Rai Management Journal: Price: 75

Rai Management Journal
An Initiative of Rai Business School Alarming Attrition Rate in Call Centers and BPO Industry Is Employer Branding an Influencing Factor for Accepting an Offer?
ISSN No: 0975-4326
Price : 75/-
Vol. 7
Issue 1
R. Ganapathi, S. Anbu Mala and R. Kanniah
L.Gandhi and K. Senthil Kumar An Empirical Study: Students Perception on Service Quality Using Malaysian Hedperf Measurement Scale K. Ravichandran and S. Arun Kumar Global Recession and Microfinance Sector: A Study of Five Large MFIs in India Amrit Lal Ghosh, Ranjit Singh and Anurag Singh Employee Engagement @ Indian Retail Industry Pooja Misra and Kokil Bhalotia Knowledge Transfer by Repatriates for Organizationals Competitive Advantage B.R. Santosh and Krishnaveni Muttiah A Study on Evaluation of Intrinsic Value of Selected Public Sector Banks in India Sunita Sukhija and Suman Ghalawat Growth of Organized Food Retailing in Punjab: An Exploratory Study K.C. Mittal, Anupama Prashar and Anmol Soi Making Teaching Learning Process More Vibrant for Better Results Neetu Jain Positive Relationship of Foreign Direct Investment and Economic Growth Mahesh Chandra Prasad Pricing of Milk: A Study in Karnataka Milk Federation M. Jeyarathnam and Geetha M. Rajaram A Comparative Study on Financial Performance of Pre and Post Introduction of Core Banking in Indian Bank and the South Indian Bank N. Sundaram and C.M. Maran
Editor
Dr. Sheetal Kaul Rai Business School, Delhi, India
Associate Editors
Prof. Gunjan A. Rana Rai Business School, Delhi, India Prof. Piyush Ranjan Rai Business School, Delhi, India Prof. Lubna A Khan Rai Business School, Delhi, India Prof. U S Wahie Rai Business School, Delhi, India
Advisory Board
Paul Edelblut Senior Vice President, Vantage Labs, New Jersey,USA Dr. Mahesh Chandra Associate Professor, Hofstra University, New York, USA Dr. B.K Mohanty Professor, Indian Institute of Management, Lucknow, India Basab Bordoloi Vice President- HR, Domino Pizza, Noida, UP, India Upender Rai General Manager - HRD, NTPC, Delhi, India Salehuddin Ahmed Chief Technical Advisor, IPRCC, Beijing, China Dr. Annabel Droussiotis Associate Professor, Limassol, Cyprus, USA Dr. R.K Gupta Professor, Punjab University, Chandigarh, India Himanshu Chawla
Head Enterprize Partner Sales, Sun Microsystem India Pvt Ltd., Delhi, India
Editorial Board
Dr Abhishek Mishra Assistant Professor, Indian Institute of Management, Ahmedabad, India Dr Dinesh Kumar Professor, Indian Institute of Management, Bangalore, India Prof. Vivek Gupta Associate Professor, Indian Institute of Management, Lucknow, India Dr. M.Jayadev Associate Professor, Indian Institute of Management, Bangalore, India Dr. Neera Jain Assistant Professor, Management Development Institute, Gurgaon, India Prof. Harkirat Singh Professor, Indian Institute of Foreign Trade, Delhi, India Dr. Sandeep Anand Assistant Professor, Xavier Institute of Management, Bhubaneswar, India Dr. Parul Rishi Assistant Professor, Indian Institute of Forest Management, Bhopal, India Dr. Biresh K Sahoo Associate Professor, Xavier Institute of Management, Bhubaneswar, India Dr. Manoj Srivastava Assistant Professor, Management Development Institute, Gurgaon, India Dr. Ranjana Agarwal Assistant Professor, IMT, Ghaziabad, India Dr. Sukumar Nandi Professor, Indian Institute of Management, Lucknow, India Dr. Anita Goyal Associate Professor, MDI, Gurgaon, India Dr. Avanish Kumar Associate Professor, MDI, Gurgaon, India Dr. Sabita Mahapatra Assistant Professor, Indian Institute of Management, Indore, India Prof. Sanjay Dhamija Professor, International Management Institute, Delhi, India Prof. Pradip Chakraborty Senior Professor, Fore School of Management, Delhi, India Dr. P. N Pandey Professor, CDAC, Delhi, India\ Dr. Ambrish Gupta Senior Professor, Fore School of Management, Delhi, India Prof. PR Ramanujam Director, IGNOU, New Delhi, India Prof. Seema Unnikrishan Associate Professor, NITIE, Mumbai, India
June 2010 Vol. 7 Issue 1
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From the Editors Desk

t gives me immense pleasure to present the next issue of our management journal. As we complete one eventful year and enter the second, I would like to express my sincere thanks to all for their support without which, it would not have been possible to take this journal to an international level.
papers, thereby helping us in our endeavour to enrich the value of our journal. On the other hand, the authors should not feel disheartened by the rejection of their articles rather they should take it as a learning experience and analyze the lacunae in their paper that led to the rejection, helping them to overcome these shortcomings while writing papers in the future. We have taken into consideration the viewpoints and suggestions of our reviewers and have made sincere efforts to incorporate the same. We would like to appreciate the efforts of the editorial board for working towards the betterment of our Journal. We hope that our readers would find the blend of conceptual and application based articles/ case studies/ research papers valuable enough and intellectually gratifying. We however look forward to your valuable feedback and constructive suggestions that would help us in our journey towards excellence. Your comments and suggestions are welcome. You can reach us at raijournal@rbs.edu.in
Rai Management Journal is a scholastic platform to share ideas, nourish and promote the culture of academic and industrial research. This biannual journal invites and attracts best quality papers from all parts of the globe and reaches to a wide variety of readers. This journal publishes papers that impart knowledge through research on contemporary management issues and the cases in functional areas of marketing, finance, human resource management, information technology and general management. In this edition I am delighted to bring the blind peer reviewed research papers contributed by academicians and professionals from various sectors. The diversity of topics is nicely blended and I am sure that the readers will appreciate the same. We thank the researchers for contributing papers for the journal and would request academicians/ research scholars to keep on contributing scholarly
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Contents
Alarming Attrition Rate in Call Centers and BPO Industry 4 - 24
Is Employer Branding an Influencing Factor for Accepting an Offer? An Empirical Study: Students Perception on Service Quality Using Malaysian Hedperf Measurement Scale Global Recession and Microfinance Sector: A Study of Five Large MFIs in India
25 - 35
36 - 54
55 - 67
Employee Engagement @ Indian Retail Industry
68 - 80
Knowledge Transfer by Repatriates for Organizationals Competitive Advantage
81 - 95
A Study on Evaluation of Intrinsic Value of Selected Public Sector Banks in India
96 - 111
Growth of Organized Food Retailing in Punjab: An Exploratory Study
112 - 128
Making Teaching Learning Process More Vibrant for Better Results
129 - 145
Positive Relationship of Foreign Direct Investment and Economic Growth
146 - 159
Pricing of Milk: A Study in Karnataka Milk Federation A Comparative Study on Financial Performance of Pre and Post Introduction of Core Banking in Indian Bank and the South Indian Bank
160 - 169
170 - 191
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Alarming Attrition Rate in Call Centers and BPO Industry
R. Ganapathi* S. Anbu Malar** R. Kanniah***
Call centers and outsourcing have become the main components of globalization and is a result of unparalleled scientific and technological development throughout the world. Because of the vast employment opportunities provided by the Call Centres and Business Process Outsourcing (BPO), they are called the sunshine industries. Today India is the hub of BPO because of the availability of cheap and qualified workforce, state of the art technology, booming IT and telecommunication sectors and its unique geographical location. But the alarming rate of employee turnover in the Call Centres and other BPO sectors has become a stumbling block for the growth of this sector. In India, the average attrition rate in the BPO sector is approximately 30-35 percent. It is true that this is far less than the prevalent attrition rate in the US market (around 70 %), but the challenge continues to be greater considering the recent growth of the industry in the country. Keeping low attrition levels is a major challenge as the demand outstrips the supply of employees by a big margin. The sample size of 209 employees working in Call Centres / BPOs, of Coimbatore, have been selected for this study. The objectives of the study are to analyze the prevailing reasons for increasing attrition rate in BPOs / Call Centers in India, to study the employees level of satisfaction towards his / her job, work environment, interpersonal relationship and benefits enjoyed by him / her, to examine employers opinion on the increase in employee attrition rate, to examine the factors that influence the employees to leave the BPOs / Call centers, to analyze employees perception towards shift in their jobs and to suggest strategies to control the increasing attrition rate in BPOs / Call Centre. The major findings of the study are that a majority of employees who have moved from one company to another company in the field of Call Center / BPO industry belong to the age group of 25-30 years. Lack of safety and more career opportunities elsewhere are the topmost reasons for the employees to quit their jobs. The main reason why people opt for a job in the Call Centres / BPOs is the compensation package available. Constructive suggestions including formulation of an effective recruitment and selection strategy and an integrated performance appraisal and reward system have been highlighted to reduce the attrition rates with respect to this industry. Keywords: Globalization, attrition, recruitment and appraisal
Introduction
Today India is the hub of BPO because of the availability of cheap and qualified workforce, state of the art technology, booming IT and telecommunication sectors and its unique geographical location.
Call Centers and Business Processing Outsourcing (BPOs) are the new mantras of global business scenario. They are called sunshine industries as they provide job opportunities and generate revenues in India. Breakthrough developments in the information
technology, severe global competition, rapid organizational restructuring, emerging market economies and growing realization of the importance of customers have revolutionized the new business paradigm. Outsourcing is the byproduct of this change. In general, when a company
*Lecturer in Commerce, Directorate of Distance Education, Alagappa University, Karaikudi, Tamil Nadu, India **Lecturer in Commerce, Sri Krishna Arts & Science College, Coimbatore, Tamil Nadu, India ***Research Scholar, Department of International Business and Commerce, Alagappa University, Karaikudi, Tamil Nadu, India Rai Management Journal
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decides to focus on its core business and outsource its non-core operations such as customer care, finance, payment services, human resources, insurance claims etc it is called business outsourcing. Of late, BPO has emerged as a popular competitive strategy for multinationals in many developing countries and is creating good opportunities for the educated, talented, unemployed youth in countries like India and China. Outsourcing broadly refers to the transfer of an activity or operation and day-to-day management of business process to an external service provider. In India, the average attrition rate in the BPO sector is approximately 30 to 35 percent. It is true that this is far less than the prevalent attrition rate in the US market (around 70 %), but the challenge continues to be greater considering the recent growth of the industry in the country. The BPO sector is estimated to be somewhere around three decades old. Keeping low attrition levels is a major challenge as the demand outstrips the supply of good agents by a big margin. Further, the salary growth plan for each employee is not well defined. All this encourages poaching by other companies who can offer a higher salary.
key organizational challenge facing the BPO companies in India. There was consensus on attrition being the foremost challenge facing the BPO companies resulting in more cost of attrition, recruitment, lost productivity, training and lost knowledge. Bhaskara Rao V. K (2006) identified how day-by-day BPO industries are raising all around in India. BPO has emerged as a popular competitive strategy for multinationals in many developing countries and are creating good opportunities for the educated. Kulkarni P K and Gujarati (2006) examined career opportunities in the BPO industry. They express that BPO industry offers good money, professional status, job satisfaction and intellectual challenge. Mohammed Ghazi Shahmawaz (2006) specified some occupational stressors; low salary, low time, low normative commitment, work schedule, relationship etc. in call centres and BPO industries. Adilakhmi P (2006) analyzed segment attrition data, spending time during recruitment, build a value proposition and make line managers equally responsible. Abirami Devi and Ranjitham D (2007) identified high attrition rate as the biggest challenge faced by IT sector. Nayanathara (2007) stated that the multi billion dollar BPO industry racking its brains to solve the crisis, a complicated one that could prove to be disastrous in the long run. Brand building has become the panacea for the attrition problem. Sanjeev (2008) mentioned that, the daily experience is of repetitive, intensive and stressful work, based upon Taylorist principles, which frequently results in employee burnout.
Review of Literature
Karthik. D and Rao U. S (2004) identified how companies can add value to the existing processes being outsourced and be more efficient. Nitin Aggarwal (2005) examined the June 2010 Vol. 7 Issue 1
In India, the average attrition rate in the BPO sector is approximately 30 to 35 percent.
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The present study is new of its kind in this region and has revealed a number of factors which determine and govern the attrition rate in various BPO centers.
Objectives of the Study

The following are the objectives of the study: 1. To review theoretically the problems of attrition in BPO firms and Call centres. 2. To analyze the relationship between personal factors and level of satisfaction of the respondents. 3. To analyze the correlation between job factors and perception of the employees 4. To offer suggestions for minimizing the attrition rate in BPO firms and Call centres.
district of Tamil Nadu. Coimbatore, an important industrial center, and seen as tire II city by various IT / BPO Industries. A number of prestigious IT units have already established their foot prints in the city. Under the initiative of the Government of Tamil Nadu, a tidal park is coming up in the city, which in coming years, promises to make the Coimbatore city, an important IT hub in the country. The study being empirical in nature would require immense database and therefore the analysis is based on primary as well as secondary data collected. Questionnaire is used for collecting data from Call Center / BPO employers and employees. Interview schedules are used as a primary data tool. The secondary data sources include published books, articles, newspapers, and reports of the various consultancy firms, published and unpublished research work of various institutions. In conducting this study, a sample unit was selected from Coimbatore Call Centers / BPO Industries and the information was obtained from 209 employees. Statistical tools such as Measures of Dispersion, Standard Deviation, Co-efficient of Variance, Arithmetic Mean, Rank Order, Likerts Scaling Technique, Chisquare Test, Contingency Co-efficient, Factor Analysis and Specimens RHO and t test were used in the study. The period of the study was from January 2009 to July 2009.
Research Methodology
In line with the objectives, this research is empirical and descriptive in nature as it is aimed to find out the reasons and the causes for the increasing attrition rate in Call Centres / BPOs. The sample size for the study is 209 respondents from BPO and Call centre employees. The study was conducted in Coimbatore
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Analysis and Interpretation of the Data

The results of the analysis of the collected data are presented in table 1 The majority of the respondents i.e. 43.54% have joined for good salary 37.32% have joined for Bright Career
Prospects, 15.31% have joined because they liked the working environment, 2.39% have joined as part time shift and the rest of respondents i.e. 1.44% have joined for the reasons of make shift job. Thus, it is inferred that majority of the respondents i.e,. 43.54% have joined Call Center / BPO Industry for good salary.
Table 1: Reasons Stated For Joining A Call Center / BPO Job Sl.No. Reasons 1. 2. 3. 4. 5. Good salary Working environment Bright career Prospects Part time job Make shift job TOTAL Source: Primary Data Table 2: Gender and Level of Satisfaction Towards Attrition Rate Sl. No. GENDER LEVEL OF SATISFACTION LOW 27 1. Male (58.7) 19 2. Female (41.3) TOTAL 46 (44.4) 99 (39.1) 64 209 (55.6) 44 (60.9) 25 88 MEDIUM 55 HIGH 39 121 TOTAL Number of Respondents 91 32 78 5 3 209 Percentage 43.54 15.31 37.32 2.39 1.44 100
Gender and Level of Satisfaction Towards Attrition Rate Factor Calculated 2 Value Table Value Degree of freedom Gender 0.477 5.991 2 Remarks Not Significant
Source: Primary Data June 2010 Vol. 7 Issue 1
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The result of the chi square test in table 2 indicates that the calculated value (0.477) is less than the table value (5.991) at 5 per cent level of significance for 2 degrees of freedom. Hence the null hypothesis is accepted. The association between the gender of
the respondents and their level of satisfaction towards attrition rate is not significant. It can be concluded that the association between the gender of the respondents and their level of satisfaction towards attrition rate is not significant.
Table 3: Age and Level of Satisfaction Towards Attrition Rate Sl. No. GENDER LEVEL OF SATISFACTION TOTAL LOW 12 1. Below 30 years (26.1) 29 2. 31 - 40 years (63.0) 5 3. Above 40 years (10.9) TOTAL 46 (24.2) 99 (3.1) 64 209 (28.3) 24 (4.7) 2 31 (47.5) 28 (92.2) 3 60 MEDIUM 47 HIGH 59 118
Age and Level of Satisfaction Towards Attrition Rate Factor Calculated 2 Value Table Value Degree of freedom Age 67.472 9.488 4 Remarks Significant at 5% level
Source: Primary Data
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The result of the chi square test in table 3 indicates that the calculated value (67.472) is greater than the table value (9.488) at 5 per cent level of significance for 4 degree of freedom. Hence the null hypothesis is rejected. The association between the age group of the respondents and their level of satisfaction towards attrition rate is significant. It can, therefore be concluded that the association between the two is significant.
The result of the chi square test in table 4 indicates that the calculated value (51.027) is greater than the table value (9.488) at 5 per cent level of significance for 4 degree of freedom. Hence, the null hypothesis is rejected. The association between the educational status of the respondents and their level of satisfaction towards attrition rate is significant. It can, therefore, be concluded that the association between the two is significant.
Table 4: Educational Status and Level of Satisfaction Towards Attrition Rate Sl. No. GENDER LEVEL OF SATISFACTION TOTAL LOW 14 1. Graduates (30.4) 13 2. Post Graduates (28.3) 19 3. Diploma (41.3) TOTAL 46 (13.1) 99 64 209 (23.2) 13 0 32 (56.3) (63.6) 23 (43.8) 36 72 MEDIUM 63 HIGH 28 105
Educational Status and Level of Satisfaction Towards Attrition Rate Factor Educational Qualification Source: Primary Data Calculated 2 Value Table Value 51.027 9.488 Degree of freedom 4 Remarks Significant at 5% level
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Table 5: Monthly Income and Level of Satisfaction Towards Attrition Rate Sl. No. GENDER LEVEL OF SATISFACTION TOTAL LOW 1. Below Rs.10000 Rs.10001 to 20000 Above Rs.20000 TOTAL 5 (10.9) 36 (78.3) 5 (10.9) 46 MEDIUM 11 (11.1) 67 (67.7) 21 (21.2) 99 HIGH 35 51 (54.7) 18 121 (28.1) 11 37 (17.2) 64 209
2.
3.
Educational Status and Level of Satisfaction Towards Attrition Rate Factor Monthly Income Calculated 2 Value Table Value 51.315 9.488 Degree of freedom 4 Remarks Significant at 5% level
Source: Primary Data The result of the chi-square test in table 5 indicates that the calculated value (51.315) is greater than the table value (9.488) at 5 per cent level of significance for 4 degree of freedom. Hence the null hypothesis is rejected. The association between the Monthly Income of the respondents and their level of satisfaction towards attrition rate is significant. It can, therefore, be concluded that the association between the two is significant.
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Table 6: Educational Status and Level of Satisfaction Towards Attrition Rate

Sl. No. Particulars Very High 80 High 118 Neutra l 10 Low 1 (38.28) (56.46) (4.78) 24 118 59 (0.48) 8 (11.48) (56.46) (28.23) (3.83) 51 3 Listening Skills (24.40) (47.37) (25.84) (2.39) Analytical Skills / 38 112 51 8 Understanding skills (18.18) (53.59) (24.40) (3.83) 43 5 Phone Etiquette (20.58) (48.80) (28.23) (2.3) 3 777 (1.44) 8 749 (5.26) (60.29) (25.84) (4.78) (3.83) 3.56 7 3.72 6 102 59 5 810 3.87 5 99 54 5 823 3.94 3 825 3.95 2 904 4.33 1 Very Low Total Mean Rank
Good Command over English
Marketing Skills / Responding Skills
807
3.86
Knowledge of 32 97 72 5 consumer / customer behavior (15.31) (46.41) (34.45) (2.39) 11 126 54 10
Computer Literacy
From table 6 it is clear that the majority of the respondents i.e. 38.28 have attributed Good Command over English as the most important job requirement in Call Centres / BPOs. The second place goes to Marketing Skills / Responding Skills. Then the 3rd rank has been assigned to listening skills and 4th rank to Analytical Skills / Understanding
Skills. 5th and 6th ranks have been given to Phone Etiquette and Knowledge of consumer / Customer behavior respectively. And the last place has gone to computer Literacy. Thus, it is inferred that the majority of the respondents rank have chosen Good Command over English as the most important job requirement in the field of Call Centers / BPO industry.
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Table 7: Employees Level of Satisfaction Towards Job, Working Environment and Working Culture in General
Sl. Highly Satisfie Neutra Dissati Highly Particulars Total No. Satisfied d l sfied Dissatisfied 60 1 Job (28.71) (26.32) (21.05) (19.14) (4.78) 55 44 40 10 742 3.55 1 Mean Rank
Working Environme nt Working Culture in the Organizatio n
32 (15.31) 27 (12.92)
57
72
25
23 677 3.23 2 (11.00) 45 (21.53) 556 2.66 3
(27.27) (34.45) (11.96) 25 52 60
(11.96) (24.88) (28.71)
From table 7 it is clear that the majority of the surveyed respondents have perceived that their personal interests have an important effect on the quality of their job. Freedom to decide and suggest has been ranked the second and the belief that they are capable to do more challenging job has been assigned the 3rd place in the
perception of the respondents. And the rest of the respondents have perceived that they are overburdened in their job. Thus, it is observed that the majority of the respondents have perceived that their personal interests have an important effect on the quality of their job in the Call Centers / BPO industry.
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Table 8: Employees Level of Perception Towards the Job

Sl. No. Particulars Very High High Neutra l Low Very Low Total Mean Rank
Personal interest 51 99 54 5 has an important effect on the (24.40) (47.37) (25.83) (2.39) quality of the job Freedom to decide and suggest 43 102 59 5
823
3.93
(20.57) (48.80) (28.23) (2.39)
810
3.88
Capable to do 37 113 51 8 more challenging job (17.70) (54.07) (24.40) (3.83) 24 118 59 8
806
3.86
Overburdened in the job
(11.48) (56.46) (28.23) (3.83)
785
3.76
Source: Primary Data From table 8 it is clear that the majority of the surveyed respondents have perceived that their personal interests have an important effect on the quality of their job. Freedom to decide and suggest has been ranked the second and the belief that they are capable to do more challenging job has been assigned the 3rd place in the perception of the respondents. And the rest of the respondents have perceived that they are overburdened in their job. Thus, it is observed that the majority of the respondents have perceived that their personal interests have an important effect on the quality of their job in the Call Centers / BPO industry.
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Table 9: Employees Level of Perception Towards Superior Subordinate Relationship

Sl. No. Level of Perception Strong Strong ly Neutra Disagr ly Agree Total Disagr l ee Agree ee 40 42 42 52 33 631 (19.15) (20.09) 20.09) (24.88) (15.79) 3.02 1
Mean
Rank
Superior has self ego problem
Superior is more 33 38 52 38 48 a BOSS than a leader (15.79) (18.18) (24.88) (18.18) (22.97) 23 23 73 45 45
597
2.86
Superior is biased (11.00) (11.00) (34.93) (21.53) (21.53) 17 (8.13) 8 (3.83) 15 33 96 48
561
2.65
Superior treats fairly
484 (7.18) (15.79) (45.93) (22.97) 10 40 79 72 430 (4.78) (19.14) (37.80) (34.45)
2.31
Superior is an effective manager
2.06
Source: Primary Data Table 9 deals with the respondents perception about their superiors. Majority of the surveyed respondents i.e. 19.15 % perceive their superiors to be egoistic. 15.79% of the respondents feel that the superiors behave more like a boss than a leader. While 11% of the respondents think that their superiors are biased, 8.13% opine that their superiors treat them fairly. Only 3.83% of the respondents perceive their superiors to be effective managers. Thus, it is found that the majority of the respondents view their superiors to have ego problem.
Table 10: Srearmans Rank Order Correlation Co-Efficient (Rho) Correlation between Employees relationship with superior and colleagues R 0.50 R2 0.25 Calculated Value of t 1 Table Value of t 2.776 Level of Significance 5 per cent
Source: Calculated from Primary Data Rai Management Journal
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In table 10 the calculated correlation value R is 0.50 and R2 is 0.25. The calculated value of t is 1 at 5 percent level of significance which is greater than the table value of 2.776, thus the
hypothesis framed is accepted. Thus it is calculated that the relationship with the superior and colleagues is an important factor resulting in quiting the Call Center / BPO jobs.
Table 11: Level of Satisfaction Towards Benefits Provided by Employer

Sl. Level of Highly Satisfie Neutra Dissati Highly Total No. Satisfaction Satisfied d l sfied Dissatisfied 54 1 Number of days of vacation (25.83) 29 52 46 28 (13.40) 662 3.17 1 Mean Rank
(13.88) (24.88) (22.01)
Sick leave policy
40 (19.14)
38
48
45
38 624 2.99 2 (18.18)
(18.18) (22.97) (21.53)
Leave travel allowances
44 (21.05)
29
44
50
42 610 2.92 3 (20.09)
(13.88) (21.05) (23.92)
Paid leave policy
40 (19.14)
21
46
65
37 589 2.81 4 (17.70)
(10.05) (22.01) (31.10)
Health care benefits
28 (13.40)
42
46
48
45 587 2.79 5 (21.53)
(20.09) (22.01) (22.97)
Insurance benefits
19 (9.09)
44
40
60
46 557 2.66 6 (22.01)
(21.05) (19.14) (28.71)
Provident Fund and Gratuity
19 (9.09)
44
40
60
46 557 2.66 7 (22.01)
(21.05) (19.14) (28.71)
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From table 11 it is clear that the majority of the respondents i.e. 25.83% are satisfied with the number of days of vacation available in this field. The next compensation factor giving them satisfaction is the employee sick leave policy followed by leave travel allowances paid to them. The next two factors giving them satisfaction are paid leave facility and
health care benefits. Provident Fund and Gratuity and Insurance benefits are the last compensation factors that make the employees happy. Thus, it is found that the majority of the respondents rank the number of days of vacation provided to them in the field of Call Centre / BPO Industry as the first compensation factor that satisfies them.
Table 12: Level of Satisfaction Towards Reward and Recognition Programmes Practiced in Call Center / BPO Firms
Sl. No Level of satisfaction Rewards Total Highly Satisfie Neutra Dissati Highly Satisfied d l sfied Dissatisfied 94 (44.98) 21 (10.05) 19 (9.09) 11 (5.26) 11 5 Family Day (5.26) Club Membershi p Fully paid overseas trip 5 (2.39) 19 (9.09) 3 8 Freebies (1.44) (18.18) (30.62) (36.84) (12.92) (12.92) (35.89) (38.27) 35 88 51 (7.66) 30 561 (16.75) (42.11) (24.40) 43 32 67 (14.35) 48 545 (20.57) (15.31) (32.06) 38 64 77 (22.97) 27 540 2.58 8 2.60 7 2.68 6 29 50 21 15 793 (13.88) (23.92) (10.05) 64 51 67 (7.17) 6 654 (30.62) (24.40) (32.06) 70 35 59 (2.87) 26 624 (33.49) (16.75) (28.23) 48 51 86 (12.44) 13 585 (22.97) (24.40) (41.15) 27 75 80 (6.22) 16 564 2.69 5 2.80 4 2.99 3 3.13 2 3.79 1 Mean Rank
Incentives and Awards Organizatio n Awards Outing for Destressing and Team Building Free Medical Advice
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From table 12 it is clear that the majority of the respondents have expressed highest level of satisfaction towards incentives and awards. They have assigned the second place to organization awards, third place to outing for de-stressing and team building and fourth place to free medical advice. Celebration of family
day enjoys the fifth place and club membership the sixth place. Fully paid overseas trips and freebies enjoy the last two positions. Thus, it is found that the majority of the respondents have expressed highest level of satisfaction towards incentives and awards given in the Call Centre / BPO firms.
Table 13: Employees Level of Satisfaction Towards Fringe Benefits in Call Center / BPO Industry
Sl. No Fringe Benefits Food facilities Canteen Transportat ion Allowances Level of satisfaction Total Highly Satisfie Neutra Dissati Highly Satisfied d l sfied Dissatisfied 27 (12.92) 8 (3.83) 3 (1.44) 10 (4.78) 3 (1.44) 13 (6.22) 8 (3.83) 3 (1.44) 126 54 2 (60.28) (25.84) (0.96) 102 59 40 (48.82) (28.23) (19.14) 64 64 72 6 613 (30.62) (30.62) (34.45) 46 46 86 (2.87) 21 565 (22.01) (22.01) (41.15) 40 72 88 (10.05) 6 573 (19.14) (34.45) (42.10) 24 67 75 (2.87) 30 542 (11.48) (32.06) (35.89) 35 56 80 (14.35) 30 538 (16.75) (26.79) (38.28) 43 48 88 (14.35) 27 534 (20.57) (22.97) (42.10) (12.02) 2.55 8 2.57 7 2.59 6 2.69 5 2.70 4 2.93 3 705 3.37 2 805 3.85 1 Mean Rank
Sick leave policy
Mediclaim, LIC etc. Any health care allowance Retirement programme
Any paid leave policy
Vision coverage
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From table 13 it is clear that the majority of the surveyed respondents have expressed highest level of satisfaction about the food facilities offered in the Call Centres / BPO industry which is followed by transportation allowances. The third and fourth places go to sick leave policy and mediclaim, LIC etc respectively. The fifth most satisfying
factor is health care allowances, followed by retirement programme. The last two items are paid leave policy and employee vision coverage. It is, thus seen that the majority of the surveyed respondents, have expressed highest level of satisfaction about the food facilities offered in the Call Centres / BPO industry.
Table 14: Level of Satisfaction Towards Employee Development Programmes

Developme Level of satisfaction nt Sl. Total Highly No Programme Highly Satisfie Neutra Dissati Satisfied d l sfied Dissatisfied s Higher education and skill developmen t opportunity Job in the field of interest 18 (15.65) 58 32 7 (50.43) (27.83) (6.07) 432 3.76 1 Mean Rank
16 (13.91) 12
68
24
2 430 3.74 2 (1.74)
(59.13) (20.87) (1.74) 62 40 2
Good salary (10.43) Better opportunity 9 (7.82) 6 (5.22) 2 (1.74) (53.11) (34.78) (1.74) 59 39 5
432
3.76
6 410 3.57 4 (5.22) 3 410 3.57 5 (2.61) 2 402 3.50 6 (1.74)
(51.30) (33.91) (2.56) 63 39 4
Career counseling Foreign assignment s providing Assessment technique provided by this organizatio n
(54.78) (33.93) (3.48) 61 44 7
(53.14) (38.26) (6.07)
6 (5.22)
43
57
9 391 3.40 7
(37.39) (49.57) (7.82)
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From table 14 it is clear that among the respondents, best choice of the development opportunities that are provided in the Call Centres / BPO, it is the facility for higher education and skill development which is followed by the opportunity to work in the field of their choice. The third place goes to good salary and the fourth place to career counseling and better
opportunity. Foreign assignments occupy the fifth place which is followed by assessment technique. Thus, it is found that the respondents best choice of the development opportunities that are provided in the Call Centers / BPO is the facility for higher education and skill development.
Table 15: Level of Satisfaction Towards Training Programmes

Level of satisfaction Training Sl. Programme Highly Satisfie Neutra Dissati Total Highly No s Satisfied d l sfied Dissatisfied On the job training 29 (13.88) 24 (11.48) 21 (10.05) 108 72 (51.67) (34.45) 91 67 24 3 764 (43.54) (32.06) (11.53) 75 59 38 (1.48) 16 674 (35.89) (28.23) (18.18) (7.65) 3.22 3 3.66 2 793 3.79 1
Mean
Rank
Communica tion training Team building games session
Source: Primary Data From table 15 it is clear that the majority of the respondents have expressed highest level of satisfaction towards the on-the-job training provided to them in this industry. The second and third positions go to communication training and team building games respectively. Thus, it is seen that the majority of the respondents have expressed highest level of satisfaction towards the onthe-job training provided to them in the Call centers / BPO industry.
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Table 16: Influences of Various Factors on Increasing Employee Attrition Rate

Level of satisfaction Sl. No Factors Very High Total High Neutral Low Very Low Mean Rank
Lack of career opportuniti es
84 (40.19)
90 (43.06)
10
22
3 857 4.10 1 (1.28)
(4.78) (10.52)
Health issues No proper communica tion channels established in the company Poor promotion policies Inadequate compensati on and benefits Poor salary
30 (14.35)
99
75
5 781 3.74 2
(47.37) (35.89) (2.39)
26 (12.55)
102
59
11
11 748 3.58 3 (5.26)
(48.80) (28.23) (5.26)
53 (25.36) 72 (34.44) 21
70
36
17
33 720 3.44 4 (15.79) 32 712 3.40 5 (15.31) 5 697 3.33 6 (2.39)
(33.49) (17.22) (8.13) 41 28 36
(19.61) (13.39) (17.22) 54 113 16
(10.05) Unnecessar y inference of superior in the employees work
(25.84) (53.07) (7.65)
48 (22.97)
60
24
21
21 650 3.11 7 (10.05)
(28.71) (11.48) (10.05)
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From table 16 it is clear that the majority of the surveyed respondents rank the Lack of Career Opportunities as the first main factor influencing the increasing Employees Attrition Rate. The second and third place goes to health issues and improper communication channels established in the company. Poor Promotion Policies and inadequate compensation and benefits have been assigned the fourth and fifth places. The sixth place goes to poor salary and the seventh place to unnecessary interference of superior in the employees working. Thus, it is seen that the majority of the respondents feel that the lack of career opportunities is the first main factor influencing the increased employees attrition rate in the Call Centre / BPO firms.
5. The association between the Monthly Income of the respondents and their level of satisfaction towards attrition rate is significant. 6. Majority of the respondents i.e. 38.28% have attributed Good Command over English as the most important job requirement in Call Centres / BPOs. 7. Majority of the surveyed respondents have expressed highest level of satisfaction with their job followed by high level of satisfaction with the working environment. 8. Majority of the surveyed respondents have perceived that their personal interests have an important effect on the quality of their job. 9. Majority of the surveyed respondents i.e. 19.15 % perceive their superiors to be egoistic. 10. Majority of the respondents i.e. 25.83% are satisfied with the number of days of vacation available in this field. 11. Majority of the respondents have expressed highest level of satisfaction towards incentives and awards. 12. Majority of the respondents surveyed have expressed highest level of satisfaction about the food facilities offered in the Call Centres / BPO industry. 13. Among the respondents best
FINDINGS
1. Majority of the respondents i.e. 43.54% have joined Call centre / BPO for good salary package. 2. The association between the gender of the respondents and their level of satisfaction towards attrition rate is not significant. 3. The association between the age group of the respondents and their level of satisfaction towards attrition rate is significant. 4. The association between the educational status of the respondents and their level of satisfaction towards attrition rate is significant.
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choice of the development opportunities that are provided in the Call Centres / BPO, it is the facility for higher education and skill development. 14. Majority of the respondents have expressed highest level of satisfaction towards the on-thejob training provided to them in this industry. 15. Majority of the surveyed respondents rank, Lack of Career Opportunities as the first main factor influencing the increasing Employees Attrition Rate.
3. Most BPO firms will have to look to add value to the customers processes thereby climbing up the value chain. 4. A detailed analysis of strengths, weaknesses, opportunities and threats are required before entering value added segments. 5. It is not enough to just scale technology solutions, rather skill, efficiency and domain expertise must become an integral part of a companys strategy, and organizational functions and processes must be adapted to complement the IT up gradation. 6. To reduce location risks firms must establish business centers in different locations in the country. 7. World-class certification is a requirement to prove a firms credibility which will help to retain the existing employees. 8. Customers must take an integrated approach to Business Process Outsourcing and seek reengineered processes from their outsourcing firms. BPO must reduce complexity and increase velocity. 9. Call centers can curb attrition by offering a better working condition in the work place. 10. Employers should concentrate on leadership and brand building as people prefer to be associated with a brand. Respect should be created for the job.
SUGGESTIONS
1. The age at which employees join the Call Centers / BPO industries has a positive effect on the average tenure of employees in an organization. Employees taken in at a comparatively lower age have a higher propensity to leave the job. It, therefore, requires an effective recruitment and selection strategy. Then, there should be an integrated performance appraisal and reward system which should include proper recognition and reward devices and counseling and feed back arrangements to effectively curtail the increasing attrition rate in the Call Centers / BPO industry. 2. A very good command over English language is the main skill required. Freshers have to undergo intense training to make them suitable for the job.
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11. Job rotation and part-time training programme should be offered to make the employees skilled in the particular work. 12. Jobs of executives should be rotated from voice to non-voice. A significant amount of value addition must be introduced and included.
persons and also help to retain them in the organization. They must provide better welfare facilities like housing, transport, medical, insurance, recreation, canteen, etc. to meet their needs. Since many organizations provide these benefits, they must focus on the specific needs or desires of the employees and try to satisfy them as much as possible. Diversification in terms of age, experience, qualification, family background, culture etc, brings more innovativeness to the organization. The company could provide employment to the categories like physically challenged people, youngsters from rural areas, housewives, etc. BPO is likely to continue under all kinds of circumstances. The companies around the world have become habitual in moving their BPO work to India. The future of BPO industry appears to be bright and shining. BPO has been in great demand in India because of low costs and educated workforce. The BPO Companys reward and recognition programmes have become the trendsetters in setting new ways and schemes to retain the employees. In this background, the supply of jobs is higher than the demand and thus attrition is rampant, as people look for higher pay packages, better lifestyle and convenient work timings. As such, the BPO companies are expected to continuously innovate their reward and recognition programs to keep their professionals on their rolls and to attract prospective employees.
CONCLUSION
Call centre is the latest buzzword on the Indian business scenario. Its economic rationale is well established but people off late have started questioning its human implications. The growth of ITES and BPO companies is enormous; they provide substantial employment opportunities. Though the attrition rate is not very high in India as compared to US, even if one employee leaves the organization, it causes substantial loss to the company as discussed earlier. This means, the company needs to solve this problem by adopting a suitable strategy to reduce attrition rate in future. Human Resource practices play a vital role in the organization. The main function of the HR is to find the right person, for the right job at the right time. But, it is very difficult to find the person who can stay with the organization for a long time especially in ITES and BPO companies. There is a need to identify the people with a mind-set who would stick with the organization for a long period. They must adopt the best HR practices which help to identify the right
The growth of ITES and BPO companies is enormous; they provide substantial employment opportunities. Though the attrition rate is not very high in India as compared to US, even if one employee leaves the organization, it causes substantial loss to the company.
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References
Abirami Devi K and Ranjitham D, Attrition Rate way to control, MBA Review Vol. VI, Issues II, February 2007. Adilakshmi P, Employee Attrition Critical Issues HRD Times, Vol.11, No.7, September 2006, pp.11-13. Ananthan K, IT Destination Nest Accenture BPO in Emerging Markets: Boom Time, June 2006. Babu P. Ramesh (2004), Cyber coolies in BPO insecurities and Vulnerabilities of Non standard Work, Economic and Political Weekly, January, p. 492. Baskara Rao. V. K Growth of BPO and Call Centers in India, HRD Times, April 2006, Vol. 8, No.4, pp.14-15. Catriona M. Wallace (2000), The Sacrificial HR Strategy in Call Centers, International Journal of Service Industry Management, 2000, Vol. 11, No. 2, pp. 174185. Gopala Krishna Chitta, BPO: Driving Shift in Business Module, Prajnan, Vol. XXXIII, No. 3, 2004-05. Karthik. D and Rao U. S, (2004), Strategies for entering high value added BPO services, IBAT Journal of Management, Vol. 1, No. 1, January 2004, pp. 157 168. Kipins. D (1976) The power holders (Chicago: University of Chicago Press, 1976) Kothari C. R, Research Methodology, Wishua Prakashan, New Delhi, 2008. Kulakarni P. K and Gujarati, Career opportunities in BPO, MBA Review Vol. V, No. VIII, August 2006. Mohammed Ghazi Shahnawaz Occupational stress in call centers Myth or Reality, Abhigyam, Vol. XXIV, No.3, October December 2006, pp. 30-38. NASSCOMS featured article, Can BPOs handle the challenge? August 06, 2002. NASSCOM, ITES-BPO forum, Super Nine
Indian, ITES Destinations, August 06, 2002. NASSCOM finding, Attrition in Indian BPO Industry, September 2004. NASSCOM, Shades of Ancient Rome in Call Centers, 2006. Nayanathara (2007), Indian industry, Chille Breeze, July 2007. BPO
Nitin Aggarwal (2005), Making the right call Managing Attrition in BPO companies, Indian Management, December 2005, Vol.44, Issue. 12, pp. 40-42. Prasad Unawane, Call Center in India Call Center Industry in India, January 23, 2008. Raman R. The BPO Revolution; Strategies to control high rate of attrition Udyog Pragati, Oct-Dec.2004, Vol.28, No.4. Sanjeev (2008), Stress, Human Issues in Call Centers and BPO industry, January 2008. Scalem M and Adarsh Ravichandranathan, Managing attrition in the BPO industry; Critical factors and strategic recommendations, Vol. XXIII, No. 3, OctDec. 2005. Tripathi P. C, Personnel Management and Industrial Relations, Sultan Chand & Sons, New Delhi. Vikas Gupta, Call Center / BPO Training Course, Patparganj, New Delhi. www.bpo.nasscom.org www.assureconsulting.com Zigon J (1994), Making performance appraisal work for teams Training, June 1994, pp. 58-63.
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Is Employer Branding an Influencing Factor for Accepting an Offer?

L. Gandhi* K. Senthil Kumar** Employer branding simply signifies the image of the organization in the minds of the employees. This study observes the opinion of the employees, its stakeholders and the customers towards the organization and also evaluates the parameters which are being considered by the employees to accept a job offer. The various factors that the employees take into account include employment package, environment, brand image and personal factors. The study also focuses on the influence of branding and non branding factors on the employees. The importance of employer branding is significantly increasing, since the talent enriched workforces expectations in terms of reputation and image of the company as well as the package are steadily increasing in recent days. In todays era the emphasis is on policies that are employer friendly and strategies that can retain them. Employer branding is the process of creating an identity and managing the companys image in its role as an employer. Keywords: Branding, stakeholders and company image
Introduction
Employer branding is defined as the image of the organization as a great place to work in the minds of current employees and key stakeholders in the external market (active and passive candidates, clients, customers and other key stakeholders). Employer branding is an effective tool for any employee. The study is conducted to know how far the employees consider the employer branding as a factor for accepting employment and otherwise. The term simply signifies the image of the organization in the minds of the employees. The opinion of the employees, its stakeholders and the customers towards the organization is what is observed in this particular study. Some of the views of the experts in this regard are as follows:
According to Goutam Sinha, CEO, TVS Infotech, employees who are in the industry for 3-4 years, brand is the first priority, for those who have spent 5 years in any industry the job role is important and for those with 10 years behind them the job role becomes the critical factor. According to Sasken, People first policy is given primary importance. According to Fedex people - service - profit is the core policy which communicates to us the order of the preference in framing policies. Bill Marriott of Marriott Hotels, believes that one should "take care of the associates, and they'll take good care of the guests, and the
*Lecturer, Guruvayurappan Institute of Management, Coimbatore, Tamil Nadu, India **Research Scholar, Department of Commerce, Periyar University, Salem, Tamil Nadu, India June 2010 Vol. 7 Issue 1
Employer branding is defined as the image of the organization as a great place to work in the minds of current employees and key stakeholders in the external market
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An organization must adopt a concerted and focused approach to building and maintaining its reputation as a Best Workplace and constantly work towards reinforcing this branding through continuous exercises.
guests will come back." Therefore it is believed that if the company takes care of people, people will take care of the company. D K Srivastava, Vice President, HR at HCL Comnet says, It is said that an unsatisfied customer tells ten people about his experience while an unsatisfied employee tells a hundred. Employer branding reflects the work culture in an organization. Therefore, it is of much significance. Through right branding, the company can recruit the best talent and reinforce its positioning amongst its employees. Srivastava even said that we expect to see more innovation within organizations to improve our corporate image. Training programmes, motivational classes, employee career plans have become a common phenomenon now a days. What organizations would be aiming towards is not employee satisfaction but employee delight! He further said, I believe that the most credible forms of communication are not the ads, literature and websites, but the behaviour of ones own employees and accounts of their own work experience. Commenting on the changing scenario, Arun Tadanki, the chief executive officer of Monsterindia.com, says, Till recently, employment ads were just showing the job description of the vacancy. The focus in the last two-three years has shifted and is largely driven by the IT & ITES employers, to create a powerful
image for the organization as a dream place to work. Pramode Sadarjoshi, Director, Human Resources, Cognizant Technology Solutions, points out that employer branding is not an easy task as it is a long-term process. It takes tremendous effort and a strategic blend of logic and intuition in the brandbuilding exercise. The company has to have superior leadership, operational excellence, customer focus and most importantly people-orientation in a genuine way, for the branding exercise to be successful. R Shekar, Senior Vice President and Head HR, Corporate Strategy and Business Excellence of Polaris Software says, An organization must adopt a concerted and focused approach to building and maintaining its reputation as a Best Workplace and constantly work towards reinforcing this branding through continuous exercises.
The above citations indicate the efforts taken by the organizations to build their brands in the changing scenario. The study is undertaken with a view to evaluate the parameters that are more significant to accept the employment. The parameters which are being considered to accept an offer by the employees are employment package, culture & environment, brand image, management performance, personal factors, economical environment, financial requirements etc. The study focuses on the influential nature of branding factors such as package Rai Management Journal
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image Vs non branding factors such as geographical convenience and limited job opportunities etc.
Personal factors are some of the other factors that influence employees to accept an offer. According to Indranil Banerjee, Manager, West Bengal Electricity Distribution co. ltd., Kolkata the employer branding tools is: i. internal benchmarks
Literature review
Simon Barrow, Chairman, People in Business, is the pioneer in employer branding researchers. According to him, bringing the best brand to people at work has mentioned the imperatives of employer branding on the following four parameters: I. Employment package
ii. current management practices iii. great place to work iv. competitors branding strategies v. contribution in literature forums The literature facilitates employer branding and its importance. The study concentrates more on the influential nature of employer
II. Management performance III. Brand Image IV. Culture & Environnent
The employer branding factors are stated below
(Source: www.sitehr.com)
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There are thirteen variables to evaluate influence of employer branding like Vision and size of the company, leadership, package, management performance, transparency in the system are used in the questionnaire for assessment.
branding with reference to accepting the offer.
Objectives:
(i) The study is made to assess the influence of employer brand as a key factor for an employee to select his employer. (ii) The study is also extended to know the other factors which influence the employee to accept an offer.
transparency in the system are used in the questionnaire for assessment. There are thirteen non branding variables like personal factors, economical constraints, challenging capacity of the individual, nature of the job, geographical inconvenience, etc. which are used in the questionnaire for assessment. A pilot survey was conducted to refine the pattern of questions and variables. The variables were scaled from 1 to 5, strongly disagree to strongly agree as per the Likerts scale. The respondents are the employees belonging to corporate at Salem city.
Hypothesis: Sampling characteristics

Null Hypothesis: H0: The influence of both the branding factors and nonbranding factors are equal 1=2 Alternative Hypothesis H1: The Influence of the branding factors are greater than the non branding factors i.e. 1 is greater than 2 Alternative Hypothesis H2: The Influence of the non branding factors are greater than the branding factors 2 is greater than 1 The research is based on the convenience sampling method, due to time constraints the respondents were selected at random. The sample size is restricted to 30 only .The respondents are the employees of various organizations in the Salem city.
Research Tools
Half of the questions were used to evaluate branding factors and the remaining were focused on the non branding factors. Z test for equality of 2 sample means were tested. Sample mean 1 represents branding factors and sample mean 2 represents the non branding factors. [Questionnaire is annexed] Mean and variance are also used as tools to interpret the data.
A questionnaire was prepared to assess the factors which influence an employee to accept the offer. The branding and non-branding factors were sourced from the references mentioned above. There are thirteen variables to evaluate influence of employer branding like Vision and size of the company, leadership, package, management performance,
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Results & Interpretations

Table 1: Represents the descriptive statistics of branding and non branding factors Branding factor Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count 46.43333333 1.124117363 46 45 6.157044372 37.9091954 0.003879083 0.311096696 26 35 61 1393 30 Non Branding factor Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count 43.16667 0.966191 43 48 5.292046 28.00575 0.312779 -0.41561 25 29 54 1295 30
The Maximum possible scores for branding as well as non brandings factors are 65. The actual of maximum scores are 61 and 54 respectively and the means are 46.43 and 43.17 respectively. It implies that branding factors are influencing more when
compared to non-branding factors with respect to accepting an offer by an individual. The minimum scores are 35 & 29 for branding and nonbranding factors respectively. It implies that the branding factors are given more importance.
...branding factors are influencing more when compared to non-branding factors with respect to accepting an offer by an individual.
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Table 2: Branding variables Sl.No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10 11 12 13 Variables Policies & Procedures Vision of the company Executives inspiration Reputation Concerned towards employees CSR activities Employee referrals Management Performance Mean 3.7 3.933333 3.466667 3.8 3.3 3.633333 3.533333 3.433333 Variance 0.562069 0.409195 0.878161 0.993103 0.906897 0.929885 0.947126 0.874713 1.305747 0.805747 1.062069 0.874713 0.598851
Being forefront in the industry 3.733333 Welfare schemes Size of the organization Transparency Career advancement 3.566667 3.2 3.566667 3.566667
Among the branding factors the following factors are given priority by the employees (Based on the mean values which are more than 3.5) i. Vision of the company
Career advancement The Top managements vision, leadership and its ethical practices are more valued followed by the ethical & HR practices within the organization. Size of the organization and management performance are given less priority while accepting an offer. The expectations of the employees with regard to size of the organization and the company being forefront in the industry are Rai Management Journal
ii. The company being forefront in the industry iii. Policies & Procedures iv. CSR activities v. Welfare schemes, Transparency &
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varying widely which implies some of the employees give less importance to these factors.
Every employee considers the vision of the company as an important factor for employment.
Table 3: Non Branding Variables Sl.No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10 11 12 13 Variables Geographical Convenience Interest towards the Industry Uncertainty Nature of Job Traditional Profession Challenges in getting job Intuition Interest in facing challenges Work experience organization in the Mean 3.033333 3.633333 3.166667 3.466667 2.6 3.433333 3.233333 3.766667 previous 3.266667 3.733333 3.966667 1.9 3.966667 Variance 1.205747 0.722989 0.833333 0.671264 1.558621 1.633333 1.012644 0.805747 1.167816 1.305747 1.205747 0.093103 0.929885
Economical constraints Job opportunities Pink slips Personal factors
Amongst the non-branding factors the following factors are given priority by the employees (Based on the mean values which are more than 3.5) i. Personal factors opportunities & Job
ii. Interest in facing challenges iii. Economical constraints iv. Interest towards the industry v. Nature of the job
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Personal factors and the availability of jobs are the leading factors to accept an offer. The employees have not considered the downtrend as a factor for accepting an offer. The employees do not show much interest to continue with their family vocation as they are more interested in facing challenging jobs. The expectations of the employees with regard to challenges in getting job is varying widely which implies some of the employees feel that getting into an organization is not a difficult task. Most of the employees feel the down trend has less significance while accepting an offer.
Influence of branding and non branding factors

The study is carried on to find the influencing nature of the factors between the branding factors and non- branding factors for an employee in accepting an offer. Z test is a more suitable tool to assess the equality of two means. The sample mean for branding factors and sample mean for non branding factors have been tested for equality Null Hypothesis: H0 : The influence of both the branding factors and nonbranding factors are equal 1=2 Alternative Hypothesis H1 : The Influence of the branding factors are greater than the non branding factors i.e. 1 is greater than 2 Alternative Hypothesis H2 : The Influence of the non branding factors are greater than the branding factors 2 is greater than 1
Table 4: Branding variables z-Test: Two Sample for Means Branding factors Mean Known Variance Observations Hypothesized Mean Difference z P(Z<=z) one-tail z Critical one-tail P(Z<=z) two-tail z Critical two-tail 46.43333333 37.91 30 0 2.203889382 0.013766062 1.644853627 0.027532124 1.959963985 Non Branding factors 43.1666667 28 30
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The critical value for one tailed test is 1.644.The calculated Z value is 2.203 and therefore null hypothesis is rejected and H1 is accepted. i.e. the influence of the branding factors is greater than the non branding factors. The branding factors are influencing more even in the current scenario of recession and downtrend in the economy.
Limitations research
and
future
The study is conducted in the Salem city only due to geographical convenience. The size of the respondents is limited to 30 only. A few factors are considered to test the hypothesis mentioned above and the study is restricted to a few companies. From the study it is understood that there is mismatch between the internal identity and the external image which may lead to dissatisfaction among the employees and can be tested further. The data can also be used to cluster the variables. The factor analysis is also possible for understanding the association of the variables in a better way.
A survey taken by CNBC TV 18 states that the preference of employees to get in to BPO jobs which are not branded, is also declining. The importance of employer branding is significantly increasing, since the talent enriched workforces expectations in terms of reputation and image of the company as well as the package are steadily increasing in recent days. The corporates have understood the current scenario and therefore the emphasis has been shifted towards policies that are employee friendly and strategies that can retain them. The measures taken by the corporate are to retain and to attract the deserving HR asset; reputation and image of the organization in the market and its internal and external status are also considered the need of the hour. The hypothesis testing in the study reveals that the branding factors do influence an employee to accept an offer.
References
Graeme Martin, Phillip Beaumont, Rosalind Doig and Judy Pate, Branding: A New Performance Discourse for HR? Employer Branding-ICFAI Publications Tapomoy Deb Building Employer Branding for competitive advantage-HRM Review, April 2007, ICFAI Publications Indranil Banerjee Designing Employer Branding strategic Initiative -HRM Review, October 2007 The employer brand: Bringing the best brand to people at work. Simon Barrow and Richard Mosley www.sitehr.com
Conclusion
D K Srivastava, vice president- HR at HCL Comnet has rightly said that a satisfied employee would certainly perform better if he is taken care by the organization.
The importance of employer branding is significantly increasing, since the talent enriched workforces expectations in terms of reputation and image of the company as well as the package are steadily increasing in recent days.
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www.cipd.co.uk www.wikiepidea.com
Name Age
: : :
Annexure
The questionnaire has been designed to assess the factors that would induce a candidate to accept the particular job. We appreciate and thank you for sparing your valuable time to fill the questionnaire. The data is collected purely for research work and would be kept confidentially.
Sex
Name of the Organization : Designation Years of experience : :
S.No Particulars 1 The policies & procedures of the organization appeal to me. The companys vision is a driving force for accepting the offer Top level executives were a motivational factor for accepting the offer I accepted the offer due to the reputation of the organization The organization is more concerned towards employees. I was attracted by the contributions made by the organization to the society The references that I had with the employees made me accept the offer I have accepted the offer due to economical constraints I have accepted the offer due to limited job opportunities
Strongly Disagree Neutral Agree Strongly Disagree agree
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S.No Particulars I have accepted the offer in such a period when most of the organizations issue pink slips I have accepted the offer on personal grounds The size of the organization attracted me very much The appraisal system in the organization is more transparent. I have better scope in my career advancement I have opted this organization because of geographical convenience I like to work in this particular Industry I have opted because of uncertainity. The nature of job impressed me to accept. Forefathers in my family are in the same profession. I feel getting job else where is difficult. My intuitions directed me to accept the offer I like to face challenges, which provoked me to accept the job. I have accepted the offer due to the companys achievement and awards received by the company in the yester years. My company is in the forefront in the industry I am attracted by the welfare schemes offered by the organization. The working atmosphere was not conducive in the previous organization
Strongly Disagree Neutral Agree Strongly Disagree agree
10
11 12 13 14 15 16 17 18 19 20 21 22
23
24 25
26
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An Empirical Study: Students Perception on Service Quality Using Malaysian Hedperf Measurement Scale
K. Ravichandran* S. Arun Kumar** The purpose of this paper is to empirically measure the service quality level using the new industry specific scale called HEdPERF (Higher education performance-Measurement Scale) among engineering colleges/Institutions which are offering professional courses in Tiruchirappalli, Tamilnadu, India. In this study, Purposive Non-Probability sampling techniques were adopted with a sample size of 106 respondents who were administered using structured questionnaire. Statistical tools namely Univariate analysis, Multiple regression analysis and Factor analysis were used for this study. From the study findings using multiple regression analysis, attributes namely standardized syllabus and structure, quality programs, students feedback for progressive measures, empathetic administrative staffs to solve students problem and fair and equal treatment are the dominant variables which strongly predicts the overall service quality. Also, from the study findings using factor analysis, it is inferred that a HEdPERF scale is not factor loaded as per the proposed original four dimensions, instead we got a loading of eleven [1] factors/Dimensions. Hence, professional engineering institutions should concentrate their efforts on the extracted dimensions[1] perceived to be important rather than focusing their energy on a number of different attributes, which they feel are important determinants of service quality. Keywords: Service quality, Professional Engineering colleges, Higher education, Performance -HEdPERF
In today's world of global competition, rendering quality service is a key for survival and success and many experts concur that the most powerful competitive trend currently shaping marketing and business strategy is service quality (Zeithaml et al, 1996).
Introduction
Service industries are playing an increasingly important role in the overall economy of many nations. In today's world of global competition, rendering quality service is a key for survival and success and many experts concur that the most powerful competitive trend currently shaping marketing and business strategy is service quality (Zeithaml et al, 1996). Since 1980s service
quality has been linked with increased profitability and it is seen as providing an important competitive advantage by generating repeat sales, positive word-of-mouth feedback, customer loyalty, and competitive product differentiation. As Zeithaml and Bitner (1996, p. 76) point out," the issue of highest priority today involves understanding the impact of service quality on profit and other financial outcomes of the organization".
*Assistant Professor, College of Business Administration, King Saud University, Saudi Arabia **Assistant Professor, Saranathan College of Engineering, Trichy, Tamilnadu, India Rai Management Journal
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Service quality has since emerged as a pervasive strategic force and a key strategic issue on management's agenda (Bowers, 1997). It is no surprise that practitioners and academics alike are keen on accurately measuring service quality in order to better understand its essential antecedents & consequences and ultimately establish methods for improving quality to achieve competitive advantage and build customer loyalty (Bitner, 1993). The pressures driving successful organizations toward top quality services make the measurement of service quality and its subsequent management of utmost importance (Webster, 1989). However, the problem inherent in the implementation of such a strategy has been compounded by the elusive nature of the service quality construct, rendering it extremely difficult to define and measure (Parasuraman etal., 1985; Carman, 1990; BoltonandDrew, 1991b). Although researchers have devoted a great deal of attention to service quality there are still some unresolved issues that need to be addressed and the most controversial one refers to the measurement instrument (Babakus and Boiler, 1992; Buttle, 1996; Robinson, 1999). An attempt to define the evaluation standard independent of any particular service context has stimulated the setting up of several methodologies. In the last decade, the emergence of diverse instruments of measurement such as SERVQUAL (Parasuraman et al., 1988), SERVPERF (Cronin and
Taylor, 1992) and evaluated performance (EP) (Teas, 1993a) has contributed enormously to the development in the study of service quality. SERVQUAL operationalises service quality by comparing the perceptions of the service received with expectations, while SERVPERF maintains only the perceptions of service quality. On the other hand, EP scale measures the gap between perceived performance and the ideal amount of a feature rather than the customer's expectations. Diverse studies using these scales have demonstrated the existence of difficulties resulting from the conceptual or theoretical component as much as from the empirical component (Carman, 1990; Babakus and Boiler, 1992; Boulding et al, 1993; Quester et al, 1995). Nevertheless, many authors concur that customer' assessments of continuously provided services may depend solely on performance, thereby suggesting that performance-based measures explain more of the variance in an overall measure of service quality (Oliver, 1989; Bolton and Drew, 1991a, b; Cronin and Taylor, 1992; Boulding et al, 1993; Quester et al., 1995). These findings are consistent with other research that have compared these methods in the scope of service activities, thus confirming that SERVPERF (performance-only) results in more reliable estimations, greater convergent and discriminant validity, greater explained variance, and consequently less bias than the SERVQUAL and EP scales (Cronin
Although researchers have devoted a great deal of attention to service quality there are still some unresolved issues that need to be addressed and the most controversial one refers to the measurement instrument...
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Whilst its impact in the service quality domain is undeniable, SERVPERF being a generic measure of service quality may not be a totally adequate instrument by which to assess the perceived quality in as unique a sector as higher education.
and Taylor, 1992; Parasuraman et al, 1994a; Quester et al, 1995; Llusar and Zornoza, 2000). Whilst its impact in the service quality domain is undeniable, SERVPERF being a generic measure of service quality may not be a totally adequate instrument by which to assess the perceived quality in as unique a sector as higher education. Firdaus (2004), on the other hand, proposed HEdPERF conceptual frame work (Higher Education Performance), a new and more comprehensive performance-based measuring scale that attempts to capture the authentic determinants of service quality within the higher education sector in Malaysia. The 41item instrument has been empirically tested for unidimensionality, reliability and validity using both exploratory and confirmatory factor analysis. Therefore, the primary issue addressed by this paper is about application of Malaysian HEdPERF service quality measurement scale in a different cultural and demographic area like India, hence an empirical study got attempted in a single industry like higher education sector in Trichirappalli, Tamilnadu, India. The goal is to assess the relative strengths and weaknesses of the instrument in order to determine whether instrument has the superior measurement capability in terms of reliability, validity, and explained variance of service quality.
of students from professional engineering institutions in Tiruchirappalli, Tamilnadu, India. Aims to evaluate the application of Malaysian HEdPERF (Firduas, 2004) measurement scale for measuring service quality perception among students of professional engineering institutions in Tiruchirappalli, Tamilnadu, India. To identify the important underlying perceived service quality dimensions among students of professional engineering institutions in Tiruchirappalli, Tamilnadu, India. To identify the dominant variables, which is a stronger predictor of service quality?
Review of Literature:
Many researchers (Parasuraman et al, 1985; Carman, 1990; Bolton and Drew, 1991b) concur that service quality is an elusive concept and there is considerable debate about how best to conceptualize this phenomenon. Hence, they concomitantly come to an agreement that a comprehensive definition of service quality is notoriously difficult to produce. Lewis and Booms (1983, p. 100) were perhaps the first to define service quality as a "measure of how well the service level delivered matches the customer's expectations". Thereafter, there seems to be a broad consensus that service quality is an attitude of
Research Objectives:
To understand the Sociodemographic and rational profile
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overall judgment about service superiority, although the exact nature of this attitude is still hazy. Some suggest that it stems from a comparison of performance perceptions with expectations (Parasuraman et al, 1988), while others argue that it is derived from a comparison of performance with ideal standards (Teas, 1993a) or from perceptions of performance alone (Cronin and Taylor, 1992). In terms of measurement methodologies, a review of literature provides plenty of service quality evaluation scales. Some stem from the realization of conceptual models produced to understand the evaluation process (Parasuraman et al, 1985) and others come from empirical analysis and experimentation on different service sectors (Cronin and Taylor, 1992; Franceschini and Rossetto, 1997b; Parasuraman et al, 1988). The most widely used methods applied to measure perceived quality can be characterized as primarily quantitative multi-attribute measurements. Within the attributebased methods, a great number of variants exist and among these variants, the SERVQUAL and SERVPERF instruments have attracted the greatest attention. Generally, most researchers acknowledge that customers have expectations and these serve as standards or reference points to evaluate the performance of an organization. However, the unresolved issues of expectations as a determinant of perceived service quality have resulted in two conflicting measurement paradigms:
the disconfirmation paradigm (SERVQUAL) which compares the perceptions of the service received with expectations and the perception paradigm (SERVPERF) which maintains only the perceptions of service quality. These instruments share the same concept of perceived quality. The main difference between these scales lies in the formulation adopted for their calculation and more concretely, the utilization of expectations and the type of expectations that should be used. Most research studies do not support the five-factor structure of SERVQUAL posited by Parasuraman et al. (1988), and administering expectation items is also considered unnecessary (Carman, 1990; Parasuraman etal, 1991a; Babakus and Boiler, 1992). Cronin and Taylor (1992) were particularly vociferous in their critiques, thus developing their own performance-based measure, dubbed SERVPERF. In fact, the SERVPERF scale is the unweighted perception components of SERVQUAL, which consists of 22 perception items thus excluding any consideration of expectations. In their empirical work in four industries, Cronin and Taylor (1992) found that unweighted SERVPERF measure (performance-only) performs better than any other measure of service quality, and that it has greater predictive power (ability to provide an accurate service quality score) than SERVQUAL. They argue that current performance best reflects a customer's perception of service quality and that expectations are not part of this concept.
...most researchers acknowledge that customers have expectations and these serve as standards or reference points to evaluate the performance of an organization.
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Llusar and Zornoza (2000) confirmed that SERVPERF results in more reliable estimations, greater convergent and discriminant validity, greater explained variance, and consequently less bias than the EP scale.
Likewise, Boulding et al. (1993) reject the value of an expectations-based SERVQUAL, and concur that service quality is only influenced by perceptions. Quester et al. (1995) performed similar analysis to Cronin and Taylor in the Australian advertising industry, and their empirical tests show that SERVPERF performs best, while SERVQUAL performs worst, although the differences are small. A tea (1993a) on the other hand, discusses the conceptual and operational difficulties of using the "expectations minus performance" approach, with a particular emphasis on expectations. His empirical test subsequently produces two alternatives of perceive service quality measures namely EP and Normed quality (NQ). He concludes that the EP instrument, which measures the gap between perceived performance and the ideal amount of a feature rather than the customer's expectations, outperforms both SERVQUAL and NQ. A review of service quality literature brings forward diverse arguments in relation to the advantages and disadvantages in the use of these instruments. In general, the arguments make reference to aspects related to the characteristics of these scales notably their reliability and validity. Recently, Llusar and Zornoza (2000) confirmed that SERVPERF results in more reliable estimations, greater convergent and discriminant validity, greater explained variance, and consequently less bias than the EP scale. These results are consistent
with earlier research that had compared these methods in the scope of service activities (Cronin and Taylor, 1992; Parasuraman et al, 1994a). In fact, the marketing literature appears to offer considerable support for the superiority of simple performancebased measures of service quality (Mazis et al, 1975; Churchill and Surprenant, 1982; Carman, 1990; Bolton and Drew, 1991a, b; Boulding et al, 1993; Teas, 1993a; Quester et al, 1995).
Description - Conceptual Framework of HEdPERF Scale:

Firdaus(2004), on the other hand, proposed HEdPERF(Higher Education Performance) a new and more comprehensive performance based measuring scale that attempts to capture the authentic determinants of service quality within higher education sector. The 41-item instrument is an empirically tested scale of unidimensionality, reliability, explored and confirmed using both exploratory and confirmatory analysis. The HEdPERF scale got four dimensions which Comprises 41 items. First dimension namely NonAcademic Aspects which contains variables that are essential to enable students fulfill their study obligations and it relates to duties and responsibilities carried out by non academic staff. In other words, it is concerned with the ability and willingness of administration (or) support staff to show respect, provide equal treatment and safeguard
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confidentiality of information. Additionally, this factor describes the importance of being approachable and accessible, having positive attitudes and good communication skills, allowing fair amount of freedom and providing services within stipulated time frame. Second dimension namely Academic Aspects: This factor represents the responsibilities of academics and it highlights key attributes such as having positive attitude, good communication skills, allowing sufficient consultation, and being able to provide regular feedback to students. Other important elements center on the academic reputation of the institution, notably its ability to offer prestigious and wide ranging programme with flexible structure, degrees that are recognized locally and internationally and finally having highly educated and experienced academic staff. Third dimension namely reliability which consists of items that put emphasis on the ability to provide the pledged service on time, accurately and dependably. It is also concerned with the ability to fulfill promises and the willingness to solve problems in a sympathetic and reassuring manner. Finally, the fourth dimension namely empathy which relates to the provision of individualized and personalized attention to students with clean understanding of their specific and growing needs while keeping their best interests at heart.
structured questionnaire comprising three Sections namely A, B and C. Section A contained nine questions pertaining to students demographic and rational profile. Section B, on the other hand composed of 41 items extracted from the original HEdPERF (Firdaus, 2004) validated construct, a scale uniquely developed to embrace different service quality aspects of a higher education sector. As the items were generated and validated within higher education context, no modification was required. All the items in Sections B were presented as statements on the questionnaire, with the same rating scale used throughout and measured on a seven-point Likerttype scale that varied from 1 = strongly disagree to 7 = strongly agree. In addition to the main scale addressing individual items, respondents were asked to provide an overall rating of the service quality in Section C. The draft questionnaire was eventually subjected to pilot testing with a total of 30 students and they were asked to comment on any perceived ambiguities, omissions or errors concerning to the draft questionnaire. The feedback received was rather ambiguous thus only minor changes were made. For instance, technical jargon was rephrased to ensure clarity and simplicity. In the subsequent full-scale survey, data were collected from students of top three professional engineering learning institutions in Tiruchirappalli, Tamilnadu, India. In this study, Purposive Non-Probability sampling techniques were adopted
Research methodology:
Data were collected by means of a
Academic Aspects... represents the responsibilities of academics and it highlights key attributes such as having positive attitude, good communication skills, allowing sufficient consultation, and being able to provide regular feedback to students.
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with a sample size of 106 respondents who were administered using structured questionnaire. Statistical tools namely Univariate analysis, multiple regression analysis and factor analysis were used for this study. Data had been collected using the "personal-contact" approach as suggested by Sureshchandar et al.
(2002) whereby "contact persons" (Head of Institutions and Heads) have been approached personally and the survey explained in detail. The final questionnaire together with a cover letter was then handed personally to the "contact persons", who in turn distributed it randomly to students within their respective institutions.
Table 1: Demographic Profile & Rational Profile of Respondents Demographic Profile& Category Rational Profile Gender University/Institute/ College Age Male Female Public Private 20 years and below 21 35 Full time Status of Education Part time Distance Education Diploma Level of study UG PG PhD B.E/B.Tech MBA Course Studying MCA M.E/M.Tech PhD Post Diploma MBA Highest qualification planned M.E/M.Tech MCA PhD Post Doctorate Frequency 63 42 48 57 38 67 98 4 3 2 56 44 3 55 24 8 16 1 1 31 28 9 28 16 Percent 60 40 46 54 36 64 93 4 3 2 53 42 3 52 23 8 15 1 1 30 27 8 27 15
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From table 1 it is clear that, large group of respondents belong to age group between 21-35 age(64%), followed by 20 years and below age (36%), gender proportion with male (60%) and female(40%), the respondents studying college proportion with public institutions (46%) and private institutions(54%), the respondents status of education
proportions with full time (93%),part time(4%) and distance education(3%),the course opted by respondents were B.E(52%), MBA(23%), MCA(8%), ME(16%) and followed by PhD(1%),the highest qualification planned for denotes MBA(30%) followed by PhD and ME(27%).
Table 2: Reliability Statistics of HEdPERF scale Cronbach's Alpha .935 The alpha values were calculated to assess the internal consistency reliabilities of the HEDPERF scale. N of Items 41 For HEdPERF scale, the value of .935 indicated adequate reliability (Nunnally, 1978).
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Table 3: Regression Analysis Unstandardized Standardize d Coefficients Coefficients B 18 Excellent quality programs Easy accessible and contactable staffs Administrative staffs caring and individual attention Standardized syllabus and structure Wide range of programme & Specialization Academic staffs Provide Progress feedback Students are treated equally Institutions Value feedback from students Academic staffs are never too busy Administrative staffs show Sincere interest in problem solving Academic staffs communicates well Academic facilities are adequate Std. Error .069 Beta
Model
Sig.
.277
.330
4.024
.000
.097
.048
.128
2.011
.047
-.430
.067
-.516
-6.422
.000
.330
.057
.385
5.824
.000
-.217
.056
-.271
-3.909
.000
-.382
.062
-.431
-6.188
.000
.292
.049
.399
5.951
.000
.231
.053
.300
4.393
.000
-.264
.053
-.300
-4.977
.000
.259
.063
.307
4.141
.000
.146
.065
.150
2.250
.027
.155
.053
.184
2.907
.005
Dependent Variable: Overall Service Quality
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Multiple R=0.865, F-Value =22.849, d.f (12, 92), p-value <0.01, R Square =0.749 = 2.371+0.277x1+0.097x2-0.430x3 + 0.330x4 0.217x50.382x6+0.292x7+0.231x80.264x9+0.259x10+0.146x11+0.155x1 2 Where, is the estimated Overall service quality. The above equation shows the impact of the variables of service quality aspects such as standardized syllabus and structure, students are treated equally, excellent quality programs, administrative staffs show sincere interest in problem solving and institution value feedback from students. On an average, if the standardized syllabus and structure change by 1 unit, there will be 0.330 units increase in the overall service quality when other variables are kept constant. Moreover the result of the ttest confirms that the calculated partial regression coefficient such as Table 4: KMO and Bartlett's Test
(0.330), (.292), (.277), (.259) and (.231) are highly significant at 1 percent level and 5 percent level. Similarly the multiple R of 0.865 shows there exists a relationship of 86.5 percent between variables of HEdPERF service quality variables and overall service quality. The R Square value of 0.749, exhibits that the variables of service quality explained a variation of 74.9 percent in overall service quality. Finally, the result of F-test signifies that the explained variation by the above said variables in the HEdPERF was highly significant at one percent level. From the above analysis, it is concluded that the HEdPERF service quality variables namely Standardized syllabus and structure, excellent quality program and students are treated equally and were the dominant variables that increase the overall service quality among students of professional engineering institutions.
FACTOR ANALYSIS:
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square Df Sig.
.743 2780.535 820 .000
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KMO Measures the magnitude of observed correlation coefficients to the magnitude of partial correlation coefficients. A value of greater than 0.5 is desirable. Bartletts test measures the correlation of variables. A probability of less than 0.05 is acceptable. The hypothesis formulated is as follows: H0: (Null Hypothesis): There is insignificant correlation between variables.
H1: (Alternate Hypothesis): There is significant correlation between the variables. The significance (0.000) is less than assumed value (0.05), so we reject H0. This means that the factor analysis is valid. Inferring the KMO coefficient (0.743), the value is more than 0.05. So, this implies that the factor analysis for data reduction is effective. Finally, the Kaiser-Meyer Olkin Measures of sampling adequacy of 0.743 shows that the variables and the sample size of 106 were viable and feasible to run a factor analysis.
Table 5: Total Variance Explained Rotation Sums of Squared Loadings Component Total 1 2 3 4 5 6 7 8 9 10 4.017 3.787 3.424 3.142 2.845 2.532 2.530 2.319 2.300 1.596 % of Variance 9.797 9.238 8.350 7.664 6.938 6.176 6.170 5.657 5.609 3.892 Cumulative % 9.797 19.034 27.385 35.049 41.987 48.163 54.334 59.990 65.599 69.491
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The above table exhibits the result of factor analysis with principal component analysis of 41 items of HEdPERF service quality variables, were total variance explained with 11 factors that were extracted out of 41 items and this has been confirmed by the Eigen value for the extracted factors which were (4.017), (3.787), (3.424), (3.142), (2.845), (2.532), (2.530), (2.319), (2.300), (1.596) and (1.518) respectively greater than recommended level of 1. It is worth Table 6: Factor Analysis
noted that the first factor explained a variance of 9.8 percent from the original set of items. Moreover, the eleven factors extracted together account for 73.19 percent of the total variance (information contained in the original 41 HEdPERF service quality variables). This is a pretty good bargain, because we are able to economize on the number of variables, while we lost only about 27 % of the information content.
Component 1 Academic staff knowledge Academic staffs deal with me in a caring and courteous manner. Academic staffs Never too busy Academic staffs show sincere interest Academic staffs Show positive attitude Academic staffs Communicates well Academic staffs Provide .720 Progress feedback Academic staffs Sufficient and convenient time for consultation Institutional Professional .506 appearance Hostel facility and equipments Academic facilities are adequate Excellent quality programs Adequate recreation facilities Minimum class size for personal attention 2 3 4 .642 .636 .782 .792 .512 5 6 7 8 9 10 11
.756
.773 .765 .569 .549 .755
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Component 1 Wide range of programs Specialization Flexible syllabus and structure Ideal location with excellent layout Highly reputable programs Academic staffs have educate and Experience in their respective field Employability graduates Administrative staffs shows sincere interest in problem solving Administrative staffs show caring and individual attention Dealt Efficiency and promptly Administrative staffs never too busy to respond a request Administration accurate retrievable records promises to do something by certain times Convenient opening hours of administrative office Administrative staffs have positive work .672 attitude Administrative staffs Communicate well with .701 students Administrative staffs have good knowledge of .660 the systems .620 .710 .588 .784 2 3 4 5 6 7 8 .519 .654 9 10 11
.672
.749 .557 .749
.552
.608
.756
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Component 1 I Feel secure and confident in the institution Institution Provides services within expected time Students are treated equally Students fair amount of freedom Staff respects and maintains confidentiality Easy accessible and contactable staffs Institution Operates excellent councelling services Health facilities are adequate Institution encourage setting up Students Association Institution accept value feedback from students Standardized and simple service delivery procedure Extraction Method: Principal Component Analysis. .551 2 .665 3 4 5 6 7 8 9 10 11
.573
.689
.696
.624
.812
Extraction Method: Principal Component Analysis.
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Table 6 shows the result of factor analysis with the extraction technique of principal component analysis as well as the rotated component matrix based on the varimax rotation technique with Kaiser Normalization. It is inferred that the researcher identified and taken those component loading for service quality items was greater than + or 0.5(We look for high loadings close to 1.00).The variables: Academic staffs Provide Progress feedback, Administrative staff positive work attitude, Administrative staff communicates well with students, Administrative staff has good knowledge of systems, institution provides service within expected time and students are treated equally, are all put together and form Factor 1. The variables: Institutional Professional appearance, Ideal location with excellent layout, highly reputable programs, Academic staff has education and experience in their respective field, employability graduates, students feel secure and confident in the institution, are all put together and form Factor 2. The variables: administrative staffs sincere interest in problem solving, administrative staff shows caring and individual attention, deals efficiently and promptly and administrative staff never too busy to respond a request, are correlated together and form Factor 3. The variables: Academic staffs knowledge, Academic staff shows positive attitude, Administrations accurate retrievable records, Staff respects and maintains confidentiality, easy accessible and contactable staffs form Factor 4. The variables namely excellent quality programs, promises to do something by certain times, convenient opening
hours of administrative office form Factor 5. Variables namely Students fair amount of freedom, Institution encourages setting up students association all form Factor 6. The variables namely Academic staff deals with students in a caring and courteous manner, Academic staff is never too busy, Academic staff shows sincere interest, all form Factor 7. The variables namely minimum class size for personal attention, wide range of programs Specialization, Flexible syllabus and structure all form Factor 8. The variables namely hostel facility and equipments, academic facilities all form Factor 9. The variable academic staffs sufficient and convenient time for consultation form Factor 10. The variable adequate recreation facilities form Factor 11.) [1]. It is observed and concluded from the study that the 41 items as loaded in the original HEdPERF (Firdaus, 2004) do not load like the proposed original construct.
Conclusions Recommendations:
and
The objective of the study is to determine the level of service quality using Malaysian HEdPERF measurement scale and to check whether the instrument had the superior measurement capability in terms of reliability, validity and explained variance. The tests were conducted utilizing sample from students of professional engineering institution from Tiruchirappalli, Tamilnadu, India. From the findings of multiple regression analysis the attributes namely standardized syllabus and structure, quality
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programs, students feedback for progressive measures, empathetic administrative staffs to solve students problems and fair treatment are the dominant variables which strongly predict the overall service quality. Hence professional engineering institutions need to focus on these attributes to deliver improved and consistent service quality. Also, from the study findings using factor analysis, it is inferred that a HEdPERF scale is not factor loaded as per the proposed original four factors, instead we got a loading of eleven [1] factors. Hence professional engineering institutions should therefore concentrate their efforts on the extracted factors/dimensions[1] perceived to be important rather than focusing their energy on a number different attribute, which they feel are important determinants of service quality. While the idea of providing adequate service of all dimensions may seem attractive to most service marketers and managers, failure to priorities these attributes may result in inefficient allocation of resources. Hence, to highlight the conclusion a mandatory focus on these attributes is very much essential for providing superior service quality in these professional engineering institutions.
relative efficacy was found in the HEdPERF scale. Given that the current study is limited to one service industry, this assertion would need to be validated by further research. Future studies should apply in all the geographic area of India, other industries and with different types of tertiary institutions in order to test whether the results obtained are general and consistent across different samples. Likewise, it may be worthwhile to compare different measuring instruments from a different perspective that is from other customer groups namely internal customers, employers, government parents, and general public. Although in higher education, students must now be considered primary customers (Crawford 1991) the industry generally has a number of complimentary and contradictory customers. This study has concentrated on the student customer only but it is recognized that education has other customer groups which must be satisfied.
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The current study allows us to understand how HEdPERF measuring instruments and capture the service quality level of professional engineering colleges. Caution is necessary in generalizing the findings although considerable evidence of
While the idea of providing adequate service of all dimensions may seem attractive to most service marketers and managers, failure to priorities these attributes may result in inefficient allocation of resources.
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Global Recession and Microfinance Sector: A Study of Five Large MFIs in India
Amrit Lal Ghosh* Ranjit Singh** Anurag Singh*** The recent global recession of 2008-09, has severally affected almost all the sectors of the world including India. The banking and financial sectors have felt the pinch most. The present study finds the impact of the global recession on microfinance sector in India. The objective of the present study is to understand the working and financial performance of the microfinance institutions [MFIs] in India during the recession and to unfold the growth trajectory of the Microfinance Institutions in India. For this purpose five large MFIs were selected to be studied. It has been found that there was no impact of global recession on the working and financial performance of the MFIs in India during the recession, rather the selected MFIs were growing by leaps and bounds even during the recession period. Keywords: Microfinance, Microfinance Institutions [MFIs], Global recession
1.1 Introduction
Global recession impacted most of the sectors across the globe. However, banking and financial sectors felt the pinch most. Lehman Brothers went bankrupt, AIG received unparallel Govt. support. Like wise almost all the giants of financial world (e.g. Citigroup, Wachovia Corp, Merrill Lynch, HSBC, Bank of America, Barclays, JP Morgan, and Chase etc.) were facing troubles and frantic steps were taken by the respective governments to prop them up. India
was not an exception to it. GDP growth of the country came down from 9.7 per cent in the year 2006-07 to 6.7 per cent in the year 2008-09. It was estimated that it will further decline in the current financial year i.e. 200910. [Economic Survey, 2008-09]. However, in the recent Union Budget it was estimated that GDP growth will be around 7%. Though India was not affected as much, yet the effect of recession was felt in India in certain aspects like low investments by foreign companies. Many FIIs were heavily selling their holdings in
*Associate Professor, School of Management Studies, Assam University, Silchar, Assam, India **Assistant Professor, School of Management Studies, Assam University, Silchar, Assam, India ***Assistant Professor, School of Management Studies, Assam University, Silchar, Assam, India
The recent global recession of 200809, has severally affected almost all the sectors of the world including India. The banking and financial sectors have felt the pinch most.
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In July 2008, the IMF foresaw the world economy growing at 3.9 percent in 2009, advanced economies at 1.4 percent and developing countries at 6.7 percent.
numerous Indian companies and the same are reflecting in the gloom and doom scenario in stock exchange. Apart from these, some of the IT and ITES companies whose prime business is with USA and other developed countries are also bound to suffer. Textile companies registering low top line and bottom-line growth in their balance sheets because of less demand from foreign countries and consequently less revenue from exports. In July 2008, the IMF foresaw the world economy growing at 3.9 percent in 2009, advanced economies at 1.4 percent and developing countries at 6.7 percent. In November 2008 (just four months later) these forecasts had been slashed down to 2.2 percent, minus 0.3 percent and 5.1 percent, respectively (Shankar, A., 2009).
be connected. In the US, the financial system has completely split off from the real economy. Castles were built in the sky, and suddenly people realized that these castles don't exist at all. That was the point at which the financial system collapsed (Yunus, M., 2008).
1.3 Indian Scenario Microfinance Industry
of
1.2 Microfinance and Global Recession

Microfinance sector was also facing the pinch of global recession across the world. Nobel laureate of 2006 Md. Yunus, Grameen Bank, Bangladesh advocated that, Microfinance sector will not be much affected because the economic activities of microfinance are directly related to the creation of values. He pointed out that, The fundamental difference is that our (Microfinance/ Micro loan) business is very much connected to the real economy. When we provide a loan of $200, that money will go to buy a cow somewhere. If we lend $100, someone will, maybe, buy some chickens. In other words, the money goes to something with concrete value. Finance and the real economy have to
It has been observed that microfinance institutions were progressing fairly well in India during the ongoing global recession, which intensified during 2007. It has been found that all the large microfinance institutions in India have registered progress during 2007-09. For example, SKS Microfinance has registered growth of about 300% during last two years (Operational and financial Information, SKS Microfinance Ltd, 2008-09), from March 2007 to March 2009 as total number of branches increased from 275 to 1354. Active borrowers of Bandhan Microfinance on March 2006 were 149,886 and the same grew to 757,903 numbers on March 2008. In a similar manner the number of branches over the same period increased from 155 to 427 (MFI Grading Report: Bandhan, July 2008). Like wise progress was registered by almost all the large Microfinance Institutions of the country. The present study endeavors to study the progress and performance of the large five microfinance institutions and the impact of recession on the microfinance sector of the country.
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2.1 Objectives of the Study

The study was undertaken with a view to unfold the performance of microfinance sector of India in the context of recent global recession. The objectives of the study are: 1. To analyse the working performance of five large Microfinance Institution of the country over the recession period. 2. To study the financial performance of five large Microfinance Institutions of the country over the recession period. 3. To unfold the growth trajectory of the Microfinance Institutions of India.
working and financial performance of the Microfinance Institutions of India during the recession period from March 2007 to March 2009. It was found in course of the study that the microfinance sector of the country is in the growth path despite recessionary pressure across the globe. This fact will help and guide the policy makers to make appropriate policy decisions and to focus their attention to the microfinance sector of the country. The findings of the study will be significant for future researchers and policymakers.
2.4 Conceptual Framework

The study was conducted within the theoretical and conceptual framework outlined here. Working performance of the microfinance institutions can be studied with reference to parameters such as, area covered, the number of SHGs formed/members inducted, number of beneficiaries, numbers of offices, and the number of employees engaged by the organization. Financial performance of the MFIs can be studied to find out the viability and sustainability of the MFIs. For this purpose, commonly used financial parameters may be profitability of the organization, amount of loan disbursed, amount of loan outstanding, net worth (own capital) and the recovery rate. Growth trajectory of the microfinance sector of India can be studied with reference to the overall growth achieved by the microfinance institutions during the recessionary period and comparing the same with the globally accepted parameters
2.2 Scope of the Study

The study has been carried out over the recession period, that is, from March 2007 to March 2009. Current scenario of the Microfinance sector of India is studied with reference to the five large Microfinance institutions of the country. These institutions are SKS Microfinance Ltd., BASIX Microfinance, Bandhan Microfinance, Spandana Microfinance and SHARE Microfin Limited. Operational and financial facts and figures for these MFIs were collected for the period from March 2007 to March 2009 and was analysed to observe their operational and financial performance over the period of recession.
2.3 Significance of the Study

The study aims at unfolding the June 2010 Vol. 7 Issue 1
Working performance of the microfinance institutions can be studied with reference to parameters such as, area covered, the number of SHGs formed/members inducted, number of beneficiaries, numbers of offices, and the number of employees engaged by the organization.
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describing the recession, such as global economic growth rate, global capital flow, decline in production, decline in international trade, increase in global unemployment rate, and the reduction in asset value.
the Microfinance Organisations

For the purpose of the study five large microfinance institutions of India were selected and the relevant information was tabulated in the following tables and the growth rate for 2007-08 and 2008-09 were calculated.
3.1 Operational and Financial Performance of
Table 1: SKS Microfinance: Operational and Financial Performance for the period 2007-2009 Parameters Area Covered (No. of Districts) Members (Nos.) March 2007 March 2008 March 2009 % of Growth 2007 to 2008 211% 218% 180% Na Na Na % of Growth 2008 to 2009 8% 110% 116% 76% Na Na Na
308^
334*
603,933 1,879,258 3,953,324
Beneficiaries (Borrowers) 513,108 1,629,474 3,520,826 (Nos.) Number of offices (Branches) Employees engaged (Nos.) Net profit (Rs. in crores) Amount of loan disbursed (Rs. in crores) Amount of loan outstanding (Rs. in crores) Net Worth (Rs. in crores) Recovery Rate (%) Source: 275 Na Na Na 771 Na Na Na 1,354 13,000* Na 7417*
275.70 71.68 99**
1050.67 212.54 99**
2456.82 664.85 99**
281% 197% -
134% 213% -
1. Operational and Financial Information, SKS Microfinance. 2. SKS Microfinance Update July 2009. 3. Letter to The Wall Street Journal by Vikram Akula, CEO, SKS Microfinance. 4. Annual Report of SKS Microfinance for the year 2008-09. * The figures are up to 31/5/ 2009. ** Average Recovery rate. ^ Up to December 2008 Rai Management Journal
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It is observed from the above table that the largest microfinance company of the country has achieved impressive growth in almost all the spheres of activities of the company. Number of borrowers grew by 218% and 116% during the year 2008 and 2009 respectively. Growth of outstanding loan was even more impressive, which was 281% for the year 2008 and 134% for the year 2009. At the same time it could maintain a recovery rate of 99% on an average. It is evident in table 2 that Bandhan, the second largest microfinance
company of the country has achieved a phenomenal growth over the two year recessionary period. Its members and borrowers have both achieved more that 100% growth over the period 2008-09. Disbursement of loan grew 137% and 430% during the year 200708 and 2008-09 respectively. Bandhan was able to maintain a recovery rate of over 99% in the period under study, achieving a growth record of over 100% in almost all the sphere of activities except in the case of area covered, where the growth rate is 23% in the year 2008-09.
Table 2: Bandhan Microfinance: Operational and Financial Performance for the period 2007-2009 Parameters Area Covered (No. of States) Members (Nos.) March 2007 March 2008 March 2009 % of Growth 2007 to 2008 19% 74% 75% 40% 46% 107% 2810.18* 137% 430% % of Growth 2008 to 2009 23% 104% 114% 99% 116%
11 498,444
13 866,381 757,903 427 2415 12.812 529.913
16 1767,131* 1621,981* 850* 5217*
Beneficiaries (Borrowers) 433,324 (Nos.) Number of offices 305 (Branches) Employees engaged 1649 (Nos.) Net profit (Rs. in crores) 6.200
Amount of loan disbursed 223.94 (Rs. in crores) Amount of loan outstanding (Rs. in 126.129 crores) Net Worth (Rs. in crores) Recovery Rate (%) Source: 8.643 99.91
278.279 21.455 99.89
797.54*
121% 148%
187%
99.94
1. CRISIL Ratings for Bandhan, July 2008. 2. Performance update July 2009, Bandhan. * The figures are up to July 2009.
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Table 3: Spandana Microfinance: Operational and Financial Performance for the period 2007-2009 Parameters Area Covered (No. of villages) Members (Nos.) Beneficiaries (Borrowers) (Nos.) Number of offices (Branches) Employees engaged (Nos.) Net profit (Rs. in crores) Amount of loan disbursed (Rs. in crores) Amount of loan outstanding (Rs. in crores) Net Worth (Rs. in crores) Recovery Rate (%) Source: 1. Operational Snapshot, Spandana 2. Annual Report of Spandana. * No. of Centers. 2,223 4,556 100% 151% March 2007 March 2008 March 2009 % of Growth 2007 to 2008 % of Growth 2008 to 2009 105% 105% 116% 111%
47,693*
90,221*
12,40,000 25,43,000 11,89,000 24,32,000 435 3,024 941 6,373
731
1,837
It has been observed from Table No. 3 that Spandana has achieved a growth rate of 116% and 111% in respect of the expansion of offices and increase of employees respectively during the year 2008-09. Its growth in number of
beneficiaries was 105% in both the cases over the same period. Outstanding loans have grown at 151%, indicating that the business of microfinance institution has progressed well over the same period.
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Table 4: BASIX Microfinance: Operational and Financial Performance for the period 2007-2009 Parameters March 2007 March 2008 March 2009 % of Growth 2007 to 2008 % of Growth 2008 to 2009 99%V
Area Covered (No. of villages) Members (Nos.) Beneficiaries (Borrowers) (Nos.) Number of offices (Branches) Employees engaged (Nos.) Net profit (Rs. in crores) Amount of loan disbursed (Rs. in crores) Amount of loan outstanding (Rs. in crores) Net Worth (Rs. in crores) Recovery Rate (%) Source: 170
13S, 77D, 16S,205D, 12,574 V 25,300V
498,681
574,293
88%
15%
0.39 282
0.46 586 66%
18% 108%
140
225 29.96
462 67.32 99.2%
61%
105% 125%
1. Basix Newsletter Dec2009 2. Basix Annual Report 2009. * Figure up to March2009. **Figure up to December2009. S=State; D=District; V= Villages
Table No. 4 shows that BASIX Microfinance has gained substantial mileage so far as the area covered is concerned during 2008-09. Its growth in this sphere is 99%. It has registered a growth of 108% and 105% in respect of loan disbursed and loan outstanding over the same period. Growth of
beneficiaries was 88% and 15% during the year 2007-08 and 2008-09 respectively. Net profit of the company grew at 18% in the year 2008-09. All these indicate that the company has not faced much pressure during the period of recession.
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Table 5: Share Microfin Ltd.: Operational and Financial Performance for the period 2007-2009 Parameters March 2007 March 2008 March 2009 % of Growth 2007 to 2008 100% 18% 19% 48% 28% % of Growth 2008 to 2009 60% 44% 45% 66% 41%
Area Covered (No. of villages) Members (Nos.) JLGs Beneficiaries (Nos.)
5 States 10 States 16 States 213,404 252,420 364,730
1,083,0 1,289,000 1,868,000 00 312 2,363 462 3,022 766 4,259
Number of offices (Branches) Employees engaged (Nos.) Net profit (Rs. in crores) Amount of loan disbursed (Rs. in crores) Amount of loan outstanding (Rs. in crores) Net Worth (Rs. in crores) Recovery Rate (%) Source:
2,202
3,249
5,314
48%
64%
400 37 97.3
609 119 98.5
1,217 178 99.6
52% 222%
100% 50%
1. Annual Reports of Share Microfin Ltd 2. Financial highlights of Share Microfin Ltd. 31/3/2009
Share Microfin Ltd is another large microfinance company of the country. Presently it is working in 16 states. In March 2007 it was operating in only 5 states. Its growth in respect of the area covered was 100% and 60% during the year 2007-08 and 2008-09. Its beneficiaries grew at the rate of
19% and 45% over the same period of time. Number of employees in the year 2007, 2008, & 2009 were 2,363, 3,022, and 4,259 respectively. Amount of loan disbursed and amount of loan outstanding grew at 64% and 100% in the year 2008-09. Growth in all other aspects was also impressive.
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Table 6: Share Microfin Ltd.: Operational and Financial Performance for the period 2007-2009 Parameters Area Covered (No. of villages) Members (Nos.) or JLGs Beneficiaries (Borrowers) (Nos.) Number of offices (Branches) Employees engaged (Nos.) Net profit (Rs. in crores) Amount of loan disbursed (Rs. in crores) Amount of loan outstanding (Rs. crore) Net Worth (Rs. in crores) Recovery Rate (%) SKS na 211% 218% 180% na na na Bandhan Spondhana 19% 74% 75% 40% 46% 107% 137% na na na na na na na Basix na na 88% na na na 66% Share 100% 18% 19% 48% 28% na 48% Average 60% 101% 100% 89% 37% 107% 84%
281% 197% 99%
121% 148% 99.89%
na na na
61% na na
52% 222% 98.5%
129% 189% 99%
Source: Compiled & calculated by the authors
It can be observed from Table No. 6 that the average growth for the big five microfinance institutions was impressive during the first year of recession, i.e. 2007-08. The growth in respect of the number of members and number of borrowers (beneficiaries) was 101% and 100% respectively. Growth in the number of employees was 37% and the growth for the number of offices was 89%. These facts clearly highlight that microfinance sector of India was operating well during the period of recession, i.e. during the year 2008-09. As regards
the financial performances are concerned, the growth was significant in all the spheres. Net profit grew 107%, amount of loan disbursed grew at 84% and the amount of outstanding loan grew by 129% during the same period. Net worth for the five companies grew at an average rate of 189%. An average recovery rate of 99% has been maintained by the microfinance companies. This fact is worth being noted. All these facts are clearly highlighted with the help of the following figure:
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Figure 1: Average Growth Rate of the MFIs for 2007-08
Source: Compiled & calculated by the authors Table 7: Average Growth Rate of the Five MFIs (2008 to 2009) Parameters SKS Bandhan Spondhana Basix 23% 104% 114% 99% 116% Na 105% 105% 116% 111% Na 430% Na 99% Na 15% Na Na 18% 108% Share 60% 44% 45% 66% 41% Na 64% Average 56% 91% 79% 89% 89% 18% 201%
Area Covered (No. 8% of villages) Members (Nos.) 110% (JLGs) Beneficiaries (Borrowers) (Nos.) 116% Number of offices 76% (Branches) Employees engaged Na (Nos.) Net profit (Rs. in Na crores) Amount of loan disbursed (Rs. in Na crores) Amount of loan outstanding (Rs. cror) Net Worth (Rs. in crores) Recovery Rate (%) 134% 213% 99%
187%
151% Na
105% 125% 99.2%
100% 50% 99.6%
135% 129% 99%
99.94%
Na
Source: Compiled & calculated by the authors Rai Management Journal
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Table 7 has been prepared to find out the average growth rate over the different aspects of performance of the five microfinance companies of the country during the second year of recession i.e. 2008-09. It has been observed from the table that in respect of all the five parameters of operation, i.e. in respect of Area Covered, increase in Members, Beneficiaries/ Borrowers, number of offices and Employees engaged, microfinance companies have achieved growth rates of 56%, 91%, 79%, 89% and 89%
respectively in the year 2008-09. Financial performance of the microfinance institutions is also very impressive. Growth rate on account of loan disbursed was 201%, and the same was 135% in respect of the amount of loan outstanding. Net worth of the companies grew at 129% during the period under study. These facts clearly depict that microfinance sector of the country was not affected by recession. Facts are presented in Figure 2.
Figure 2: Average Growth Rate of the MFIs for 2008-09
Source: Compiled & calculated by the authors
3.2 Global Recession vis-vis Microfinance Sector of India

Though the center of gravity for the recent global recession was USA, yet most of the countries of the globe were affected. During March, 2009 MTM Inc. of USA had destroyed $ 500 billion of capital which resulted in a drastic fall in share holders wealth. Total
loss of bank credit in USA was $ 5 trillion. IMF estimate of global growth rate decreased from 3.9% on July 2008 to -1.4% in July 2009. Volume of world trade declined by 12.1% in 2009 (Chakraborty, K. C., 2009). Dow Jones Industrial Average declines from 13, 930 in October 2007 to 9, 325 level in October, 2008. It further declines to 7, 608 in March 2009.
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...microfinance sector of India was able to resist the pressure of the recent global recession and could register growth in all aspects of operation.
India was also not isolated from the global economic slowdown. Real GDP of India declined to 6.7 per cent in 2008-09 and the rate of inflation became sky high. To overcome recessionary situations, RBI took various steps, it reduced Repo rate by (-) 425 bps, CRR by (-) 400 bps and SLR by (-) 100 bps, net result for the same is that, the potential liquidity in the market raised to Rs. 5, 617 crores (Subir, G., 2009). RBIs Liquidity drive through Liquidity Adjustment Facility crossed Rs 900 billon (www.rbi.in). Indian rupee depreciated sharply from 39.99/$ as on March 2008 to 52.09/$ as on March, 2009. BSE Sensex fell to a low of 8160 as on March, 2009 from the peak of 21,000 level of January 8, 2008 (www.bseindia.com), a total fall of 60.9%. Fiscal Deficit of the central government rose from 2.5% of GDP to 6.2% of GDP in the budget for 200809. Combined fiscal deficit (Central and State) rose to 10.7% of the GDP in 2008-09. The growth rate of banks declined 25% in 2007-08 and 21.2% in 2008-09. However, impact of global recession was not that intense in India when compared to other countries. Performance of the microfinance sector in India, during 2007-09, i.e. the period of recession was impressive. This is reflected in the growth of five selected MFIs in India. When the entire globe was economically melting down, the microfinance sector of India was not affected rather it was flourishing and registered a growth in respect of disbursement of loan by 84% in 200708 and 201% in 2008-09. The net worth of the MFIs have grown up by
189% in 2007-08 and 129% in 200809. The growth in respect of number of employees engaged is 37% in 2007-08 and 89% in 2008-09. This indicates that microfinance sector was insulated from the global recession.
4.1 Scope Research
for
Further
Future studies can be extended by considering larger number of MFIs to generalize the findings for the entire microfinance sector. Studies can also be taken up to compare the microfinance sector across the countries. The study can further be extended by considering more parameters of growth and different sectors of the economy.
4.2 Limitations of the Study

The study is based on five MFIs of India, with ten parameters of growth. Five parameters were considered for working performance of the MFIs and five parameters for the financial performance of the MFIs. Some of the figures for the MFIs under study are not available. This might have led to sampling error and hence the result may not be capable of generalizing and extending to all the MFIs in India.
4.3 Conclusion
It is clear from the study that microfinance sector of India was able to resist the pressure of the recent global recession and could register growth in all aspects of operation.
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This indicates that the microfinance sector, which is linking the poor people of the country to the mainstream economy has fairly good inner strength and potentiality. The policy makers must appreciate this fact and take appropriate decisions so that the inner strength of the sector can be enhanced and sustained in the long-run to make the country strong. Similar recommendations also came out from the CGAP, 2008 virtual conference (CGAP, 2008). This can enable achievement of the vision India by 2020.
MFI Grading Report: Bandhan, July 2008, Kolkata. Operational and financial Information, SKS Microfinance Ltd, 2008-09 Operational Snapshot, Spandana Performance updates, July 2009, Bandhan. Shankar, A. (2009), Recession: India's prospects in 2009, at http://www.rediff.com/money/2008/dec/1 1bcrisis-india-prospects-in-2009.htm, accessed on 06/09/09 at 1100hrs. SKS Microfinance Update, July 2009 Subir, G., (2009), Indians Economic Recovery: Drivers and Risks, RBI, Mumbai. Lectures delivered in Indian Merchants Chamber, Mumbai on Dec 24 , 2009. Vikram Akula, CEO, SKS Microfinance, Letter to The Wall Street Journal www.bseindia.com www.rbi.in . Yunus, M. (2008), 'Capitalism Has Degenerated into a Casino' 10/10/2008, at www.muhammadyunus.org , downloaded on 12/01/2009 at 1030 hrs.
References
Annual Report of Basix, 2008-09 Annual Report of SKS Microfinance, 200809 Annual Report of Spandana, 2008-09 Annual Reports of Share Microfin Ltd, 200708 Annual Reports of Share Microfin Ltd, 200809. Basix Newsletter Dec2009. CGAP, (2008), CGAPs Virtual Conference Highlights: How will microfinance weather the financial crisis storm? at http://www.cgap.org/p/site/c/template.rc /1.26.4301, downloaded on 12/01/2010 at 1300 hrs Chakraborty, K. C. (2009), Global Crisis: Genesis, challenges and opportunity Unleashed, the inaugural address delivered at the 21st anniversary convention of the Association of Professional Banks of Sri Lanka, on Sept 25th 2009, RBI, Mumbai. CRISIL Ratings for Bandhan, July 2008. Economic Survey, Govt. of India, 2008-09 Financial highlights of Share Microfin Ltd, 31/3/2009.
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Employee Engagement @ Indian Retail Industry

Pooja Misra* Kokil Bhalotia** Most organizations today realize that a satisfied employee is not necessarily the best employee in terms of loyalty and productivity. Engaged employees are those inspired and guided by the leadership, equipped with the right tools and managed by the right systems. The objective of this study is to determine the level of an employees passion about their work and emotional commitment to their company in the retail industry in India. The study provides additional evidence about the impact of drivers on employee engagement. Further, the survey is designed to translate the 'softer' aspects of workplace emotions and behaviours into a hard measure of engagement, which can be linked to organizational outcomes. Employees responded to each of the questions on a dichotomous scale. The study has shown that a significant relationship exists between employee engagement and their term of employment, employee turnover and the HR practices of retailers in India. Out of the ten Cs of engagement, Career, Clarity, Convey and Collaborate come up most strongly, indicating that retailers heavily need to focus on them in order to increase the engagement levels in their respective organisations. Keywords: Employee engagement, Employee, Organisation, 10 Cs, Satisfaction, Commitment
Most organizations today realize that a satisfied employee is not necessarily the best employee in terms of loyalty and productivity. Engaged employees are those inspired and guided by the leadership, equipped with the right tools and managed by the right systems.
INTRODUCTION
Employee engagement can be defined as putting forth of extra discretionary effort by an employee as well as the likelihood of the employee being loyal and remaining with the organization over the long haul. It is the energy, passion, or fire in the belly that employees have for their employer. It may be expressed as the three Ss: Stay: Desire to be a member of the organization
Say: Speak positively about the organization Strive: Go beyond minimally required what is
An engaged employee is a person who is fully involved in, and enthusiastic about, his or her work. He/ She shows a positive attitude towards the organization and has the desire and passion to remain with the organization for a long period of time. The concept of engagement is a
*Assistant Professor, Birla Institute of Management Technology, Noida, UP, India **Student, Birla Institute of Management Technology, Birla Institute of Management Technology, Noida, UP, India
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natural evolution of past research on high-involvement, empowerment, job motivation, organizational commitment, and trust. All of these research streams focus on the perceptions and attitudes of employees about the work environment. Negative workplace relationships may be a big part of why so many employees are not engaged with their jobs. There are a number of critical factors that lead to employee engagement. Some of them identified are shown in the figure below: Employee engagement needs to be measured at regular intervals in order to track its contribution to the success of the organization. But measuring
the engagement without planning how to handle the result can lead employees to disengage. It is therefore not enough to feel the pulsethe action plan is just as essential. There is a huge difference between employee satisfaction, employee effectiveness and employee engagement. Satisfaction, effectiveness, and engagement are all inter-related in an upward progression. Each item has different drivers, but they build on one another to increase performance in the workplace. Engagement leads to employees to stay with the company, be an advocate of the company and its products and services and contribute
Employee engagement needs to be measured at regular intervals in order to track its contribution to the success of the organization.
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Schmidt et.als influential definition of employee engagement was an employees involvement with, commitment to, and satisfaction with work.
to bottom line business success. Engaged employees also normally perform better and are more motivated. They care about the future of the company and are willing to invest the discretionary effort exceeding dutys call to see that the organization succeeds. In his book, Getting Engaged: The New Workplace Loyalty, author Tim Rutledge explains that truly engaged employees are attracted to, and inspired by, their work (I want to do this), committed (I am dedicated to the success of what I am doing), and fascinated (I love what I am doing). He urges managers to implement retention plans so that they could keep their top talent, as there is a significant link between employee engagement and profitability.
and organizational commitment (Meyers & Allen, 1991). Harter and Schmidts (2003) most recent metaanalysis can be useful for understanding the impact of engagement. Research indicates that the war for talent is intense due to labour market shortages (Branham, 2005; Brewster et al., 2005; Lawler, 2005; Boudreau and Ramstad, 2005), yet very little research attention has been aimed at competitive talent management strategies. Employee engagement as a key to the retention of talent (oneof-a-kind hire in 100 employees; Glen, 2006) is an area in which the lead has been taken by practitioners (Parsley, 2006; Baumruk et al., 2006; Woodruffe, 2005; Gallup Management Journal, 2006; Bennett and Bell, 2004; Hay Group, 2002). Linkage research (eg.; Treacy) received significant attention in their business community due to correlations between employee engagement and desirable business results such as talent retention, customer service, individual performance, team performance, business unit productivity and even enterprise level financial performance (Rucci et al, 1998 using data from Sears). According to a survey conducted by Towers Perrin on 86,000 employees around the world, all of whom were employed full time by midsize to large organizations in its Global Workforce Study 2007-2008, Closing the Engagement Gap: A Road Map for Driving Superior Business Performance states that The companies with high employee
REVIEW OF LITERATURE
Engagement at work was conceptualized as the harnessing of organizational members selves to their work roles (Wiiliam A. Kahn, 1990). In engagement, people employ and express themselves physically, cognitively and emotionally during role performances. Employee engagement was described in the academic literature by Schmidt et.al. (1993) with the help of data from Gallups Q12 engagement survey. A modernized version of job satisfaction, Schmidt et.als influential definition of employee engagement was an employees involvement with, commitment to, and satisfaction with work. This integrates the classical constructs of job satisfaction (Smith et.al., 1969)
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engagement had a 19% increase in operating income and almost a 28% growth in earnings per share. Conversely, companies with low levels of engagement saw operating income drop more than 32% and earnings per share decline over 11%. They also concluded Engaged employees redefine the job to improve efficiency, effectiveness and results. Willing employees do whats necessary, but often no more. Engaged employees seek opportunities to go beyond to try new approaches, test boundaries, challenge the status quo, achieve personal or team bests because they find it stimulating, challenging and satisfying. Willing employees are solid B or C performers; engaged employees always seek to deliver A performances. A Study published in Annual Handbook of Human Resources Initiatives 2008, Increasing Employee Retention through Employee Engagement A challenge for HR, written by Sushama Khanna States that, Employees with the highest level of commitment perform 20% better and are 87% less likely to leave the organization, which indicates that engagement is linked to organizational performance. In the article, Employee Engagement: Doing It vs. Measuring, Theresa Welbourne, 2003 says, You cant have engaged employees without super engaged managers. Engagement improving efforts must start at the top and work their way down. The most senior executives must be assured that they are engaging their senior team, and that team has to work on creating a high engagement environment for its direct reports, and
so on and so on. Mr. Hari Nair in his article Employee Engagement Scaling Down Attrition, concluded that Engaged employees can help your organization achieve its mission, execute its Strategy and generate important business results. Organizations define and measure engagement in a variety of different ways, suggesting there is no one right or best way to define or stimulate engagement in the workforce. The decision to invest in strengthening engagement or commitment (or both) depends on an organizations strategy and the makeup of workforce. Steve Crabtree in his article Getting Personal in the Workplace published in The Gallup Management Journal states that Engaged employees are also much more likely to consider their relationship with their manager to be crucial to their success. Of engaged employees, 49% strongly agree that "A strong positive relationship with this person is crucial to my success at work," while just 12% of actively disengaged employees strongly agree with the same statement. In contrast, 33% of actively disengaged employees strongly disagree with this statement, compared to just 6% of engaged employees. Bhatnagar J., Employee Relations; Vol 29 No. 6, 2007 key findings with relation to the ITES industry were that high engagement levels could lead to high retention initially, but only for a limited time in the ITeS sector. The need for a more rigorous employee engagement construct was indicated by the study. Given the highly competitive work environment,
The decision to invest in strengthening engagement or commitment (or both) depends on an organizations strategy and the makeup of workforce.
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...organised retail in India is in its nascent stage and is growing at 30-40% per year, making employee engagement in the Indian retail industry a vital area of study.
post liberalization and with the concept of organised retail catching up in India, a study regarding engagement levels in the retail industry is much needed. It has been studied that there is a need amongst the managerial group to build capabilities, resources, competencies, strategies, and macro as well as micro human resources management activities (Bhatnagar and Sharma, 2005). Considerable research work has been done in the field of employee engagement; however negligible literature is available on employee engagement in the retail sector. Also, organised retail in India is in its nascent stage and is growing at 3040% per year, making employee engagement in the Indian retail industry a vital area of study.
retailers in India 4. Determine the key drivers which affect the engagement level among the employees in retail industry 5. Determine key strength areas that need to be consolidated; and 6. Determine key areas for intervention to enhance employee engagement in retail industry.
RESEARCH METHODOLOGY
Descriptive Research has been used in the research as Engagement as a subject as its parameters are known. This paper aims to determine the engagement level of employee in retail industry in India. Descriptive research studies are those studies which are concerned with describing the characteristics of a particular individual or a group. Data was collected by the means of Questionnaire and Interviews. Respondents were selected by RANDOM SAMPLING METHOD from the different levels of hierarchy i.e. both managers and sales staff. The survey is done at the leading retailers of the country viz; pantaloons, globus, lifestyle MC Donalds, V Mart, Reebok and Levis. Secondary information was collected through India retail report 2009, Annual Reports, Past Records, Images retail website and Internet (HR Related sites). Questionnaire was designed using Dichotomous Scale and is based on
OBJECTIVE OF STUDY
This study is done to determine the level of employees engagement with their work and emotional commitment with their company and their co-workers in the retail industry in India. The study will also provide additional evidence about the impact of drivers on employee engagement: 1. Determine the relationship between the level of engagement and the term of employment 2. Determine the relationship between the level of engagement and the employee turnover in retail industry 3. Determine the relationship between the level of engagement and the HR practices of the
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the 10 Cs of engagement, viz: Connect, Career, Clarity, Convey, Congratulate, Contribute, Control, Collaborate, Credibility and Confidence. Data collected through questionnaires from 75 respondents was inserted in SPSS for analysis. Simple Random Sampling is used as sample size is large and time was a constraint. Data is presented using Dichotomous Scale where 1 being positive and 0 being negative. Data has been analysed using Correlation and T- Test. Relationship is identified between 10 Cs. Employee engagement is determined. HR practice levels are quantified using Weighted Average. Statistical tools used are: Correlation T-Test (Hypothesis Testing) Weighted average
systems of their organisation. This has been identified as a gap on the part of induction programmes conducted in the organisations. 90.2 % of the employees say that their superiors do practice the code of conduct of the organisation. 85.3% of the employees were comfortable with the profiles offered to them at the time of joining of the organisation, but 59% of the employees were not satisfied with the job rotation opportunities provided by their organisations. 60.9% of the employees felt content about the training programmes of the organisation, and only 56% of the employees felt content with the compensation offered to them. However, 78% of the employees were contended with their performance appraisal. The sense of belongingness towards the organisation leads to engagement at work. This develops gradually with the length of duration (term) of the employment, which depends upon various factors relating to employee welfare. 71% of the employees say that their needs are also considered in the organisation along with the organisational objectives. Also, 73.1% of the employees are happy with the perquisites provided by their organisations. Retail jobs need a lot of enthusiasm on part of the employees, but statistics show that only 53.6% of the employees say that good cheer leading and motivational sessions happen in their organisations. Also, only 58.5% of the employees agree that any fun or stress bursting activities are conducted in their organisations. On the other hand, as it
All the data analysis is done with the help of MS-Excel & SPSS (Statistical Package for Social Sciences)
ANALYSIS AND FINDINGS

The analysis identifies the role of HR practices in engaging the employees. In this study, HR practices refer to induction, training and development, compensation, performance appraisal and other motivational programmes held in the organisation. 65.8% of the employees say that they were given a warm welcome by their peers, seniors and sub ordinates at the time of joining and only 63.4% of the employees are aware of the value
The sense of belongingness towards the organisation leads to engagement at work. This develops gradually with the length of duration (term) of the employment, which depends upon various factors relating to employee welfare.
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In a country like India, where 56.9% of the population is between 15 to 59 years of age and 39% is working force, it should be well inferred by the organisations that career growth opportunities play a vital role in engaging the employees and hence bringing the attrition levels down in their respective organisations.
is a well known fact that retail jobs demand its employees to be on their toes 24*7; even then 87.7% of the employees say that they get proper leaves and 92.6% of the employees say that they get proper breaks to have meals and rest during their work hours. Belongingness also develops when the employees feel that they are assets for their organisations and their voice is also heard in the organisation. However, involvement of employees in the decision making process of the organisation is quite low, as only 58.3% of the employees say that their opinions are considered while any of the decisions are being taken, also only 54% of the employees are involved in the implementation of those decisions. In a country like India, where 56.9% of the population is between 15 to 59 years of age and 39% is working force, it should be well inferred by the organisations that career growth opportunities play a vital role in engaging the employees and hence bringing the attrition levels down in their respective organisations. The psychological development is also a major factor. As per the employees, 63% of the leaders in retail sector hold their sub ordinates accountable for progress and 93% of the leaders show confidence in the abilities of their subordinates. 98% of the employees are content with the knowledge provided to them regarding their job profiles and job duties, also 73% employees feel that their skills are well utilized in their jobs.
Employees feel ease at work if they are clear regarding their job profiles. This relates to the third C, Clarity. 92.7% of the employees say that they are clear about their duties and responsibilities. 90% of the employees are aware of the action plan to achieve their targets, which happen by the way of sales reviews, morning briefings, target reviews etc. The fourth C, Convey also comes up quite strongly in engaging the employees. Retailers in India provide proper and timely feedback to 100% of the employees and in this feedback, employees are told about the dos and donts most of the times, also their activities are analysed in depth in some cases. 95% of the times employees got motivated positively only by praising. 68% of the leaders reprimand their sub ordinates in front of everybody, which is highly disliked by the employees. The need for collaboration in the organisation was also explained by the management guru, Henry Fayol, when he mentioned espirit de corps as his 14th principal. Indian retail scenario says that 85% of the organisations applaud team work and motivate employees towards it. Support from colleagues is 98.2% among the employees engaged in the retail industry in India, also 97.5% of the employees say that they have people in the organisation with whom they can share their personal matters and can confide in them.
INTERPRETATION
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Hypothesis 1
H0: There is no significant relationship between employee engagement and the HR practices of the retailers in India H1: There is a significant relationship between employee engagement and the HR practices of the retailers in India X: Level of employee engagement
and more engaged in their jobs. There is certainly a relationship between the employee engagement and retailers HR practices in India. *Includes practices like induction, training and development, compensation and other offered benefits, performance appraisal and motivational sessions held in the organisation.
Hypothesis 2
Y: HR practices* of retailers Hypothesis 2 r= 0.5890 tstatistic = 4.5520 tcritical = 1.3036 Result: Null hypothesis rejected Inference: The results show that employee engagement and HR practices have a linear positive correlation, i.e. with better HR practices, employees tend to be more H0: There is no significant relationship between employee engagement and the term of employment in retail industry in India H1: There is a significant relationship between employee engagement and term of employment in retail industry in India X: Level of employee engagement
Table 1: Hypothesis 1
X TOTAL MEAN 32.48 0.79 Y 30.36 0.74 (X(Y(X-Xmean)* (X(YXmean) Ymean) (Y-Ymean) Xmean)2 Ymean)2 0 0 0.58 0.61 1.58
X TOTAL MEAN 32.48 0.79 Y 95 2.31 (X(Y(X-Xmean)* (X(YXmean) Ymean) (Y-Ymean) Xmean)2 Ymean)2 0 0 1.32 0.61 42.88
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Y: Term of employment r= 0.2583 tstatistic = 1.6701 tcritical = 1.3036 Result: Null hypothesis rejected Inference: The results show that employee engagement and term of employment have a linear positive correlation and there is certainly a relationship between the employee engagement and their term of employment in retail industry in India.
between employee engagement and employee turnover in retail industry in India X: Level of employee engagement Y: Employee turnover r= (-)0.3002 tstatistic = 1.9634 tcritical = 1.3036 Result: Null hypothesis rejected Inference: The results show that employee engagement and employee turnover have a linear negative correlation and there is certainly a relationship between the employee engagement and their term of employment in retail industry in India. With the increase of level of engagement, turnover decreases.
Hypothesis 3
H0: There is no significant relationship between employee engagement and employee turnover in retail industry in India H1: There is a significant relationship
CONCLUSION
X TOTAL MEAN 32.48 0.79 Y 121 2.95 (X(Y(X-Xmean)* (X(YXmean) Ymean) (Y-Ymean) Xmean)2 Ymean)2 0 0 1.48 1.61 39.90
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It may be well concluded that: A relationship exists between Employee engagement and the HR practices of the organisation. The
major practices effecting engagement levels are
the
There is a significant relationship between employee engagement and term of employment in retail industry in India. There is a significant relationship between employee engagement and employee turnover in retail industry in India. It shows a
negative linear correlation. Although all the 10 Cs play a significant role in engaging the employee, but in case of retail industry in India, Career, Clarity, Convey and Collaborate come up most strongly.
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66% of the employees find their jobs challenging. However periodic job rotation is required to break the monotony of operations.
SUGGESTIONS AND RECOMMENDATIONS:

Employees are the face of the organisation in the public. So it is very important that they represent their organisation with its value system. Retailers do conduct induction programmes, but clarity about the company's vision, values, business strategy, goals, and progress toward these goals should be ensured. In doing so, they should also clarify the direction towards which the company is heading and what role employees need to play. Organisations need to prove that they value their employees and consider them as their assets. Relative importance should be given to the employees of all levels in some or the other decision making processes of the organisation. It gives them a feeling of belongingness and they feel that their opinion also matters for the organisation. Openness and Involvement to shape a companys culture should be encouraged to give suggestions and feedback. Companies may use a consultative approach to problem solving and strategy development. Various methods like open forum, suggestion boxes, one to one interactions etc may be used to take employee opinions. 66% of the employees find their jobs challenging. However periodic job rotation is required to break the monotony of operations. It revitalizes the employees and also gives them a chance to learn
new things and utilize their skills in different work requirements. Sufficient training related to job is already been provided by the organisations. However, people may also be trained to analyze and resolve interpersonal conflicts, promote joy and humour within the office, be flexible and help people to balance work and home responsibilities. Employees should be able to prioritize among the various tasks to be performed at work. Gap analysis may be conducted to determine what kind of training and coaching is required and how much training needs to be done. Employees need on-going training to remain focused and engaged. Performance appraisal is a crucial factor when it comes to mental satisfaction regarding the job. It is being done periodically in retail industry in India. However, it has to be transparent to reduce the dissonance among the employees. 360-Degree Appraisal system can be used to recognize high performers and providing constructive feedback and coaching to under performers. Balanced Score Card method of appraisal can be adopted. This technique focuses on clear outcomes, financial, customers business building and organization building. External agencies can be invited to conduct performance appraisal for key personnel in the organization to avoid any biasness.
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Company should take up rewarding practices consistently. Rewards can include a variety of benefits and perks other than money, Incentives could be provided to employees based on target achieved rather than on fixed terms. Employees are more satisfied when they feel they are rewarded fairly for the work they do. Make sure rewards are for genuine contributions to the organization. As an added benefit, employees who are rewarded fairly, experience less stress. Retail is a very challenging job; it is a difficult task to keep the morale of employees up to perform. So, effective cheer leading and motivational sessions are required to keep the employees energetic and also some fun activities should be incorporated to bring the WOW effect in the job. Flexible leave provisions including career break schemes, domestic leave, and study leave etc. Many other benefits like Telecommuting / teleworking, Flexible starting and finishing times, the ability to leave work suddenly to deal with family emergencies, the ability to take time off for appointments and make it up later, Job-sharing where two or more employees share a job, Job-splitting - where one job is split into two or more part time positions, Part-time work - permanent part-time work is an ongoing contract of employment, which means employees accrue cumulative
benefits such as annual leave and sick leave, Phased retirement - a reduction of work hours or responsibilities, Term time working - where a career stops work during school holidays, Time banking, Virtual teams (e-teams) etc can help the employees to maintain work life balance.
References
Conway, N. and Briner, R. (2005) Understanding psychological contracts at work: a critical evaluation of theory and research. Oxford: Oxford University Press. Truss, C., Soane, E. and Edwards, C. (2006) Working life: employee attitudes and engagement 2006. Research report. London: Chartered Institute of Personnel and Development. Wellin, M. (2007) Managing the psychological contract: using the personal deal to increase business performance. Aldershot: Gower. Coyle-Shapiro, J. and Shore, L.M. (2007) The employee-organization relationship: where do we go from here? Human Resource Management Review. Vol 17, No 2, June. pp166-179. Cullinane, N. and Dundon, T. (2006) The psychological contract: a critical review. International Journal of Management Reviews. Vol 8, No 2, June. pp113-129 Bhatnagar J.; (2007) Talent Management Strategy of Employee Engagement in Indian ITES employees: key to retention; Employee Relations; Vol 29 No. 6, Emerald Group Publishing Limited Bhatnagar, J. and Sharma, A. (2005), The Indian perspective of strategic HR roles and organizational learning capability, International Journal of Human Resource Management, Vol. 16 No. 9, pp. 1711-39. Fegley, S. (2006), 2006 Talent Management Survey Report, SHRM Research, Alexandria, VA.
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Branham, L. (2005), Planning to become an employer of choice, Journal of Organizational Excellence, Vol. 24 No. 3, pp. 57-68. Brewster, C., Sparrow, P. and Harris, H. (2005), Towards a new model of globalizing HRM, International Journal of Human Resource Management, Vol. 16, pp. 949-70. Boudreau, J.W. and Ramstad, P.M. (2005), Talentship, talent segmentation, and sustainability: a new HR decision science paradigm for a new strategy definition, Human Resource Management, Vol. 44 No. 2, pp. 129-36. www.citehr.com www.greatplacetowork.com www.hr-survey.com www.isrinsight.com www.decwise.com www.qualityvalues.com http://en.wikipedia.org/wiki/Employee_ engagement http://retention.naukrihub.com/ http://www.accordsyst.com/engagement. html http://bw.businessworld.in/PDF_upload /hrspecial_survey.pdf http://www.boston.com/jobs/nehra/ 062308.shtml http://blog.nasscom.in/emerge/2008/06 /cultural-issues-in-employee-engagementand retention/ http://blog.nasscom.in/emerge/2008/09 /higher-employee-engagement-today http://www.scotland.gov.uk/Publications /2007/05/09111348/7 http://www.blessingwhite.com/EEE__ report.asp http://www.gallupconsulting.ro/event/ about-gallup.php http://blog.vovici.com/blog/bid/18535/
Employee-Engagement-Survey-The-GallupQ12 http://govleaders.org/gallup_article_ getting_personal.htm http://www.humanresourcesmagazine. com.au/articles/db/0c0216db.asp http://www.hewitt.gr/en/Our%20Services /Consulting/Talent%20Management/Eng agement http://www.towersperrin.com_tp_ getwebcachedoc_webc=HRS_USA_2008_20 0803_GWS http://www.hr.com/hrcom/general/ pf.cfm?oID=12AC5D68-0D30-4413
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Knowledge Transfer by Repatriates for Organizationals Competitive Advantage

Krishnaveni Muttiah* B.R.Santosh** The repatriation process offers an opportunity to transfer and apply the knowledge gained abroad, back into the organization, despite this acknowledged possibility to use repatriates as knowledge transferor, the repatriation process is still both under-researched and the most overlooked phase of international assignments and many returning repatriates experience difficulties to readjust and feel dissatisfied with the repatriation process. More analytical information is thus needed for managers to inform about what actions to take to generate more advantageous results for both the company and the repatriate. The aim of the paper is therefore to further examine how multinational national companies can manage repatriates successfully which can result in transfer of knowledge. This paper will be partly theoretical & partly empirical that deals with the concept concerning management of repatriates for effective knowledge transfer. The analysis of the empirical findings showed dispersed answers and signs of dissatisfaction among the repatriates especially about the formal mechanisms used for transfer of knowledge. Conclusions drawn from the analysis are that the management of repatriates needs to be further implemented within the company & for the company to become more competitive through knowledge transfer both formal & informal mechanisms must be used simultaneously. Keywords: Repatriation, Knowledge transfer and Competitive advantage
INTRODUCTION
The past decade has been characterized by an increased rate of globalization and substantial advancement in technology. As a result considerable changes are occurring in the way businesses organize and compete (Watson & ODonnel, 2000). The shift toward a more integrated and interdependent world economy has created a huge marketplace and the falling tradebarriers have made it easier to compete internationally (Tung, R.1988). International assignments
provide individuals with the chance to gain international knowledge and in the global market it is crucial for multinational firms (MNC:s) to develop, exploit and transfer this knowledge across their organizational units (Lazarova & Tarique, 2005). The transfer of knowledge and in particular tacit knowledge is of great importance for the firm to create competitive advantages due to the difficulties it creates for competitors to imitate (Patriotta, 2004). Repatriation is although often a disregarded aspect of global work
*Assistant Professor, PSG Institute of Management, Peelamedu, Coimbatore, Tamil Nadu, India **Lecturer, Reva Institute of Technology & Management, Yelahanka, Bangalore, Karnataka, India June 2010 Vol. 7 Issue 1
The past decade has been characterized by an increased rate of globalization and substantial advancement in technology. As a result considerable changes are occurring in the way businesses organize and compete.
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Common repatriation problems experienced by the repatriates are loss of status, loss of autunomy and loss of careers directions.
assignments when it comes to research. More attention in international studies is concerning expatriate adjustment in the country of assignment and less focus lies on the preparation on the employees return home (McDonald & Arthur, 2004). Expatriation offers the opportunity to acquire knowledge but repatriation creates the opportunity to transfer this knowledge back to the home country and implement it into the organization (Lazarova & Tarique, 2005).
The Repatriation
A problem connected to international assignments is the repatriation of expatriates. The repatriation is the process of the expatriates return and adjustment to their home countries (Kamoche 1997, Lazarova & Cerdin 2007). This is an important but often neglected issue in MNCs today. In order to make use of the benefits of repatriates MNCs must ensure that the repatriates stay within the company when they return home. However, many repatriates leave their company when they return home. This is one of the major human recourse problems MNCs face today (Lazarova & Cerdin 2007). The repatriation process of the expatriate is not without problems. Derr, C.B. & Oddou, G. R. (1991) & Black (1999) finds that former expatriates often are extremely frustrated and disappointed when they come home because many find that their employers do not value their international experience.
Common repatriation problems experienced by the repatriates are loss of status, loss of autunomy and loss of careers directions. Once again research shows that repatriates feel that their international experience is not of much value to the company (Selmer, Ebrahimi, & Mingtao 2002). Many perceive their jobs at home as lacking in significance compared to their global assignments. Many repatriates also feel that they have been offered a limited amount of career opportunities and that they are rarely considered for promotion. Repatriates feel that they have been removed from the mainstream of corporate advancement (Lazarova & Cerdin 2007). Repatriate turnover is likely to be high in organizations that are unable to meet the expectations of the repatriates who have returned home (Bolino 2002). The basic way to facilitate the adjustment to the home country and to make sure that the repatriation process is made as easy as possible for the employee is to make sure that the employee has got realistic and accurate expectations. Clear information as well as the frequency and quality of information between the home country and the expatriate will facilitate this formation of accurate expectations and will help the employee to better know what to expect when they come back home (Lazarova & Cerdin 2007).
Knowledge Transfer
The previous section illustrated that one of the problems with the repatriation process is that many repatriates feel that their company
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does not value the knowledge that they gained abroad. In spite of this, or maybe just because of this, recent studies on repatriates management have turned the attention to repatriates as vehicles of knowledge transfer. These studies show that repatriates can function as a key resource to new knowledge since they are able to gain knowledge about new markets, cultures and ways of doing business (Collings, Scullion & Morley 2007 and Lazarova & Cerdin 2007). When it comes to the transferability of knowledge, two different types of knowledge is often highlighted in the literature, tacit and explicit knowledge. Tacit knowledge refers to the knowledge that is hard to codify and teach. This type of knowledge is achieved through experience and observations and not through formal learning. Explicit knowledge on the other hand refers to knowledge that can more easily be shared and formally transmitted for example: blueprints and manuals. Both of these types of knowledge are important when it comes to the transfer of expatriate knowledge (Riusala & Suutari 2004 and Nonaka 1991).
factor that influences the difficulty of knowledge transfer is the social context. This refers to features connected to a specific country. Studies indicate that the success of knowledge transfer is partly dependent on country specific features and Riusala and Suutaris study points out that the bureaucracy of the public authorities, legislation, taxation as well as the traditional use of bribes and gifts all affect the transfer of knowledge. Riusala and Suutari have also highlighted organizational context. This factor concerns the effect the organizational culture has on the transfer of knowledge. Similar to Riusala and Suutari, Berthoin (2001) has also highlighted the difficulties connected to knowledge transfers. However, Berthoins research focuses on the exploitation of repatriate knowledge when the repatriates have returned home. Berthoins study, done on two German companies, illustrates the difficulty in turning repatriates tacit knowledge into explicit knowledge. Berthoin acknowledges that a gap exists between what individuals learn and what the organization as a whole learns from international assignments. According to Berthoin (2001) there are three main barriers when it comes to turning repatriates knowledge into organizational knowledge. The first barrier is connected to the process of organizational learning. Berthoins study indicates that difficulties when it comes to the distribution of knowledge are related to the absence of interest, initiatives
Barriers To Transfer Repatriates Knowledge
Of
Transfer of repatriates knowledge within the MNC is not an easy task and a study done by Riusala and Suutari (2004) states that there are few factors that influence the difficulty of international knowledge transfer. According to Riusala and Suutari, the
Riusala and Suutaris study points out that the bureaucracy of the public authorities, legislation, taxation as well as the traditional use of bribes and gifts all affect the transfer of knowledge.
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...the position that the company assigns for the returning expatriate also affects the use of knowledge within the organization.
and structures for the communication of knowledge. Another problem that Berthoin found was that it was hard for the repatriates to get their coworkers at home to understand their new knowledge. The interviewed repatriates felt that the absence of a shared understanding lead to difficulties in knowledge sharing. This problem has to do with the fact that organizational learning only is possible if the employees can achieve a shared understanding of the knowledge. However, when the local employees were able to try the new knowledge in their own context they were also able to convert the knowledge into their own tacit knowledge. As a result the new knowledge could be embedded in new organizational structures (Berthoin 2001). The second type of barrier Berthoin acknowledges is the cultural and structural barrier. Berthoins study (2001) indicates that the factors needed to motivate and support learning processes were often missing in the organizational/national culture or held back by the firms structure. A specific cultural feature that was highlighted as a barrier to knowledge transfer by the interviewed repatriates, was the organizational politics within headquarters. The repatriates highlighted that the fear of loosing power was one of the reasons to why headquarters did not use the repatriates knowledge. Another reason was fear for sharing new ideas with other co-workers. The returning repatriates also mentioned that the structure of the company functioned as a barrier to organizational learning since the
hierarchical structures within the firm made knowledge sharing difficult. In large MNCs with bureaucratic structures it becomes more difficult to identify the relevance of and develop a mutual understanding of the new knowledge (Berthoin 2001). The third barrier Berthoin (2001) highlights concern the way the repatriation process is managed. Studies done in the area of repatriation recommends that the process of repatriation is handled as a whole cycle. However, in reality the repatriation process is not always treated accordingly. As a result, the MNCs overall strategy, the HR policies and the repatriation process often stands in contrast to the organizational learning. Many repatriates in Berthoins study reported that bad connections with managers during their time abroad negatively affected their ability to contribute to the organizational learning when returning. Furthermore, Berthoins study also indicated that the position that the company assigns for the returning expatriate also affects the use of knowledge within the organization. If a repatriate is assigned to a position connected to the region that she/he have been working with in the MNC, the company is more likely to gain from the repatriates than they would, if the repatriate was assigned another position. However, regardless of the position gained after returning home, active procedures with the purpose of identifying and sharing knowledge are crucial to facilitate the learning process within a MNC.
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From the theory it was evident that six factors affect knowledge transfer which is summarized below:
when the expatriate returns home. Informal mechanisms of knowledge exploitation have to do with relationships between coworker as well as other informal networks. Riusala & Suutari (2004) and Berthoin (2001) all pointed out the importance of creating channels of communication within the MNC. In the same vein have Mezias and Scandura (2005) also proposed that informal mechanisms such as international mentoring own initiative & Personal networks can improve knowledge transfers within the MNC. Individual factors refer to factors connected to the communication and interpretation of the knowledge. For example, Berthoins study indicated that it is hard for repatriates to get their co-workers at home to understand their new knowledge due to difficulties in interpretation and communication. This factor also includes repatriates own perception
Operational definition of the terms:

Formal mechanisms of knowledge transfer concerns with instruments such as databases, manuals, newsletters, seminars and workshops but also if an organization has a specific strategy or vision about knowledge transfer or not. Downs and Thomas (1999) and Kamoche (1997) have for example argued that MNCs must build up a supporting infrastructure in order to gain something from the repatriates knowledge. For knowledge transfer to be successful Berthoin (2001) have highlighted that these types of mechanisms must exist throughout the whole expatriation period, not only
Mezias and Scandura (2005) also proposed that informal mechanisms such as international mentoring own initiative & Personal networks can improve knowledge transfers within the MNC.
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and interpretation of their knowledge.
Riusala and Suutaris (2004) study pointed out that the bureaucracy of the public authorities.
Country specific factors refer to features connected to one specific country. Riusala and Suutaris (2004) study pointed out that the bureaucracy of the public authorities, legislation and taxation as well as the traditional use of bribes and gifts all affects the transfer of expatriate knowledge Organizational culture concern traditions, power relations and attitudes connected to the organization. If the organizational culture is open for both communication and change it seems like the transfer of expatriate knowledge is easier then in firms with a closed and bureaucratic organizational culture. Organizational structure refers to vertical and horizontal structures within the company. For example, the returning expatriates expressed that the structure of the company functioned as an obstacle to organizational learning since the firms hierarchical structure made knowledge sharing difficult.
between formal transfer mechanisms and individual factor, country specific factor, organizational culture & structure? Hypothesis 1: There is no significant difference among the age group with regard to opinion about the formal transfer mechanism Hypothesis 2: There is no significant difference among the gender with regard to opinion about the formal transfer mechanism Hypothesis 3: There is no significant relationship between formal transfer mechanism & individual factor Hypothesis 4: There is no significant relationship between formal transfer mechanism & country specific factor Hypothesis 5: There is no significant relationship between formal transfer mechanism & organisational culture & structural factor.
METHOD
The empirical work in this study
RESEARCH QUESTIONS & involved gathering of information, HYPOTHESIS from employees working in IT
The study was conducted in order to attempt to answer the following key research questions: 1. Does age & gender difference influence the opinion about the transfer of knowledge by repatriates? 2. To explore the relationship industries in Bangalore & Mysore region. The choice of this region was driven mostly by feasibility. A total of 40 respondents were contacted of which complete response was received from 25 respondents who were in middle and senior management levels. Of the respondents, 72 per cent were male. The median age was 39 years, and the median tenure of the respondents was 5.6 years. The data
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was collected using a five point likert scale questionnaire.
DEMOGRAPHIC CHARACTERISTICS OF PARTICIPANTS

As indicated in Table 1 majority of the respondents (56 per cent) were between the age group of 36-45, 68 per cent of the respondents were male as indicated in Table 2 and the respondents experience is given in Table 3 which indicates that minimum experience of the respondents was 5 years and maximum experience of the respondents was 25 years.
RESULTS AND ANALYSIS

The investigation of the data analyzed the extent to which the independent variable both formal and informal mechanisms had an influence on the dependent variable. The analysis was done on the following lines:
Table 1 Age 25-35 36-45 46 and above Total Frequency 8 14 3 25 Percentage 32 56 12 100
Table 2 Age 25-35 36-45 46 and above Total Frequency 8 14 3 25 Percentage 32 56 12 100
Table 3 Experience Exp n 25 Mean 14.2 Std Dev 5.73 Min 5.00 Max 25.00
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Independent factors influencing the knowledge transfer INFLUENCE OF GEOGRAPHICAL FACTOR LIKE AGE AND GENDER ON KNOWLEDGE TRANSFER
Influence of age factor on knowledge transfer mechanisms Influence of the gender on knowledge transfer mechanisms.
In order to test the Hypothesis 1, study conducted the one-way analysis of variance (ANOVA) i.e. whether there is a significant difference among the age group with regard to opinion about the transfer of knowledge. Table 4 shows that the results of ANOVA between age group and formal mechanism of knowledge. The results revealed that there is no significant difference among the age group with regard to opinion about the transfer of knowledge (F (3, 22) = 0.79, p > 0.05). In simple words, the results revealed that the formal transfer of knowledge does not vary with the age group, thereby supporting Hypothesis 1. The results revealed that there is no
Hypothesis one and two stated that there is no significant relationship with regard to repatriates age and gender regarding their opinion about the formal transfer mechanism Table 4 Age Group Between Groups Within Groups Total *5% level significance Table 5 Gender Formal mechanism s of knowledge transfer Sex Male Female N 17 8 Sum of Squares .298 41.542 41.840 Df 3 22 25
Mean Square .149 1.888
F .079
Sig. .924*
Mean 3.18 2.38
Std. Deviation 1.237 1.408
Std. Error Mean .300 .498
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significant difference between genders with regard to transfer mechanisms, thereby supporting Hypothesis 2
Relationship between country specific factors and formal transfer mechanism. Relationship between organizational culture and structure on formal transfer mechanism. Hypothesis 3 to 5 states that there is no significant relationship between formal transfer mechanisms and individual factor, country specific factor and organizational culture & structure. To test the moderating affect of relationship between formal mechanisms and individual factor, country specific factor, organizational culture & structure the mean, standard deviation and correlation was used. Table 6 determines the Correlation between all variables & Table 7 determines mean and standard deviation.
Gender
The mean standard deviation and standard error of mean among the gender in given in Table 5. In order to test the Hypothesis 2, study conducted T-Test i.e. whether there is significant difference among the gender with regard to opinion about the transfer mechanisms. Relationship between independent variable (individual factors, country specific factors, organizational culture and structure) and formal transfer mechanism. Relationship between individual factors and formal transfer mechanism.
Table 6: Relationship between independent variables and formal transfer mechanism. Variables Formal Mechanisms & Individual factor Formal mechanism & Country specific factor Formal mechanism & Organisational culture & structure *5% level of significance Value (r) .837 Sig.* .000 Results Significant
-.748
.000
Significant
-.794
.000
Significant
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Table 7: Results of mean and standard deviation of the independent variables Study Variables Individual factor Organisational culture Country specific factor Valid N (list wise) N 25 25 25 25 show that organisational culture & structural factor (r=-0.794) was significantly negatively correlated with formal mechanisms at 0.01 level, leading us to accept the alternative hypothesis and reject the null hypothesis. Regression, analysis of variance and coefficient of variables are studies in Table 8, 9 and 10. In order to the test the regression between various factors, multiple regression analysis was used. The constant variables which were considered as predictors for the study are Individual factors, country specific factors and organizational culture & structure, the dependent variable are the formal mechanisms for knowledge transfer. The results of the multiple regression analysis are summarized in Table 8. Minimum Maximum 1.71 1.25 2.00 3.57 4.25 4.00 Mean 2.5143 3.0300 3.0400 Std. Deviation .58467 .90231 .84063
To test Hypothesis 3 the bivariate correlation analysis was used which shows that individual factor (r=0.837) was significantly correlated with formal mechanisms at 0.01 level, leading us to accept the alternative hypothesis that there is significant relationship between formal transfer mechanism & individual factor. Further to test Hypothesis 4 & 5 the bivariate correlation analysis was used and the results show that country specific factor (r=-0.748) was significantly negatively correlated with formal mechanisms at 0.01 level, leading us to accept the alternative hypothesis that there is a significant relationship between formal transfer mechanisms & country specific factor. The bivariate correlation analysis
Table 8: Summary of Regression Analysis of variables. Model 1 R .910 R Square .827 Adjusted R Square .803 Standard Error of the estimate .586
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Table 9: Analysis of variance of study variables
Model Regression Residual Total
Sum of Squares 34.619 7.221 41.840
Df 3 21 24
Mean Square 11.540 .344
Sig.
33.560
.000*.
*5% level of significance Table 10: Coefficient of variables for organizational culture and country specific factor Unstandardized Coefficients B (Constant) Organizational culture Country specific factors Individual factors 4.580 -.391 -.615 .510 Std. Error 1.518 .253 .174 .241 -.267 -.392 .385 Standardized Coefficients Beta 3.017 -1.543 -3.538 2.116 .007 .138 .002 .047
Model
Sig.*
Finally to test the reliability of the results, cronbachs alpha test of reliability was conducted and the
results of the test are summarized in Table 11 to 14.
Table 11: Summary of reliability test of individual factors Cronbach's Alpha .926 No. of Items 5
The research study reveals that driving a bus is an occupation with high risk for health and well-being.
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Table 12: Reliability test of individual factors influencing knowledge transfer Variables Company evaluation Given opportunity to attend conference Taking advantage Sharing and communicating international knowledge Formal report Scale Mean 11.04 11.08 Scale Variance 17.540 15.577 Corrected ItemTotal Correlation .764 876 Cronbach's Alpha .918 .895
10.92
16.160
.860
.899
11.04
17.207
.858
.903
10.64
14.657
.750
.931
Table 13: Reliability test of individual factors influencing knowledge transfer Cronbach's Alpha .905 No. of Items 4
Table 14: Reliability test of organizational culture and structure influencing knowledge transfer Variables Organisational culture barrier Structure No formal procedures Did not work well with my company Scale Mean 9.16 Scale Variance 6.973 Corrected ItemTotal Correlation .794 Cronbach's Alpha .878
9.32
7.810
.859
.857
8.92
7.827
.800
.875
8.96
7.623
.723
.902
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To test the reliability of individual factors effecting transfer mechanisms, five factors have been tested and an average reliability of .926 was achieved indicating high reliability of the test result. And to test the reliability of the results on organizational culture and structure, four factors have been tested and an average reliability of .905 was achieved indicating again the high reliability of the test results.
and own initiatives seem to be a more common way of transferring knowledge in the investigated company. Research results also show that repatriates considered organizational structure and country specific factors and the repatriation process as a whole, to be major obstacles for use of formal mechanisms of knowledge transfer which is supported from the theories that have been suggested earlier.
DISCUSSION
The objective of this study was how MNCs can use the repatriates knowledge effectively. The study throws light on the mechanisms used for knowledge transfer & the level of relationship between individual factors, country specific factors, organisational culture & structure with regard to mechanisms used for transfer of knowledge. The results of the research highlighted that repatriate knowledge in the company is not exploited by using formal mechanisms. The most of the repatriates in our study were not aware of many formal mechanisms of knowledge transfer within their company. According to the repatriates the absence of complete knowledge about formal mechanism was considered to be the greatest barrier to the transfer of repatriate knowledge. The findings also support the argument that repatriation and knowledge exploitation is not completely made use of in the organizations to gain competitive advantage In general, informal mechanisms of knowledge transfer such as networks June 2010 Vol. 7 Issue 1
LIMITATIONS STUDY
OF
THE
The following limitation became evident during the research study The size of the sample was considered to be small since the area covered two regions only, hence the generalizability of the findings are limited. The length of the questionnaire was considered by some respondents to be too long. This could have brought about the low response rate. Analysis was conducted only on individual level, however generally field studies of the above nature involves two levels of analysis (individual and organizational level)
SUGGESTIONS FUTHER RESEARCH
FOR
The study does not provide a definitive answer about type of
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...organizations have to understand that in order to take maximum advantage of repatriates knowledge managers must ensure effective use of both formal and informal transfer mechanisms...
knowledge transferred, hence further research can be done in the area of whether knowledge transferred is tacit or otherwise. The study confirms only to two regions with limited sample size, hence further research can be done by improving the geographical area and the sample to determine if the new result correlates with the existing theories. Study concentrates in general on the repatriates, however further studies can be done where data is collected from repatriates who were a failure on the international assignment and made to come back to the home country before completing the job assignment.
thecontinuing need for global assignment, Journal of knowledge management, Volume 4, Issue Bennett, R. (1993), "Meeting the challenges of repatriation", Journal of InternationalCompensation and Benefits, pp.28-33. Berthoin Antal, A. (2001) Expatriates contribution to organizational learning, Journal of General Management Volume 26, pp. 62-84. Berthoin Antal, A. & Walker, E-M. (2005), Organizational Learning from Chinese Returners:An Exploratory Study of the Role of Cross-Cultural Interactions, Contribution to EGOS 2005,Subtheme 28 Unlocking organizational learning in multinational corporations: Exploring the pivotal role of cross-cultural interactions. Black, J., & Gregersen, H. (1999). The right way to manage expats. Harvard Business Review. MarchApril 1999, 1-8 Derr, C.B. & Oddou, G. R. (1991, September). Are US multinationals adequately preparing future American leaders for global competition? International Journal of Human Resource Management,2 , 227-245. Retrieved October 9, 2002 from http://unx1.shsu.edu:2277/delivery.asp Fink, G. & Meierewert, S. (2005). The use of repatriate knowledge in organizations. Human Resource Planning, 28.4, pp. 30-36. Harvey, M. (1982). "The other side of foreign assignments: dealing with the repatriation dilemma", Columbia Journal of World Business, Vol. 17 No.1, pp.53-59. Harvey, M. (1989), "Repatriation of corporate executives: an empirical study", Journal of International Business Studies, Vol. 20 No. 1, pp.131-144. Jassawalla, A., Conolly, T. & Slojkowski, L. (2004). Issues of effective repatriation: A model and managerial implications. KPMG survey: Majority of companies select top employees for overseas assignments, however fail to successfully repatriate. (2000, October 25).PR Newswire, Retrieved
Finally to conclude organizations have to understand that in order to take maximum advantage of repatriates knowledge managers must ensure effective use of both formal and informal transfer mechanisms. Also steps should be taken to ensure positive correlation with regard to formal transfer mechanisms and that of country specific factors, organizational and structural factors.
References
Ambos, T. C. Ambos, B. & Schlegelmilch, B. B. (2006). Learning from foreign subsidiaries: an empirical investigation of headquarters' benefit from reverse knowledge transfers'.International Business Review, Vol 15, 294-312. Bender, S. & Fish, A. (2000), The transfer of knowledge and the retention of expertise:
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October 9, 2002 from http://unx1.shsu.edu:2067/universe /printdoc Revisiting repatriation concerns: organizational support versus career and contextual influences. Journal of International Business Studies, 38, pp. 404429. Lazarova, M. & Tarique, I. (2005). Knowledge transfer upon repatriation. Journal of World Business, 40, pp. 361-373. Lazarova, M. & Cerdin, J-L. (2007). Advanced Management Journal, 69.2, pp. 38-46. McDonald, S. & Arthur, N. (2004). Connecting career management to repatration adjustment. Career Development International, Vol. 10, No. 2, pp. 145-158. Minbaeva, D. & Michailova, S. (2004). Knowledge transfer and expatriation in multinational corporations. Employee Relations, Vol. 26, No. 6, pp. 663-679. Nonaka (1991), The knowledge-creating company, Harvard Business Review, 69, November-December, 96-104. Patriotta, G., (2004), Knowing and Organizing, in G. Patriotta, Organizational Knowledge in the Making: How Firms Create, Use and Institutionalize Knowledge, Oxford University Press: Oxford, UK, pp. 1552 PriceWaterhouseCoopers (2002). International Assignments Global Policy and Practice Key Trends 2002. Retrieved March 7, 2003 from http://users.anet.com/~smcnulty/docs/pw c2002.pdf Selmer J.; Ebrahimi B.P.; Mingtao L. Career management of business expatriates from China pp. 17-33(17) Suutari, V. and Brewster, C. (2003). Repatriation: Empirical Evidence from a Longitudinal Study of Careers and Expectations among Finnish Expatriates. International Journal of Human Resource Management, 14:6.
Suutari, V. and Riusala, K. (2000). Operating in 'Economies in Transition'Adjustment and Management Issues faced by Finnish Repatriate Managers in CEE. Finnish Journal of Business Economics, 49:1, 87-107 Suutari, V. (2003). Global managers: career orientation, career tracks, life-style implications, and career commitment. Journal of Managerial Psychology, 18:3, 185-207. Simonin, B. (2004). An empirical investigation of the process of knowledge transfer in international alliances. Journal of International Business Studies, Vol. 35, No. 5, pp. 407-427 Tsang, E. (1999). The knowledge transfer and learning aspects of international HRM: an empirical study of Singapore MNCs. International Business Review, Vol. 8, No. 5, pp. 591-609. Tung, R. (1988). Career issues in international business. The Academy of Management Executive, Vol. 11, No. 3, pp. 241-244. Watson ODonnell, S. (2000). Managing foreign subsidiaries: agents of headquarters, or an interdependent network? Strategic Management Journal. Vol. 21, No. 5, pp. 525-548.
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A Study on Evaluation of Intrinsic Value of Selected Public Sector Banks in India

Sunita Sukhija* Suman Ghalawat** Without a sound and effective banking system India cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by technology and any other external and internal factors. For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. The Public Sector Banks (PSBs), which are the base of the Banking sector in India account for more than 78 per cent of the total banking industry assets. The State Bank of India (SBI) has posted a net profit of US $1.56 billion for the nine months ending in December 2009, recorded an increase by 14.43 per cent from US $175.4 million posted in the previous nine months which ended in December 2008. Without a sound and effective banking system in India it cannot have a healthy economy. The present paper focuses on evaluating intrinsic value of the banks and practical exposure of public sector banks in India. The study reveals that SBI performed better in terms of Earning per Share and the share price in case of SBI despite the fact that its profit margin ratios are not better than that of other four banks. On the other hand, BOB has fared better in terms of Current Ratio, Quick Ratio and Debt Equity Ratio. Canara Bank is realizing highest returns from its capital employed in comparison to other sample banks with highest average Return on Capital Employed. Keywords: Economy, Indian Banking System and public sector banks
...Indian banking is a reflection of the Indian economy. The robust growth experienced in the industrial and services sector is mirrored by the growth of the Indian banks. The Indian banking industry is seen as quite healthy.
In many ways, Indian banking is a reflection of the Indian economy. The robust growth experienced in the industrial and services sector is mirrored by the growth of the Indian banks. The Indian banking industry is seen as quite healthy. The industry continues to enjoy high growth rates with retail credit being at the forefront of action. Alongside this demand for personal consumption are factors such as the
upward movement of interest rates, creeping inflationary pressures and escalating asset prices that are a cause for concern. As ever, each category of banks-public, old private, new private and foreign banksface its own unique challenges. For some it is surviving in the face of heightened competition, others have compressing net interest margins, NPAs, manpower and technology to
*Assistant Professor, Department of Management Studies, JCDV Sirsa, India **Assistant Professor, Department of Management, Haryana Agricultural University, Hisar, Haryana, India Rai Management Journal
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deal with. In terms of the future, a high growth scenario creates challenges of its own. Bankers cannot remain complacent as they would require managing a host of dynamics like interest rate movements, escalating asset prices on the funding side. On the operational side, significant pressure will be felt in the areas of achieving growth in earnings and returns, managing and deploying financial and human capital and proactively dealing with powerful competitive forces.
For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process.
Research Methodology OBJECTIVES STUDY
Current Scenario of public sector banks

Indian banks, the backbone of the Indian economy, are the major contributors in the development of the economy. The Public Sector Banks (PSBs), which are the base of the Banking sector in India account for more than 78 per cent of the total banking industry assets. The State Bank of India (SBI) has posted a net profit of US$ 1.56 billion for the nine months ended December 2009, up 14.43 per cent from US$ 175.4 million posted in the nine months ended December 2008. Meanwhile the economic and corporate sector slowdown has led to an increasing number of banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance. Without a sound and effective banking system India cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors.
OF
THE
To gain knowledge of evaluating intrinsic value of the banks. To acquire practical exposure of public sector banks in India. To get familiarity of scheming comparative efficiency of sample banks. To analyze and give conclusion and recommendations.
HYPOTHESIS
The study tests whether the selected variables of sample banks vary significantly during the study period. The following hypotheses have been taken to put on test. H1: The Earning per Share (EPS) position of SBI, PNB, BOI, BOB and CB does not differ significantly.
The banking system of India cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors.
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H2: The Debt Equity Ratio (DER) position of SBI, PNB, BOI, BOB and CB does not differ significantly. H3: The Price Earning Ratio (PER) position of SBI, PNB, BOI, BOB and CB does not differ significantly. H4: The Price to book Ratio (PBR) position of SBI, PNB, BOI, BOB and CB does not differ significantly. H5: The Return on Capital Employed (ROCE) position of SBI, PNB, BOI, BOB and CB does not differ significantly. H6: The Return on Net worth (RONW) position of SBI, PNB, BOI, BOB and CB does not differ significantly. H7: The Current Ratio of SBI, PNB, BOI, BOB and CB does not differ significantly. H8: The Quick Ratio of SBI, PNB, BOI, BOB and CB does not differ significantly.
SAMPLE SIZE
A finite sample size of five banks listed on the National Stock Exchange (NSE) has been selected for the purpose of the study. They are State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BOB), Bank of India (BOI) and Canara Bank (CB).
TOOLS USED FOR ANALYSIS

Ratio Analysis: Ratios have been calculated for the past five years for the purpose of analysis. Ratios being designed are named as: Earning Per Share (EPS), Debt Equity Ratio (DER), Price Earning Ratio (PER), Price to Book Ratio (PBR), Return on Capital Employed (ROCE), Return on Net Worth (RONW), Current Ratio, Quick Ratio. Analysis of Variance (ANOVA): The statistical tool that is used for testing hypothesis is one-way Analysis of Variance (ANOVA).
DATA COLLECTION AND DATA SOURCE

For this study, secondary data has been collected from a financial database of centre for monitoring economy (CMIE) called Prowess, Business Newspapers and via internet etc.
ANALYSIS & INTERPRETATIONS I. Current Ratio

This ratio explains the relationship between current assets and current liabilities of a business. This ratio is used to assess the firms ability to meet its short term liabilities on time.
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Table 4.1(a): Current Ratio (in Times) Positions of Banks Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Mean Bank of Baroda 2.61 2.42 2.75 3.62 4.81 4.34 4 3.51 Bank of India 2.26 3.69 2.3 3.63 3.57 3.37 4.35 3.31 Canara Bank 2.79 2.97 2.5 3.06 3.75 2.89 3.21 3.02 Punjab Nat. State Bank Bank of India 2.52 1.99 1.39 3.97 4.1 2.98 2.82 2.82 1.36 1.32 2 1.66 1.73 1.6 1.87 1.65
Source: Data complies from the software PROWESS
Interpretation
BOB has the highest current ratio (mean) which means that BOB has the highest ability to meet its short term liabilities on time in comparison to other 4 banks.
HYPOTHESIS TESTING
H0 : Current Ratio of BOB, BOI, CANARA BANK, PNB and SBI do not differ significantly. H1 : Current Ratio of BOB, BOI, CANARA BANK, PNB and SBI differ significantly.
Table 4.1(b): One-Way Anova For Current Ratio Year Between People Within People Between Items Residual(a) Total Total Sum of Squares 14.820 8.643 7.182 15.825 30.645 df 4 6 24 30 34 Mean Square 3.705 1.441 .299 .528 .901 4.814 F(4,30)=2.69 F 5% F-Limit (From FTable)
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INFERENCE
Since the calculated value of F is 4.814 which is greater than the table value of 2.69 (CV>TV at 5% significance level), the null Hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the Current Ratio position of SBI, PNB, BOI, BOB and CANARA BANK differ significantly.
II Quick Ratio
The quick ratio is an alternative measure of liquidity that does not include inventory in the current assets.The quick ratio indicates whether the firm is in the position to pay its current liabilities within a month or immediately.
Table 4.2(a): Quick Ratio (In Times) Position Of Banks Bank of Baroda 2.38 2.18 2.58 3.32 4.55 4.21 3.86 3.30 Bank of India 2.16 3.34 2.02 3.22 3.36 3.15 4 3.04 Canara Bank 2.75 2.91 2.38 2.89 3.65 2.87 3.18 2.95 Punjab Nat. State Bank Bank of India 2.46 1.9 1.36 3.87 3.95 2.82 2.69 2.72 1.33 1.26 1.93 1.65 1.68 1.56 1.82 1.60
Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Mean
Interpretations
BOB has the highest quick ratio (mean) which means that BOB has the highest ability to meet its short term liabilities on time in comparison to other sample banks.
HYPOTHESIS TESTING
H0 :Quick Ratio of BOB, BOI, CANARA BANK, PNB and SBI does not differ significantly. H1 : Quick Ratio of BOB, BOI, CANARA BANK, PNB and SBI differ significantly.
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Table 4.2(b): One-Way Anova For Quick Ratio Year Between People Within People Between Items Residual(a) Total Total Sum of Squares 12.104 8.202 6.806 15.008 27.113 df 4 6 24 30 34 Mean Square 3.026 1.367 .284 .500 .797 4.821 F(4,30)=2.69 F 5% F-Limit (From FTable)
INFERENCE
Since the calculated value of F is 8.272 which is greater than the table value of 2.69 (CV>TV at 5% significance level), the null Hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the Quick Ratio position of SBI, PNB, BOI, BOB and CANARA BANK differ significantly.
III Earning Per Share

This ratio measures the profit available to the equity shareholders on a per share basis. All profits left after payment of the tax and preference dividend are available to equity shareholders.
Table 4.3(a): Earning Per Share (In Rupees) Position Of Banks Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Mean Bank of Baroda 26.11 32.97 23.08 22.7 27.17 39.41 58.53 32.85 Bank of India 17.42 20.69 6.98 14.39 19.08 38.26 57.26 24.87 Canara Bank 24.85 32.63 27.06 32.76 33.4 38.17 50.55 34.20 Punjab Nat. State Bank Bank of India 31.74 41.79 44.72 45.65 61.14 64.98 98.03 55.44 59 69.94 81.79 83.73 74.13 106.56 143.67 88.40
Source: Data complies from the software PROWESS June 2010 Vol. 7 Issue 1
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Interpretation
SBI has the highest EPS (mean) which means that it has highest profits available to equity shareholders on per share basis in comparison to other 4 banks.
HYPOTHESIS TESTING
H0 : Earning Per Share of BOB, BOI, CANARA BANK, PNB and SBI does not differ significantly. H1 : Earning Per Share of BOB, BOI, CANARA BANK, PNB and SBI differ significantly.
Table 4.3(b): One-Way Anova For EPS

Sum of Squares 18472.651 Between Items Residual(a) Total Total 8825.861 2099.273 10925.134 29397.785 Mean Square 4618.163 1470.977 16.817 87.470 364.171 864.641 F(4,30)=2.69 5% F-Limit (From F-Table)
Year
df
Between People Within People
4 6 24 30 34
INFERENCE
Since the calculated value of F is 16.817 which is greater than the table value of 2.69 (CV>TV at 5% significance level), the null Hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the EPS
position of SBI, PNB, BOI, BOB and CANARA BANK differ significantly.
IV Debt Equity Ratio

This ratio is calculated to assess the ability of the firm to meet its long term liabilities.
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Table 4.4(a): Debt Equity Ratio (in Times) Position Of Banks Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Mean Bank of Baroda 0.45 0.48 0.56 0.9 0.45 0.85 0.99 0.67 Bank of India 1.84 1.69 1.93 1.9 1.98 1.37 1.33 1.72 Canara Bank 0.46 0.54 0.45 0.5 0.96 1.04 1.39 0.76 Punjab Nat. State Bank Bank of India 0.65 0.8 0.64 0.95 0.56 1.08 0.95 0.80 0.77 0.85 0.94 1.29 1.79 1.49 1.45 1.23
Interpretation
BOB has the lowest debt equity ratio (mean) which means that a less risky financial position from the long term point of view, as it indicates that less and less funds invested in business are provided by long term lenders.
HYPOTHESIS TESTING
H0 : Debt Equity Ratio of BOB, BOI, CANARA BANK, PNB and SBI does not differ significantly. H1 : Debt Equity Ratio of BOB, BOI, CANARA BANK, PNB and SBI differ significantly.
Table 4.5(b): One-Way Anova For Debt Equity Ratio Year Between People Within People Between Items Residual(a) Total Total Sum of Squares 5.370 .772 1.914 2.686 8.056 df 4 6 24 30 34 Mean Square 1.343 .129 .080 .090 .237 1.612 F(4,30)=2.69 F 5% F-Limit (From FTable)
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INFERENCE
Since the calculated value of F is 1.612 which is less than the table value of 2.69 (CV>TV at 5% significance level), the null Hypothesis is accepted and the alternative hypothesis is rejected. Hence, it is concluded that the Debt Equity Ratio position of SBI, PNB, BOI, BOB and CANARA BANK does
not differ significantly.
V Return Employed
on
Capital
Return on Capital Employed (ROCE) is used in finance as a measure of the returns that a bank is realizing from its capital employed.
Table 4.5(a): Return On Capital Employed (In %Age) Position Of Banks Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Mean Bank of Baroda 14.18 13.82 8.56 4.28 7.34 8.69 9.68 9.51 Bank of India 12.36 11.13 3.18 5.53 7.31 10.83 12.48 8.97 Canara Bank 18.98 18.91 10.92 13.08 10.73 9.52 10.11 13.18 Punjab Nat. State Bank Bank of India 15.36 16.8 14.02 7.31 9.22 10.74 13.24 12.38 11.01 11.01 8.53 7.98 6.42 6.71 7.1 8.39
Interpretation
SBI is showing decreasing trend of return on capital employed. And Canara Bank has the highest return on capital employed (mean) which indicates that Canara Bank is realizing highest returns from its capital employed in comparison to other banks taken under study.
HYPOTHESIS TESTING
H0 : ROCE of BOB, BOI, CANARA BANK, PNB and SBI does not differ significantly. H1: ROCE of BOB, BOI, CANARA BANK, PNB and SBI differ significantly.
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Table 4.5(b): One-Way Anova For Roce

Sum of Squares 129.305 Between Items Residual(a) Total Total 233.913 113.112 347.024 476.329 Mean Square 32.326 38.985 4.713 11.567 14.010 8.272 F(4,30)=2.69 5% F-Limit (From F-Table)
Year Between People Within People
df 4 6 24 30 34
INFERENCE
Since the calculated value of F is 8.272 which is greater than the table value of 2.69 (CV>TV at 5% significance level), the null Hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the ROCE position of SBI, PNB, BOI, BOB and CANARA BANK differ
significantly.
VI Return on Net Worth

Return on equity (ROE) measures how much a bank earns within a specific period in relation to the amount that's invested in its common stock.
Table 4.6(a): Return On Net Worh (In %Age) Position Of Banks Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Mean Bank of Baroda 18.81 19.14 12.58 7.44 12.19 14.5 18.63 14.76 Bank of India 26.64 26.38 8.02 14.84 20.35 24.38 24.97 20.80 Canara Bank 26.71 27.06 15.64 19 16.25 15 18.25 19.70 Punjab Nat. State Bank Bank of India 19.95 24.51 21.4 12.55 15.54 18 23.52 19.35 19.08 19.43 16.07 16.81 16.14 16.72 16.95 17.31
Source: Data complies from the software PROWESS June 2010 Vol. 7 Issue 1
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Interpretation
BOI has the highest return on Net Worth (mean) which is a sign that management of BOI is using leverage to increase profits and profit margins. It is also indicating a sign of good management.
HYPOTHESIS TESTING
H0 :RONW of BOB, BOI, CANARA BANK, PNB and SBI does not differ significantly. H1 :RONW of BOB, BOI, CANARA BANK, PNB and SBI differ significantly.
Table 4.6(b): One-Way Anova For Ronw

Sum of Squares 159.644 Between Items Residual(a) Total Total 402.244 286.622 688.866 848.510 Mean Square 39.911 67.041 11.943 22.962 24.956 5.614 F(4,30)=2.69 5% F-Limit (From FTable)
Year Between People Within People
df 4 6 24 30 34
INFERENCE
Since the calculated value of F is 5.64 which is greater than the table value of 2.69 (CV>TV at 5% significance level), the null Hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the RONW position of SBI, PNB, BOI, BOB and CANARA BANK differ
significantly.
VII Price Earning Ratio

In general, a high P/E suggests that investors are expecting higher earnings growth in the future, compared to companies with a lower P/E.
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Table 4.7(a): Price Earning Ratio (In Times) Position Of Banks Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Mean Bank of Baroda 3.29 7.36 9.45 10.14 7.93 7.2 4.01 7.05 Bank of India 2.18 2.85 14.83 9.17 8.79 6.61 3.84 6.89 Canara Bank 2.87 4.43 7.41 8.15 5.83 5.9 3.28 5.41 Punjab Nat. State Bank Bank of India 3.21 7.99 8.79 10.32 7.71 7.82 4.19 7.15 4.57 8.66 8.03 11.56 13.39 15 7.42 9.80
Interpretation
SBI has the highest Price earning ratio (mean) which means that investors are expecting higher earnings growth in the future from SBI as compared to other four banks with a lower P/E.
HYPOTHESIS TESTING
H0: price earning ratio of BOB, BOI, CANARA BANK, PNB and SBI does not differ significantly. H1: price earning ratio of BOB, BOI, CANARA BANK, PNB and SBI differ significantly.
Table 4.7(b): One-Way Anova For Price Earning Ratio

Year Between People Within People Between Items Residual(a) Total Total Sum of Squares 70.585 205.633 96.525 302.159 372.744 df 4 6 24 30 34 Mean Square 17.646 34.272 4.022 10.072 10.963 8.521 F(4,30)=2.69 F 5% F-Limit (From FTable)
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INFERENCE
Since the calculated value of F is 8.521 which is greater than the table value of 2.69 (CV>TV at 5% significance level), the null Hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the PE Ratio position of SBI, PNB, BOI, BOB
and CANARA significantly.
BANK
differ
VIII Price to Book Ratio

The price-to-book ratio, or P/B ratio, is a financial ratio used to compare a bank's book value to its current market price.
Table 4.8(a): Price To Book Ratio (In Times) Position Of Banks Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Mean Bank of Baroda 0.58 1.39 1.14 1.07 0.91 0.94 0.67 0.96 Bank of India 0.55 0.75 1.17 1.33 1.49 1.5 0.98 1.11 Canara Bank 0.73 1.16 1.37 1.56 1.01 1.11 0.68 1.09 Punjab Nat. State Bank Bank of India 0.73 1.89 1.58 1.64 1.43 1.49 0.99 1.39 0.83 1.58 1.44 1.84 1.7 2.06 1.17 1.51
Interpretation
SBI has the highest Price to book ratio (mean) which implies that investors expect management of SBI to create more value from a given set of assets.
HYPOTHESIS TESTING
H0: Price To Book Ratio of BOB, BOI, CANARA BANK, PNB and SBI do not differ significantly. H1: Price To Book Ratio of BOB, BOI, CANARA BANK, PNB and SBI differ significantly.
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Table 4.8(b): One-Way Anova For PB Ratio

Year Between People Within People Between Items Residual(a) Total Total Sum of Squares 1.515 2.713 1.156 3.869 5.384 df 4 6 24 30 34 Mean Square .379 .452 .048 .129 .158 9.388 F(4,30)=2.69 F 5% F-Limit (From FTable)
INFERENCE
Since the calculated value of F is 9.388 which is greater than the table value of 2.69 (CV>TV at 5% significance level), the null Hypothesis is rejected and the alternative hypothesis is accepted. Hence, it is concluded that the P/B Ratio position of SBI, PNB, BOI, BOB and CANARA BANK differ significantly.
times) and BOI also has very less debt equity ratio (0.76 times) which means that both these banks have less risky financial position from the long term point of view in comparison to other sample banks. Canara Bank has the highest return on Capital Employed of 13.18% (on an average) from the year 2003-2009, which indicates the efficiency of Canara Bank in realizing highest returns from its capital employed in comparison to other sample banks taken under study. BOI has the highest average return on Net Worth of 20.18% from the year 2003-2009 in comparison to BOB, CB, PNB, SBI which indicates that management of BOI is very good as it is using leverage to increase profits and profit margins. There is more responsiveness between the earning capacity and the share price in case of SBI as it has the highest price earning ratio for each year from 2003-2009.
MAJOR FINDINGS
BOB has the highest Current Ratio and Quick Ratio which means that BOB has the highest ability to meet its short term liabilities on time in comparison to other sample banks. The Earning per Share of SBI is substantially higher than that of PNB, BOI, BOB, CB for the data taken from 2003-2009. On an average, SBI has generated EPS of Rs. 80.40, making it one of the most efficient banks in terms of generating earnings. On an average, BOB has the lowest debt equity ratio (0.67
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SBI has the highest price to book ratio of 1.51% from the year 20032009 (on an average) which implies that investors expect from management of SBI to create more value from a given set of assets.
Recommendations
After performing a profound analysis of the major players of the Indian Banking Industry, the following suggestions might be looked over: Investors with short term outlook for investment should prefer SBI as their investment intention because there is more responsiveness between the earning capacity and the share price in case of SBI, despite the fact that its liquidity ratios are not better than that of the other banks. The investors who are risk averse may invest their capital in Bank of Baroda as it has the highest portion of self-owned funds in its capital structure. Bank of India has registered lowest earning capacity, highest debt proportion; therefore, immediate investment in the same should be evaded. The study reveals that PNB has good return on capital employed which indicates that it is realizing good rate of return. The investors with an objective of earning moderate returns might invest in PNB.
Conclusion
The Fundamental Analysis which aims at developing an insight into the economic performance of the business is of paramount importance from the investment point of view. Thus, the present study has been conducted to examine the economic sustainability of the five Major Banks in the Indian banking sector: SBI, PNB, BOI, BOB and the CB. The study reveals that SBI performed better in terms of Earning per Share and the share price in case of SBI despite the fact that its profit margin ratios are not better than that of other four banks. On the other hand, BOB has fared better in terms of Current Ratio, Quick Ratio and Debt Equity Ratio. Canara Bank is realizing highest returns from its capital employed in comparison to other sample banks with highest average Return on Capital Employed, but least efficient in terms of earning per share and the share price. BOI has lowest earning capacity, highest debt equity ratio. The study efficient in from its comparison taken under reveals that PNB is realizing good returns capital employed in to other sample banks study.
References
Bauman Mark P (1996), A Review of Fundamental analysis research in accounting, Journal of accounting literature, (www.findarticles.com).
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Berg Jim (1999), Fundamental Analysis using internet, Past edition of ASX investor update e-mail newsletter,(www.asx.com.au) Whisenant Scott ,Fairfield Patricia M. (2001), Using Fundamental Analysis to Assess Earnings Quality: Evidence from the Center for Financial Research and Analysis, Journal of Accounting Auditing & Finance, Vol. 16, No. 4, pp. 273-295, Fall 2001 Vanston B. Finnie G and Tan C. (2004), Enhancing security selection in the Australian stock market using fundamental analysis and neutral networks Ramudu P Janaki, Rao S Durga (November 2006), A Fundamental Analysis of Indian Banking Industry The Icfai Journal of Bank Management, Vol. 5, No. 4, pp. 68-79, November 2006 Maureen G. Butler , Carolyn M. Callahan and Rod Smith (September 2008), Fundamental Analysis of Firm Performance Following Strategic Alliance Announcements (September 2008) Bettman Jenni L., Sault Stephen and Welch Emma (March 2009), Fundamental and Technical Analysis: Substitutes or Compliments?, Accounting & Finance, Vol. 49, No. 1, pp. 21-36, March 2009.
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Growth of Organized Food Retailing in Punjab: An Exploratory Study

K.C. Mittal* Anmol Soi** Anupama Prashar***
India is going through a retail revolution. All the big business houses are entering this Sector and it is growing at a very fast pace. International giants in this sector like WalMart, Tesco and Carefour are also trying to enter the Indian market. Growing at the rate of 30%, Indian food retail is going to be the major driving force for the retail industry. The paper maps the performance of various retail formats in Food & grocery segment in selected cities of Punjab on the basis of parameters that are governed by consumer perception and operational efficiency. Keywords: Retail, grocery and consumer
INTRODUCTION
Retailing is a sunrise industry in India with many challenges like exclusion of small farms, management of processing and distribution chains.
Food & Grocery form a big and better portion of organized retailing these days. Indias retail sales now account for 44 per cent of its GDP. Food retail sales make up for close to 63 per cent of total retail sales. In absolute terms, food retail sales have grown from Rs 3, 81,000 crore in 1996, to Rs 7,03,900 1 crore in 2001 . Retailing is a sunrise industry in India with many challenges like exclusion of small farms, management of processing and distribution chains. Evolution of super markets and fast food chains is
a recent phenomenon in India. Various demand and supply side factors have contributed towards this growth.
Supply Side:
The liberalization of the economy in the 1990s led to a boom in the Consumer Goods. Industry with reductions in custom duties and shift from quota to tariff based system. Entry barriers on multinationals were largely removed after which Food Industry majors like Kelloggs, Heinz, Tropicana, etc., entered the Indian food industry. This gave rise to
*Professor, PSMS, Punjabi University, Patiala, India ** Assistant Professor, Delhi School of Professional Studies and Research, New Delhi, India ***Research Scholar, Punjabi University, Patiala, India
1
Global Retailing 006, IGD
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tremendous development of sophisticated supply chain & logistics which eventually and gradually has led to the growth in the food processing & packaging industry.
Restrictive Labour laws Urban land ceiling regulations, restrictions on shop opening timings, requirements for shops to close once a week There is no uniform tax structure multiple layers of taxes.
Demand Side:
The increase in the income levels of middle & higher income groups in the 1990s coupled with the reduction in poverty levels was a major factor in contributing to the increase in demand for high quality food retailing services. Changing consumer lifestyles with the steep increase in time value, wide spread change in the Indian family structure from vast joint Hindu families to more manageable nuclear families and increasing level of quality awareness has also helped the cause of the Food Retailing industry. Another major factor that has accelerated the growth of the Indian Food Retailing Sector has been the advent of cable television and the increasing instances of overseas travel by Indians for various reasons. Retailing is subject to a plethora of laws and regulations at central, state and municipal/local levels, some of which have been listed below: Restrictive zoning legislation limits availability of land for retail/ commercial purposes Restrictions on interstate movement of food grains deprive farmers from getting remunerative prices.
2. Food Retailing Scenario in Asia

There is a tremendous change afoot across the Asian food retail landscape, as retailers strive to keep pace with changes in the way people shop for food. Asias market landscape is far from homogenous, with markets ranging from developed economies with world-leading business practices and sophisticated consumer tastes to fast-expanding, emerging markets with double-digit economic growth. This contrast is clearly visible when looking at the growth rates in retail sales in 00 (China 7%, India 1%, Indonesia 18%, Thailand 11%, 2 Taiwan %, Australia %) . Asias food retail market is equally vast and diverse, with many different formats, modern and traditional, available. Moreover, the ways in which the food retail market landscape is changing varies tremendously throughout the region. Over the past few years, the food retail sector in Asia has undergone a transformation that has seen the
The increase in the income levels of middle & higher income groups in the 1990s coupled with the reduction in poverty levels was a major factor in contributing to the increase in demand for high quality food retailing services.
2006 Asia Pacific Retail and Shopper Trends, ACNielsen
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introduction and proliferation of modern food retail formats: supermarkets, hypermarkets and convenience stores3. Food retailers continue to invest in new stores across the region: total food retail outlets in Asia grew by 2% in 2005, to over 1.7 million. Modern retail is growing even faster: in the past five years modern trade has increased share from traditional retail by 11 share points.
With a net increase of over 1,000 selfservice outlets over the previous year, at a growth rate of 6%, modern trade accounted for 8% of Asian fast-moving consumer goods (FMCG) packaged food retail sales in 00. Modern trade will account for the majority of trade in a few years time. A transformation that took the U.S. market more than half a century to complete will take place in Asias food retail markets in less than 0 years.
Source: 2006 Asia Pacific Retail and Shoppers Trends, A C Nielson

Hypermarkets A combination of a general merchandise store and the supermarket with over 0,000 square feet in total selling area and approximately ,000 items. Hypermarkets offer an expanded selection of non-food items, including health and beauty products and general merchandise at low prices. Typically between a third to two-thirds of the mix in a hypermarket is from food. Supermarkets A predominantly self-service format offering a full line of groceries, meat, and produce with between ,000 to 0,000 square feet of total selling area. These stores typically carry approximately 1,000 items and frequently offer a service deli and a bakery. Typically close to two-thirds of the mix in supermarkets is from food. Convenience Stores These are small self-service retail outlets with less than ,000 square feet in total selling area and fewer than ,000 items. These stores typically feature ease of access, late-night hours, and a limited line of merchandise, including staple groceries, snacks and sometimes gasoline. Convenience stores charge above-average prices compared to supermarkets.
3
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Asias food retail market is vast and diverse, with many different formats, both modern and traditional. Moreover, the ways in which the food retail market landscape is changing varies tremendously throughout the region. The total number of food retail outlets in Asia grew at a modest 2% in 2005, to over 1 .7 million. However, modern retail is growing much faster; in the past five years, modern trade has increased in share by 11 points, and now accounts for 8% of share of trade. Modern trade will command the majority of trade in a few years time. Three modern food retail formats begin to emerge as the primary formats across the region: hypermarkets, supermarkets and convenience stores. Although supermarkets have become well entrenched on the Asian landscape (being the first modern retail format to enter most markets), convenience stores and hypermarkets have been leading the outlet expansion race in recent years, and hypermarkets have even become the most significant format in some markets. Varying market maturities among Asian countries adds to the complexity of store format development. Many countries in the region, however, share common patterns and themes. Underlying these patterns and themes are two key dimensions that impact food retail format success: the needs of shoppers, and the business environment. There are similarities among Asias retail market landscapes as well as among their economic and demographic characteristics. Markets within our study are clustered based upon similarities among shopper occasions and market landscape factors, which combine to make some formats more successful at meeting shopper June 2010 Vol. 7 Issue 1
needs than others. Differences within and across clusters also point to possible evolution paths, which a market can take. The four clusters are follows: i) Big and Basic Markets India, Indonesia, and the Philippines where multiple formats co-exist in a developing food retail sector.
ii) Multi-format China, which also accommodates multiple formats and is developing, but at a scale and speed unlike any other market. iii) Modern Growth Markets Taiwan, Korea, Malaysia and Thailand where the experiential requirements of shoppers help make hypermarkets significant. iv) Discriminating Shopper Markets Japan, Australia, Hong Kong and Singapore are mature markets, where shoppers demand superior service from their retailers, and where supermarkets are significant. As per study on Food retail formats in Asia: Understanding Format Success conduced by IBM, it is expected that for the next five years, the significant format in each of these markets today is unlikely to be supplanted. In India, China, Indonesia and the Philippines, multiple formats will continue to grow due to the size and untapped potential in these markets. In Thailand, Korea, Malaysia and Taiwan, hypermarkets and convenience stores will continue to be significant and will impact undifferentiated supermarkets adversely. The current state of regulation will
The total number of food retail outlets in Asia grew at a modest 2% in 2005, to over 1 .7 million. However, modern retail is growing much faster; in the past five years, modern trade has increased in share by 11 points, and now accounts for 8% of share of trade.
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Retailing within this sector is not just about the front-end, but involves complex supply chain and logistics issues as well.
require hypermarkets to limit store size, and locate farther away from residential centers. In response, these hypermarkets will need to augment their offering to attract shoppers who might otherwise object to the added inconvenience of longer commute times and smaller store sizes. In the more developed markets of Japan, Singapore, Hong Kong and Australia, supermarkets will continue to be the most significant format. However, alternative formats with distinctive value propositions are likely to find favour. Moreover, consolidation will continue unabated in all markets, as weak competitors succumb to, or get acquired by, stronger players.
3. Food Retailing Scenario in India

Indias retail sales now accounts for 44 per cent of its GDP. Food retail sales make up for close to 63 per cent of total retail sales. In absolute terms, food retail sales have grown from Rs 3,81,000 crore in 1996, to Rs 7,03,900 crore in 2001. And, just for the record, non-food retail sales have grown from Rs 2,22,400 crore in 1996, to Rs 4,19,000 crore in 2001. Besides, the food and grocery sector now accounts for 14 % of total organized retail, after clothing and textiles (36 %) and watches and jewellery (17 %). Modern, or organized retail, accounts for just about 1.6 per cent of the total retail sales in the country, estimated at Rs 18,000 crore. The study further analyses that last year, for the first time in five years, retail shares of grocery dropped, even though in terms of absolute value, the shares remained stable.
According to Mr. R Subramanian, Director of the Chennai-based discount retail chain, Subhiksha: "Food and grocery retailing is a tough business. Margins are low, and consumers are not dissatisfied with existing shops where they buy. For example, the next door grocery shopkeeper is smart and delivers good customer service, though not value." As of now, while Chennai has some five organised food and grocery retail chains, other big cities such as Delhi, Bangalore, and Mumbai average only two-three such chains. Also, most food retail players have been region-specific as far as geographical presence is concerned. RPG Groups FoodWorld, Nilgiris, Margin Free, Giant, Varkeys and Subhiksha, all of which spread more or less in the Southern region; Sabka Bazaar has a presence only in and around Delhi; names such as Haiko and Radhakrishna Foodland are Mumbai-centric; while Adani is Ahmedabad-centric. "Organised food and grocery retailing chains going national require significant investments. Retailing within this sector is not just about the front-end, but involves complex supply chain and logistics issues as well." Says Mr. Arvind Singhal, Chairman KSA Technopak. FoodWorld, came first in the food and grocery retailing sector. The chain has no plans to venture beyond the Southern region just yet. FoodWorld has a current sales figure of Rs.350 crore. Subhiksha too is gung-ho about the future of the discount chain. Given that organized retail has been registering growth rates of approximately 40 per cent over the last three years, it is expected to grow to about Rs 35,000 crore in 2005, and Rai Management Journal
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close to Rs 70,000 crore in 2010. And as an industry analyst elaborates, "Some years down the line, food and grocery stores will become dominating trade partners for the food industry, which, in turn, will be forced to offer special discounts and trade terms for them to get the shelf space in such stores. Also, once established, in-store label brands will become a real threat to the industry as manufacturers will have to compete with the store label brands which are generally very pricecompetitive." In the retail format, hypermarkets are expected to be the most successful format. Food and
Parent Group Heritage foods Big Bazaar Bharti Enterprises RPG Group Nilgiris+Actis Viswapriya Reliance Industries Ltd. Dairy farm International Supplyco(KSCSCO) RPG Group AB Group AB Group Sankalp retail value stores(AHMBD) Hiranandani Group Trent Ltd Star Shoprite Cooperative (Kerala) M K Ahmed (Bangalore) Margin Free Markets Godrej Wadhawan group Piramyd holdings Zakaria Shahid Group Apna Bazaar (Cooperative Retail chain) Adani group Radhakrishna Group Varkeys (Kerala)
grocery and hypermarkets are likely to generate the best returns in five years. Most of the growth will come from hypermarkets and, coincidentally, all announcements of expansions by leading players are in this format. In terms of returns, food and grocery format scores over the apparel one. Although apparel stores have higher margins, food and grocery stores earn higher returns once the stores stabilize; this is driven by lower fixed costs and significantly higher stock turnover ratios. Private labels have yielded higher margins for most large players.
Retail Store Name Fresh @ Food Bazaar FieldFresh FoodWorld Nilgiris Subhiksha Reliance Fresh Giant Maveli stores Spencer.s Fab Mall Trinetra Sankalp Haiko India Bazaar Hypermarket Shoprite Triveni Stores (Kerala) M K Retail (Bangalore) Margin Free Stores (Kerala) Natures Basket Spinach Trumart Sabka Bazaar Apna Bazaar Adani Radhakrishna Foodland Varkey
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Punjab is the second largest milk producing state in India, producing around 10% of the countrys total milk production i.e. 8 million tones annually. The state is served by 44 milk plants and 2424 veterinary institutions.
The comprehensive list of Food & Grocery retail in India are :
veterinary institutions. Poultry farming is also adopted on scientific lines in the state. Punjab ranks first in average per hectare yield of rice, wheat and cotton in the country. Punjab has earned the rare distribution of being called the food basket of the whole country4. The state produces 1 percent of rice, 2 percent of wheat and 2 percent of cotton of the world. Thus, there is a clear opportunity in Punjab in the foods and beverages category, but more importantly, and strategically, retailers can effectively utilize Punjab as their major sourcing hub for their nationwide chain of stores in the food and grocery sector. Figure 2 shows a comparison of per capita SDP in the country.
4. Food Retailing Scenario in Punjab

Punjab is a prosperous state with highest level of per-capita SDP (State Domestic Product) in the country. The state has a sound economic policy that has nourished the agriculture sector and has actively promoted key investments in other allied sectors like agro-processing, diary farming and poultry. Punjab is the second largest milk producing state in India, producing around 10% of the countrys total milk production i.e. 8 million tones annually. The state is served by 44 milk plants and 2424 Figure 2: Per capita SDP in 2006-2007
Source: www.punjabgovt.nic.in
www.punjabgovt.nic.in
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With the highest per capita income in the country, that is nearly three-anda-half times the all-India average, an excellent infrastructure to promote new industries and support the existing ones, coupled with high percentage of employment, Punjab stands second to none in fast becoming a favored destination for the retail industry5. This state provides a grand opportunity to all the retailers at large to exploit its huge consumption potential. Punjab will possibly be the largest gainer in the process of retail evolution in the country. Figure 3 depicts the growth in retail space in Punjab. Unlike other states, growth of consumption in Punjab gets equal support from the urban as well as rural consumers and this unique
feature indicates an immense potential for organized retail, as the choice for location is not really a constraint here. On an average, a consumer in rural Punjab spends nearly Rs.130 per month on services like telecommunications, banking, insurance, leisure etc. which is higher than the average of Rs 39 for rural India. Similarly, in rural Punjab, the per person monthly spend on health care products and services is Rs 57, which is again higher than the spend in both urban Punjab (Rs 42) and rural India (Rs 34)6.Thus, it is the second-tier cities and semi-urban and rural towns of Punjab that represent a goldmine of opportunity for the retailers. The big cities of Ludhiana, Jalandhar, Chandigarh, Amritsar, Patiala and Mohali also provide ample opportunity for growth.
Figure 3: Growth in retail space in Punjab
Source: Images & CII study

5 6
On an average, a consumer in rural Punjab spends nearly Rs.130 per month on services like telecommunications, banking, insurance, leisure etc. which is higher than the average of Rs 39 for rural India.
Retailing in Punjab 2010 and beyond Retailing in Punjab 2010 and beyond (2008),
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5. Review of Literature
With consumerism in India reaching new heights, the gap between the Indian consumer in her new avatar and her global counterpart is gradually diminishing.
According to report on Food retail formats in AsUnderstanding format success story(2006) by IBM Consulting services each country brings its own unique set of historical, cultural, economic, and regulatory conditions to bear. Highly specific combinations of market drivers both demand side shopper drivers and supplyside business drivers tend to reward very different food retail formats in different countries. The Indian Consumer - Outlook 2005, KSA Technopak India Pvt. Ltd., believes that India, being one of fastest growing economies in the world, is witnessing some pretty sweeping changes at the home turf. With consumerism in India reaching new heights, the gap between the Indian consumer in her new avatar and her global counterpart is gradually diminishing. The 105 million strong Indian urban rich & middle class, with spending power growing at a double digit rate every year, have evolved from a 'Hindustic self denial' existence to an 'indulgence' mode. The boom in retail sector, marked by entry of international brands & developing mall culture, is further fueling the consumer spending. The changing attitude towards credit and the EMI phenomenon has lowered the age of big-ticket acquisitions such as cars, durables and homes. All these brands trends put together have changed the consumption
patterns & attitude of the Indian urban consumer - leading to Changed Paradigms. Dick and Basu (1994), conceptualized consumer loyalty as the relationship between the relative attitude towards a brand or service or store or vendor and patronage behavior. Two dimensions, the degree of attitudinal strength (weak or strong) and the degree of attitudinal differentiation (existent or not) seem to influence an individuals relative attitude towards a store. According to results of survey conducted by Nielsen Shopper Trends (2009), ease of accessing a store tops the list of attributes driving store choice among organized retail store shoppers. While more than half the shoppers are accustomed to visit their regular store, almost an equal proportion of shoppers claim to have shopped at a store because of its proximity. The survey also found that shoppers do not explicitly state promotions as a factor that influences their store choice. However, when their actual behavior is considered, then it is observed that attractive and interesting promotions play a vital role in store selection. According to an article by Elliott John in Fortune (June, 2007), the future rapid growth of the retail sector, together with shoppers' preferences in developed markets around the world for both big and small outlets, should mean that
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the impact on the mom-and-pops will be far less than feared. Sharma, S.R., Tiwari, Prakash & Verma, Hemraj did an Empirical Study on Customer Perceptions about Vishal Mega Mart and its Impact on Shopping Behavior in Dehradun City (2008). They proposed that a big parking lot, a centralized Air-Conditioned (AC) environment covering spacious floors, soothing music, a tempting visual display of products with self selection facility and a variety of products priced with occasional heavy discounts are some of the features which affect the choice of selection of store. Bech-Larsen, Tino and Esbjerg, Lars, did a Study of Customer Perceptions of the Fruit and Vegetable Department's Influence on Store Image, Journal of Food Products Marketing (2007) described the results of two empirical studies (a focus group and a survey), which explored customer-perceived quality dimensions of the fruit and vegetable department and the extent to which these dimensions influence customer attitudes towards the fruit and vegetable department and stores image in general. According to a report by ETIG Economic Times Intelligence Group, (2002), concerning food category, the most important attribute looked for while selecting a store is quality, which is followed by the price.
Chintagunta and Pradeep K. (1993) in their study Investigating purchase incidence, brand choice and purchase quantity decisions of households, proposed that, while specialized and traditional stores are preferred for fresh products, hypermarkets are preferred for general shopping, and that for frozen food, groceries and beverages in particular. Bawa K and Ghosh, A. (1999) proposed that in the case of hypermarkets, the main factors for developing preferences in decreasing order are low prices, possibility of buying everything in the same place and general appearance of the store. Baker, J., Parasuraman, A., Grewal D. and Voss, G. B. (2002) propose a comprehensive store choice model that includes , three types of store environment cues i.e social, design and ambient. They empirically examine the extent to which environmental cuesinfluence consumers assessment of store.
6. The Empirical Study

The study involves the following methodology 6.1 Objective of study The major objectives of the study are: To study the various retail formats in the field of organized food retailing
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To analyze the performance evaluation of organized food retailing by consumers. To analyze the consumer perception on various parameters like customer service, variety & value, pricing, displays related to organized food retailing. To understand the growth pattern and development trends of organized food retailing formats in Punjab. To analyze the future of organised food retailing formats in Punjab
retail stores are developing rapidly. According to Retailing in Punjab 2010 and beyond (2008) report, there were over 900 different organized retail formats which include malls, hypermarkets, specialty stores, chain stores etc. in Punjab in 2007. Out of these, over 500 are chains of supermarkets, convenience and hypermarkets with Food & Grocery as the major retail category. For sampling of organized food retail outlets, an exhaustive list of total number of organized retailers in Food & grocery segment is obtained from each of the selected cities by using secondary sources. From the above list, a sample size of 10% of organized food retail outlets were selected following the stratified random sampling method. The retail outlets were categorized into three formats on the basis of their area in Sq. Ft. as follows:
6.2 Research sample Organised food retailing is booming in not only metros but in tier II and tier III cities as well. Therefore, tier III cities of Punjab viz. Bathinda, Hoshiarpur, Ferozpur, Moga and Gurdaspur were selected for the present study where different types of Convenience stores Supermarkets Hypermarkets
500- 1000 sq ft 1000-10000 sq ft Above 10000 sq ft
50 questionnaires for consumer and 10 questionnaires for organized retailer were completed from sampled retail outlets from five selected cities of Punjab. A total of 250 questionnaires for consumer and 50 questionnaires for organized retailers were completed and validated from the five stated cities of Punjab.
6.3 Research Methodology

The review of literature revealed a number of parameters which affect the performance of Food & grocery retail outlets. Some of the parameters are related to consumer perception like customer service, variety & value, pricing, displays etc. Other parameters are related to operational
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efficiency of store like sales, inventory days, infrastructure etc. Two questionnaires were designed to study the performance of different retail formats in the Food & grocery segment on the basis of consumer perception and operational efficiency related parameters. The first questionnaire consists of seven sections; first section addresses to the demographic details of the respondent, for rest of the six sections respondents were asked to indicate their level of agreement (1 = strongly disagree to 5 = strongly agree).The second questionnaire rates various retail formats on the basis of operational efficiency. The questionnaire consists of four sections; first section addresses the details of store (location, ownership, area etc.); section two and three focus on sales and inventory related parameters (inventory days, footfall, conversion rate, sales per sq ft etc); the fourth section addresses the obstacles to organized food retailing in the state of Punjab. The questionnaires were first tested within the academic group of fellow researchers and faculty for errors and on their valuable suggestions the questionnaires were modified. The modified questionnaires were tested for internal consistency through a pilot survey involving respondents in the proposed sampling frame. The value of cronbach alpha was found to be 0.889. This exercise was mainly done to test the degree of understanding the meaning of the questions, the difficulty in understanding the questions by the respondents if the meaning of the questions are conveyed correctly and
to check the relevance of the questions with respect to the interest of the respondent. After the pilot survey the questionnaire was further modified.
7. Statistical Analysis
In the present study different types of food retail formats have been studied for their performance on the basis of consumer perception and operational efficiency related parameters. The different types of retail formats are Convenience stores, Supermarkets and Hypermarkets. These stores are classified on the basis of their area in sq. ft. The area of convenience stores is 500- 1000 sq. ft., supermarkets is 1000- 10000 sq. ft. and hypermarkets above 10000 sq. ft. These retail stores have been studied for the Food & Grocery segment in five selected cities of Punjab. 7.1 Demographic profile of sample A total of 250 questionnaires (for consumers) were returned and after eliminating uncompleted questionnaires, the remaining 225 questionnaires were used as the sample. The sample survey is biased towards women (72.5%) who are most often responsible for shopping in their families. It was found that 58.7% of the consumers who visited the organized store were married whereas rest of 41.3% were unmarried. It was found that 47.7 percent of shoppers were under 30 years old; 30.3 percent were aged between 30 and 39 years; and 22.0 percent of shoppers were 40 years or older. The sample survey is slightly biased towards higher income respondents in comparison with the
The different types of retail formats are Convenience stores, Supermarkets and Hypermarkets. These stores are classified on the basis of their area in sq. ft. The area of convenience stores is 500- 1000 sq. ft., supermarkets is 1000- 10000 sq. ft. and hypermarkets above 10000 sq. ft.
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general population characteristics of Punjab. It is expected that those consumers who have good income are willing to go shopping at organized
retail outlets. Table 2 represents the demographic profile of consumer sample.
Table 2: Demographic characteristics of the consumer sample Variables Male Gender Female Under 30 yrs Age 30-39 yrs Above 40 Lower than secondary school Secondary School or equivalent Bachelor degree Education Master degree Doctoral degree Others Single Marital Status Married Less than Rs.10,000 Rs.10,000 to Rs.20,000 Monthly Family Rs.20,000 to Rs.30,000 Income Rs.30,000 to Rs.40,000 More than Rs.40,000 93 0 46 99 56 24 41.3 0 21 44.4 25.9 8.6 66 0 0 132 29.0 0 0 58.7 65 106 66 53 0 30 129 28.5 47.7 30.3 22 0 13.6 57.4 Frequency 163 % 72.5
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Out of a total of 50 questionnaires completed for organized retailer store owner, 10 were found to be incomplete. Out of 40 organized store surveyed, 30(75%) of the retail stores were found to be company owned and only 10(25%) were franchises. As far as the area of store is concerned, 10(25%) stores fall under the category of convenience stores (500- 1000 sq. ft), 26(66%) stores fall in the category of supermarkets (1000- 10000 sq. ft) and only 4(6%) stores fall in the category of hypermarkets(above 10000 sq. ft).Table 3 represents the details of sampled stores. 7.2 Data Analysis Exploratory Factor Analysis At the initial stage of analysis, exploratory factor analysis was conducted using the Principal
Component Approach with a varimix rotation. In this study, the result of Bartletts test of sphericity (0.00) and KMO (0.633) indicate that the data are appropriate for factor analysis. In the analysis only the factors having latent roots or eigenvalue greater than 1 were considered significant. Total six factors were extracted during this stage of exploratory factor analysis. All the six factors together accounted for 68.734 percent of the total variance. These six factors were consumer service, variety & value, pricing, displays, promotion and store loyalty. Table 4 represents the overall rating of selected organized retail formats (convenience stores, supermarkets, hypermarkets) in Food & grocery segment on the basis of selected consumer performance perception parameters.
Table 3: Details of sampled organized stores Variables Convenience stores Format of store Supermarkets Hypermarkets Suburb Location Main market In a mall Company owned Ownership Franchisee 10 25 Frequency 10 26 4 10 24 6 30 % 25 66 6 25 60 15 75
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Table 4: Rating of selected organized retail formats Convenience store Parameters Supermarket Hypermarket Mean 4.65 4.24 4.25 4.35 3.51 3.19 Standard Deviation 0.65 0.98 0.69 0.86 1.05 1.10
Standard Mean Standard Mean Deviation Deviation 3.15 2.69 3.68 2.05 2.58 2.49 0.56 0.62 0.57 1.09 1.03 1.08 4.25 3.81 4.52 3.31 3.54 3.15 0.71 1.08 0.73 0.91 1.04 1.11
Consumer service Variety & value Pricing Display Promotion Store loyalty
Notes: 1 to 5 scale: 1 = strongly agree, 5 = strongly disagree. To compare whether the means for two different categories, for example convenience stores and supermarkets for the consumer service (a horizontal comparison) or for the consumer service criteria and the variety & value criteria for fresh food (a vertical comparison), are the same or different, the following test statistic z=(xa xb)/ (sa2/na+sb2/nb) Where na and nb are the sample sizes for the two groups, are the sample means for two groups, and sa and sb are the standard deviations for the two groups, can be used. Under the null hypothesis that the two population means are the same, the test statistic is distributed asymptotically as a standard normal distribution. For a two-tail test conducted at the 5% significance level, the relevant critical values are 1.96 and 1.96. For a one-tail test where the first mean assumed to be higher than the second mean, the relevant critical value is 1.64. This test statistic assumes that the responses for the two categories are uncorrelated. When we used a one-tailed test for the difference between the two means (greater than zero), for vertical comparison, if the difference between any two sample means is greater than 0.15, then the difference between these two normal population means is significant at the5% level. The same results hold in the case of horizontal comparison.
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It was found that hypermarkets and supermarkets are rated better than convenience stores for all the consumer perception parameters. However, consumer rated price levels of supermarkets better than price levels of hypermarkets. Table 5 represents the influence of type of retail format on inventory days which have been divided into quartiles. The calculated value of Chi Square is 22.46848 which is higher than the table values of Chi Square at 5% level of significance (12.592) for 6 Degrees of freedom, the alternative hypothesis is accepted at 5% level of significance. It could be concluded that type of
retail format has significant influence on operational efficiency (Inventory Days) of retail stores. Therefore, the types of retail format & inventory days are dependent on each other. The value of coefficient of contingency (C) is equal to 0.32. This value indicates that the association between format of retail outlet and operational efficiency is moderate and is not very strong. Therefore, retail format may not influence the operational efficiency of retailers to a great extent. Table 6 represents the influence of location of retail store on inventory days. As the calculated value of chi-square (14.614) is higher than the table value
Table 5: Influence of type of retail format on inventory days Inventory Days Type of Retail Format Convenience stores Supermarkets Hypermarkets 5 6 2 2 4 0 2 5 1 1 9 1 10 26 4 17-61 61-128 128-235 235-745 Total
Table 6: Influence on location of store on inventory days Inventory Days Location Suburb Main market In a mall 1 10 3 4 6 1 4 2 1 1 6 1 10 24 6 17-61 61-128 128-235 235-745 Total
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Consumer performance perception parameters identified were consumer service, variety & value, pricing, displays, promotion and store loyalty.
at 5% significance level (12.592) but not at 1% significance level (16.812) for 6 degrees of freedom, the alternative hypothesis is accepted at 5% significance level but not at 1% significance level. It could be concluded that location of retail outlet has significant influence (at = 0.05) on the operational efficiency. The value of coefficient of contingency (C) is equal to 0.261 which is quite low. This indicates that the location & inventory days have low degree of association.
KSA Technopak, 'Consumption Outlook for 2005' Time Magazine, The New India, and the Old One Sunday, Mar., 006 The Asia Pacific Wealth Report(2006) by Merrill Lynch and Cap Gemini Global Retailing 006, IGD Mittal and Prashar(2007). .Organised Retail in India: A study of growth, challenges & opportunities. GGU journal of Business Vol. 1 No. 5 July 2007 Retailing in Punjab 2010 and beyond (2008) Global Food, Drug, Mass shopper update Apr 2008 , Retail Forward IMAGES & CII Study(2008), Retailing in Punjab 2010 and beyond Mittal and Prashar(2009).Trends in Consumption pattern of consumers in Punjab: Choice between Organized Retail stores and Traditional Retail stores Asia Pacific Business Review, Vol. 5, No 3, July September 2009., Mittal and Prashar(2009).Organized Retail in Punjab: Analysis of opportunities and obstacles. BVIMR Management Edge. Vol. 2 No 2 July December 2009 issue. Mittal and Prashar(2009).Supermarkets in Punjab: Analysis of Growth and Challenges. Disha journal of Management. Vol. 2 No 1 April-June 2009. IMAGES Retail. http://www.imagesretail. com/india retail report.htm Nielson 2009 Shopper Trends India.. 6 May
8. Conclusion:
As discussed above, six consumer perception factors have been extracted with the help of exploratory factor analysis. Confirmatory factor analyses successfully validated the items used to measure the performance. Consumer performance perception parameters identified were consumer service, variety & value, pricing, displays, promotion and store loyalty. From the data analysis it is observed that there is significant influence of format of retail stores and location on the operational efficiency. However, the degree of association is not very high. This shows that the operational efficiency of the firm is affected by the size of the firm i.e., retail stores will have higher efficiency if they utilize their retail store space rationally.
http://punjabgovt.nic.in/economy/ ECOFINAL.HTM
References:
2006 Asia Pacific Retail and Shopper Trends, AC Nielsen
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Making Teaching Learning Process More Vibrant for Better Results

Neetu Jain* The long history that goes beyond the sacred traditions indicate that people are born to learn and teach each other. From a process of learning and teaching nexus, one would mutually reinforce a transformational outcome for the betterment of a teacher and a learner. An attempt has been made in this paper to understand both the Teaching and the Learning Process. This Paper has been divided into two parts. In part I, the focus is on the Learners and facilitation of Learning. In part II the focus is on Teacher and Teaching Pedagogy. In this part, two theories have been explained. One is the change model for Facilitation of Learning & Pygmalion Effect in a Classroom Setting which will help in understanding the facilitation of Learning Process of Learners and second is The Kurt Lewins theory of change that can be applied in facilitating the learning of the learners in institutional context. Teachers can create better students just by believing in them(Pygmalion effect). Teaching is more complicated than it was in 1960s, 1970s and 1980s. It requires us to take into account many more variables, each with its own challenge. The goals for student learning outcomes are far more extensive and ambitious than ever before. Teaching offers a mutuality of tending, rewarding and relating that moves in two directions at once: from the teacher to the student and back again. In part-II, we aim to explore the role of adopting good teaching pedagogy and develop a pyramid of Teaching- Pedagogy. Good faculty can help improve bad systems but even good systems with bad faculty can not lead an institution towards excellence. Therefore, roles of a teacher with reference to a student are also discussed. This section of the paper elaborates A-Z of Teaching Pedagogy to make teaching-learning process more vibrant i.e all the factors from A to Z which are responsible for enhanced learning. Keywords: Learning, pygmalion effect and teaching pedagogy
INTRODUCTION
Guru Gobind Dou Khade ,kaake lagu paaye Balihari guru aapne jin gobind diyo bataaye The famous couplet of Kabirdas,
obviously suggests greater reverence for Guru than God because it is Guru who illumines the path of his disciples and acts as a beacon light for them. In fact, today there is a great need to realize the importance of teachers in social transformation as they constitute the most important critical success factor
Teaching offers a mutuality of tending, rewarding and relating that moves in two directions at once: from the teacher to the student and back again.
*Assistant Professor, Fore School of Management, Delhi, India June 2010 Vol. 7 Issue 1
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...today there is a great need to realize the importance of teachers in social transformation as they constitute the most important critical success factor (CSF) for excellence in education. A good teacher will ignite creative minds and facilitate in developing great qualities of head and heart among students.
(CSF) for excellence in education. A good teacher will ignite creative minds and facilitate in developing great qualities of head and heart among students. From the earliest civilizations, teaching has always been a sacred profession. It has inspired our deeply held human values and ignited our inner desire for human perfection through learning. Earlier, such learning and teaching had been associated primarily with religious and spiritual traditions than with secular and practical affairs of human livelihood. The long history that goes beyond the sacred traditions indicates that people are born to learn and teach each other. Thus, education is as natural and symbiotic as the relationship between a mother and a child. From a process of learning and teaching nexus, one would mutually reinforce a transformational outcome for the betterment of a teacher and a learner. (Medis, 2006) An attempt has been made in this paper to understand both the Teaching and Learning Process. This Paper has been divided into two parts. Part I focuses on the Learners and facilitation of Learning and part II focuses on Teacher and Teaching Pedagogy. In this part, we aim to explore the role of adopting good teaching pedagogy by seeking to define A to Z of teaching pedagogy, roles of a teacher with reference to a student and develop a pyramid of Teaching Pedagogy.
understand what is learning? Learning has been described as a relatively permanent change in behavior that occurs as a result of insight, practice or experience. Learning may be simply an addition (new information); it may be a subtraction (unlearning a bad habit); or it may be a modification (adjusting new knowledge to old). Learning as a change may be for the better or for the worse. It may be conscious or unconscious and it is such a complicated process that no one can really claim to know how it occurs. Learning takes place more readily in some circumstances than in others and to a great extent it can be influenced. To facilitate learning a teacher needs to understand the various factors which bear upon the learning process of students. Previous learning and experiences affect a students perception and expectations. Learning is reflected in behavior. A change in an individuals thought process or attitude, not accompanied by behavior, is no learning. Two theories given below will help in understanding the facilitation of Learning Process of Learners: I Change model for Facilitation of Learning
II. Pygmalion Effect in a Classroom Setting
I. Change Model for Facilitation of Learning:

It is pertinent to discuss Kurt Lewins theory of Change process for understanding its implications for enhancing learning of learners in a Rai Management Journal
I. LEARNING PROCESS
First of all, it is worthwhile to
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classroom setting. Kurt Lewins Theory of Change Process: Kurt Lewin suggested three steps for an organization willing to move from present to future state. These three steps are: 1. Unfreezing 2. Change 3. Refreezing
proposed change so that adaptation to the new environment takes shape as desired.
3. Refreezing:
It is a phase of stabilization, assimilation and institutionalization of the changes which are successfully implemented. The changes which are accomplished should remain a stable and permanent characteristic of the system until another need arises for change. The new role relationships and behavioral patterns should be allowed to take on the characteristics of habit. People must get a genuine feeling that the benefits generated by the change are worthwhile.
1. Unfreezing:
The manager as a change agent has to assume the responsibility to break open the shell of complacency among his subordinates. He has to identify the background factors contributing to resistance to change. The interplays among the several factors responsible for resistance have to be isolated. Through a series of discussions with the subordinates, it should be possible to explain them the problem with the present state of affairs and the need for change, the pace and volume of proposed change, the direction and implications of such change.
Application of Kurt Lewins model for Facilitation of Learning:

The Kurt Lewins theory of change can be applied in facilitating the learning of the learners. For applying this theory at institutional level three steps which need to be taken into account are given below:
UNLEARNING: 2. Change or Moving to the New Level:

Once the employees become receptive to change, the change agent introduces the proposed changes in a systematic manner with their full cooperation. Employees are given intensive orientation as to the behavioral changes necessary for successful introduction of the June 2010 Vol. 7 Issue 1 Alvin Toffler said, Illiterate of 21st century will not be those who can not read and write but those who can not learn, unlearn and relearn. Since childhood every student has been programmed to behave in a particular way. They have predefined beliefs, attitudes and assumptions. Past learning influences their behaviour and thinking. If learning is
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When a student joins a college and starts attending classes, his unlearning is to be emphasized. In this context unlearning means breaking down their old beliefs, attitudes and assumptions so that they start with a clean slate.
to take place then they need to shed away their unfounded assumptions and old nasty behaviour. When a student joins a college and starts attending classes, his unlearning is to be emphasized. In this context unlearning means breaking down their old beliefs, attitudes and assumptions so that they start with a clean slate. When students move from school to college, they may have the assumption that they would not be compelled to sit in the class religiously and thereby may have a very casual attitude towards their studies. This process of unlearning will make them aware about the need for change in their attitude and prepare them for change. By asking questions, making them play some management and simulation games, administering questionnaires, providing some exercises and by conducting microlab and mind stilling exercises, unlearning can be targeted.
process in order to adjust to a new environment. New ways of behaving and learning are to be developed.
RELEARNIG:
Relearning occurs when the new way of behavior becomes a normal way of life. The new behavior must replace the old behavior completely for successful change and it must be continuously reinforced so that this new behavior does not diminish. Reinforcement can be given by rewarding them for their appropriate or better behavior, handling their queries and resolving their personal and professional doubts and issues.
II. Pygmalion Effect (Self Fulfilling Prophecy) in Classroom setting:

All it takes really believes. Teachers can create better students just by believing in them. It is a persistently held belief in another person such that the belief becomes a reality... is called the Pygmalion Effect. Limited expectations bring limited results, high expectations lead to exceptional results. If a teacher is told that a child is bright, the teacher will be more supportive, teach more difficult material, allow more time to answer questions, and provide more feedback to that child. The child receiving this attention and basking in the teacher's belief learns more and is better in school. It does not matter if the child is actually bright. All that matters is that the teacher believes in the child. People tend to live up to the Rai Management Journal
CHANGE:
It is a process of moving to a new situation. Once the unlearning has been completed, students are ready to accept the changes which may involve a change in their behaviour, style and attitude towards studies and various other things in life. In this step the students learning and behavior patterns have to be redefined. New and innovative methods of teaching by a responsible teacher can reassign new patterns of behavior. Students can be psychologically impressed upon to identify themselves with some given role models whose behavior they would like to adopt and would like to become like them. Efforts should be made for changing their thought
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expectations they have for themselves or the expectations others have for them. We can make a great difference in empowering our students by first having great expectations for them.
Communicate high expectations:

A 1987 study conducted by Brophy and Good observed teacher-student interaction and concluded that teachers may unconsciously send different messages to low achievers than to high achievers. Low achievers often receive insincere praise, less feedback, and more criticism. In addition, these students tend to be called on less often and given less time to respond. The lesson from the Brophy and Good study is that even the most dedicated teachers may be sending subtle, nonverbal cues that they expect less of certain students. Children don't fail to miss these cues, and they react accordingly. Students feel valued by simple gestures, such as eye contact and open smiles. A positive attitude can truly work wonders because students intuitively sense that the teacher has a genuine interest and belief in them. Early assumptions that one makes about a student can often become selffulfilling prophecies. A student labeled as "gifted" may succeed, while a student branded as a "troublemaker" or as a "low achiever" might fall behind.
following experiment to test the validity of the Pygmalion Effect. At an elementary school, teachers were given the names of students who had been identified as those with high intellectual abilities. The teachers were told to expect more from these students. In reality, the students were chosen at random. After eight months, however, the students who had been identified as the "brightest" did in fact have higher increases in their achievement scores than those who had been identified as average. The high expectations of the teachers had resulted in higher achievement by the students. It is believed that the students were given more attention and that the teachers' behaviors likely produced increased student confidence as well as a desire by students to study and do well.
Implications of Pygmalion Effect:

Therefore, prophecy needs to be given to the students so that they can do better. Students are quick to pick up the expectations of successes and failures that others have for them. The positive or negative expectations shown by the Parents, Teachers, Counselors, Principals, Peers affect students expectation and hence their learning behavior eg. when a teacher signals his or her lack of confidence in the ability of the students to understand certain subjects, the students may loose confidence in their ability and may perform more poorly than they otherwise might. Expect more and you will get more. High expectations are important for everyone for the poorly prepared, for those unwilling to exert themselves,
Belief in potential creates potential

In 1968, Dr. Robert Rosenthal did the June 2010 Vol. 7 Issue 1
A positive attitude can truly work wonders because students intuitively sense that the teacher has a genuine interest and belief in them.
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and for the bright and well motivated. Expecting students to perform well becomes a self fulfilling prophecy when teachers and institutions hold high expectations and make extra efforts. Don't forget the importance of having high expectations for others and clearly communicating those expectations. An outstanding teacher inspires students to go beyond their comfort levels in learning. These teachers are role models who help their students gather information, assess and evaluate, assimilate and synthesize. Outstanding teachers are not knowledge dispensers; rather they are facilitators in the learning process. Students of these teachers are self confident about their abilities to solve
problems. Ronda Mains(Music),J.William Fulbright Collge of Arts and Sciences, Outstanding Teacher award
II. Pyramid of TeachingLearning Pedagogy

As there is a strong relation between active involvement of the students and effective learning, focus should be on involving students in the entire process of learning. Teaching should not be just by lecture mode. It should be a mix of different methods. Following TeachingLearning pedagogy can be used for enhancing Learning.
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Roles of a Teacher with reference to Learners: Teaching is like no other profession. A Professor wears many hats. Diverse
roles that he is supposed to perform require practice and skills. A teacher should perform all the given roles at a given point of time:
S.NO ROLE 1 2 3 4 5 6 7 8 Communicator Disciplinarian Evaluator Role Model Mentor Counselor Facilitator Patient Listener
RESPONSIBILITY Ability to convey what he knows Disciplining the students for proper Class Management Evaluating the students and finding out their potential Setting example by walking his talk Guiding students in their professional aspects Resolving problems their personal issues and
Involves students in various group exercises Giving them a patient maintaining his cool hearing and
9 10
Linking Pin Surrogate Parent
Communicating the expectations of different interested groups to students or vice versa Nurtures and cares for the students
ART OF TEACHING : A TO Z towards excellence. A great teacher OF TEACHING PEDAGOGY: will inspire his students and leave a Making Teaching- Learning Process more Vibrant:
Good faculty can help improve bad systems but good systems with bad faculty can not lead an institution permanent mark in the process of personality development of the students. This section of the paper elaborates A-Z of Teaching Pedagogy to make teaching-learning process more vibrant i.e. all the factors from A to Z which are responsible for enhanced learning.
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A to Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Teaching Learning Pedagogy Accommodate students preferred learning style Begin with what the student knows Climate setting Divide lecture into micro lecture Enhance contact between student & Faculty Focus on Team based approach Give prompt feedback Have the knack of generating interest Involve all Judge and evaluate fairly Knowledge of the subject Learn names fast Make Field Trips Narrate Stories& Illustrations Organise the Lecture Prepare for Learning Query about understanding Reward desired learning with praise Social transmission Theory to Practice Use Paraphernalia Values are to be inculcated Welcome curiosity Exercises for sustaining interest Yearning for knowing the latest trends Zap the gaps
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Visual learners gain knowledge best by seeing or reading what you are trying to teach; auditory learners, by listening; and tactile or psychomotor learners, by doing.
A - Accommodate the stu- or amplify the topic or issue. The dents preferred learning student will find learning more style rewarding if he has the opportunity to
Students bring different talents and styles of learning to college. Brilliant students in the seminar room may be all thumbs in the lab or art studio. Students rich in hands-on experience may not do so well with theory. They need the opportunity to show their talents and learn in ways that work for them. How quickly and well a student learns depends not only on his or her intelligence and prior education, but also on the student's learning style preference. Visual learners gain knowledge best by seeing or reading what you are trying to teach; auditory learners, by listening; and tactile or psychomotor learners, by doing. Chances for teaching success can be improved if learners' preferred learning style is assessed and then teaching activities are planned accordingly and teaching tools appropriate to that style are used to assess learning style, different teaching tools, such as printed material, illustrations, videotapes, and actual equipment can be experimented. master simple concepts first and then apply these concepts to more complex ones. However, what one student finds simple, another may find complex. Therefore, a careful assessment needs to take these differences into account.
C - Climate Setting
A prerequisite for effective learning to take place is the establishment of a climate that is conducive to learning. Following types of climate can be established: i) A climate of mutual respect: People are more open to learning if they feel respected, if they feel that they are talked down, embarrassed, or otherwise denigrated, their energy is diverted from learning to dealing with these feelings. ii) A climate of collaborativeness: A climate of collaborativeness rather than competitiveness must be created. Learners should see themselves as mutual helpers rather than rivals. For many kinds of learning, the richest resources are within their peers, hence the importance of making these resources available. iii) A climate of supportiveness: A climate of supportiveness rather than judgementalness must be created. Instructor can set this climate by being supportive in his behavior. Rai Management Journal
B - Begin with what the student knows

Learning moves faster when it builds on what the student already knows. Teaching that begins by comparing the old, known information or process and the new, unknown one allows him to grasp new information more quickly. Therefore, attempt should be made to extract information about a topic from the students only. It can be described later which may illustrate
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iv) A climate of fun: Learning should be one of the most joyful things we do and teacher should do everything that can make the experience enjoyable. Use of spontaneous (not canned) humor can be made to make learning fun. v) A human climate: Learning is a human activity. So try to establish a climate in which people feel that they are being treated as human beings not objects. Try to care for their human needs- comfortable chairs, timely breaks and adequate ventilation.
between Faculty
Students
and
Frequent student-faculty contact in and out of classes is the most important factor in student motivation and involvement. Faculty helps students get through rough times. Knowing a few faculty members well enhances students' intellectual commitment and encourages them to think about their own values and future plans. In order to reduce the instinctive mistrust with which people typically react to authority figures, a teacher should emphasize that he is first a human being rather than an expert.
D - Divide lecture into micro lecture:

Attention span of the students keeps changing in a class. Students are highly attentive in the beginning and end of the lecture. As the time passes they start absenting themselves mentally. Therefore, a lecture can be divided into small microlectures containing different activities for the purpose of sustaining their interest. viz one hour lecture can be divided into four microlectures of 15 minutes each. By dividing the lecture or information we are providing a framework for students to more readily assimilate what they are hearing in the lecture. Learners can much more easily understand and retain four main ideas than a long narrative of information. These micro lectures act as a hook on which students can hang their ideas.
F - Focus on Team based approach

Learning is more a team work than an individual experience. Students should be encouraged to work in teams so that collective learning can take place. Learning is enhanced when it is more like a team effort than a solo race. Good learning, like good work, is collaborative and social, not competitive and isolated. Working with others often increases involvement in learning. Sharing one's own ideas and responding to others' reactions sharpens thinking and deepens understanding.
G - Give Prompt Feedback

Students need appropriate feedback on performance to benefit from courses. When getting started, students need help in assessing existing knowledge and competence. In classes, students need frequent
Learning should be one of the most joyful things we do and teacher should do everything that can make the experience enjoyable.
Enhance
Contact
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A teacher should make judgments free from prejudice and without coloring them with distorted perception. All the students should be evaluated in an unbiased manner.
opportunities to perform and receive suggestions for improvement. At various points during college, and at the end, students need chances to reflect on what they have learned, what they still need to know, and how to assess themselves. Learning is made easier when students are aware of their progress. Positive feedback can motivate them to greater effort because it makes their goal seem attainable.
listening to teachers, memorizing prepackaged assignments, and spitting out answers. They must talk about what they are learning, write about it, relate it to past experiences and apply it to their daily lives. They must make what they learn, a part of themselves. As there is a strong relation between active involvement of the students and effective learning, focus should be on involving students in the discussion. Somebody has rightly said: You tell, I forget You show, I remember
H - Have the knack of generating interest

With the help of short stories and humor interest can be generated among the students in the lecture. If students do not feel interested they will not learn. Therefore, explain the utility of the subject. Students can be involved in experiential learning which means learning by experiences or learning by doing. For instance, if we want to make students understand the importance of team work, we can involve them into various team building exercises wherein they can be asked to cross a river together, or go for mountaineering, or river rafting which will actually make them understand the importance of concepts related to team building.
You involve, I understand
J- Judge and evaluate fairly

A teacher is entrusted with the responsibility of fairly evaluating the students. He should not be prejudiced at any stage of his dealing with the students. If a teacher is fair, students will respect him. A teacher should make judgments free from prejudice and without coloring them with distorted perception. All the students should be evaluated in an unbiased manner.
K - Knowledge of the subject I - Involve all

Sometimes only intelligent students involve themselves in discussion. Effective teacher is one who involves all the students regardless of their intelligence level and level of achievement. Students do not learn much just by sitting in classes Knowledge is sina qua non for being a good teacher. Without having the requisite knowledge a teacher can not teach anything. In the competitive marketplace, educators continually need to cultivate new knowledge and skills. This is needed because the educational enterprise is largely
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driven by ever changing information technology and the dynamics of multiculturalism. A skilled teacher will make a skilled student.
getting the cyanide capsule were the same as the chances of colliding with another car if they ran a red light. Through stories, learners can very well relate to a given situation under discussion.
L - Learn names fast

It is very important to learn the names of the students as soon as possible and call on them by name as often as possible. This step will help the instructor in relating to the students or vice versa. This is a very fundamental technique that should be implemented anytime one is interacting with students.
O - Organize the Lecture

The initial step in preparing a lecture is to first determine the objectives for the lecture. A decision must be made as to what a teacher wants students to take away with them when the lecture is over, i.e. what do you want your students to learn? A lecture should be organized in much the same way that a public speech is organized. That is, it should have an introduction, a body and a conclusion. The function of each of the three major sections of the lecture is as follows: Tell your students what you are going to tell them. Tell them. Then tell them what you told them.
M - Make Field Trips:

Field trips are a way to promote interactive learning between the classroom and the outside world. Inviting practitioners to the classroom and taking students on a field trip infuse different perspectives to academic learning. This establishes mutual respect between the academic community and the society at large. Through field trips students learn by observing, critical thinking and applying their classroom knowledge to social problems.
P - Prepare for Learning

Too many times the professor simply walks into the room and begins talking. When this occurs there has been no attempt made to prepare the students for what is to come. Therefore, prepare them for learning by giving them a preview of the days event. A good method is to write the days agenda on the board. When you are previewing the days event, share with your students the objectives and
N - Narrate Stories & Illustrations/ Experiences:

Relate personal examples of your experience that relate to the subject matter. In order to illustrate the dangers of running a red light, a professor asked students to reach into a jar filled with 100 capsules, one of which was cyanide. Their chances of
Field trips are a way to promote interactive learning between the classroom and the outside world.
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...people learn better, faster and retain longer when they have frequent and appropriate opportunities to verbalize and share what they are learning with other learners or with instructors.
goals you have for this class session. By sharing this information with your students, you accomplish at least two tasks: One, you have established a plan for the day and can readily get back on course if you go astray. Second, by knowing what they are supposed to have learned by the end of the class, students can speak up if they are not learning that.
S - Social Transmission:
The term social transmission was used by psychologist Piaget to refer to the need for learners to consistently and productively communicate what they are learning to other people. His research and that of other indicates that people learn better, faster and retain longer when they have frequent and appropriate opportunities to verbalize and share what they are learning with other learners or with instructors. There is some evidence to suggest that effective social transmission also plays a critical role in the development of attitudes and self confidence.
Q - Query about understanding

Timely feedback regarding the pace and other aspects of teaching should be taken from the students so as to know whether they have understood the topic or not. They also provide an accurate sense of the quality of the course and how well the professor is communicating. This will help the faculty in mid course corrections instead of always correcting after the fact. These comments or feedback from the students is critical to improve teaching.
T - Theory to practice:
It is important to bridge the gap between theory and practice. Real life case studies and practical examples from industry can be used for integrating theory with Practice. Participants under the guidance of their instructor, rotate between learning and application so that as each new task, procedure, strategy and concept is learned, it is applied cumulatively to the real situation until the total desired outcome is produced. In this way not only does guided application take place, but needed attitudes (and team work) can be built or reinforced because the focus is on the end-result rather than on isolated specific learning.
R - Reward desired learning with praise

Praising desired learning outcomes or behavior improves the chances that the students will retain the material or repeat the behavior. Praising your students' successes associates the desired learning goal with a sense of growing and accepted competence. Reassuring them that they have learned the desired material or technique can help them retain and refine it and internalize the learning experience.
U - Use Paraphernalia:
Props can be used e.g. if you are going to talk about the evils of industrial
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pollution, bring a small box to class that is labeled as Pandoras Box. Inside the box, place slips of paper which identify various kinds of pollutants. At appropriate times during the lecture, individual pollutants (the evils mentioned above) can be literally pulled out of the box for discussion. A teacher can also wear a specific costume, if required, e.g. wear a campaign hat if you are talking about a political system. Presentation software such as power point, video tapes and slides can be used to drive home the point.
will hinder creativity of the students. Students must get clarification in order to learn something new. Asking questions is not a sign of weakness. By asking questions they will learn incessantly, at a more rapid pace than those who do not. Even the instructor should ask questions from the students. Instructor initiated questions enhance their learning by: Developing critical thinking skills Reinforcing understanding Correcting misunderstanding Providing feedback
V - Values are to be inculcated

Teachers shape the personality of the students by building their character and inculcating values in them. Besides, sharing ones knowledge and wisdom, values are to be inculcated among the students. William Ward has aptly quoted: The mediocre teacher is one who tells The good teacher is one who explains The superior teacher is one who demonstrates The great teacher is one who inspires
X - Xrcises for sustaining interest

Various simulation exercises such as Management Games, Role Plays, in basket exercises should be used in the classes. In lecture mode of teaching, students are just passive listeners, not active participants. Thus they loose interest in the topic as it becomes monotonous as well. Therefore, to facilitate the learning process, more than one method needs to be used at a given time. Bring items that students can touch/ feel, smell, taste, handle etc. Educational videos from CNN, ABC, PBS and the Aneenberg Series can also supplement learning from different perspectives of experts.
W - Welcome curiosity
Allow and encourage students to ask questions in your class. If you do not, it
Y - Yearning for knowing the latest trends

Teacher should keep himself abreast of latest developments in the field by
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Most important function of teaching is bridging the gap between existing knowledge and desired state of knowledge of a learner.
studying various journals and magazines. Trainers i.e. teachers should learn about the teaching pedagogy and endeavour to attend various faculty development and quality improvement programmes. By learning the technique of teaching and applying them in day to day teaching, one can become an effective trainer. Based on his exposure, a teacher in turn will engage learners in local affairs and global thinking.
Z - Zap the gaps

Most important function of teaching is bridging the gap between existing knowledge and desired state of knowledge of a learner. The instructor should make sure that participants have formed clearer context pictures so that they have all the needed elements in their minds to guide their future actions. With concept learning, participants who have formed concepts can recognize when, how and why to use their learning in situations beyond the instruction.
rewarding and relating that moves in two directions at once: from the teacher to the student and back again. Thus, in addition to helping people get to places in the world they want to do, teaching satisfies our deep craving for meaningful forms of social connection. Teaching is a selfless art. One surrenders to an experience that seems evanescent and difficult to measure. No series of books stands on the shelf at the end of a career to say, I accomplished this at 30, that at 40.What remains if one is lucky- is a returning student who might remember to say, You changed my life- you influenced me. But most students forget so that what really remains, beyond praise and recognition, is the deeply satisfying sense that ones profession matters. Marcia Imbeau ( College of Education and Health Professions, Outstanding Teacher Award) has aptly quoted: I believe an outstanding teacher is someone who not only takes great care in his/her preparation but cares that the students get it. I also believe that a really great teacher is someone who knows that there is more to learn and is seen as someone who actively pursues new knowledge regarding not only the content of what she teaches but how she might design her class so that students come to genuinely understand the content.
Concluding Remarks:
Teaching is more complicated than it was in 1960s, 1970 s and 1980s, requiring us to take into account many more variables, each with its own challenge. The knowledge explosion continues unabated. New views of knowledge and knowledge construction have emerged, challenging what, why and how we teach. The goals for student learning outcomes are far more extensive and ambitious than ever before. Teaching offers a mutuality of tending,
References
Vaill,P,(1988), Managing as a Performing Art ,San Francisco, Jossey- Bass Heifetz,R & D.Laurie,(1997) The work of Leadership, Harvard Business Review, JanFeb issue,pp.124-134
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Mendis,Patric,(2006) Teaching and Leading in the global marketplace: The use of Information Technology for Greater Democratic Transformation, Journal of Human Values Dezure, Deborah,(2000) Learning from Change, Kogan Page Senge ,P,(1990),The fifth Discipline: The art and Practice of the Learning Organisation, New York: Doubleday Currency Block,P,Flawless Consulting: Guide for getting your expertise used, Learning Concepts,Austin,1983 Sharma, Subhash,(1996), Management in new Age: Western windows Eastern Doors, New age publication Stacey,R,(1996),Complexity and Creativity in Organisation, Sage publications Mc Shane, Steven L, (2006),Organisation Behavior, TMH, pp 93- 99 www.ascd.org, Classroom Instruction That Works: Research-Based Strategies for Increasing Student Achievement www.scsunr.edu www.rit.edu, Strategies That Promote Student Engagement : Unleashing the Desire to Learn / Ernestine G. Riggs, Cheryl R. Gholar ; Foreword By Raymond F. Morgan, 2008
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Positive Relationship of Foreign Direct Investment and Economic Growth

Mahesh Chandra Prasad* This paper tests the theoretical paradigm that foreign direct investment (FDI) and economic growth generally point to a positive FDI-growth relationship. However, very few studies offer direct tests of causality between the two variables. In theory, economic growth may induce FDI inflow, and FDI may also stimulate economic growth. This paper adds to the literature by analyzing the existence and nature of these causal relationships. The present analysis focuses on South and Southeast Asia, where growth of FDI has been the most pronounced. Using Granger causality tests, the paper finds substantial variation in the FDI-growth relationship across countries. Further analyses, based on regression techniques, reveal that FDI-to-growth causality is strengthened by the presence of greater trade openness, more limited rule of law, lower receipts of aid, and lower income level of the host country. Growth-to-FDI causality, on the other hand, is reinforced by greater political rights and more limited rule of law. Keywords: Foreign direct investment, Economic growth, Granger causality
INTRODUCTION
The share of net FDI in world GDP has grown five-fold through the eighties and the nineties, making the causes and consequences of FDI and economic growth a subject of ever-growing interest.
Over the past two decades, many countries around the world experienced substantial growth in their economies, with even faster growth in international transactions, especially in the form of foreign direct investment (FDI). The share of net FDI in world GDP has grown five-fold through the eighties and the nineties, making the causes and consequences of FDI and economic growth a subject of ever-growing interest. This paper attempts to make a contribution in this context, by analyzing the existence and nature of causalities, if any, between FDI and economic growth. It uses as its focal point the
South and Southeast Asian region, where growth of economic activities and FDI has been one of the most pronounced. The literature on FDI and economic growth generally points to a positive relationship between the two variables, and offers several, standard explanations for it. In principle, economic growth may induce FDI inflow when FDI is seeking consumer markets, or when growth leads to greater economies of scale and hence, increased cost efficiency. On the other hand, FDI may affect economic growth, through its impact on capital stock, technology transfer, skill acquisition, or market competition.
*Reader, Department of Applied Economics and Commerce, Patna University, Patna, India Rai Management Journal
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FDI and growth may also exhibit a negative relationship, particularly if the inflow of FDI leads to increased monopolization of local industries, thus compromising efficiency and growth dynamics. Empirically, the positive effect of economic growth on FDI and also the positive and negative effects of FDI on economic growth have been identified in the literature. However, very few studies attempt to directly test for causality between FDI and growth. Two studies are included in Basu, Chakraborty and Reagle (2003) and Trevino and Upadhyaya (2003). Both find that FDI-to-growth causality is more likely to exist in more open economies. In addition, an earlier study by Ericsson and Irandoust (2000) explores the causal relationship between FDI and total factor productivity growth in Norway and Sweden, and finds the two to be causally related in the long run. This paper extends the line of work mentioned above, and provides a direct test of causality between FDI and economic growth in one of the most dynamic regions of the world: South and Southeast Asia. Using Granger causality tests, the analysis reveals substantial variation in the FDI-growth causal relationship across countries, implying that generalization of any causality between the two variables can be problematic. To better understand the cross-country variation, the paper extends the analysis using regression techniques, and identifies institutional variables that affect the FDI-growth relationship. The importance of institutions to economic dynamics is now well recognized, and given the widespread but varying institutional reforms across countries through the June 2009 Vol. 7 Issue 3
eighties and the nineties, the inclusion of institutional factors is indispensable for the analysis at hand. To identify their relevance to the FDI-growth relationship, separate from their direct effects on FDI or growth alone, the analysis focuses on interaction effects involving the explanatory variables. The results show that FDIto-growth causality is reinforced by greater trade openness, more limited rule of law, lower receipts of bilateral aid, and lower income level in the host country. Growth-to-FDI causality, on the other hand, is reinforced by greater political rights and more limited rule of law. The remainder of the paper is structured as follows. Section II discusses the background literature on the determinants of and relationship between FDI and economic growth. It also describes the sample used in the present analysis. Section III carries out the Granger causality tests and establishes the cross-country variation in FDI-growth causality. Section IV extends the analysis using regression techniques and identifies the economic and institutional factors that help to explain the cross-country variation in the FDI-growth causal relationship. Finally, Section V concludes relevant tables, with descriptive statistics and results of the analyses are presented in the appendix.
FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH

Standard economic theory points to a direct, causal relationship between economic growth and FDI that can run in either direction. On the one hand,
The importance of institutions to economic dynamics is now well recognized, and given the widespread but varying institutional reforms across countries through the eighties and the nineties, the inclusion of institutional factors is indispensable for the analysis at hand.
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...the positive growth effects of FDI have been more likely when FDI is drawn into competitive markets, whereas negative effects on growth have been more likely when FDI is drawn into heavily protected industries
FDI flows can be induced by host country economic growth if the host country offers a sizeable consumer market, in which case FDI serves as a substitute for commodity trade or if growth leads to greater economies of scale and cost efficiency in the host country. On the other hand, FDI itself may contribute to host country economic growth, by augmenting the countrys capital stock, introducing complementary inputs, inducing technology transfer and skill acquisition, or increasing competition in the local industry. Of course, FDI may also inhibit competition and thus hamper growth, especially if the host country government affords extra protection to foreign investors in the process of attracting their capital. Empirically, the positive effect of host country economic growth on FDI inflow has been confirmed by various studies (see Veugelers, 1991; Barrell and Pain, 1996; Grosse and Trevino, 1996; Taylor and Sarno, 1999; Trevino et al., 2002). The effects of FDI on subsequent economic growth has been shown to be both positive (Dunning, 1993; Borensztein et al., 1998; De Mello, 1999; Ericsson and Irandoust, 2000; Trevino and Upadhyaya, 2003) and negative (Moran, 1998). Generally, the positive growth effects of FDI have been more likely when FDI is drawn into competitive markets, whereas negative effects on growth have been more likely when FDI is drawn into heavily protected industries (Encarnation and Wells, 1986). Overall, though, FDI turns out to be associated with greater domestic investment, not smaller. Moreover, this positive association between FDI and domestic investment tends to be greater than that between foreign
portfolio investment and domestic investment (Bosworth and Collins, 1999). Basu, Chakraborty and Reagle (2003) studied a panel of 23 developing countries from Asia, Africa, Europe and Latin America, and found the causal relationship between GDP growth and FDI to run both ways in more open economies, and in only one direction from GDP growth to FDIin more closed economies. Trevino and Upadhyaya (2003) found a comparable result, based on their study of five developing countries in Asia, that the positive impact of FDI on economic growth is greater in more open economies. Whether other factors, especially institutional ones that directly affect FDI or economic growth, also influence FDI-growth relationship remains an open question. Generally speaking, FDI decisions depend on a variety of characteristics of the host economy, in addition to its market size. These include the general wage level, level of education, institutional environment, tax laws, and overall macroeconomic and political environment. The impact of host country wage level or education level on FDI depends on the skill intensity of the particular production process in question and hence, may vary from case to case. The impact of institutional quality, physical infrastructure, import tariffs, macroeconomic stability and political stability on FDI inflow is usually positive (see Wei, 1997; Mallampally and Sauvant, 1999; Trevino et al., 2002; Biswas, 2002), whereas that of corporate taxes tends to be negative (see Wei, 1997; Gastanaga et al., 1998; Hsiao, 2001). Rai Management Journal
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Turning to economic growth, the standard determinants include the rate of capital accumulation and variables that raise total factor productivity, such as education level, institutional quality, macroeconomic stability, political environment, and potentially, trade openness. In studying the direct, causal relationship between FDI and economic growth in this paper, we explore the relevance of some of these economic and political economy variables just mentioned. Our study covers the FDI-growth relationship in nine countries: Bangladesh, India, Korea, Malaysia, Pakistan, Philippines, Singapore, Sri Lanka and Thailand. The choice of this sample was driven by our attempt
to include an economically diverse set of countries in a region that has been characterized by relatively high rates of economic growth and FDI over the past two decades. Collectively, the sample countries have featured higher rates of foreign investments, foreign aid, and commodity trade relative to their GDP than the rest of world. They also experienced significantly greater growth rates in GDP, foreign investments, and commodity trade, compared to the rest of the world. Table 1 presents some of the key statistics with respect to resource flows and commodity trade in the sample countries vis--vis the world economy. Table 2 presents some data on cumulative growth rates of these flows.
Table 1: Resource Flows And Commodity Trade: 20002009 Average Country / Group Bangladesh India Korea, Rep. Malaysia Pakistan Philippines Singapore Sri Lanka Thailand Sample Countries Low & Middle Income Countries High Income Countries World FDI (% of GDP) 0.105 0.255 0.552 4.316 0.606 1.230 10.038 0.991 1.898 2.232 1.437 1.118 1.180 FPI (% of GDP) 0.001 0.380 0.998 1.378 0.362 0.928 n.a. 0.383 0.734 0.688 0.230 n.a. n.a. Aid (% of GDP) 5.100 0.669 0.026 0.387 2.490 1.623 0.077 6.380 0.801 1.950 1.121 0.015 0.244 Trade (% of GDP) 26.366 20.081 68.461 152.059 35.495 69.850 329.231 73.264 75.885 82.037 42.199 40.478 41.514
Sources: World Development Indicators, Global Development Finance, and own calculations. Notes: FDI refers to net inflows of foreign direct investment; FPI refers to foreign portfolio investment. Aid measures the sum of official development assistance (ODA) and net official aid flows.
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Table 2: Cumulative Growth Rates: 20002009
...over the years Bangladesh, India and Korea have outpaced most other countries in terms of FDI growth.
Country / Group GDP Bangladesh India Korea, Rep. Malaysia Pakistan Philippines Singapore Sri Lanka Thailand Sample Mean Low & Middle Income High Income World 155 144 525 231 116 111 539 262 245 259 99 201 180
FDI 2472 3143
FDI (%GD Aid P) 898 1218 -8 -19 -172 -48 15 84 -98 -26 59 -24 90 -15 85
Aid Trade (%GD Exports Imports (%GD P) P) -64 -67 -111 -84 -48 -13 -100 -80 -55 -69 -4 -72 -34 482 419 699 659 211 391 n.a. 354 832 506 156 242 227 164 302 530 480 71 285 n.a. 240 566 330 150 241 224 34 83 13 101 0 105 n.a. 5 128 59 64 16 32
12225 1936 129 419 4298 474 234 1896 2810 972 2087 1783 -29 140 2370 -9 -7 477 777 297 500 442
Source: Own calculations. Notes: Growth rates reflect cumulative growth from 1980-82 average (in current dollars) to 2000-2009 average.
Evidently, not all countries in the sample have been highly open to foreign investments or trade, and not all countries have experienced similar growth in GDP or in international transactions. In terms of GDP growth, Bangladesh, India, Pakistan, and the Philippines outperformed other low and middle-income countries collectively, but they lagged behind the world average. As for FDI, Bangladesh, India, Pakistan, Sri Lanka, and Korea tended to attract less investments compared with other countries. However, over the years Bangladesh, India and Korea have
outpaced most other countries in terms of FDI growth. A casual look at the data does not clearly reveal any discernible pattern involving GDP growth and FDI. However, it seems consistent with a positive correlation between the two variables. As already discussed, causality, if any, can run in either direction, and other variables may also complicate these direct, causal relationships. We now turn to the empirical examination of these relationships for our sample countries. Rai Management Journal
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GRANGER CAUSALITY
In order to test for direct causality between FDI and economic growth, we perform a Granger causality test using equations (1) and (2): GD[P.sub.t] = [gamma] [k.summation over (i=1)] [[alpha].sub.i] x [GDP.sub.t=i] [k.summation over (i=1)] [[beta].sub.i] x [FDI.sub.t-i] [[micro].sub.t] (1) [FDI.sub.t] = [phi] [k.summation over (i=1)] [[delta].sub.i] x [GDP.sub.t=i] [k.summation over (i=1)] [[lambda].sub.i] x [FDI.sub.t-i] [[eta].sub.t] (2) where [GDP.sub.t] and [FDI.sub.t] are stationary time series sequences, [gamma] and [phi] are the respective intercepts, [[micro].sub.t] and [[eta].sub.t] are white noise error terms, and k is the maximum lag length used in each time series. The optimum lag length is identified using Hsiao's (1981) sequential procedure, which is based on Granger's definition of causality and Akaike's (1969, 1970) minimum final prediction error criterion. If in equation (1) [k.summation over (i=1)] [[beta].sub.i] is significantly different from zero, then we conclude that FDI Granger causes GDP. Separately, if [k.summation over (i=1)] [[delta].sub.i] in equation (2) is significantly different from zero, then we conclude that GDP Granger causes FDI. Granger causality in both directions is, of course, a possibility. Since macroeconomic time-series data are usually non-stationary (Nelson and Plosser, 1982) and thus conducive to spurious regression, we test for June 2010 Vol. 7 Issue 1
stationarity of the data series before proceeding with the Granger causality test. We employ two separate methods for the stationarity test. First, we conduct an augmented Dickey-Fuller test (Nelson and Plosser, 1982) by carrying out a unit root test based on the structure in (3): [DELTA][X.sub.t] = [kappa] [rho] x t [[theta].sub.i] x [X.sub.t-i] [n.summation (i=1)] [[PHI].sub.i] x [DELTA][X.sub.t-i] [[epsilon].sub.t] (3) where X is the variable under consideration, A is the first difference operator, t captures any time trend, [[epsilon].sub.t] is a random error, and n is the maximum lag length. The optimal lag length is identified so as to ensure that the error term is white noise. If we cannot reject the null hypothesis [theta] = 0, then we conclude that the series under consideration has a unit root and is therefore non-stationary. Second, in addition to the Dickey-Fuller test, we perform the Phillips-Perron test (Phillips, 1987; Phillips-Perron, 1988), using a nonparametric correction to deal with any correlation in error terms. The results of the stationarity tests are reported in Table 3. The unit root tests on the levels of each variable reveal the corresponding series to be non-stationary for all countries. Analogous tests on the first-difference measures of the variables, however, reveal both series to be integrated in the first order and, hence, stationary at the first-difference level. We therefore proceed with the Granger causality tests with equations (1) and (2) using first-differences of the respective series.
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According to the test results, reported in Table 4, the existence and direction of causalities between GDP growth and FDI have varied significantly across the countries in our sample. In Bangladesh and Malaysia, no direct causal relationship between the two variables seems to have existed during the given period. In South Korea, Singapore, Sri Lanka, and Thailand, causality ran from growth to FDI, but not in the reverse direction. In Pakistan, causality ran from FDI to growth and not from growth to FDI. In India and the Philippines, causality ran both from growth to FDI and from FDI to growth. Table 3: Unit Root Test
It is thus evident that despite the above-average growth rates in both GDP and FDI in the sample region, we cannot generalize any FDI-growth causal relationship for the region. Growth seems to induce FDI in several, but not all cases. Likewise, FDI seems to induce growth in some, but not all cases. Overall, the results indicate the presence of some FDIgrowth causality in seven of the nine countries, with the variation in the nature of this relationship pointing to possible influence of other, institutional factors. We explore these possibilities in the next section.
Augmented Dicky Fuller Level Bangladesh India Korea, Rep. Malaysia Pakistan Philippines Singapore Sri Lanka Thailand FDI GDP FDI GDP FDI GDP FDI GDP FDI GDP FDI GDP FDI GDP FDI GDP FDI GDP -2.608 -1.069 -2.512 -2.988 -2.892 -1.408 -1.835 -1.877 -2.691 -0.996 -1.723 --2.912 -2.434 -1.979 -2.255 -1.955 -1.591 -1.707 First Diff. -3.572*** -3.479*** -3.330*** -3.759** -3.805** -3.877** -3.937** -3.344** -4.506* -4.261** -3.998** -4.126** -3.942** -3.736** -4.618* -3.051 -3.259*** -3.770**
Philip-Perron Level -2.626 -0.544 -2.106 -2.539 -2.777 -2.539 -2.768 -1.800 -3.019 -0.601 -3.046 -1.871 -2.615 -1.457 -2.698 -2.076 -1.709 -0.947 First Diff. -4.595* -5.670* -3.295*** -4.000** -5.393* -4.648* -5.894* -4.515* -3.603** -7.650* -6.831* -3.937** -5.764* -3.920** -8.603* -4.334** -4.051** -3.753**
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Table 4: Granger Casuality Test Result FDI GDP Bangladesh No No India Yes Yes Korea, Rep. No Yes Malaysia No No Pakistan Yes No Philippines Yes Yes Singapore No Yes Sri Lanka No Yes Thailand No Yes GDP FDI F statistic. 0.1345 0.619 2.497**** 2.593**** 0.233 2.477*** 1.512 1.777 3.953** 0.624 7.111*** 4.437*** 0.413 2.409*** 0.713 3.001*** 0.024 2.814*** P value 0.967 0.657 0.119 0.117 0.915 0.089 0.245 0.187 0.039 0.611 0.069 0.085 0.855 0.098 0.559 0.060 0.976 0.079
* denotes significance at 99% confidence level; ** denotes significance at 95% confidence level *** denotes significance at 90% confidence level; **** denotes significance at 85% confidence level
INSTITUTIONAL FACTORS finding from the causality tests that is AND FDI-GROWTH of particular significance here is the
Most studies investigating the causes of FDI or economic growth concentrate on identifying factors that directly affect the variable under consideration. In this sense, the analysis in the preceding section, which tests for a direct, causal relationship between FDI and growth, is similar to existing studies. The key June 2010 Vol. 7 Issue 1 cross-country variation in FDI-growth causality. Some of this variation is likely due to cross-country differences in the predominant type of FDI inflow, that is, the investors motivation behind FDI, such as access to host country consumer markets versus locating low-cost production areas. Additional variation in the FDIgrowth causal relationship likely
Most studies investigating the causes of FDI or economic growth concentrate on identifying factors that directly affect the variable under consideration.
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arises from cross-country differences in economic and institutional structures. Very few studies have explored these host country influences. Examples include Basu et al. (2003) and Trevino and Upadhyaya (2003), both of which find that the degree of trade openness of the host country affects the extent to which growth and FDI affect each other. We extend this line of work by considering a broader set of economic and institutional factors, and attempt to better understand the variation in FDI-growth causalities observed within our sample.
In Table 5, we divide our sample countries into four sub-groups, based on the existence of causal relationships between FDI and growth as established in Section III, and present a set of economic and institutional data for each sub-group. A glance at these data, though cursory, is somewhat revealing. A causal link from FDI to economic growth seems more likely to exist in countries that receive less FDI, are less open, have more limited transparency and rule of law, receive greater amounts of aid from the U.S., and have lower income per capita. On the other hand, growth-to-FDI causal-
Table 5: FDI, GDP, and Institutional Variables: Group Averages FDI GDP GDP FDI Countries in Group FDI (% of GDP) Growth in GDP-PC (%) Open (% of Years) Corruption Rule of Law Political Rights Index Bilateral Aid (% of GDP) ODA-USA (mil 1985$) GDP-PC (PPP$) 0 0 0 1 1 0 Pakistan 0.44 5.76 0.00 1.67 1.70 4.93 0.35 102 1133 1 1 India, Philippines 0.45 4.54 0.20 2.10 1.93 2.97 0.37 95 2064
Korea, Bangladesh, Singapore, Malaysia Sri Lanka, Thailand 2.33 6.32 0.50 2.52 2.61 3.77 0.42 66 2391 3.24 8.64 0.87 3.58 3.20 3.48 0.35 13 5073
Sources: Alesina and Dollar (2000), World Bank (2003), and authors calculations. Notes: 0 for FDI GDP or GDP FDI denotes the absence of the corresponding granger causality. 1 for FDI GDP or GDP FDI denotes the presence of the corresponding granger causality. GDP-PC refers to per capita GDP, measured at purchasing power parity exchange rates. Political rights index is based on Freedom House reports, with lower values reflecting more freedom.
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ity is more likely in countries that have greater political rights and receive smaller amounts of bilateral aid overall. Of course, this cursory glance misses valuable information contained in the time-series variation within the panel data, and is therefore only suggestive. In order to draw more accurate inferences from the given data, we use basic regression techniques and look at the interaction effects associated with the FDI-growth relationship. Since FDI typically involves longerterm considerations, we divide the time-series data from 2000 through 2009 into sub-periods of five years each and regression the dependent
variable on lagged independent variables. The explanatory variables in the growth model include FDI, trade openness, rule of law, political rights, overall bilateral aid, bilateral aid from the U.S. and per capital GDP. Additional terms include quadratic terms for FDI and per capita GDP, and interaction terms involving FDI. The FDI model includes per capita GDP growth, trade openness, rule of law, political rights, overall bilateral aid, and bilateral aid from the U.S as explanatory variables. Additional terms include the interaction effects involving economic growth. The results from the growth model are presented in Table 6, and those from the FDI model are presented in Table 7.
Table 6. Estimating Per Capita GDP Growth: FDI And Interaction Effects
Dependent variable R-Squared (%) Adjusted R-Squared (%) Constant Trade Openness t-1 Rule of Law t-1 Political Rights (PR) Index t-1 Bilateral Aid t-1 U.S. Aid t-1 GDP-PC t-1 (GDP-PC t-1)2 GDP-PC Growth 93.0 78.9 1131.5**** (292.5) 0.1167 (0.1205) 4.654*** (1.749) 1.2038 (0.8593) 13.197** (6.503) 0.03565* (0.02158) 0.004333 (0.002920) 0.44 E-06* (0.25 E-06) Dependent variable FDI t-1 (FDI t-1)2 Trade Openness t-1 FDI t-1 Rule of Law t-1 FDI t-1 PR Index t-1 FDI t-1 Bilateral Aid t-1 FDI t-1 U.S. Aid t-1 FDI t-1 GDP-PC t-1 FDI t-1 Year GDP-PC Growth 9.738 (9.353) 0.7423 (0.6978) 0.14579*** (0.06380) 3.151** (1.684) 0.886 (1.348) 13.505** (6.147) 0.01807 (0.02994) 0.0018319*** (0.0007693) 0.5738**** (0.1469)
Notes: Standard errors are in parentheses below the estimates. **** denotes significance at 99% confidence level, ***denotes significance at 95% confidence level, **denotes significance at 90% confidence level, and *denotes significance at 85% confidence level June 2010 Vol. 7 Issue 1
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Table 7. Estimating FDI: Per Capita GDP Growth And Interaction Effects
Dependent variable R-Squared (%) Adjusted R-Squared (%) Constant Trade Openness t-1 Rule of Law t-1 Political Rights (PR) Index t-1 Bilateral Aid t-1 U.S. Aid t-1 GDP-PC Growtht-1 GDP-PC Growth 93.5 85.8 354.9*** (135.6) 0.04079 (0.05447) 2.863** (1.472) 1.960* (1.162) 8.596 (8.850) 0.04373 (0.03266) 1.5981** (0.8786) Dependent variable Trade Openness t-1 GDP-PC Growth t-1 Rule of Law t-1 GDPPC Growth t-1 PR Index t-1 GDPPC Growth t-1 Bilateral Aid t-1 GDP-PC Growth t-1 U.S. Aid t-1 GDP-PC Growth t-1 GDP-PC t-1 GDP-PC Growth t-1 Year GDP-PC Growth 0.000246 (0.006869) 0.3041* (0.1898) 0.886 (1.348) 1.336 (1.271) 0.005635 (0.004698) 0.3003 E-04 (0.2286 E-04) 0.17151*** (0.06619)
Notes: Standard errors are in parentheses below the estimates. **** denotes significance at 99% confidence level,***denotes significance at 95% confidence level, **denotes significance at 90% confidence level, and *denotes significance at 85% confidence level For the sample as a whole, the effect of FDI on subsequent economic growth is not statistically significant (Table 6), whereas the effect of growth on subsequent FDI inflow is positive and significant (Table 7). It is worth noting, though, that inclusion of country dummies in the growth model (not reported in the paper) reveals the growth effect of FDI to be positive, diminishing and statistically significant. More central to our analysis here are the interaction effects in the two models. In this context, the growth model reveals that the effect of FDI on economic growth is more positive in countries characterized by greater trade openness, more limited rule of law, lower receipts of bilateral aid, and lower income level. The positive effect of openness on FDI-to-growth causality is consistent with the findings by Basu et al. (2003) and Trevino and Upadhyaya (2003), and likely reflects the importance of an open, competitive economic environment required for productive investment. The negative interaction effect of the rule of law, in our interpretation, is suggestive of a beneficial role of FDI within an institutional environment that otherwise constrains the efficiency of investments. It is plausible that due to structural reasons foreign investment has a
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greater degree of immunity to domestic corruption and institutional weaknesses than does domestic investment and consequently the marginal productivity of foreign capital is relatively higher in an environment with weaker legal infrastructure. In this sense, FDI and domestic rule of law exhibit some substitutability in generating domestic economic growth. Finally, note that the negative interaction effects associated with bilateral aid receipts and income level are consistent with diminishing returns to resources. Turning to the FDI model, the positive and significant effect of economic growth on subsequent FDI inflow is found to be greater in the presence of greater political rights (lower PR index) and more limited rule of law in the host country. Note, however, that the direct effect of political rights on FDI inflows is negative, and that of domestic rule of law is positive. This suggests that in the sample region FDI as a whole has been more likely in the presence of more authoritarian regimes, perhaps reflecting greater stability, whereas market-seeking FDI, which is induced by growth, prefers political competition in the host country. Similarly, wellfunctioning institutions and legal systems attract FDI overall, but in the presence of institutional weakness, the pull effect of economic growth on FDI inflow tends to be greater. Weak institutions and economic growth thus exhibit some substitutability in inducing FDI, and it may be that institutional weakness is more harmful to domestic investment than it is to foreign investment and, consequently, growth induces greater June 2010 Vol. 7 Issue 1
FDI when domestic institutions are weak.
CONCLUSION
This study analyzes the causal relationship between economic growth and increased FDI in nine Asian countries. Using Granger causality test, we find evidence of FDI-to-growth causality in three of the nine countries, and growth-to-FDI causality in six countries. Two of the countries showed causality in both directions, while two showed no causality at all. This variation in the FDI-growth relationship indicates that causality between the two variables cannot be generalized and must be considered more carefully. We extend our investigation of FDIgrowth causality using regression techniques, and identify institutional variables that may help to explain the cross-country variation. The results show that FDI-to-growth causality is reinforced by greater trade openness, more limited rule of law, lower receipts of bilateral aid and lower income level in the host country. Growth-to-FDI causality, on the other hand, is reinforced by greater political rights and more limited rule of law. Our findings are revealing substantial cross-country variation in FDI-growth causality as well as some of the economic and institutional causes of such variation. Given the rapid growth of both FDI and GDP around the world and specifically in South and Southeast Asia, these findings should be of significant interest to both scholars and policymakers in the arena of international development.
...well-functioning institutions and legal systems attract FDI overall, but in the presence of institutional weakness, the pull effect of economic growth on FDI inflow tends to be greater.
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Of course, the present findings are region-specific, and further work is needed to establish whether we may generalize the results for the global economy.
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Pricing of Milk: A Study in Karnataka Milk Federation

M.Jeyarathnam* Geetha. M. Rajaram** India is the largest producer of milk, producing more than 100 million tons of milk per annum. Yet, its per capita milk consumption is around 250 gm per day. Indias milk production will grow at about 3 per cent per annum in spite of the difficulties due to stagnant livestock, herd size and shortage of fodder. With increasing population, per capita availability of milk will increase by only about 1.5 per cent per annum. For an economy growing at about 8 per cent per annum, this increase in availability will be grossly inadequate. Production growing at only 3 per cent and consumption growing at more than double the rate will lead to a mismatch between demand and supply and this mismatch would affect the milk prices. This article provides a primer on the complex pricing system that has evolved in India to deal with milk production, its assembly (collection), and its distribution to alternative users. All the various government and private institutions making up the system are expected to work together to ensure that the public gets the milk it wants, while dairy farmers get the economic returns needed to provide the milk. The major institutions are the milk price support program and milk marketing orders, State regulations, dairy cooperatives, and milk and dairy product futures and options markets. The aim of this article is to understand the milk pricing methods at Karnataka Milk Federation and also to find out the relationship between the input costs and selling price of milk. The study indicated that the purchase cost, procurement cost and selling and distribution costs influenced the selling price of milk the most. Keywords: Dairy, milk, pricing and costs
INTRODUCTION
With increasing population, per capita availability of milk will increase by only about 1.5 per cent per annum. For an economy growing at about 8 per cent per annum, this increase in availability will be grossly inadequate.
India today has the distinction of being the largest producer of milk in the world, producing more than 100 million tons of milk per annum. The White Revolution has transformed Indias dairy industry. It increased the availability of milk as well as provided a reliable source of income and employment to millions of our rural farmers. More than 1.1 lakh
dairy cooperative societies with 10 million farmers are in existence throughout the country. In spite of having the distinction of being the worlds largest producer of milk, the per capita milk consumption is around 250 g per day, which is lower than the worlds daily average of 285 grams per day. With milk production growing at only 3 per cent and consumption growing at more than
*Director, Department of Womens Studies, Bharatiyar University, Coimbatore, India **Director, Department of Management Studies, REVA Institute of Technology and Management, Bangalore, India Rai Management Journal
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double the rate leads to a mismatch between demand and supply. Milk is a special product. Milk is not a white good or a brown good. Milk is not a status symbol; rather it is the symbol of nutrition. By its indispensable nature, it is one of the biggest markets, both nationally and internationally. The demand for milk has always kept pace with the production. Two factors that account for this phenomenon are The effect of Operation Flood which linked the rural based producers with the urban markets. Growing disposable income among the middle class.
Dairy Development Karnataka
in
It is expected that other things remaining the same, an increase in the prices of milk and milk products will reduce their demand and vice versa. However, it is observed that the prices of all goods and services have been increasing over time, due to general inflation. It is therefore, the relative prices of milk and milk products that influence their demand and not the nominal or current prices that we actually pay in terms of monetary transactions at any point of time. Consequent to the globalisation and opening up of the markets, the international prices have a bearing on the Indian milk prices, both in liquid and conserved forms. The increasing milk production can be gainfully absorbed by suitable pricing strategies. It would serve the purpose of both producers and consumers.
The philosophy of dairy development is to eliminate middlemen and organize institutions to be owned and managed by the milk producers themselves, employing professionals. Achieve economies of scale to ensure maximum returns to the producers, at the same time providing wholesome milk at a reasonable price to the consumers. Ultimately the complex network of cooperative organization was built to bridge the gap between the masses of rural milk producers and millions of urban consumers and to achieve a socio-economic revolution in the hinterland of the state. With this objective, Karnataka Milk Federation (KMF) came into existence on 1st May 1984 as a successor to KDDC, by federating the milk unions in the state and thus forming the state level apex organization. The project activities are being implemented by the federation. In addition to this the federation will market the surplus milk products and to produce and supply centralized inputs.
Role of Co-Operatives
The presence of milk cooperatives all over the country helps to organize the industry and give this sector a distinct advantage. Cooperatives allow for much easier marketing of the end product as compared to other businesses. Cooperatives not only assure the farmers of a market for their product but also take care of logistic issues like transportation and
With milk production growing at only 3 per cent and consumption growing at more than double the rate leads to a mismatch between demand and supply.
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Milk possesses characteristics that individually describe other agricultural products, but taken together, make marketing, fluid milk different from marketing any other agricultural commodity.
containers. The farmer is spared from these costs as well as the cost of putting up a retail outlet. Cooperatives allow for stable selling rate which does not change even when their yield is surplus. Payments are guaranteed to milk producers and ensured within a maximum of 30 days. Cooperatives play an important role by eliminating middlemen and the associated costs.
GOVERNMENT POLICY ON MILK PRICING

Governments policy to boost dairy development is to link rural producers with the urban consumers through pricing, procurement, processing and marketing. Dairying is not an end by itself. It is more than business; it has broader social and economic dimensions. The governments policy is to ensure that the consumers get the milk they want, while dairy farmers get the economic returns needed to provide the milk. The Government price support program provides a floor price for milk. Government programs, market wide pooling, and cooperative re blends have created pricing uniformity among producers over a wide region and dampen the fluctuation of milk prices which the dairy farmers receive.
business. A milk unions responsibility goes beyond buying milk. The unions must assist the farmer in productivity improvement, hygienic milk production and animal health care. At the same time, the price that the consumer pays has to be reasonable. But in the process, the milk unions face the problem of increased productivity which should be matched by increased processing requirement as well as selling and distribution expenses which may also increase. For a perishable commodity like milk, the milk unions pose special problems as these have to be sold before the shelf life. Milk possesses characteristics that individually describe other agricultural products, but taken together, make marketing, fluid milk different from marketing any other agricultural commodity. Milk is produced every day and must move to market at least every other daythus it is a flow commodity. Some of the problems in this are the presence of a large number of producers with lesser marketed surplus, and the high cost of milk collection for the processing units. Milk pricing for the milk unions under government orders has been frequently referred to as administered pricing. Manufacturing industries such as auto, steel, textiles, etc have operated successfully within the framework. Production schedules are adjusted, from temporarily closing entire plant to working three shifts, in order to control production and thus maintain quoted prices. Administered pricing of dairy products is rather peculiar as the milk is a perishable
CONCERNS OF MILK PRICING FOR THE MILK UNIONS UNDER KMF

Dairy business is not just any
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commodity. (Carley, D.H.1976). Discovering a value for most products has never been easy but seems to be particularly difficult for milk. Nonperishable products have the advantage of storability. If you dont like the price, a buyers willingness to pay can be challenged by withholding product for a period of time. With most products, a demand curve can be examined by speeding up or slowing down productionsomething that is also difficult in the short-run with milk. (Mark Stephenson, 2008). Farm, cooperative, wholesale, and retail milk prices are determined by the interaction of a number of factors. For example, farm prices are affected by the supply of raw milk and the demand for milk products such as fluid milk, cheese, and butter, as well as by central and state dairy programs. At the cooperative level, prices are influenced by the cost of services that cooperatives provide and the relative bargaining power of cooperatives and milk processors. At the wholesale and retail levels, input costs such as procurement, processing, labour, selling and distribution costs and energy, influence milk prices.
processors or through cooperatives. The pricing of milk in Karnataka involves a wide variety of pricing regulations based on public policy decisions. Some of these regulations include milk price supports, milk and milk product orders, import restrictions, export subsidies, domestic and international food aid programs, state-level milk marketing programs, and a multi- State milk pricing organization. Non-government pricing institutions are also important the dairy cooperative being a major example.
TRADITIONAL SYSTEM
PRICING
As the dairy industry developed in the early years of this country, producers faced marketing risks due to undependable market outlets for milk, erratic and chaotic milk pricing by dealers, seasonally fluctuating milk supplies, and the distance between farms and cities (centres of consumption). In response, dairy producers formed cooperatives that extended their farm businesses beyond the farm gate. Through collective action, farmers were able to effectively bargain for milk prices, balance supply and demand and transport milk more economically. The traditional pricing system has served dairy cooperatives and their members well. In the gradually deregulated dairy market environment where the awareness of price instability is heightened, the challenge for the board of directors
For some 60 years, price supports have been the backbone of the pricing system for milk and dairy products. The support price underpinned the entire price structure for bulk milk sold by farmers either directly to
For some 60 years, price supports have been the backbone of the pricing system for milk and dairy products.
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...challenge for the board of directors and management is to assess the overall risks of the cooperatives operations and determine how the risks may impact on producers pay prices through their traditional pricing system...
and management is to assess the overall risks of the cooperatives operations and determine how the risks may impact on producers pay prices through their traditional pricing system, and how the risks should be managed. They may want to manage the risks by taking advantages of flexibility in the business system, by changing their business practices, or by forming alliance with other firms to shift the risks.
on milk produced by these milk unions. The independent variables were procurement cost, processing cost, electricity, staff expenses, selling and distribution expenses and interest and bank charges of these milk unions for a period of 5 years.
RESULTS SION
AND
DISCUS-
OBJECTIVES
An attempt has been made here to establish a relationship between selling price of milk and costs incurred with the following objectives: 1. To trace the prices paid to the milk producers by the milk unions and prices paid by the consumers. 2. To understand the relationship between the cost components and selling price of milk. 3. To understand the relationship of costs and profits earned by milk unions.
To begin the procurement and selling prices of 3.5% fat and 8.5% SNF (solid non fat) milk in Karnataka Milk federation is considered. It is observed that prices vary from flush season to lean season. The flush seasons normally are during winters and the lean seasons are in summers. Table 1 gives the procurement and selling prices in KMF from April 2006 to March 2008. It is evident from Table 1 that the milk prices paid to the producers (dairy farmers) remain low during flush season (Sept to Dec) and higher during the lean season (Jan to Aug). Also the District Cooperative Societies (DCS) have earned a margin of Rs 1.81 in 2005-06 and Rs 1.90 in 2006-07. It marginally declined to Rs 1.86 during 2007-08 even though the price paid to the producer increased from Rs 9.19 to Rs 10.77 during the same period. Interestingly, the price paid to the producer has increased from 64.4% in 2005-06 to 71.51% in 2007-08 of the selling price. Table 2 gives the growth rates in milk prices at different levels i.e. milk prices paid by DCS to producers, by Unions to DCS and Unions to Consumers (selling price).
SAMPLING AND METHODOLOGY

A study was conducted taking into consideration the 13 milk unions under Karnataka Milk Federation and a logarithmic model was used to describe the relationship between the dependent and independent variables. The dependent variable was used in two forms: the selling price and profits
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Table 1: Procurement and Selling Prices of milk per litre in KMF from Apr 2006-Mar 2008 2006-07 Months Union to DCS 9.11 9.23 9.14 9.03 9.11 9.16 9.14 9.18 10.06 10.31 10.33 10.53 9.45 Union to Producer 8.86 8.98 8.91 8.78 8.87 8.90 8.88 8.92 9.66 9.87 10.07 10.26 9.19 Selling price 13.29 13.29 13.29 13.29 13.29 13.29 13.29 14.29 14.29 14.29 14.29 14.29 13.70 Union to DCS 10.59 10.59 10.44 10.42 10.42 10.48 10.40 10.40 11.16 12.14 12.61 12.74 11.05 2007-08 Union to Producer 10.33 10.33 10.18 10.16 10.16 10.21 10.08 10.08 10.85 11.81 12.29 12.32 10.77 Selling price 14.29 14.29 14.43 14.43 14.43 14.43 14.43 14.36 16.38 16.43 16.43 16.43 15.06
April May June July Aug Sept Oct Nov Dec Jan Feb Mar Average
Table 2: Growth rates of prices at three levels, 2005-08 2005-06 DCS to Producers Unions to DCS Selling Price Source: Data Analysis 8.52 8.76 13.23 2006-07 9.19 9.45 13.7 2007-08 10.77 11.05 15.06 Growth Rates 12.43% 12.31% 6.69%
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It is clear from Table 2, that the milk prices paid to producers and DCS have grown by 12.43% and 12.31% respectively, but the price that the consumer pays has increased only by 6.69% for three years. This makes it evident that the milk unions bear the cost of processing and distribution of milk. For this, it is necessary to understand the relationship between growth rates of milk sales by the milk unions and the growth rates of cost variables. To find out the relationship between the input costs and selling price of milk, the costs were identified. The costs which influenced the selling price were procurement cost, processing cost, electricity, staff expenses, selling and distribution expenses of these milk unions. To identify the relationship between the input costs and selling price, an equation of relationship based on growth rate of sales and sum growth rates of cost variables and elasticity was found to be
GRs =0.5686 * GRp + 0.2641 * GRpr 0.0930 * GRe + 0.1142 * GRst + 0.6036 * GRsd - 0.1350 + (0.5607) GRs = Growth of Sales GRp = Growth rate of procurement cost GRpr = Growth rate of processing cost GRe = Growth Rate of electricity expenses GRst = Growth Rate of staff expenses GRsd = Growth Rate of selling and distribution expenses. The number in the parentheses is the standard error of the coefficient. The estimated coefficients for retail milk price and cost of production is described in Table 3. The analyses showed that the increase in procurement cost by 1 percent had an increasing effect on the retail price by 0.57 percent in the year 2006-07. Similarly,
Table 3: Estimated coefficients for retail milk price to cost of production, KMF, 2002-07. Years 2002-03 2003-04 2004-05 2005-06 2006-07 Procurement Processing 0.47 0.48 0.49 0.47 0.57 0.24 0.21 0.26 0.35 0.26 Electricity -0.10 -0.09 -0.09 -0.10 -0.09 Staff expenses 0.13 0.12 0.10 0.10 0.11 Selling and Distribution Expenses 0.72 0.78 0.68 0.61 0.60
Source: Data Analysis
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with one percent increase in procurement cost, retail prices have increased by 0.47 percent to 0.49 percent between 2002-06. This analysis indicates that the changes in procurement costs has had a significant impact on the retail prices of milk. With 1 percent increase in processing cost, the retail price increased by 0.26 percent in the year 2006-07. Similarly, with one percent increase in processing cost, retail prices have increased by 0.21 percent to 0.35 percent between 2002-06.This analysis establishes the linkage of changes in processing costs and the retail prices. With 10 percent increase in electricity cost, the retail price decreased by 0.9 percent in the year 2006-07. Similarly, with 10 percent increase in electricity cost, retail prices have decreased by 0.9 percent to 0.10 percent between 2002-06. This analysis establishes a positive linkage of changes in electricity costs and the retail prices. With 1 percent increase in staff expenses cost, the retail price increased by 0.11 percent in the year 2006-07. Similarly, with one percent increase in staff expenses cost, retail prices have increased by 0.10 percent to 0.13 percent between 2002-06.This analysis establishes the linkage of changes in staff expenses costs and the retail prices. It also indicates that controllable staff expenses need to be identified and accordingly controlled as the retail milk prices
would be affected by it. The above estimated equation indicates that selling and distribution expenses have been the major cost component for the increase in retail price. With 1 percent increase in selling and distribution expenses, the retail price increased by 0.60 percent in the year 2006-07. Similarly, with one percent increase in selling and distribution cost, retail prices were higher at 0.78 percent in 2003-04. However the increase in selling and distribution expenses have had a lesser impact on the increase in retail prices in the later years. It is to be noted that selling and distribution costs have a major impact on the retail prices than any other cost variable.
The above relationships indicate that pricing was used to initiate price changes in line with the cost changes. This strongly indicates that Karnataka Milk Federation followed a pattern of announcing price changes in line with the changes in the costs. Table 4 describes the estimated coefficients for milk profits to the cost of production With 1 percent increase in procurement costs, the profits decreased by 0.11 percent in the year 2006-07. Similarly, with one percent increase in procurement costs, profits have decreased by 23.56 percent in 2002-03 to 23.33 percent in 2005-06. This analysis indicates that the changes in procurement costs drastically brings the profit down, keeping the administered price unaltered.
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Table 4: Estimated coefficients for milk profits to the cost of production, 200207 Procurement Processing 2002-03 2003-04 2004-05 2005-06 2006-07 -23.56 -30.65 -23.99 -23.33 -11.77 -11.89 -13.69 -12.00 -17.48 -5.47 Electricity 4.76 5.93 4.07 4.96 1.92 Staff expenses -6.27 -7.65 -4.66 -4.84 -2.36 Selling and Distribution Expenses -35.79 -50.02 -31.18 -30.44 -12.49
Source: Data Analysis With 1 percent increase in processing costs, the profits decreased by 5.47 percent in the year 2006-07. Similarly, with one percent increase in procurement costs, profits have decreased by about 12 percent in 2002-03 to 17.48 percent in 2005-06. This analysis indicates that the changes in processing costs brings the profit down, keeping the administered price unaltered. With 1 percent increase in electricity costs, the profits increased by 1.92 percent in the year 2006-07. This analysis indicates that the changes in electricity costs improves the profit. In 2002-03 and 2003-04, with 1 percent increase in staff expenses, the profits decreased by 6 to 7 percent. In the year 2006-07, with one percent increase in staff expenses, profits have decreased by about 2.36 percent. In 2003-04, with 1 percent increase in selling and distribution costs, the profit had come down by about 50 percent. However in 2006-07, with 1 percent increase in the selling and distribution expenses, profits have declined by about 12.49 percent. Careful examination of the data reveals that the profits are most affected by an increase in the selling and distribution expenses than any other cost variable. The study implies a need for additional analysis concerning the components of selling and distribution expenses and the problems concerning the milk supplies to the various unions. The results showed, that all independent variables (input costs) were positive and significantly affected the dependent variable in both forms, i.e. selling price and profits. Selling and distribution costs were found to be the most important variables that influenced the selling price of milk. This was followed by procurement costs and processing costs. Further the analysis indicates that the changes in staff expenses, reduces the profit and hence these expenses should be monitored Rai Management Journal
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carefully to improve profit margin. It is clear that the milk prices paid to the producers and DCS have increased almost two times as compared to the growth in the price that the consumer pays.
The Milk Pricing System in the Future

Economic theory posits that the role of pricing is to balance the supply of a product with the demand for it. The pricing system that has evolved for milk in India is a complex set of market and public institutions. Many of the pricing arrangements that have arisen can be tied to the unique physical properties of milk. Creating a balance between supply and demand for milk requires establishing and maintaining a balance among the following: a) The need for producer prices to remain high enough to maintain production, but not so high as to encourage surplus production. b) The willingness and ability of consumers to pay for milk and dairy products. c) The interest of producers, handlers and public in orderly flow of milk from producers to consumers.
farming. The fact that one can trace the various changes through legislative histories illustrates this facet of the system. There is pressure currently to continue making changeswith the elimination of public pricing institutions as a stated goal of some. The study indicated that pricing was used to initiate price changes in line with cost changes. This strongly indicates that Karnataka Milk Federation followed a pattern of announcing price changes in line with the changes in the costs. The continuing restructuring of dairy cooperatives in India has included and will likely continue to include joint ventures that could alter milk pricing relationships.
REFERENCES
Carley, D. H. "Discussion: Agricultural Prices in the 1970's, How Will Value Be Established," Southern Journal of Agricultural Economics, Volume 6, Number 1, pp. 33-34, 1974.
. Carley, D. H. "Economic Factors Affecting Milk Production Costs and Prices in Georgia," University of Georgia College of Agriculture Experiment Stations, Research Bulletin 155, April 1974. . Carley, D. H. "Administered Pricing by Cooperatives: Effect on Producer and Consumer Prices and Sales of Fluid Milk," Southern Journal of Agricultural Economics, pp. 137-141, 1976. Dairy Cooperatives Role in Managing Price Risks K. Charles Ling and Carolyn Betts Liebrand, Rural Business-Cooperative Service RBS Research Report 152 September 1996). A report by US Government Accountability Office GAO, 2004.
CONCLUSION
The milk pricing system has been responsive to changes in the economic and political forces affecting dairy
The continuing restructuring of dairy cooperatives in India has included and will likely continue to include joint ventures that could alter milk pricing relationships.
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A Comparative Study on Financial Performance of Pre and Post Introduction of Core Banking in Indian Bank and the South Indian Bank
N. Sundaram* C.M. Maran** Core Banking is the heart of a bank. Core Banking is a general term used to describe the services provided by a group of networked bank branches. Core Banking Solution (CBS) is networking of branches, which enables customers to operate their accounts, and avail banking services from any branch of the Bank on CBS network, regardless of where he maintains his account. The customer is no more the customer of a particular branch, but still he becomes the Banks Customer. Thus CBS is a step towards enhancing customer convenience through Anywhere and Anytime Banking. Core banking solutions help large and growing retail banks meet the challenge of handling higher volumes, intense competition, reduced margins and increased customer expectation, thereby equipping them with a unique competitive advantage in improving their profitability and extending their customer reach. This case study throws light on the financial effectiveness of pre and post implementation of core banking in Indian Bank and the South Indian Bank by analyzing the trend of various parameters taken from the Balance Sheet and Profit and Loss account of each bank and making a comparison between these two banks. Keywords: Core banking, banking services and customers
INTRODUCTION
Core banking solutions help large and growing retail banks meet the challenge of handling higher volumes, intense competition, reduced margins and increased customer expectation, thereby equipping them with a unique competitive advantage in improving their profitability and extending their customer reach.
Information Technology has been creating waves in the Indian banking industry since two decades. The Software Packages for Banking Applications in India had their beginnings in the middle of 80s, when the Banks started computerizing the branches in a limited manner. With the advent of cheap and inexpensive but high-powered PCs and servers in the early 90s, banks
went in for what was called Total Branch Automation (TBA) Packages. The middle and late 90s hit the banking industry with a huge tide in the forms of financial reforms, deregulation, globalization etc coupled with rapid revolution in communication technologies and evolution of novel concept of 'convergence' of computer and communication technologies, like Internet, mobile / cell phones etc.
*Associate Professor, VIT Business School, VIT University, Vellore, India **Assistant Professor, VIT Business School, VIT University, Vellore, India Rai Management Journal
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Customer is the king and hence all steps for improvement revolve around him. But, the three pressing issues that banks need to address in order to chalk-out a roadmap for the future are: Customer retention: Customer retention is one of the main priorities for banks today. With the entry of new players and multiple channels, customers have become more discerning and less 'loyal' to banks. Given the various options, it is now possible to open a new account within minutes or even shift accounts within a couple of hours. This makes it imperative that banks provide best levels of service to ensure customer satisfaction. Cost pressures: Cost pressures come into picture when banks are not able to afford the cost of a certain service or initiative though they want to or need to have it in place. This is primarily because the cost structure at the backend is not efficient enough to offer that kind of service to the marketplace. Such needs/wants arise due to the entry of foreign banks and private sector banks offering new technologies not offered by the public banks. Increased competition: The entry of new players into the banking space is leading to increased competition. Technology makes it easier for any company with the right channel infrastructure and money reserves to get into banking. This has been one of the major reasons behind this kind of competition from players who do not
have a banking background. These factors paved path for the emergence of Core Banking in the Indian Banking industry.
Core Banking & Banking Solutions
Core
Core banking is referred to the services provided by a group of networked bank branches. In other words, Core banking is when banks are networked to each other and have real-time access and integration; core banking systems are deployed across regions and are very helpful for processing customer transactions. Core Banking Solution (CBS) is networking of branches, which enables customers to operate their accounts, and avail banking services from any branch on the network, regardless of where the customers maintains his/her account. The customer is no more the customer of a Branch. He becomes the Banks Customer. Thus CBS is a step towards enhancing customer convenience through anywhere and anytime banking. Boston Consulting Group (BCG)'s profitability study aimed at reducing the bank's costs and enhancing its profits is looking at three areas including product profitability, SME strategy and some aspects of the business process reengineering including the prospects of core banking. Hence the correlation between Core banking and profitability is based on a sound logic.
Core Banking Solution (CBS) is networking of branches, which enables customers to operate their accounts, and avail banking services from any branch on the network, regardless of where the customer maintains his/her account.
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...the Core Banking Systems have to satisfy the requirements of all the entities that form part of the ecosystem of the Bank.
Impact of Core Banking: According to Vijay Pithadia (2006), the Core Banking Systems have to satisfy the requirements of all the entities that form part of the eco-system of the Bank. [1] Bank Employee: Head office, regional offices, branches etc: Using Core banking System. With appropriate authority employee as given above can help customers do their financial transaction. [2] Bank management: Executives / managers at respective locations, head office, regional offices, branches etc. can obtain the financial position from Core Banking Systems related to the respective sphere of banking operations and thus help pinpoint potential problems so as to avoid crises. [3] Bank Customers: Can operate any of their accounts from any branch or preferred delivery channel and have access to his funds any time 24 hours a day. [4] Bank Auditors : Ones accounts audited, they operate the same year on year thus enabling auditors to focus more on systems and procedures at delivery channels like branches, call centers etc. [5] Bank regulators: Core Banking Systems produce the required reports for regulatory bodies like the central bank, financial statement, asset and liability reports, NPA reports, large currency transaction reports etc. are all produced by either the deposits, or the loan or a combination of deposit, loan and G.L. System.
[6] Bank Share Holders: C.B. providing the desired return to shareholders from banking operations Trends overtime on such data informs share holders about how the banks are doing and helping in taking timely action to accelerate or improve performance.
Objectives of the Study

The objectives of the study are as given below: To comprehend with the concept of Core Banking and its effective implementation in Indian Bank and the South Indian Bank. To study the pre and postimplementation scenario of each of these banks with Core Banking and perform a comparative study.
Collection of Data The data for financial analysis, i.e., Balance Sheet and Profit & Loss a/c was secured from the Internet for the Indian Bank and The South Indian Bank in India. Tools Used for Data Analysis The tools used for the data analysis include Comparative Analysis, Common Size Analysis and Trend Analysis. These tools were used as they help to understand better the financial effectiveness of the banks.
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Indian Bank Banking
and
Core
Indian Bank is a major Indian commercial bank headquartered in Chennai, India. It has 22000 employees and 1541 branches and is one of the biggest public sector banks of India. Indian Bank has an impressive international presence too. It has overseas branches in Colombo (Sri Lanka) and Singapore, and 229 correspondent banks in 69 countries. Indian Bank is one of the first among all to upgrade itself with the latest technologies. It has 100% computerized business all over, 168 centres throughout the country covered under Anywhere Banking, Core Banking Solution(CBS) in 1541 branches and 77 extension counters, 562 connected Automated Teller Machines(ATM) in 99 cities/towns, 24 x 7 Service through 32000 ATMs under shared network, Internet and Tele Banking services to all Core Banking customers, e-payment facility for Corporate customers, Cash Management Services, Depository Services, Reuter Screen, Telerate, Reuter Monitors and Dealing System provided at all Overseas Branches. It is one of the public sector banks to have achieved 100% CBS branches primarily. In this major initiative that would revolutionize the banking industry in India, Indian Bank selected Tata Consultancy Services (TCS), Asias largest global software solutions and consulting services company, to supply, customize and implement the
prestigious Centralized Core Banking System in 2004. TCS is managing the entire project and system integration. As the prime vendor, TCS teamed with Financial Network Services (FNS), Australia for this project supplying the core banking system, B@NCS.
The South Indian Bank and Core Banking

One of the earliest banks in South India, The South Indian Bank was the first among the private sector banks in Kerala to become a scheduled bank in 1946 under the RBI Act and also the first bank in the private sector in India to open a Currency Chest on behalf of the RBI in April 1992. Its also the first Kerala based bank to implement Core Banking System and has the third largest branch network among Private Sector banks, in India, with all its branches under Core banking System. Though the idea was launched in 2001, the bank adopted Core Banking only by the end of 2004. South Indian Bank had won a special award for excellence in Banking Technology from IDRBT (Institute for Development and Research in Banking Technology). The South Indian Bank now plans to extend its reach more in the northern parts of India by opening 250 branches this year. Recently, it inaugurated its 500th branch in Kerala. The bank signed up Infosys providing the Core Banking solution software Finacle as the vendor for the banks core banking solution.
...The South Indian Bank was the first among the private sector banks in Kerala to become a scheduled bank in 1946 under the RBI Act and also the first bank in the private sector in India to open a Currency Chest on behalf of the RBI in April 1992.
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Analysis & Interpretation Common Size Analysis

(All figures in Rs. Crores)
From table 1, it can be inferred that the highest contribution of reserves was in 2007 with 4.97% for Indian Bank while the highest contribution for South Indian Bank was in 2006 with 5.27%. The reserves have been increasing every year and so is the proportion of the reserves to the liabilities of the bank. From table 2, it can be inferred that
1) Reserves
Table & Graph 1: Common Size Analysis - Reserves Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 Indian Bank -13.13% -8.77% -6.73% 3.20% 4.97% The South Indian Bank 3.74% 3.88% 4.30% 5.27% 4.79%
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2) Deposits
Table & Graph 2: Common Size Analysis: Deposits Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 Indian Bank 91.01% 86.19% 86.95% 85.66% 83.87% The South Indian Bank 89.94% 89.47% 89.60% 88.47% 89.65%
the deposits were the highest in proportion to the total liabilities in 2002 constituting 91.04% in Indian
Bank whereas the highest was in 2007 with 89.94%.
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3) Borrowings
Table & Graph 3: Common Size Analysis - Borrowings Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 Indian Bank 1.41% 0.85% 1.81% 3.45% 3.96% The South Indian Bank 0.24% 0.46% 0.40% 0.10% 0.14%
Source: Compiled
From table 3, it can be inferred that the maximum contribution of borrowings to the total liabilities is in 2007 with 3.96% in Indian Bank while
the same proportion in the case of South Indian Bank in 2007 is as low as 0.14%.
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4) Advances
Table & Graph 4: Common Size Analysis - Advances Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 Indian Bank 41.30% 39.40% 45.92% 47.20% 51.75% The South Indian Bank 47.36% 45.35% 56.61% 58.83% 58.00%
Source: Compiled From table 4 it is clear that the advances of the bank have also been constantly increasing in value and proportion to total assets of the bank. The advances increasing each year imply that the bank is able to reach out to its customers more conveniently which help them in availing loans easily and thus help the bank to improve their balance sheet position.
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Comparative Analysis
The analysis in table 5 shows that reserves were the highest in 2004 in comparison to the previous year with 20.58% in the case of South Indian Bank while in the case of Indian Bank it was the highest in 2006 with 61.46%.
1) Reserves
Table & Graph 5: Comparative Analysis - Reserves Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 Indian Bank -11.92% -14.97% 61.46% 59.83% The South Indian Bank 20.58% 11.89% 18.55% 12.72%
Source: Compiled
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From table 6 it is clear that the deposits have been fluctuating over the years in relation to the proportion
of deposit increase each year but overall the deposits have increased since implementation.
2) Deposits
Table & Graph 6: Comparative Analysis: Deposits Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 Indian Bank 12.04% 13.54% 14.70% 21.34% The South Indian Bank 12.13% 2.5% 11.34% 21.74%
Source: Compiled
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3) Borrowings
Table & Graph 7: Comparative Analysis - Borrowings Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 Indian Bank -24.47% 58.75% 61.61% 35.73% The South Indian Bank -19.42% -134.80% -14.52% -65.68%
Source: Compiled
Table 7 indicates that the borrowings have also increased since implementation. The highest increase is in 2006 as compared to the previous year with 61.61% in case of Indian
Bank while in the case of South Indian Bank the borrowings have been negative indicating that there has been a decrease each year in relation to its previous year.
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4) Advances
Table & Graph 8: Comparative Analysis: Advances State Bank of India Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 Indian Bank 22.78% 23.14% 18.25% 22.62% The South Indian Bank 13.91% 21.78% 15.78% 19.56%
Source: Compiled
From table 8 it clear that the advances have been increasing throughout the years but the increase per year has been fluctuating. While the year of implementation, constitutes 22.78% of
the advances, 2006 constitutes 22.62% of previous year with respect to Indian Bank while in case of the South Indian Bank the year of implementation, constitutes 13.91% of the advances.
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5) Employee Cost
Table & Graph 9: Comparative Analysis - Employee Cost Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 Indian Bank 3.38% 8.60% 17.58% 11.97% The South Indian Bank 14.78% 13.85% 13.96% 8.49%
Source: Compiled
From table 9 it clear that the employee cost has been increasing in a steady manner though the absolute change over the years has been fluctuating. This increase in employee
cost implies that the bank spend much on the employee development and recruitment including their training which in turn helps the bank to reap more profits.
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6) Miscellaneous Expenses
Table & Graph 10: Comparative Analysis Miscellaneous Expenses Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 Indian Bank 54.64% 30.24% 17.36% 22.02% The South Indian Bank 27.68% 18.14% 5.42% 17.26%
Source: Compiled
From table 10, it is clear that miscellaneous expenses have a downward representation as the absolute change and miscellaneous expenses have been increasing
simultaneously over the years except in 2006 when the absolute change decreases compared to other years in case of Indian Bank and The South Indian Bank.
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7) Net Profit
Table & Graph 11: Comparative Analysis - Net Profit Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 Indian Bank 89.13% 25.18% 19.03% 33.63% The South Indian Bank 33.11% 11.65% 32.39% 34.82%
Source: Compiled
From table 11 it is clear that Indian Bank has made a remarkable profit by introducing and implementing core banking, after which the net profits
jumped from 33.22 crore to 305.75 crore in the very first year. But in the following years, the bank was not able to maintain that increase.
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Trend Analysis
From the table 12 it is clear that the bank increased its total income by 122.12% of the base years total income in 2004 while it increased by 182.69% in 2007 in the case of Indian Bank and in the case of South Indian Bank from 109.34% in the year of implementation to 131.09% in 2007.
1) Total Income
Table & Graph 12: Trend Analysis - Total Income Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 Indian Bank 122.12% 123.15% 139.35% 182.69% The South Indian Bank 109.34% 97.55% 101.68% 131.09%
Source: Compiled
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2) Total Expenses
Table & Graph 13: Trend Analysis - Total Expenses Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 Indian Bank 108.90% 109.84% 122.76% 157.38% The South Indian Bank 108.65% 105.63% 104.64% 119.87%
Source: Compiled
From table 13, it is clear that along with the total income, the total expenses have also increased in a steady manner thus emphasizing the effect of Core Banking in the banks. Indian Bank increased its total
expenses by 108.9% of the base years total expenses in 2004 while it increased by 157.38% in 2007 while The South Indian Bank increased from 108.65% in 2004 to 119.87% in 2007.
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3) Net Profit
Table & Graph 14: Trend Analysis - Net Profit Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 Indian Bank 1221.40% 1229.65% 1518.60% 2287.09% The South Indian Bank 116.59% 12.03% 70.37% 143.95%
Source: Compiled
From table 14, it is clear that the net profit shows a healthy trend which is quite steady throughout the years and
implies that adopting core banking was profitable to the banks.
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4) Total Assets and Liabilities

Table & Graph 15: Trend Analysis - Total Assets & Liabilities Years 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 Indian Bank 133.74% 151.55% 180.35% 212.58% The South Indian Bank 121.31% 124.24% 141.93% 178.96%
Source: Compiled
The total assets and liabilities have also shown an upward trend which gives the banks a positive outlook. This constant increase is a physical proof to the positive impact of core banking on the banks increasing their total assets and liabilities throughout.
In terms of Net Profit, Indian Bank shows an increase of 2254 crores from the year of implementation and South Indian Bank shows an increase of 32 crores from the year of implementation. In terms of Reserves, Indian Bank shows an increase of 6259 crores from the year of implementation Rai Management Journal
Findings of the Study
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and South Indian Bank shows an increase of 368 crores from the year of implementation. In terms of Total Assets And Liabilities, Indian Bank shows an increase of 29735 crores from the year of implementation and South Indian Bank shows an increase of 6024 crores from the year of implementation. In terms of Advances, Indian Bank shows an increase of 18150 crores from the year of implementation and South Indian Bank shows an increase of 4306 crores from the year of implementation. In terms of Total Income, Indian Bank shows an increase of 2312 crores from the year of implementation and South Indian Bank shows an increase of 261 crores from the year of implementation. In terms of Total Expenses, Indian Bank shows an increase of 1585 crores from the year of implementation and South Indian Bank shows an increase of 229 crores from the year of implementation. In terms of Deposits, Indian Bank shows an increase of 23052 crores from the year of implementation and South Indian Bank shows an increase of 5378 crores from the year of implementation. In terms of Borrowings, Indian Bank shows an increase of 1564 crores from the year of implementation and South Indian Bank shows a decrease of 62 crores
from the year of implementation. In terms of Miscellaneous Expenses, Indian Bank shows an increase of 289 crores from the year of implementation and South Indian Bank shows a decrease of 48 crores from the year of implementation. In terms of Employee Cost, Indian Bank shows an increase of 315 crores from the year of implementation and South Indian Bank shows an increase of 39 crores from the year of implementation.
Recommendations
The Net Profit has increased but comparing to the size of the bank it is not satisfactory in both the cases Indian Bank and South Indian Bank. Thus in order to achieve a better profit margin the services need to be improved which in turn will attract customers hence resulting in better profit. The banks should come forward to be transparent and share with the public the mutual gains attained after the introduction of core banking in monetary terms, rather than a veiled reference to core banking as a cause of the improvements in financial performance. This would result in promotion of core banking in general despite the huge costs involved. The banks may have to develop data on cost per transaction, one of the major criteria in evaluating a core banking solution
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Conclusion
Core Banking entered the Indian market with the entry of private banks and foreign banks into the banking sector. The stiff competition posed by them forced the existing players, i.e., the public banks to adopt this revolutionary technology. With its adoption, gradually banks got accustomed to its many advantages thus moving the strategy in the banking sector from transactionoriented to customer-centric. In this regard, moving towards core banking signals a shift in the positive direction towards profitability in the Indian Banking sector. This is especially so in the case of Indian Bank which is one of the leading public sector banks in India. The South Indian Bank, being a new generation private bank was not among the initiators of core banking in the industry. Yet, being a techsavvy bank it was rapid in getting accustomed to the new technology and hence achieving 100% CBS branches in a short span of time. The spontaneity of the bank for providing better customer service is the vital reason for the bank being the second best private sector bank in India. Considering the growth in various economic indicators of the banks and keeping in mind the absence of other intervening factors in contributing to the growth during the year following inception of core banking, the growth is attributable mainly to the success of core banking. Further, a content analysis of news reports on increase in revenues or profits found that these reports almost invariably cite the introduction and expansion of core
banking by the banks. Such juxtaposition of the two adds strength to the claim that core banking positively influences profitability of a bank.
References
http://www.tata.com/tcs/releases/ 20041020.htm http://tatamail.com/tcs/releases/ 20020517.htm http://www.indiaearnings.moneycontrol. com http://www.evolution-asia.com/ empseconf2.htm l http://www.indianmba.com/Faculty_ Column/FC382/fc382.html http://www.indianbank.in http://www.southindianbank.com
http://www.wikipedia.com http://www.indianbank.in/PressRelease_ FinancialResult_Q1_0708_9.12.06.htm. http://www.indianbank.in/PressRelease_ FinancialResult_23.04.08.pdf http://www.domain-b.com/finance/ banks/union_bank/20060424_targets.htm. http://www.freelists.org/index.html http://www.prlog.org/10046712-southindian-bank-q3-net-profit-zooms-by-64percent.html http://www.thehindubusinessline.com/ 2008/02/23/stories/2008022352150600.ht m http://www.rupeetimes.com/news/home_ loans/south_indian_bank_q3_net_up_by_6 4_percent_1403.html http://www.iba.org.in/Febbulletin/ IBA%20June-06.pdf
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Rai Management Journal

ISSN No: 0975-4326

R. Ganapathi, S. Anbu Mala and R. Kanniah

June 2010 Vol. 7 Issue 1

From the Editors Desk