which was at major complications, he wished to replace his surname with some Latin words. The surname of the founder Horch means Listen in German which was then translated into Latin, becomes, Audi. In the year 1910, Horch registered the brand AUDI Automobilwerke GmbH. The cars which were built under Audi's name won
several rallies, with which the name 'Audi' happened to establish worldwide. Unfortunately, it was the time of First World War and the company was at the initial days of its growth stages. The company faced tremendous problems as it was forced to manufacture vehicles for the war effort. Followed by the First World War, Germany was at high recession period. Because of these issues, the founder Horch had to leave the management in 1920. Later, the only option recognized to keep Audi alive from recession was the union of the other small vehicle manufacturers. At that time, Horch, Audi, Wanderer and DKW joined together to form Auto Union. The familiar 4-ring logo was derived representing the union of these four companies, which is still used by the brand as brand logo. Until the Second World War, the union had most powerful cars at great success in motor sports. The Auto Union was once again forced to produce vehicles for German Military use during the years of the Second World War. As a result of this, the factories were completely destroyed with heavy bombs by the American troops. Later to the war, Auto Union started to produce cheap cars powered by 2-stroke engines as the Germany's economy was poor. In the year 1958, Diamiler-Benz acquired Auto Union and brought a little to the production lineup. Volkswagen brought the company from Diamiler-Benz in 1965. By enlarging the factory, it started building its popular Beetle cars. It was during 1990s, when Audi adopted a new strategy which made to position itself directly against Mercedes Benz and Bavarian Motor Works as a premium German marque. Audi has invested lots of time and efforts to
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upgrade the build quality, styling and especially technology. This was made possible as the components and platforms are shared with Volkswagen group which ultimately reduced its cost permitting to spend money for Research & Development to reach the rivals market. In the new millennium, more sports cars, crossover vehicles and coupes entered the scene allowing the sales to break one million units for the first time in 2008. Today, Audi is one among the leading international manufacturers of premium cars. Including German and various other countries like Hungary, South Africa, China the company maintains high profile production sites. The company has more than 100,000 employees around the globe.
approach: The companies that satisfy the same customer needs are competitors. The characteristics like strategies, objectives, strengths and weakness, and reaction patterns about the primary competitors should be identified by the company in order to compete. The strategic group is the list of companies following the same strategy to satisfy the customers. Here Bavarian Motor Worksand Mercedes Benz follow the premium strategy like Audi to serve the customers. A continuous monitoring of the competitors' strategies is vital for the company. Japanese automakers shifted to sensory qualities when US automakers were just caught up with mechanical quality. Such kind of analysis paves opportunities for the challenges and threats in the near future. Once the primary competitors and their strategies are identifies, it is essential to know the competitors objectives, including market size, management techniques and financial positions. As the major competitors of Audi are the division of larger companies, it is also necessary to know the competitors' expansion plan> Volvo is the major competitor of Audi's recent expansion plans in Southern Asia. Volvo ranked 9th place among the bestselling luxury car brands in the American market during the year 2011. The total of 4659 cars of Volvo XC60 was sold in 2011 and this was the most selling car of this brand in 2011. Each competitor's strengths and weakness have to be gathered by the company. Lincoin managed to be the 8th ranked brand in the highest selling luxury cars in 2011. The strength of this brand is its unique selling proposition and its weakness is the lag of new technological innovations. Lincoin MKZ was the bestselling car in 2011 at the total of 4659 cars. Companies react differently to core competition. Infiniti answered with its Infiniti G37 for the launch of Cadillac CTS almost a year later, yet managed to increase 31.7% sales during 2011. To improve on best practices, Benchmarking technique can be adopted and competed. Toyota started to benchmark its production line up saying "Six Sigma Strategy" and achieved the most defect-free technology. A competitive intelligence system designed by Audi is setting up a strategy, collecting the data, evaluating the data, and disseminating information and responding to queries. Market Segmentation Analysis A group of customers who share a similar set of needs
Competitor Analysis
According to Michael Porter, there are five forces which determine the profit at the long-run of the market segment, they are: Industry competitors, potential entrance, substitutes, buyers and suppliers.
Source: Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance It might be an easy task for a company to identify its competitors. But in real sense it is not that easy. Even a layman can say Nokia knows that Sony is its major competitor or PepsiCo knows that Coca Cola is its major competitor. In reality, the company's actual and potential competitors are much boarder. More than the current existing competitors, the company is more likely to be affected by the new innovative technologies and emerging trends by the new competitors. The competitors can be identified with the help of market
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and wants constitute a market segmentation. As market segmentation is a classification of customers by one or more characteristics, Audi segments its customers in mass marketing segmentation where it engages itself in mass production, mass distribution and mass promotion of the same product for many buyers. In the olden days, cars were available only in black color. It created a revelation, when Henry Ford epitomized the marketing strategy by offering the Model-T Ford "in any color, as long as it is black." VARIABLES GEOGRAPHIC: Region City / Metro Size Density Climate DEMOGRAPHIC: Age Family Size Family Life Cycle Gender Income Occupation Religion Social Class PSYCHOGRAPHIC: Lifestyle Personality BEHAVIORAL: Occasions Benefits User Status Usage Rate Loyalty Status Readiness Stage Attitude towards product
Audi has distinctlysegmented its brand in an effective manner with the characteristics and purchasing power of the segment at a measurable function. The segments are profitable enough and large to serve and sustain as well. The market segment is accessible to the brand. The marketing-mix elements and programs are conceptually distinguishable in the segment. Audi launches effective programs to attract and serve the segment.
SEGMENTS France, UK, Italy, Spain, Russia, USA, Brazil, Asia Pacific, China, Hong Kong, India 1,000,000 or over Urban and Suburban All Whether 20-34, 35-49, 49+ Young, Married with Children, Older Nuclear & Joint Family Male & Female 250,000 and over Professionals, Businessmen & Proprietors All Upper Uppers Sports Oriented & Outdoor Oriented Compulsive, Gregarious, Ambitious Regular & Special Occasions Quality, Speed, Comfort, Class Potential Users Medium and Heavy Users Strong & Absolute Interested & Desirous Enthusiastic & Positive
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Benny J. Godwin
Role of Technological Innovations Audi is the first automobile company which created a revolutionary change in the technological innovations when compared to its primary competitors. Audi has recently launched its first full LED headlamps on the Audi R8 in 2008. Today, even in the dark night, the use of LED technology helps create a look that's unmistakably and iconic Audi. Audi does not simply concentrate style' but the LED technology itself offers many other advantages like: low energy consumption, long operating life, daylight white brightness, and faster reaction time than the traditional bulbs. Audi placed a new benchmark by naming it as Audi Quattro: All wheel drive, all year round, by winning the driver confidence and performance. Quattro technology distributes power to the wheels that need it most by increasing the traction whether it is a rain, shine or any weather. Audi Quattro legendary all-wheel drive technology is available on almost all models. Additionally, Audi's A3 and TT include a version that features a hydraulic system with an electronically controlled multi-plate clutch. This advanced control module monitors the wheel slip; traction and cornering with the road speed and respond quickly to any driving situation. Audi gained a wide acceptance with its new clean diesel variants offering technological options including high fuel efficiency, low emission, excellent performance and ultimately low maintenance. Audi TDI places a new era to the US market by its Hybrid- level efficiency: a new kind of driving pleasure with a clear conscience. Audi produce vehicles in the US by putting the cleanest diesel engine technology as the priority. Audi FSI direct injection sets a new standard in performance with engine power and efficiency. The old conventional intake manifold injection on conventional spark ignition engines were replaced with FSI Direct injection engines injecting fuel directly into the combustion chambers. This reduces heat loss by increasing output with the reduction of fuel consumption. This, Audi FSI, module uses two air supply modes allowing increasing the compression and performance. State-of-the-art technology enhancing handling performance and lower overall weight with an increased
stiffness was used by ASF Audi Space Frame by creating a body made of aluminum. Passionately lighter, stronger and safer than steel is the third generation Audi Space Frame with all-aluminum frame structure. In the previous generation ASF was 75% constructed by hand, but now in A8 build process 75% is automated. Demonstrating yet again with high speed handling, all around road performance and ride comfort are maintained. The next technological innovation by Audi is the Multi Media Interface. This Audi Multi Media Interface offers latest navigation, communication and entertainment at user friendly module. This is a third generation technology which guides with a voice assistance on the move. One need not necessarily know the exact way where he is heading. Once the engine is start, the driver can set the destination and relax comfortably by just following the course of the route. It is also embedded with a satellite traffic control system, which guides at the shortest distance. This interface has a cruise control which detects the road speed and warns the driver to travel at the optimal speed which was initially set. Audi Multi Media Interface comes with a separate control panel with the automatic climatic control. These are the major technological conceptions by Audi in the recent times. Role of Internet For a long time, over a couple of decades, television was dominating to be the prevailing advertising media to reach the customers. It was when there was lesser number of internet users. Now, the scenario has completely changed and revamped. As the selective is high with possible customer interactions at relatively low cost in internet, Audi has launched a web connected online campaign to promote its A7 sportback range in the UK. Audi is the first advertiser to play an advertising video campaign on internet connected televisions in the UK. Eve Tyers (2011), national communications manager at Audi UK quoted in an interview that, Audi is always looking for cutting edge ways to launch vehicles and we are delighted to be the first manufactures to embrace this new and exciting platform. Smartclip UK Managing Director, Sam Kayum (2011) says, This is the first ever connected Television campaign in the UK that is delivered across different
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web apps on multiple connected televisions. Creating some funny advertisements by having Brooke Shields as the spokesperson, Volkswagen was not able to sell many vehicles. Audi has planned Justin Timberlake to get the leading role in advertising for the Audi A1. According to Peter Schwarzenbauer (2009), marketing executive at Audi, As a superstar he appeals to a young target audience that we are particularly intent on exciting about the compact and efficient A1, which is superlatively well suited for city traffic. Businesses are making use of viral marketing strategies in order to enhance the online presence owing to their efficiency and cost effectiveness as the advertising world is changing. Word-of-mouth advertising technique is used by Audi to increase the brand awareness online by getting people to talk about its products and services in Twitter, Facebook, YouTube, Orkut and other popular social networking sites and blogs. Conclusion Audi Motors is one among the largest automobile global industries. It has always been succeeding from its existence because of the efforts and contribution of the management and employees towards the organization. Audi determines to maintain its position as the bestselling luxury car brand in the commonwealth with a reinforced product line up and elaboration of its dealer network. Stepping up the introduction of new models in China, Audi tries to head off rising competition from rival luxury carmakers BMW and Mercedes-Benz. There was a considerable increase by 34% to 236,000 units in 2011, while the overall luxury market expanded by 65% to close to 761,000 units according to data released by the company. The study indicates that the main competitor Mercedes is being held back by its continued high production costs and lagging development of new technologies. While the other competitor BMW has recently launched its
new XI compact SUV model and Audi says its equivalent Q3, Mercedes is only planning to release its answer to the compact SUV trend in 2013.This study mainly aimed to discuss the evolution on Audi Motors. Irrespective of various tough times, Audi managed to capture the market position by implementing innovative technological solution. Audi Motors showkeen interest insatisfying the customers by sharing the duties and responsibilities among the employees.
References:
Ehmke, C., Fulton, J., & Lusk, J. (2009). Marketing's Four P's: First Steps for New Entrepreneurs. Warren, Michigan, USA: SAGE Publishers. p133-138. Hoffman,D & Novak, T, (1996), 'Marketing in Hypermedia Computer-mediated Environments: Conceptual Foundations', Journal of Marketing, Vol 60(July), pp50-68 Keller, Kevin Lane. (1993). Conceptualizing, Measuring, and Managing Customer-Based Brand Equity. Journal of Marketing. 22 (1), 57. Leon G. Schiffman, Leslie Lazar Kanuk (2007). Consumer Behavior. 9th ed. New Jersey: Pearson Education. p80-105. Londre, L. S. (2009). Marketing, IMC, Advertising, Promotion, Media and More. Perth, Australia: Wiley & Sons. p47-53. Nick Baldwin, G N Georgano, Brian Laban, and Michael Sedgwick (1987).The World Guide to Automobile Manufacturers. New York: Facts & File. p43-44. Philip Kotler (2003). Marketing Management. India: Pearson Education. p278-296. Wendell R. Smith. (1956). Product Differentiation and Market Segmentation as Alternative Marketing Strategies. Journal of Marketing. 4 (2), p14-17.

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