ALLANA MANAGEMENT JOURNAL OF RESEARCH MANAGEMENT...Dr. Sanjay Kaptan, Professor & Head, Department...
Transcript of ALLANA MANAGEMENT JOURNAL OF RESEARCH MANAGEMENT...Dr. Sanjay Kaptan, Professor & Head, Department...
“Information search : an empirical study among retail banking customers in India”
Dr. G. Ramasundaram, Professor, St. Joseph's College Of Engineering, Chennai, Tamilnadu, India
Dr. B. Aiswarya, Professor, Dept. Of Management Studies Sathyabama University, Chennai, Tamil Nadu,
India
“An empirical study on capital structure And its impact on bank's performance : with special reference
to SBI”
Jignesh B. Bhatt, I/c Principal, Assistant Professor, Takshashila Institute of Management, BBA Department
Jignesh R. Vaja, HOD, Assistant Professor, Sarvoday College of Management & Tech. (MBA), Limbdi, Gujarat
Hetal B. Panchal, Assistant Professor, C. U. Shah College of Eng. & Tech., Gujarat
“Micro finance - opportunities & challenges in India”
Dr. Sanjay Kaptan, Professor & Head, Department of Commerce & Research Centre, University of Pune
“Training effectiveness from HRD manager’s perspective”
Dr. Netra Neelam, Assistant Professor, Symbiosis International University, Symbiosis Centre for
Management Studies, Pune
“Developing executive (Managerial) competencies”
Dr. Tayyab S. Shaikh, HR & Training Consultant, Formerly, Executive Director, Personnel & Executive
Director, National Institute of Aviation Management & Research, Airports Authority of India, New Delhi
“Managing family business - {a critical study of six family businesses}
Prof. S. D. Bagade, Professor, AIMS, Pune
“Harnessing the power of social media in higher education institutions”
Prof. M. M. Junaid F., Assistant Professor, AIMS, Pune
Dr. Manik Kadam, Research Guide, AIMS, Pune
“A study of Moodle : open source Learning Management System with reference to it’s application in
test / exam management”
Prof. Sheetal Uplenchwar, Assistant Professor, AIMS, Pune
“Changes in the focus of parameter of market segmentation in Automobile Industries in India”
Ali Asghar Tabavar, Ph. D., Researcher, Pune University, India
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 001
FINANCE &
BANKING
MANAGEMENT
HUMAN
RESOURCES
MANAGEMENT
GENERAL
MANAGEMENT
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ALLANA MANAGEMENT JOURNAL OF RESEARCHCONTENTS
JULY - DECEMBER, 2013
CHIEF EDITOR
DR. (PROF). R. GANESAN
DIRECTOR, AIMS, PUNE
ADVISOR
DR. A. B. RAO
SENIOR RESEARCH GUIDE & MANAGEMENT CONSULTANT
HEAD, RESEARCH CENTRE, AIMS, PUNE
EDITORS
DR. ASHRAF RIZVI
PROFESSOR, IIM, INDORE
DR. (PROF). ROSHAN KAZI
PROFESSOR, AIMS, PUNE
DR. (MRS.) SURYA RAMDAS
DIRECTOR, II BM, PUNEe
ASST. EDITORS
PROF. ASHFAQUE AHMED PINITOD
ASST. PROFESSOR, UNIVERSITY OF YAMBU, KINGDOM OF SAUDI, ARABIA
PROF. S. D. BAGADE
ASST. PROFESSOR, AIMS, PUNE
EDITORIAL BOARD
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 002
t present research in Management and allied Disciplines is more analytic
Aand technology- oriented with precision, in content, and based on logical
reasoning, consistence and accuracy. Further originality in research is a
resultant of new ideas, their expression though appropriate formulation, thereby
paving the way for new insights into progressive research.
The variety and content in the articles of this issue, would provide ample scope to all
those interested readers to reflect and review.
Suggestions from readers are welcome. The Editorial committee would thankfully
receive the same.
EDITORIAL
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 003
DR. (PROF). R. GANESAN
CHIEF EDITOR
ver since the entry of new private sector banks in the wake of economic
Ereforms in 1991, the competition has become very tough for getting a pie in
retail banking segment in India. In order to attract consumers of retail
banking, a competent bank has to frame a strategy which warrant understanding of
consumer buying behavior especially information search phase of consumer
behavior. Hence, this study has attempted to identify the source of information and
analyze the level of usefulness thereof in selection of bank by collecting information
from 895 retail credit customers. The sample size covered all spectrums of customer
profiles such as age, income, education, and gender. Using ANOVA and independent T
test, it has found the significant differences among various segments in terms of
perception on level of usefulness of different information sources.
KEYWORDS
Retail banking, advertisement, family and friends, financial advisor, pamphlets,
previous dealings and shopping around.
Dr. G. Ramasundaram
Professor,
St. Joseph's College Of Engineering,
Chennai, Tamilnadu, India
Dr. B. Aiswarya
Professor,
Dept. Of Management Studies
Sathyabama University,
Chennai, Tamil Nadu, India
ABSTRACT
“INFORMATION SEARCH : AN EMPIRICAL STUDY AMONG
RETAIL BANKING CUSTOMERS IN INDIA”
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 004
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inancing decisions are one of the most critical areas for finance managers. It
Fhas direct impact on capital structure and financial performance of the
companies. It has always been an area of interest for researchers to
understand the relationship between capital structure and financial performance of
the company. This paper analyses the relation between capital structure decision &
financial performance of SBI using data from the financial year 2008 to 2012. The
data were analysed on the basis of correlation between profitability ratio i.e. return
on long term fund, return on net worth, return on assets, & EPS & capital structure
ratios i.e. total debt to owners fund ratio. Results of our study demonstrated that
capital structure influences financial performance.
KEYWORDS
Capital structure, performance, SBI.
Jignesh B. Bhatt
I/c Principal,
Assistant Professor,
Takshashila Institute of Management,
BBA Department
Jignesh R. Vaja
HOD, Assistant Professor,
Sarvoday College of Management &
Tech. (MBA), Limbdi, Gujarat
Hetal B. Panchal
Assistant Professor,
C. U. Shah College of Eng. & Tech.
Gujarat
ABSTRACT
“AN EMPIRICAL STUDY ON CAPITAL STRUCTURE AND ITS IMPACT
ON BANK'S PERFORMANCE : WITH SPECIAL REFERENCE TO SBI”
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 005
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he present paper deals with a few important issues related with possibilities
Tof utilization of Micro Finance as a tool of bringing in developmental change.
The paper discusses certain key issues associated with poverty alleviation &
women empowerment. It also proposes an argument as to how Micro Finance
alleviates the socio-economic status of women & helps in removing disparities
between rich and poor. The paper also explains the nature of Micro Finance as an
economic system supporting the neglected sections of society. The author argues
that there are certain issues and hindrances affecting development of Micro Finance
& all these issues need to be rightly addressed so that Micro Finance becomes a viable
solution for bringing about socio-economic change in India.
KEYWORDS
1. Micro Finance
2. Self Help Groups
3. Constituents of Micro Finance
4. Structures and systems for development of Micro Finance
Dr. Sanjay Kaptan
Professor & Head,
Department of Commerce
& Research Centre,
University of Pune
ABSTRACT
“MICRO FINANCE - OPPORTUNITIES & CHALLENGES IN INDIA”
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 006
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ost of the times training functions in the organizations are criticized to
Mbe ineffective due to their inability to deliver desired results. In many
cases training functions are viewed as poor reflections of Training Needs
Assessment, lack of support from training managers, insufficient budget and failure
towards transfer of knowledge and learned capabilities to transform into workplace
requirements. This study aims at understanding such issues and the perspective
towards training effectiveness from the point of view of HRD managers.
The data was collected from HRD managers of different Manufacturing and
Information Technology industries by using a questionnaire. All these industries had a
turnover of more than 50 crores.
Chi Square analysis was used to interpret the results of the data. The results of the
analysis showed a positive rejoinder from the side of the HRD managers with respect
to the training and development programs and functions carried on in the
organizations.
KEYWORDS
HRD Managers, Training Effectiveness, Training needs identification, Transfer of
Training.
Dr. Netra Neelam
Assistant Professor
Symbiosis International University,
Symbiosis Centre for Management
Studies, Pune
ABSTRACT
“TRAINING EFFECTIVENESS FROM HRD MANAGER’S PERSPECTIVE”
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 007
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xecutives (and managers) have capacity to influence performance of an
Eorganization, they are part of. Organizations, large & small, are integral
part of modern society and effective organizations can make modern
society economically productivity and socially viable. Organization also serves as a
tool to accomplish individual's career goals. It is therefore imperative that
executives / managers are effective in their given assignment. The effectiveness can
be learned by acquiring / developing competencies such as: requisite knowledge,
skills and right attitude towards the organization and the work. Requirement of
competencies may vary at different levels of management. In this article
competencies required at junior / base level executive / managerial positions are
discussed.
KEYWORDS
Executive, Manager, Effectiveness, Organization, Society, Managerial Competencies.
Dr. Tayyab S. Shaikh
HR & Training Consultant
Formerly, Executive Director
Personnel & Executive Director,
National Institute of Aviation
Management & Research,
Airports Authority of India,
New Delhi
ABSTRACT
“DEVELOPING EXECUTIVE (MANAGERIAL) COMPETENCIES”
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 008
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hen family members work together, emotions may interfere with
Wbusiness decisions. Conflicts may arise as relatives see the business
from different perspectives. Those who are silent partners are likely to
judge capital expenditures, growth and other critical matters primarily. Those
engaged in daily operations are more likely to be concerned about transactions and
personnel matters. Obviously, there is potential for conflict. As there is a gap in
between expectations and performance, in some family businesses daily operations
are hampered by conflict; in others, the challenge.
A clear chain of command -- lines of authority -- for decision making. ! A clear plan to
accomplish goals and provide for orderly succession. ! Good communication among
family members and with non-family employees. These factors are important in a
family business because of the strong emotions that can arise and the confusion that
can occur in their absence. Rights and responsibilities are different at home than at
work, and it is imperative that family Language is personal, attitudes are subjective,
roles -- husband/wife, parent/child, family / relatives / in-laws -- are traditionally
defined.
Prof. S. D. Bagade
Professor,
AIMS, Pune
ABSTRACT
“MANAGING FAMILY BUSINESS -
{ A CRITICAL STUDY OF SIX FAMILY BUSINESSES }
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 009
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ocial media differentiates from traditional media in many aspects such as
Squality reach, frequency, usability, immediacy and permanence. Corporates
have realized its power and taking benefit from, however educational
institutions are still reluctant in using it. We have conducted a survey of 100
respondent in order to get their view about use social media by educational institute.
Majority of the respondents were positive about it. We have also given Suggestions
how the different stake holders in an education institute can take benefit from this
powerful media(section 5).
KEYWORDS
Social media, Higher education, Stake holders, Benefits, Teaching, Recruitment,
Communication.
Prof. M. M. Junaid F.
Assistant Professor,
AIMS, Pune
Dr. Manik Kadam
Research Guide,
AIMS, Pune
ABSTRACT
“HARNESSING THE POWER OF SOCIAL MEDIA IN
HIGHER EDUCATION INSTITUTIONS”
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 010
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learning Management System (LMS) expands course management and adds
Amore functionality beyond creation, storage and retrieval of content like
registration; automating reporting, administration, assessment, course
management and tracking student progress etc. Most colleges and universities use
learning management system to support the delivery of course content.[1].
There are 86,268 registered sites using Moodle and total numbers of enrolled users
are . [2].73,095,190
In this work we present an overview of the Moodle's, Quiz Module. The purpose
behind using Quiz Module is to enhance the way of conducting traditional quiz.
This paper reports the relationship between the difficulty level and the
discrimination power of true/false-type multiple-choice questions (MCQs) in a multi
disciplinery paper for the MCA & MCM course.
KEYWORDS
Psychometric analysis, R Count, R%, Facility Index, Discriminative Index.
Prof. Sheetal Uplenchwar
Assistant Professor,
AIMS, Pune.
ABSTRACT
“A STUDY OF MOODLE : OPEN SOURCE LEARNING MANAGEMENT SYSTEM
WITH REFERENCE TO IT’S APPLICATION IN TEST / EXAM MANAGEMENT”
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 011
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he purpose of this study is to find out whether there is any change in the
Tfocus of parameter of segmentation in automobile industries in India or not,
in order to find out the current parameter of segmentation in automobile
industries In India researcher has gone through several published journal, books,
magazines and companies data. The result shows that the most important factor for
segmentation of automobile industries in India in the segmentation process is done
largely on the bases of the product type or the price range the product fits into.
Considering this Sample has been collected from 100 managers and 200 customers of
automobile industries in Pune, during the month of March 2012 to May 2012. The
result shows that there is a significant change in the focus of parameter of
segmentation in automobile industries in India. Based on the importance of
parameter of segmentation the results also found that there is a change in the focus
of parameter of segmentation between customers and managers of automobile
industries in India. Managerial implications of these findings are briefly discussed.
KEYWORDS
Segmentation, Automobile industries, Parameter of segmentation, India.
Ali Asghar Tabavar
Ph. D., Researcher,
Pune University, India
ABSTRACT
“CHANGES IN THE FOCUS OF PARAMETER OF MARKET
SEGMENTATION IN AUTOMOBILE INDUSTRIES IN INDIA”
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ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 013
INTRODUCTION
ndian retail banking has witnessed phenomenal growth ever since
Ithe economic reforms started in 1991. There are many reasons cited
by many authors for this growth which includes demographic
changes, flexible interest rates, competition among banks, and
profitability in retail banking business, less demand for credit from
industry, technological development and so on. Though the economy
encounters some challenges on account of global financial crisis and
recent European debt crisis, retail banking business appears to have
consistent growth. Hence, banks in India are applying strategies to
sustain and improve their share in this business. The basic of devising and
implementing strategy is to understand the borrowing behavior of Indian
retail consumers. Information search is one among stages of borrowing
behavior that is playing the vital role in evaluation and selection of a bank
for borrowing credit.
The buying behavior models developed by Howard and Sheth (1969) and
Engel, Blackwell and Miniard (1994) show that buying process of a
consumer consists of five stages Starting with problem recognition, the
consumer passes through the stages of information search, evaluation of
alternatives, purchase decision, and post purchase behavior. As this
model explains, the consumer borrowing process begins long before the
actual borrowing and has consequences long afterward.
An interested borrower who recognizes a need for retail credit will be
inclined to search for more information. The arousal would be
distinguished between two levels of arousal. At the milder search state of
heightened attention, a person simply becomes more receptive to
information about a bank. At the active information search level, a
“INFORMATION SEARCH:
AN EMPIRICAL STUDY AMONG RETAIL
BANKING CUSTOMERS IN INDIA”
DR. G. RAMASUNDARAM
PROFESSOR,
ST. JOSEPH'S COLLEGE OF ENGINEERING,
CHENNAI, TAMILNADU, INDIA
DR. B. AISWARYA
PROFESSOR,
DEPT. OF MANAGEMENT STUDIES
SATHYABAMA UNIVERSITY,
CHENNAI, TAMIL NADU, INDIA
FINANCE &
BANKING
MANAGEMENT
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 014
person surfs the Internet, talks with friends, and visits banks
to learn more about the product. Consumer information
sources include personal sources (family, friends, neighbors,
acquaintances), commercial sources (advertising, Web
sites, salespersons, dealers, packaging, displays), public
sources (mass media, consumer-rating organizations), and
experiential sources (handling, examining, using the
product). The borrower usually receives the most
information from commercial (marketer-dominated)
sources, although the most influential information comes
from personal sources. Through gathering information, the
consumer learns more and more about competing banks.
The individual borrower will come to know only a subset of
these banks (awareness set). Some of these banks will meet
initial borrowing criteria (consideration set). As the person
gathers more information, only a few banks will remain as
strong contenders (choice set). The person makes a final
choice from this set (Narayana and Marking, 1975; Desarbo
and Jedidi, 1995).
It makes it clear that a bank must strategize to get itself into
the prospect's awareness set, consideration set, and choice
set. The bank must also identify the other banks in the
borrower's choice set so that it can plan competitive
appeals. In addition, the bank should identify the consumer's
information sources and evaluate their relative importance
so it can prepare a range of effective communications for
the target market.
SOURCES OF INFORMATION
Most of the previous researchers defined information search
either explicitly or implicitly related to the specific
purchase under consideration (Beatty and Smith, 1987).
Information search behavior can be also classified as
internal or external (Beales et al., 1981). Internal
information search consists of consumers' retrieval of
memory or knowledge from previous search, experience
with products or passively acquired information during
normal regular activities. External information search
behavior comprises of consulting with friends, family
members, experts, sellers, reading books, magazines
articles, consumer ratings, advertising and direct
inspection. The other way of categorization of sources of
information includes direct experience, seller provided,
personal including family and friends and third party. Seller
provided information has been further divided into direct
from seller and advertisements.
In the survey conducted by the Mortgage Bankers Association
of America, most of the respondents cited the phone as their
favorite way to obtain information on mortgages; personal
contact was the second most cited source of information
followed by advertisement and real estate professionals;
experience was also cited as a source of information for
refinances (Lee and Cho, 2005).
Research in developed market economies constantly has
established that consumers derive product knowledge from
multiple sources of information which includes advertising
(Arndt, 1968; Coulter, Zaltman and Coulter, 2001; Hoch and
Ha, 1986), personal search (Alba and Hutchinson, 1987;
Beatty and Smith, 1987; Srinivasan and Ratchford, 1991),
influential others (Dichter, 1966; Feick and Price, 1987) and
product experience (Hoch and Ha, 1986; Kempf and Smith,
1998).
Oberlechner and Hocking (2004) found that wire services,
personal contacts, analysts, brokers, newspapers,
televisions are sources of information for foreign exchange
traders. Acquiring information also differs between
individualist and collectivistic cultures: in the individualistic
culture, people predominantly acquire information through
media sources; in the collectivistic culture, people are
perhaps to look for interpersonal sources of information (de
Mooij, 2004).
Findings of Elliot (1994) revealed that personal search (i. e.,
referrals, interpersonal) was the predominant information
source used while media search contributed best to the
formation of evoked sets. Besides, search determinants such
as age, service knowledge, perceived risk, purchase
involvement, and city size were successful in explaining
variation in external search effort.
A study conducted during economic transition in Hungary
(Coulter et al., 2009) indicated that the market information
variables explained in knowledge of consumer. Advertising
was an important predictor of consumer knowledge and
personal search was always important source of
information. However, brand experience was positively
related to knowledge in later transition and negatively
related in earlier transition. Conversely interpersonal
sources were not important in either period.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 015
METHODOLOGY
As the number of people who borrowed credit is very large, sampling technique is applied to select the respondents for study.
Using mal intercept method, totally 1500 questionnaires after pilot survey among 50 respondents have been distributed to retail
credit customers of scheduled commercial banks in Chennai city during the period of 2010-11 but only 1264 have been received
after continuous follow-up. Among collected filled questionnaires, only 895 are in usable condition. The confidence level and
deviation considered in this study are 95 per cent and 3 per cent respectively. After adding 5 per cent contingency for non response
the required sample size is 883 which is less than actual sample size of 895.
The questionnaire consists of personal information like age, income, gender, amount of loan, type of loan etc., and information
sources including personal and other sources. The usefulness of each source of information is measured on five point scale starting
with not at all useful to highly useful. The reliability of the usefulness scale is tested with cronbach alpha (0.823). Based on pilot
survey and feed back of respondents, some of the sources of information are removed and some are clubbed with others. For
example, all types of advertisements are kept under one head.
SOURCES OF INFORMATION AND SEGMENTS OF RETAIL BANK
The borrowers of retail credit use various sources for getting information regarding details of suppliers of credit and features of
loans.
TABLE: 1. DESCRIPTIVE STATISTICS
Based on previous studies conducted in this area, the major sources of information are advertisement, financial advisor, family
and friends, previous dealings with the bankers and shopping around.
The table 1 witnesses that all sources of information invariably are mentioned by all respondents and have minimum of one and
maximum of four. It shows that all sources are useful and the degree of usefulness varies from respondent to respondent. The
conclusion elicited from the table 1 that by and large the information from family and friends are highly useful and has the least
variation. The next valuable source is advertisement of banks but the deviation is the highest among sources while the least
helpful source of information is shopping around. Nonetheless none of the sources is seemed to be of no use.
SOURCES OF INFORMATION AND SEGMENTATION BASED ON DEMOGRAPHIC FACTORS
Demographic segmentation such as age, income, education and gender has been considered for analyzing the sources of
information used by different segments and how it varies in terms of usefulness for selection of bank and loan. ANOVA and
independent T test have been applied to understand the difference between segments. The table 2 illustrates F value of each
source of information and its significant value for the segments namely age, income and education.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 016
TABLE: 2. INFLUENCE OF AGE, INCOME AND EDUCATION ON USEFULNESS OF SOURCES OF INFORMATION
* Significant at 0.05
AGE AND SOURCES OF INFORMATION
With reference to the different age group of respondents, there are significant variations in the sources such as financial advisor,
family and friends, previous dealings and shopping around. Duncan post hoc method has been employed to understand the
differences.
TABLE: 3. HOMOGENEITY TABLE FOR USE OF FINANCIAL ADVISOR AND FAMILY/FRIENDS AMONG AGE GROUPS
The table 3 indicates that based on the level of usefulness of information from the source of financial advisor, the total
respondents are divided in to three subgroups. It is obvious from the data that the respondents in the age group of 31-50 have
found information given by financial advisor is more helpful than other age group. Conversely, respondents of above 50 and below
30 age groups have viewed this source as less useful source.
Regarding information from family and friends on banks and retail credit, the mean values in the table 3 confirms that there is
significant variation between different segments of respondents in terms of usefulness. Apart from respondents belonging to
above 50 age segment, all other respondents have meant this source as highly valuable source for selection of bank. Though mean
score is significantly less for the above 50 age segment, it is seemed to be useful to some extent.
TABLE: 4. HOMOGENEITY TABLE FOR USE OF PREVIOUS DEALINGS AND SHOPPED AROUND AMONG AGE GROUPS
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 017
As far as information derived from previous dealing is concerned, the worthiness of information is classified in to two categories
based on mean value. The first category contains only group of respondents below thirty age with the mean value of 2.07 that
explains relatively less value in terms of usefulness. It may be due to the fact that the young respondents would have had only few
previous dealings. Mean value of other age groups is significantly higher than the former.
For making out the difference in the worth of information collected by respondents through window shopping between age based
segments, the table 4 has been presented. The information from shopping around has been considered as less valuable by the
respondents with more than 50 age while, the respondents of 50 and less ages rate information of this source is of more use.
INCOME AND SOURCE OF INFORMATION
Respondents are classified based on their average monthly income level in to four categories such as respondents with the income
of below Rs10000, Rs10001-20000, Rs20001-30000, Rs30001- 40000 and above Rs40000. The result of ANOVA reveals that there is
significant difference between income segments in the case of financial advisor and previous dealings. Duncan post hoc analysis
has been used for further understanding on variation in the mean score of each source's usefulness.
TABLE: 5. HOMOGENEITY TABLE FOR USE OF FINANCIAL ADVISOR, SHOPPING AROUND AND PREVIOUS DEALINGS AMONG
INCOME SEGMENTS.
The Duncan post hoc table for information from financial advisor depicts that the difference in terms of value of information is
significant between Rs10000 and below and other segments. However, the variation is not found to be significant between
Rs20001-30000 and Rs30001-40000. It is also observed from the table 5 that the respondents of income less than Rs20000 find
information of this source is of less utility than the level of utility derived by respondents with more than Rs20000 income. But
none of the segments has rated this source as highly useful.
As far as information collected through previous dealings of respondents is concerned, there is significant difference between
different segments of income groups. The mean value in the table 5 ranges between 2 and 2.56 that show that the information is
helpful from a little extent to some extent. The information is more worth for Rs10001-30000 income group than the other two
segments appeared in the set 1 and set 2 of the above table. Conversely respondents with income of less than Rs10000 have found
this as significantly less useful.
The yet another source of information which has significant variation between different income segments is information collected
through shopping around. The highest mean score is given by the respondents of Rs40000 income segment which means that the
usefulness of information received by shopping around is higher. This is significantly different from the mean value of other
income segments. The first set reveals relatively less mean value. Among the various segments in the first set, respondents of
Rs20001-30000 income group regard information from shopped around as more useful than other income group in the first set.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 018
EDUCATION LEVEL AND SOURCE OF INFORMATION
Respondent's education level has been classified as school level, degree, post graduate, professional and others. The ANOVA test
result reports that there is significant difference in mean value of all sources of information except financial advisor source and
shopping around source. Duncan post hoc analysis is used to ascertain how the usefulness of information varies.
TABLE: 6. HOMOGENEITY TABLE FOR USE OF ADVERTISEMENT, FAMILY/FRIENDS AND PREVIOUS DEALINGS AMONG
EDUCATION SEGMENTS.
Total segments have been stratified in to three subsets based on the mean value with reference to usefulness of advertisement.
The first set includes degree, post graduate and professional degree. The second set consists of school, professional degree, and
post graduate. And third set is made up of others.
Among the respondents of different educational levels, the degree holders have stated the information through advertisement is
less useful where as the respondents of other qualification have found more useful for patronizing particular bank for loan.
Besides, people with school education have opined the utility of advertisement above the level of degree holders but below the
level of other qualification people. It is evident from the above table that the significant difference is found between respondents
with degree and respondents with school education, school and other qualification.
Though it has been looked significant in ANOVA table, the Duncan post hoc table shows means of family and friends and previous
dealings in one set. However, there is substantial level of differences among the usefulness of sources of information in selection
of bank for availing loan. As per the table 6, customers of retail banking with qualification of school level have found the
information given by family members and friends more useful than that of others. It may be reason that people of this category
usually rely on their own circle for decision and may not be well aware of other sources available. Conversely customers who
qualified with professional degree have felt the information offered by family and friends source less utility in comparison with
the former. But it has been rated per se by all respondents irrespective of educational qualifications helpful to a great extent for
patronizing a bank. On the basis of differences, it can be grouped as professional degree, post graduate and others under one and
the remaining under other.
Of the sources of information depicting significant differences between the segments of various educational qualifications, the
last one that has the least F value is information with help of previous dealings. Previous dealing means here that information
gathered while respondents have availed some other or same type of services with the banks. This is possible only for the existing
customers of banks.
On an average the usefulness of information through this source falls between useful to some extent to useful to great extent. The
differences have been elicited from the table that the highest utility is drawn through previous dealings by professionally
qualified customers and the least by post graduate customers. Notwithstanding the differences among respondents with diverse
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 019
qualifications, none of the segments witnesses unhelpfulness of information drawn from previous experiences.
GENDER AND SOURCES OF INFORMATION
The retail customers consist of both male and female. For finding out the dissimilarities in terms of value of information from
different sources between male and female respondents, independent T test has been exercised. It is evident from the result that
almost all sources baring pamphlets and family and friends sources are nearly similar in terms of utility regardless of gender
difference.
TABLE: 8. T TEST TABLE FOR GENDER AND SOURCES OF INFORMATION
* Significant at 0.05
The significant difference has been found in the case of family and friends between male and female respondents. Both the
classes of respondents have stated that information provided by family members and friends are highly worth for selection of bank
but relatively female respondents have found more useful than male respondents that is noticed from the mean values in the
table. Nearly all female have assigned same weight to this source it is evident from the less standard deviation value. It is not
similar in the case of male respondents. The least difference has been discovered in the usefulness of previous dealings followed
by financial advisor.
CONCLUSION
It clearly reveals that by and large, the most useful source of information is family and friends followed by advertisement. The
least helpful source is shopping around. However, there are differences in average level of utility of sources of information
between segments. Segments below 50 years, school and degree segments, and female segment found to have more use in
information provided by family and friends.
Previous dealings with banks helped income segment relatively to a greater extent whereas the role of financial advisor is high in
the case of Rs 20000 to 30000 income segment, female segment and other qualification segment. By shopping around, all age
groups except above 50 and income groups more than Rs 40000 have obtained more useful information than others. These
inferences may be very helpful for the bankers while designing their promotion strategies for target consumers. Moreover, new
retail banking products are introduced frequently by the bankers to meet the needs of different segments of the market. Hence
they can prepare separate information dissemination formula for each product based on targeting segment for attaining optimum
resource utilization.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 020
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ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 021
1.0 INTRODUCTION
Given the objective of maximization of shareholders' wealth, the
need for an optimum capital structure cannot be over
emphasised. In operational terms, every firm should try to
design such capital structure. But the determination of an optimum
capital structure is formidable task. It should be clearly understood that
identifying the precise percentage of debt that will maximise price of
shares is almost impossible, however to determine the proportion of debt
to use in the financial plan in conformity with the objective of maximizing
the share price. The key factors governing the capital stricter decision
are profitability & liquidity.
The growth in the Indian Banking Industry has been more qualitative than
quantitative and it is expected to remain the same in the coming years.
Based on the projections made in the India Vision 2020" prepared by the
Planning Commission and the Draft 10th Plan, the report forecasts that
the pace of expansion in the balance-sheets of banks is likely to
decelerate ". The total assets of all scheduled commercial banks by end-
March 2010 is estimated at 40,90,000 crores. That will comprise about 65
per cent of GDP at current market prices as compared to 67 per cent in
2002-03. Bank assets are expected to grow at an annual composite rate of
13.4 per cent during the rest of the decade as against the growth rate of
16.7 per cent that existed between 1994-95 and 2002-03. It is expected
that there will be large additions to the capital base and reserves on the
liability side.
The Indian Banking Industry can be categorized into non-scheduled banks
and scheduled banks. Scheduled banks constitute of commercial banks
and co-operative banks. There are about 67,000 branches of Scheduled
banks spread across India. As far as the present scenario is concerned the
“AN EMPIRICAL STUDY ON CAPITAL
STRUCTURE AND ITS IMPACT ON
BANK'S PERFORMANCE :
WITH SPECIAL REFERENCE TO SBI”
JIGNESH B. BHATT
I/C PRINCIPAL,
ASSISTANT PROFESSOR
TAKSHASHILA INSTITUTE OF
MANAGEMENT, BBA DEPARTMENT
JIGNESH R. VAJA
HOD, ASSISTANT PROFESSOR
SARVODAY COLLEGE OF MANAGEMENT &
TECH. (MBA), LIMBDI, GUJARAT
HETAL B. PANCHAL
ASSISTANT PROFESSOR
C.U.SHAH COLLEGE OF ENG. & TECH..
GUJARAT
FINANCE &
BANKING
MANAGEMENT
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 022
Banking Industry in India is going through a transitional
phase.
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. Unfortunately they are
burdened with excessive Non Performing assets (NPAs),
massive manpower and lack of modern technology. On the
other hand the Private Sector Banks are making tremendous
progress. They are leaders in Internet banking, mobile
banking, phone banking, ATMs. As far as foreign banks are
concerned they are likely to succeed in the Indian Banking
Industry.
The State Bank of India, the country's oldest Bank and a
premier in terms of balance sheet size, number of branches,
market capitalization and profits is today going through a
momentous phase of Change and Transformation – the two
hundred year old Public sector behemoth is today stirring out
of its Public Sector legacy and moving with an agility to give
the Private and Foreign Banks a run for their money.
The bank is entering into many new businesses with strategic
tie ups – Pension Funds, General Insurance, Custodial
Services, Private Equity, Mobile Banking, Point of Sale
Merchant Acquisition, Advisory Services, structured products
etc – each one of these initiatives having a huge potential for
growth.
2. OVERVIEW OF LITERATURE
The real debate on the capital structure was started after the
publication of the celebrated paper of Modigliani and Miller
(MM) in 1958. With the assumptions of perfect market and no
tax world MM proposed that the selection of debt-equity was
independent of the value of the firm. Modigliani and Miller
provide path and guidelines for the researchers to analyze
the financing patterns and later several hypotheses have
been put forward or considerable work has been done by
researchers to analyze the determinants of capital structure.
In 1963, Modigliani and Miller wrapped up the corporate tax
assumption and intended that the value of the firm or cost of
capital varied with the variation in the utilization of debt
capital due to tax benefits (Baral 1996).
Since Modigliani and Miller's (1958) irrelevance proposition,
firm's capital structure decisions have been intensely
investigated. The irrelevance proposition states that under
strict assumptions, among which are the absence of
corporate taxes, the structure of capital is irrelevant to the
determination of a company's value. The assumption on
taxes proved to be crucial for the irrelevance proposition. In
fact, a few years later, Modigliani and Miller (1963)
concluded that the introduction of corporate taxes and the
possibility of deducting interest on debt from taxable profits
would induce firms to be completely financed by debt.
However, as this is not usually observed, several authors,
including Modigliani and Miller themselves in Modigliani and
Miller (1963), argued that bankruptcy costs, and other costs
associated with debt, could explain why firms were not
totally financed by debt. This discussion on the benefits and
costs of debt is central to the trade-off theory of capital
structure. According to this theory, there are forces leading
firms to less leverage, for instance bankruptcy costs, and
forces leading to more leverage, among them the above
mentioned tax benefits of debt and the agency costs of free
cash flow. The combination of these forces results in the
existence of a target leverage at which the value of firms is
maximized. The main predictions of this theory on leverage
ratios are related with the profitability of firms. Profitability
should have a positive impact on leverage, as it contributes
to a decrease in bankruptcy costs. In addition, more
profitable firms benefit more from the tax benefits of debt
(DeAngelo and Masulis, 1980).
As these firms have freer cash-flow, the existence of debt
payments also helps to reduce agency costs of equity, by
aligning the interests of managers and shareholders (Jensen
and Meckling, 1976, and Jensen, 1986). Besides profitability,
there are other characteristics of firms that help to explain
target leverages. According to theory, bankruptcy costs are
expected to be lower for firms with more tangible assets, as
these could be used as collateral. In addition, the existence
of depreciation expenses helps to explain less leverage, as
these expenses result in tax benefits.
Studies showed contradictory results about the relationship
between increased use of debt in capital structure and firms
performance. Some studies (Taub, 1975; Roden and
Lewellen, 1995; Champion, 1999; Ghosh et al., 2000;
Hadlock and James, 2002, Berger and Bonaccorsi di Patti,
2006) showed positive relationship and some (Kester, 1986;
Friend and Lang, 1988, Fame and French, 1998, Gleason et
al., 2000; Miserly and Li, 2000, Booth et al., 2001 Ibrahim,
2009) showed negative or weak/no relationship.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 023
3. RESEARCH METHODOLOGY
3.1 RESEARCH DESIGN
“A research design is the arrangement of conditions for
collection and analysis of data in a manner that aims to
combine relevance to the research purpose with economy in
procedure.” For this research purpose, the research design is
analytical and descriptive design.
3.2 UNIT OF ANALYSIS
Unit of analysis means the study of variables associated with
the research problem. There are several variables under the
study but the main variables have to be studied. For this
research, a unit of analysis is SBI.
3.3 SAMPLING DESIGN
When some of the elements are selected with the intention
of finding out something about the population from which
they are taken, that group of elements are referred to as
sample and the way in which sample is selected is referred to
as 'sample design. 'The sampling design for this research
“convenience based non – probability sampling.” The non –
probability sampling means wherein items for the sample are
deliberately selected by the researcher leading to personal
bias.
3.4 DATA COLLECTION METHOD
For this research purpose, the data have been collected
through annual reports of the SBI. The present study is done
for the last five Accounting Years i.e. 2007-08 to 2011-12. The
secondary data will be very helpful in evolving an
appropriate methodology for the study and in formulating a
conceptual framework for the study. For these purposes,
various secondary sources like customer satisfaction index,
annual reports of banks, books and periodicals, research
articles, seminar reports, working papers, study reports of
government agencies, news papers, study reports of expert
committees, plan documents, web sites etc.
3.5 OBJECTIVE
The purpose of this paper is to demonstrate the impact of
defining the main variables of capital structure and
performance on experimental results. Therefore, the
following hypotheses are extracted :
1. There is a significant relation between total debt to
owners fund & return on long term fund of SBI.
2. There is a significant relation between total debt to
owners fund & return on net worth of SBI.
3. There is a significant relation between total debt to
owners fund & return on assets of SBI.
4. There is significant relation between total debt to
owners fund & total income to capital employed of
SBI.
5. There is a significant relation between total debt to
owners fund & EPS of SBI.
3.6 DATA ANALYSIS & INTERPRETATION
After gathering necessary data, they were analyzed by Excel
and the variables were calculated. Then the variables
entered in SPSS software and then correlation between
dependent and independent variables were measured by
using Pearson correlation coefficient. The four profitability
ratios of five years & one capital ratio for those five years
were analysed for finding correlation. Correlation is
denoted by r. if r =1 then its correlation is positive &
perfectly correlated. If r=-1 then its correlation is negative.
If r=-0 then it's known as there isn't any correlation. The
following data were collected for research purpose.
Year R 2007 -08 2008 -09 2009 -10 2010 -11 2011 -12
Total debt to owners fund ratio 10.96 12.81 12.19 14.37 12.43
Return on long term fund 0.57 86.83 100.35 95.02 96.73 96.84
Return on net worth 0.20 13.73 15.75 13.89 12.71 13.94
Return on assets 0.00 1251.05 1023.40 1038.76 912.73 776.48
Total income to capital employed 0.23 8.96 8.99 8.62 8.48 9.40
Earning per share 0.065 106.56 143.67 144.37 116.07 174.15
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 024
The table shows the performance ratios of Return on long
term fund, Return on net worth, Return on assets, total
income to capital employed & earning per share & capital
structure variable ratio of total debt to owner's fund. The
correlation between long term debt to owners fund & Return
on net worth, Return on long term fund, Return on assets,
total income to capital employed & earning per share were
defined by taking five years ratios of SBI.
3.7 FINDINGS & CONCLUSION
Tests on coefficient of correlation demonstrated that there is
a meaningful link between one variables of capital structure
and four variables of performance except the link between
return on assets that is not meaningful. As per the above
table the ratios of profitability i.e. return on long term fund,
Return on net worth, Return on assets, total income to
capital employed & earning per share is found.
1. The table shows that there is a positive correlation
between total debt to owners fund & return on long
term fund as the value of r is positive. But that's not
perfectly positive as its value is less than one i.e.
0.57. So the null hypothesis is rejected &
alternative hypothesis is accepted as there is
significant relation between these two
variables of SBI.
2. There is a negative correlation between total debt
to owners fund & return on net worth as the value of
r is negative. But that's not perfectly negative as its
value is more than minus one i.e. -0.20. So the null
hypothesis is rejected & alternative hypothesis is
accepted as there is significant relation between
these two variables.
3. There isn't any correlation between total debt to
owners fund & return on assets as the value of r is
zero. So the null hypothesis is accepted &
alternative hypothesis is rejected as there isn't any
significant relation between these two variables.
4. There is a negative correlation between total debt
to owners fund & total income to capital employed
as the value of r is negative. But that's not perfectly
negative as its value is more than minus one i.e. -
0.23. So the null hypothesis is rejected &
alternative hypothesis is accepted as there is
significant relation between these two
variables.
5. There is a negative correlation between total debt
to owners fund & Earning per share as the value of r
is negative. But that's not perfectly negative as its
value is more than minus one i.e. -0.065. So the null
hypothesis is rejected & alternative hypothesis is
accepted as there is significant relation between
these two variables.
CONCLUSION
Financing decisions are one of the most critical areas for
finance managers. It has direct impact on capital structure
and financial performance of the companies. It has always
been an area for interest for researchers to understand the
relationship between capital structure and financial
performance of the company. The research defined that the
capital structure decision affects the profitability of any
companies. The capital structure of SBI is having some
negative & positive effects on different profitability ratios
over the period. When there is change in capital structure it
will also make changes in performance of bank.
REFERENCES
1. M Y Khan & P K Jain, “Financial Management”, Fifth edition, TATA
McGaw Hill Education private ltd., 2010, pp. 6.1-6.72
2. Dr.P.K Srivastava, “Banking Theory & Practises”, tenth edition,
Hymaliya Publishing house, 2007, pp.30-54
3. Abor, J. (2005), "The effect of capital structure on profitability: an
empirical analysis of Listed firms in Ghana", Journal of Risk
Finance, Vol. 6 pp.438-47.
4. Berger, A., Bonaccorsi di Patti, E. (2006), "Capital structure and
firm performance: a new approach to testing agency theory and
an application to the banking industry", Journal of Banking and
Finance, Vol. 30 pp.1065-102.
5. Gleason, K., Mathur, L., Mathur, I. (2000), "The interrelationship
between culture, capital structure, and performance: evidence
from European retailers", Journal of Business Research, Vol. 50
pp.185-91.
6. http://www.eurojournals.com/ejefas_24_01.pdf
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 025
INTRODUCTION
he concept of Micro Finance in India is gaining importance all
Tover the world especially in developing countries due to its
unique features and specialties. Although the concept has
recent origin, it has a deep and lasting impact. It is necessary to
understand the reasonable tray behind development of this concept.
There are various reasons behind growth of Micro Finance phenomenon.
One of the most important and dominant reasons is the changing social
structure and change in the awareness of different sections of the
society. The classical economists usually considered the problems of
elite classes and select sections of the society as the genuine problems of
economic process. The neglected, socially deprived and low income
classes were not even the matter of consideration of these thinkers.
Selective approach and sectional thinking was the major focus of these
thinkers. Hence larger but neglected sections of the society was never
the mainstream focus of these thinkers. It was only in the 70's of the last
century where the scenario began to change. Economists and thinkers
like G. MyridalI and others started thinking in terms of developing
economies. The low income and resource-less class became the focus of
economic discussions. This was further geared up by thinkers and experts
like Md. Yunus, Amartya Sen and many others. Today the major plank of
economic thinking is how to uplift socio-economic standards and
participation of the have-nots in the economic processes. Even with
limited resources and uncertain income, this section also can contribute
to the developmental process for which an appropriate system, structure
and positive attitude is needed. Micro Finance is the solution offered
from this point of view.
“MICRO FINANCE -
OPPORTUNITIES & CHALLENGES
IN INDIA”
DR. SANJAY KAPTAN
PROFESSOR & HEAD,
DEPARTMENT OF COMMERCE
& RESEARCH CENTRE,
UNIVERSITY OF PUNE
FINANCE &
BANKING
MANAGEMENT
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 026
STATEMENT OF THE PROBLEM
The movement of helping the socially and economically
neglected section of the society, low income earners, wage
earners, small entrepreneurs and landless labourers to
participate in the economic process has come out in the
form of Micro Finance. Today a large section of the society is
linked with the financial inclusion process through Micro
Finance and Self Help Groups. The issues which raise
questions regarding Micro Finance and related activities are
-
Whether the idea of Micro Finance and SHG is
rightly accepted by the people?
Whether beneficiaries of this scheme participate in
true spirit in such movements?
Further more can Micro Finance and such related
activities bring desired change in the society ?
Though conceptually the idea of people coming together,
working together and achieving common goals appears very
sound; however there are many limitations and practical
hindrances in the whole process of implementation. Many
concepts that theoretically proved to have a great utility are
often found less effective in practice. The conceptual
strengths are lost due to procedural and practical
weaknesses. Hence even in the case of Micro Finance, the
questions which remain to be answered are-
To what extent the idea of Micro Finance shall be
successful ?
What are the likely hindrances in its success ?
What future it may have in the years to come ?
Can Micro Finance alter the socio-economic status
of its potential beneficiaries ?
Hence the title of the study is “Micro Finance – Opportunities
& Challenges in India”
OBJECTIVES OF THE STUDY
The principal objectives of the study are stated as follows-
1. To identify the reasons of growth of Micro Finance
movement in Indian Context.
2. To examine the factors favouring Micro Finance in
India.
3. To enlist the determinants influencing Micro
Finance structure and systems in India.
4. To identify hindrances in the progress of Micro
Finance.
RELEVANCE OF THE STUDY
The issue of Micro Finance has now become very important
in India with a population of 120 million; the economic
problems have become very critical and complex. The
pyramid of economy is unevenly distributed. The small and
micro-size vertex is very strong with concentrated wealth
and wealth generating resources; whereas the large and
widespread bottom has become extremely weak and has
thin opportunities to participate in the economic activities.
This paradox and contradiction needs to be rightly attended.
It will be inappropriate to presume that weakness in the
social structure will not disturb the economic stability. On
the contrary the vis-à-vis is also true.
When a large section of the society is devoid of meaningful
economic opportunities, it is not possible that this section
will accept the growing inequalities and disequilibrium
without any reasons. On the contrary, the old maxim,
“dissatisfaction has seeds of revolution” may come true.
On this backdrop the immediate solution is to minimize the
widening gap, create a favourable situation and encourage
participation of society socially deprived section of the
society in meaningful economic exercises. For this
purpose, 'Micro Finance' is a key solution. With Micro
Finance many of the socio economic problems can be
addressed meaningfully.
DISCUSSION
1. GROWTH OF MICRO FINANCE MOVEMENT IN
INDIAN CONTEXT
Today the number of Self Help Groups and networks working
for Micro Finance has increased significantly. Almost in
every state there is a well established network of small
groups working for self help and promotion of Micro Finance
activities. The emergence of such groups has occurred in
last 2 decades. It is up surgence of small but well defined
movement for collective action and benefit to the needy and
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 027
neglected sections of the society. It will be improper to
deny the existence and contribution of such small groups in
the process of development and neglected sections of the
society. This section includes self employed women,
household workers, homemakers and women working in
unorganized sectors either as independent workers or on a
contractual basis. These workers have no protection of law
and no assurance of security from any Governmental
authority.
The principal reason of bringing these sections under one
umbrella is to develop their economic strength and provide
them with financial security. Though individually they are
small, negligible and have insignificant strength, however
collectively they become a force to be recognized. The
purpose of organization of Self Help Groups is to develop this
kind of acceptable, strong and responsive force which will
work for upliftment of poor and neglected sections of the
society. This movement shall educate about economic and
financial system, create appropriate awareness and develop
a suitable mechanism for their participation in main stream
economic activities.
2. FACTORS FAVORING MICRO FINANCE IN INDIA
EMERGENCE OF MICRO FINANCE
The growth of Micro Finance in India should be linked with
socio-economic condition. An X-Ray analysis of growth
process of Micro Finance in India can throw light on a variety
of reasons responsible for growth of Micro Finance.
A few important reasons that have favoured the growth of
Micro Finance are presented here :
a. Many poor people are served by informal money
lenders who generally provide easy access to credit
but at high cost charging poor borrowers nominal
monthly effective interest that typically range
from 10% or more that 100%. Many times the
monthly effective rates of sustainable
formal financial institutions which are usually 5 to 20%.
b. The exploitation by formal money lenders both
social and economic is very high and of varied type.
This disturbs the fabric of peace, equality and
social justice. In many cases it results in social
unrest and feeling of retaliation in a very rash way.
c. The earning capacity and margin of savings of poor
in informal sector is very low and irregular. People
in this sector are unable to satisfy their savings to
meet their present and future needs. This often
results in vicious circle of indebtedness which
never ends. The only way to overcome this vicious
circle is to enhance savings above expenses and to
provide a financial support for sustainable
development.
Illiteracy, lack of awareness, absence of prudent thinking
are some of the important reasons responsible for failure of
the people in improving their economic lot. Belief in
destiny, lack of training and inappropriate financial as well
as economic understanding also mars their chances to
improve their socio economic status.
3. CONSTITUENTS OF MICRO FINANCE STRUCTURE
Present Micro Finance structure in India is influenced by
certain institutional as well as policy considerations. It is
necessary to identify all such factors leading to constitution
of a particular type of Micro Finance structure in India.
A few important determinants responsible for formation of a
typical Micro Finance structure are presented here -
a. Prevailing policies of government- both central and
state encourage formation of Self Help Groups
working for promotion of financial independence
and financial literacy among deprived and
neglected sections of the society.
b. Self Help Groups backed by bank and financial
institution are coming up to promote economic
awareness, skill development and self
employment.
c. The principle reason for promotion of Self Help
Groups is to create a planet of economic
empowerment and increase the total participation
of various social and economically backward
classes by providing them employment
opportunities, skills and capacity building
for their self development.
4. WHAT HAMPERS GROWTH OF MICRO FINANCE ?
Though initially a great lead was taken to promote Micro
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 028
Finance and Self Help Groups in India, however today it
seems to be a movement lagging behind and sinking due to its
own weight. A careful analysis of this fall out can offer
insights to improve its present status. Few important reasons
responsible for restricted success can be identified as
follows-
A. POLITICAL INTERVENTION
The continuous and growing political intervention for
developing social and economic pressure groups is a major
problem in sound development of Micro Finance movement.
Politicians and opinion makers consider Self Help Groups as
their power pocket. This has curbed the effectiveness and
utility of Self Help Groups movement.
B. MYOPIC VISION
The promoters and leaders of Self Help Groups have not
shown the desired, positive and broad based vision to give
direction to Self Help Groups. On the contrary their
leadership has worked to achieve only short term objectives
and few self centered goals, which has worked as a curse in
the development of sound financial and social upliftment
movement.
C. LACK OF APPROPRIATE STRUCTURE AND SYSTEMS
The Self Help Groups require a well defined scientifically
structured organizational set up which can improve its
effectiveness and impact. However, most of the Self Help
Groups are struggling for suitable organizational framework.
Their failure in developing such a framework is responsible
for lack of effective implementation of many socio-economic
transformation programmes. The most cherished objectives
remain on paper- unfulfilled and unsolved.
CONCLUSION
The above discussion helps us to understand the process and
problems associated with growth and development of Micro
Finance in India. In true sense, Micro Finance movement can
play the role of catalyst for quick and effective
transformation of Indian society. It is the agency which has
tremendous potential for expediting growth and
developmental process. It is an appropriate transformation
agency. The only hurdle with progress is absence of vision and
lack of leadership. Association of dedicated workers can
definitely promote a sound Micro Finance movement in India.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 029
HUMAN
RESOURCES
MANAGEMENT
INTRODUCTION
Employees are the most important possessions of any organization
and their growth and development are indispensable parameters
for the enhancement of people and creating an encouraging
working environment.
In essence, the function must be a business partner in the organization.
Most observers of the training and development, human resource
development, and performance improvement have indicated that for the
HRD to become a true business partner, three things must be giving
importance and looked into :
The overall strategic and operational framework of the
organization should make itself one with the Human Resource
Development.
Essential operating mangers should be encouraged to enter into
partnerships within themselves.
There must be a comprehensive measurement and evaluation
process to capture the contribution of human resource
development.
Management Training and development has received much criticism in
the recent years. In most organization, teaching managers how to
manage has been a difficult, haphazard, and often unsuccessful exercise.
After years of observing corporations, business and industry still struggle
with a variety of approaches to management training. Some researchers
suggest that management training has failed because it has no connection
to real life in the company.
“TRAINING EFFECTIVENESS FROM
HRD MANAGER’S PERSPECTIVE”
DR. NETRA NEELAM
ASSISTANT PROFESSOR
SYMBIOSIS INTERNATIONAL UNIVERSITY
SYMBIOSIS CENTRE FOR MANAGEMENT
STUDIES, PUNE
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 030
The five most common reasons for failure of training
include :
Programs are not linked specifically to strategies,
challenges or problem in the organization.
Programs are designed to create awareness and
understanding, but not competence.
Programs focus on individual rather than operating
units.
Participants attend programs for reasons other
than personal or organizational need.
Programs fail to help participants confront reality.
However, in some organizations, the status of the training
and development function has been enhanced in recent
years. Some organizations have credited training workforce
as a major ingredient in achieving organizational objectives
and overall success.
The growth of training and development has also
contributed to accountability. One of the most significant
jumps in formal training and development budgets occurred
in 1996, with a 16% increase reflected in a major magazine's
annual industry report. As budgets continue to grow, so does
the concern for accountability, along with a necessity to
show a contribution to the organization. Budgets' growth
should cause many organizations to step up to the challenge
and measure the success of the training function.
DEVELOPING A RESULTS-BASED FOCUS
The focus on business results should be integrated
throughout the HRD cycle. Training programs should be
linked to business results. To help eliminate confusion over
the outcome that can be expected from an evaluation
program, this paper tries to examine the HRD managers
perspective towards Training programs in their
organizations. The term 'evaluation' will be used as an all-
inclusive term and, occasionally, 'measuring results' will
refer to the measurement aspect of the evaluation.
Developing results-based HRD greatly depends on the proper
philosophy and attitude among the HRD staff and the
employees.
STATEMENT OF THE PROBLEM
Arranging a performance linked training project is
considerable towards escalating the efficiency of
employees.
The performances of managers in the respective
departments are directly proportionate to the quality of
training programs organized for them by the HRD managers.
So upgrading and changing the training programmes offered
to an individual manager are essential in the manufacturing
and information technology industries where revolution is
consistent.
OBJECTIVES OF THE STUDY
To study the perspective of HRD managers towards training
programs and understanding from them how results-based
are the training programs in their organizations.
HYPOTHESIS
HRD managers find training programs to be effective in the
organizations.
RESEARCH METHODOLOGY
The study is designed to understand the perspective of HRD
managers towards training programs organized and
conducted in their organizations.
RESEARCH DESIGN
The questionnaire used for the study for responses of
training manager is developed by Jack J. Phillips. This
questionnaire consisted of 30 questions aimed at finding out
how results-based are training and development programs in
the organization according to the HRD managers. Each of
these 30 questions has to be answered by selecting any one
of the three responses given below it.
1 point for each (a) response.
3 points for each (b) response.
5 points for each © response.
Thus, the total points per respondent will be between 30 and
150 points.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 031
RELIABILITY TESTING
The responses on the scale used for the study was tested for its reliability by using Cronbach's Alpha where the acceptable score is
0.7 and above. The reliability score of the data was observed to be 0. 97.
VALIDITY TESTING
The researcher has thought a score of 75% on the scale would suffice the purpose of research. This indicates that if the total score
of the respondent for all the questions is above 75%, then the training program would be considered effective.
STATISTICAL TOOLS USED
Chi Square Test
RESULTS AND DISCUSSION
TABLE 1: PERSPECTIVE OF HRD MANAGERS
FIG. 1 : PERSPECTIVE OF HRD MANAGERS
IN THE ABOVE FIGURE 'X' AXIS REPRESENTS THE NUMBER OF RESPONDENTS AND THE 'Y' AXIS REPRESENTS THE SCORE ON THE SCALE
Respondent 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Min Score 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30ObservedScore 118 86 120 114 110 136 130 120 100 107 126 104 108 116 116ExpectedScore 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5 112.5Max Score 150 150 150 150 150 150
150
150 150
150
150
150
150 150 150
Source: Primary Data of Authors Study
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 032
ANALYSIS
The Chi Square Value for the above data given in table 1 is
19.536. Chi Square table value at 14 degree of freedom at 5
percent level of significance is 23.685. This calculated value
is lesser than the table value; hence the hypothesis of 'HRD
managers finding training effective' is validated and proved.
INTERPRETATIONS
Table 1 and Fig 1 show that HRD Managers find training
function to be effective in the organizations. It was seen
that the direction of the training and development functions
in the organizations were based on a mission, a strategic
plan and an operating goal.
Most new training programs are initiated on after needs
analysis has indicated that the program is needed. When a
major organizational change is made, HRD managers
systematically evaluate the skills and knowledge needed by
the employees.
The responsibility of training results is shared by training
staff, participants and mangers all working together to
ensure success. New training programs are developed in the
most economical and practical way to meet deadlines and
cost objectives.
To ensure that training is transferred into performance on
the job, a variety of training transfer strategies appropriate
at each situation is encouraged.
The results of training programs are communicated
routinely to the participants. Managers' involvement in the
training programs is very specific and with clear share of
responsibility.
A zero-based budget system is followed for training activity.
The top management's involvement in the implementation
of Training and Development program includes program
participation to see what's covered, conducting major
segments of the program and requiring key executives to be
involved.
When an employee completes a training program and
returns to the job, his or her manger is likely to support use
of the program material and give positive rewards when the
material is used successfully.
CONCLUSION
On the basis of the above research we can conclude that,
though the training functions in the organizations are
criticized for various reasons, the people responsible to
organize and arrange for the training programs find it very
effective.
SCOPE FOR FURTHER RESEARCH
This study was focused only on manufacturing and
information technology industries having a turnover of
above 50 crores in and around Pune. Future research can
replicate this study in other sectors within or outside the city
of Pune.
REFERENCES
Ashton, D. 1998. Skill formation: Redirecting the Research Agenda, in
Coffield, F. (ed.), Learning at Work, University of Bristol: Policy Press.
Arulampalam, W. and Booth, A. 1998. 'Training and labour market flexibility:
is there a trade-off?, British Journal of Industrial Relations, 36, 4, 521-536.
Berry, J.K. “ Linking Management Development to Business Strategies,”
Training and Development, August 1990, pp. 20-21.
Burgoyne, J. & Cooper, C. L. 1975. 'Evaluation Methodology'. Journal of
Occupational Psychology, 48, 53-62.
Chakrabarti Shampa, 2006. 'Human Performance Improvement and the Role of
the Analyst', Performance Management, The ICFAI University Press.
Chiaburu, Dan S.,Tekleab, Amanuel G. 2005. 'Individual and contextual
influences on multiple dimensions of training effectiveness'. Journal of
European Industrial Training, Vol. 29 Issue 8, p604-626, 23p.
. Ching-Yaw Chen Sok, Phyra Sok, Keomony 2007. 'Exploring potential factors
leading to effective training'. Journal of Management Development, Vol. 26
Issue 9, p843-856, 14p.
Desimone, R.L., Werner, J.M. and Harris, D.M. (2002). Human Resource
Development. (3rded) Orlando, Harcourt College Publishers.
Industry Report, Training, 33 (10), 1996, pp. 36-79.
Ibrahim, Mohamed E. 'Measuring Training Effectiveness', Journal of
Management Research (09725814); Dec2004, Vol. 4 Issue 3, p147-155, 9p.
Jackson, N. and Jordan S. 1999. 'Skills training, Who benefits?' paper
presented to the conference 'Researching Work and Learning', University of
Leeds, 10-12 September.
Jaap, T. and Watson J.A. 1970. 'A conceptual approach to training' in Personnel
Management.
Jha Shwetabh, Feb 2007. 'How to reward employees', Business World,
K. Vasantha Aug 2006, ' HR trends in Information Technology, HRM Review,
Phillips, J. J. (1991). Handbook of training evaluation and measurement ndmethods. (2 ed.). Gulf Publishing Houston, Texas.
King, J. P. “ Union Pacific Gets Back on Track with Customer,” Training and
Development, August 1993, pp. 30-40.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 033
Murphy, K.R., and Cleveland, J.N. (1991), Performance Appraisal. An
Organizational Perspective, Needham Heights, MA: Allyn and Bacon.
Rainbird, H. 1994. 'The changing role of the training function: a test for the
integration of Human Resource and business strategies', Human Resource
Management Journal, 5,1, 72-89.
Rainbird, H., Munro, A., Holly, L. and Leisten, R 1999. 'The Future of Work in
the Public Sector: Learning and Workplace Inequality', University of Leeds,
Future of Work Programme, discussion paper no. 2.
Sahinidis, Alexandras G.Bouris, John. 2008 'Employee perceived training
effectiveness relationship to employee attitudes', Journal of European
Industrial Training, Vol. 32 Issue 1, p63-76, 14p.
Stone Ron Drew. The Real Value of Training, Tata McGraw Hill Education Pvt
Ltd, New Delhi.
T. T. Baldwin, & Ford, J. K. 1988. Transfer of training: A review and directions
for future research. Personnel Review, 26(3), 201-213.
VRK Prasad. 2006. 'Managerial and Executive Effectiveness', Human Resource
Management, The ICFAI University Press.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 034
HUMAN
RESOURCE
MANAGEMENT
xecutive in modern organization is by virtue of his position or
Eknowledge is responsible for a contribution that materially
affects the capacity of the organization to perform and obtain
results_ this be the capacity of a business to bring out a new product or to
obtain a large share of a given market” wrote Peter Drucker a renowned
management thinker of our times. It may be, for instance, the capacity of
a hospital to provide bedside care to its patients. Such a man (or woman)
must make decisions. He just cannot carry out orders. He must take
responsibility of his contribution. And he is supposed, by virtue of his
knowledge, to be better equipped to make the right decision than anyone
else. He may be overridden (superseded) or he may be demoted or fired.
But as long as he has the job, the goals, the standards and the
contribution are in his keeping. Drucker wrote further.
MANAGER AND EXECUTIVE
Most managers are executives – though not all. Many people, in other
words, are superiors of other people (and often, of fairly large numbers of
other people) – and still do not seriously affect the ability of the
organization to perform. For instance, most shop floor foremen in a
manufacturing plant belong to this category.
They are 'overseers' in the literal sense of the word. They are 'managers' in
that they manage the work of others. But they have neither the
responsibility for, nor authority over, the direction, the content, and the
quality of the work or the methods of its performance. They can still be
measured and appraised very largely in terms of efficiency and quality,
and by the yardsticks we have developed to measure and appraise the
work and performance of the manual worker. Executives however, are
individual professionals who are expected by virtue of their position or
knowledge to make decisions in normal course of their work that have
“DEVELOPING EXECUTIVE
(MANAGERIAL) COMPETENCIES”
DR. TAYYAB S. SHAIKH
HR & TRAINING CONSULTANT
FORMERLY, EXECUTIVE DIRECTOR
PERSONNEL & EXECUTIVE DIRECTOR,
NATIONAL INSTITUTE OF AVIATION
MANAGEMENT & RESEARCH,
AIRPORTS AUTHORITY OF INDIA,
NEW DELHI
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 035
significant impact on the performance and results of the
work. It must be remembered that for the modern
organizations needs both 'managers' and 'executives'.
COMPETENCIES CAN BE LEARNED
For an organization to grow & achieve its goals and
objectives it is pertinent that its managers and executives
are effective in their job. Learning and practicing various
competencies can lead to effectiveness of work. A
management competency for the purpose of this article is
defined as a “combination of knowledge and skills and the
ability to use these in carrying out managerial job
responsibilities”. By this definition, a competent manager
or executive is a highly effective performer and not simply
adequate. The objective in establishing each of these
competencies is to determine as precisely and accurately as
possible what managers / executives need to know and be
able to apply in order to perform their job responsibilities
effectively and efficiently. The requirement of
competencies can differ at various levels i.e. at junior
executive level, intermediate or middle level and at senior
executive level. Since most of the management students on
completion of their studies will join as junior level executive
/ manager, in this article competency requirement at junior
/ base level are discussed.
COMPETENCY _ UNDERSTAND ROLES AND OBJECTIVES OF
THE ORGANIZATION
The indicators for this competency represent both internal
and external aspects of the department. All Management
levels need full use of this competency, in keeping with their
respective roles. At junior executive level indicators are :
ability to relate the goals and functions of the unit
supervised to those of the immediate organization
of which it is component,
ability to relate one's functions to those of
superiors, peers, subordinates, and clients,
ability to inform subordinates and clients of roles
and functions.
COMPETENCY – DETERMINING OBJECTIVES AND GOALS
For junior level executive goals and objectives are focused
internally, involving unit or project and must be consistent
with overall organizational objectives. Competencies in this
area are :
ability to develop work plans in accordance with
the goals of the immediate organization,
ability to communicate goals clearly and
persuasively to subordinates and establish targets
and milestones,
ability to monitor progress.
COMPETENCY – ESTABLISHING PRIORITIES AMONG
ALTERNATIVES
Since the priority process generally demands some
compromise, junior executives must expect a certain
amount of dissatisfaction with any ordering or priorities or
selecting among options. For junior executives competency
to tackle such situation will require :
ability to identify alternatives and evaluation
criterion,
ability to discriminate in respect of the urgency
and importance of tasks,
ability to explain priorities to subordinates and
obtain commitment,
ability to establish priorities among tasks.
COMPETENCY – PROBLEM SOLVING AND EFFECTIVE
DECISION MAKING
The need for this competency is basically the same at all
management levels. What differ are the complexity,
sensitivity and impact of the solutions and decisions.
At junior level this means :
ability to identify problems and analyze cause,
abi l i ty to identify and supervise the
implementation of corrective measures,
ability to identify solutions to potential problems
and recommend the best corrective measures,
ability to identify and evaluate options,
ability to make timely decisions within the limits of
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 036
delegated authority.
COMPETENCY – DEVELOPING AND IMPLEMENTING PLANS
The need for this competency is basically the same at all
management levels. The difference is in the scope and
complexity of position responsibilities. At junior executive
level it will include :
ability to schedule activities and work assignments
and prepare work plans.
ability to meet the organization's operational
requirements,
ability to communicate plans,
ability to measure results and make adjustments.
COMPETENCY – ORGANIZING RESOURCES SO AS TO
ACCOMPLISH OBJECTIVES AND GOALS
This competency is crucial to office resources management
and effective planning and achievement of objectives. In
case of junior executive, this competency means :
ability to effectively utilize and control resources
provided,
ability to identify problems associated with the
allocation and utilization of resources,
ability to identify and eliminate the overlapping of
tasks.
COMPETENCY – DELEGATION OF AUTHORITY AND SETTING
PERFORMANCE STANDARDS
This is an important competency for all management levels.
Delegation should be used not only for the effective
accomplishments or work but also for the development of
subordinates. At junior executive level indicators of this
competency include :
ability to outline clearly and concisely the
responsibility and tasks being assigned to
subordinates and obtain their acceptance and
understanding of results expected,
ability to monitor progress effectively,
ability to work within one's own delegated
authority and to know where and when to refer
issues over which others hold authority.
ability to explain how performance standards
contribute to the accomplishment of unit goals,
ability to provide timely feedback to subordinates.
COMPETENCY – APPLYING DEPARTMENT PERSONNEL
SYSTEMS & ADMINISTRATIVE POLICIES AND PRACTICES
Managers at all levels have a special responsibility and
obligation to effectively utilize the resources of
department's various support systems in the discharge of
their duties. Managers should be familiar with all support
services and the impact these have on individuals. At junior
executive level it entails :
ability to make effective use of staff specialist
services,
ability to communicate administrative procedures
effectively and to recommend changes to systems
and procedures,
ability to recognize and acknowledge the rules,
rights and obligations of the union and
management,
ability to deal effectively with employee
complaints and disciplinary cases,
ability to review the performance and assess the
potential of subordinates,
ability to identity training needs of subordinates
and provide on the job training and coaching.
COMPETENCY – MANAGING FINANCIAL AND MATERIAL
RESOURCES
This competency requires a solid understanding of the
nature of financial management and knowledge of the rules,
responsibilities, authorities and account abilities of the
manger and financial specialist. Executives at all levels
share a special responsibility above and beyond that of day-
to-day operations for effective management of financial and
material resources in keeping with the organization's
policies and practice. For junior executives, it is an –
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 037
ability to oversee financial resources within
delegated authority,
ability to budget and cost the unit's operational
plans,
ability to operate within a specific financial
management system,
ability to oversee and control consumable
inventory.
COMPETENCY – DEMONSTRATING CREDIBILITY AS A
MANAGER
This competency is important for all levels of managers &
executives since they are in a position to set role model for
subordinates. For junior level executives, it means :
ability to earn respect and acceptance from others,
ability to instill confidence in others,
ability to set a good example for subordinates,
ability to remain calm and function effectively
under pressure and / or extreme conditions.
COMPETENCY – CREATING AN ORGANIZATION CLIMATE
CONDUCIVE TO A MOTIVATED WORKFORCE
This competency is important for all levels of managers &
executives because its influence on productivity. At junior
executive level it means :
ability to utilize motivational techniques in the
work place,
ability to maintain subordinates' morale in difficult
situation,
ability to intervene when subordinates behavior is
deter mental to the work group,
ability to establish and maintain support with
subordinates,
ability to identify and reduce de-motivational
working conditions,
ability to develop a result oriented team that
allows for individual subordinates' needs
and aspirations.
COMPETENCY – DEALING WITH DIVERGENT VIEWS AND
NEGOTIATES ON A WIDE VARIETY OF ISSUES
The need for negotiating skills is not limited to specialists in
labor relations or contract management. All managers must
be sensitive and objective in dealing with diverse points of
view. At junior executive's level, it translates into :
ability to assess divergent internal and external
views objectively and develop appropriate
responses in disputes,
ability to resolve differences through negotiations,
ability to resolve or reduce conflict,
ability to take the necessary rectifying action in a
conflict or refer the matter to a higher authority
along with recommendations,
ability to avoid win-lose situations where possible,
ability to identify creative solutions to avoid a
potential dispute.
COMPETENCY – SPEAKING EFFECTIVELY AND MAKE ORAL
PRESENTATIONS
It is critical that development of this competency begin
early in a managerial career and reach a high degree of
proficiency at intermediate and senior levels. At junior
executive level, this competency covers :
ability to make formal (technical/administrative)
briefings to immediate superior within the branch/
unit,
ability to organize and conduct staff meetings for
the unit,
ability to communicate (speak & listen) effectively
with subordinates, superiors and clientele on a
one-to-one basis,
ability to use appropriate aids for presentation
COMPETENCY – EFFECTIVE WRITTEN COMMUNICATION
For Managers both the preparation and review of written
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 038
materials are important. Because this competency takes
considerable time to acquire, development must begin early
in individual's career. For junior executive this competency
means :
ability to write memos and reports and record
minutes,
ability to express (develop) arguments
systematically and persuasively,
ability to utilize effective reading techniques.
CONCLUSION
Executive (and Managerial) effectiveness is central to his
performance which in turn is key to the organizational
performance. Modern society depends for its functioning on
the effectiveness of large and small scale organizations, on
their performance and results. Executive effectiveness is
therefore essential to make modern society productive
economically and viable socially. Learning, imbibing,
developing and sharpening various competencies is no more a
matter of choice but a stark reality in the life of an executive.
Only executive effectiveness can enable this society to
harmonize its two needs: the need of an organization to
obtain from the individual the contribution it needs, and the
need of the individual to have organization serve as his tool
for the accomplishment of his goals and objectives. The
competencies must be learned and these can be learned.
REFERENCES
Peter F Drucker: The Effective Executive, Harper & Row, New York
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 039
GENERAL
MANAGEMENT
The study of family owned businesses is restricted only to the
enterprises indicated above The opinion/s are based on the
discussions with the members of the respective families and the
observations made during the stay of the learner in those firms.
Expressions communicated by the concerned are authentic However
assurance was given by the learner to maintain the confidentiality and
secrecy. Hence names[s] are not indicated.
One senior member of one of the family owned businesses vindicated
that: Do not always produce discord in a family-owned business, but they
are more apt to cause sparks to fly. Emotion is the added dimension as
brothers and sisters, uncles and aunts, nephews and nieces, and parents
and children work together. The individual managing such a business must
recognize the emotional dimension and make the necessary objective
decisions to ensure smooth functioning. Keeping apart the family
syndrome. Among members of a family who is active in a business, it may
be hard to be objective about one another's skills and abilities.
If emotional outbursts affected only the family, the manager might knock
a few heads together and move along. But quarrels and ill feelings among
relatives affect non-family employees as well. The manager's challenge is
to keep the bickering from interfering with work. In an emotional
atmosphere non family employees may be tempted to base their
decisions on family tensions - they know how their bosses react and are
influenced by this knowledge. But the organization cannot become a
warring camp. All employees must understand that their interests are
best served by a profitable organization, not by allegiance to particular
family members. But this is ideal in reality it does not happen. The leader
of the family business must not take sides with any member of the family,
but rather must demonstrate that disagreements will not be permitted to
“MANAGING FAMILY BUSINESS -
{ A CRITICAL STUDY OF SIX
FAMILY BUSINESSES }
PROF. S. D. BAGADE
PROFESSOR,
AIMS, PUNE
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 040
affect the business. This attitude discourages non-family
employees from politicking for position. When the family
leader demonstrates respect for the family and an
understanding of the differences, non-family employees are
not tempted to play politics. Almost all family members of
the business opined that generally brothers are amicable
with each other But when they get married ; their better
half is from other family { Her culture, priority, ambition,
aspirations, belief system and most important attitude as
well as career goals are different } If that person is having
the difficulty in becoming homogeneous with the latter
family members then problem is aggravated.
IS THE MANAGER REALLY IN CONTROL ?
The Head of a small family-owned organization is not
necessarily the person in charge. The family elder statesman
may be in charge of the business but day-to-day
management may be in the hands of other family members.
The ceiling may be too low on the amount of money that can
be spent without permission from too many members.
Unrealistic or unnecessary clearance procedures may result
in missed opportunities for increased profits, such as failing
to take advantage of a good price on raw materials or sales
inventory.
Personalities and emotional reactions work against efficient
operation. For example, even routine matters must be
authorized by top family members because Uncle Bill never
lets you forget your mistakes.
Efficiency may be reduced by relatives' engaging in
excessive family talk during working hours. The manager
must set an example and insist relatives refrain from chit-
chat on the job.
Managers may owe their positions to their age or to the
amount of capital they have invested and may lack
leadership ability.
Some family managers may hinder progress because they do
not know how to listen.
Family members in charge of operations must be capable of
using efficient management techniques.
Thick-skinned enough to live with family bickering.
Tough enough to make decisions stick.
Definite lines of authority are essential when a member of
the family manages operations and other relatives fill
various jobs. Family employees must discipline themselves
to work within the lines of authority and the responsibilities
of family members should be spelled out. Even then, it is
wise to have a non-family employee highly involved in
operations, to help resolve problems.
One solution to management problems is to let someone else
- a hired manager - run the day to-day show. The family
member retains a title and some authority, but the hired
assistant acts as a buffer between the family and the
organization. The assistant might be executive vice
president or chief operating officer and the family member,
president or chief executive officer.
With a hired manager, the family leaders are free to work on
future strategy, basic policy and growth, while the non-
family employee guides day-to-day operations. The
authority of the manager, whether family or non-family, to
suspend or discharge flagrant violators of company rules
must be clear. Management control is weakened if family
employees are exempt from rules.
CONSIDERATION ON THE AGENDA SHOULD BE GIVEN TO
Family goals for the future.
Plans of next-generation family members.
Who is interested in staying with the business?
Who has the most aptitude for leadership?
What if several able younger family members
aspire to lead the business ?
What role will other younger members play?
What if next-generation family members are not
interested in the business?
Grooming of future leaders.
The most likely time's major transitions will occur, barring
unexpected illness or death.
Preparations of present leaders for stepping down.
Financial aspects of leadership transitions.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 041
The importance of preparing for succession before a new
leader must take over cannot be emphasized too strongly.
PERSONNEL PROBLEMS
A common challenge to family-owned companies is high
turnover among top non-family employees. Some relatives
resent outside talent and can make things unpleasant for
non-family executives. Also, top-notch managers and
workers may leave if most promotions go to family
members. Exit interviews are useful to find the cause of high
turnover. A departing key employee may tell you enough to
help you develop a positive course of action.
Again, it is wise to counsel non-family employees to not take
sides in family disputes. Outside employees who
demonstrate fairness and compatibility become a stabilizing
force in the company. The family needs these people and
should assure them of a future with the firm. Confronting a
trouble-causing relative is difficult at best, and firing one
may be out of the question. Consider these alternatives:
Counsel the family member on the responsibility to set an
example.
Encourage the relative to start a business in a noncompeting
line, if he or she has the management ability necessary for
success.
Transfer the relative to a branch office.
Find him or her job with another company.
In short, if you are unable to fire troublemakers, try to
change their attitudes or change their jobs.
SPENDING TO SAVE MONEY
In all the above businesses under study the long term capital
intensive decisions are taken amicably by involving every
member in the family. During the stretched meeting all pros
and cons are considered with transparency. It is confirmed
and conformed that this will lead to family business growth
and development. When acceded to by all; then only further
steps are taken. Out of the above mentioned seven firms the
members of the family reside together in very big house /
farm hose / bungalow. The kitchen, dining hall, drawing hall
is common. However every member is having a separate
[bed] room. In case the ladies are having difference of
opinions or disputes; the male gender candidates do not
interfere and become static spectators. Result yielded is the
disputed members amicably adjust, accommodate and
resolve the issue at their end. In one family owned business
the members get Rs. 10'000/- equally The expenses on
account of provisional household items, education, tuition
fees, health and hospital etc is spent on 'common' basis. At
the time of festival season a fixed amount is given to every
member. At any times, as owner-manager, a specific
investment will improve efficiency or profits, but other
family members may see the move as just another expense.
They view such expenditures as encroachments on year-end
dividends. It is important that these relatives understand
the concept of spending money to make money. Base your
arguments on facts and figures gathered by nonfamily
employees.
Suggest that the matter be settled on a bottom-line basis by
demonstrating how Spending "$x for this machine will
increase our profits by $y annually and will return our money
in four years.”
Should opposing relatives reject your projection, enlist the
help of outside advisers. Relatives may be more likely to
believe a banker, accountant or attorney than to accept your
judgment.
Keep in mind that it is unwise to have outside advisers who
are personally close to other family members.
In other situations, paid consultants can help prove the
worth of an opportunity. Such help is particularly valuable
with projects requiring specific expertise or intensive
research.
MAINTAINING THE STATUS QUO BLOCKS GROWTH
As relatives in a family-owned business grow older, they may
develop a preference for maintaining the status quo. They
become wary of change and afraid of risk. This attitude can,
and often does, block business growth.
The solution: Encourage status quo members to gradually
retire from the scene of operations. ! Dilute their influence
in management decisions. For example, give them an
opportunity to convert their investment in the organization
to preferred stock.
Engage estate planners who may suggest tax incentives for
giving or selling some of their stock to younger relatives.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 042
Encourage them to take a larger role in community activities
or in an industry association.
Encourage their involvement in other directions, such as
pursuit of personal hobbies and interests.
Explore the possibility of restructuring the business, with a
new partnership agreement, for example. (Proper legal
advice is essential in restructuring.)
Such actions recognize the contributions of retreating
members and assist them in recovering their equity. At the
same time, the manager and active relatives can plan for the
future. In the aforesaid survey it is noticed that
diversification is systematically done. E. g. The organization
which was earlier concentrating on 'handloom & power loom
'added a new activity of manufacturing while cloth. As the
members of family became major; the business was
diversified in to real estate, sale? Purchase of plots, garden
restaurant, chemist and druggist, wholesale pharmaceutical
agency one member entered in politics who was
instrumental in using his good office to straighten the
problems concerned and connected with different offices &
financial institutes. However the brand name / banner were
not disturbed. Entire opportunity vests with those who are
operating that segment. The family looking after 'timber
merchandizing; opened one branch of manufacturing the
furniture 9 on made to order) and the other branch was
dealing with steel furniture. One family who was
manufacturing the electrical equipment; allotted the
geographical area and specified the jurisdiction of operation
for member's crystal clearly and the others were not
interfering outside their business defined.
HOW IS THE PIE DIVIDED ?
Paying family members and dividing profits among them can
be a challenge.
Many people feel they are underpaid, but the complaints
may be more specific and more personal in the family-
owned business. Uncle Jack just sits around and he makes
more than I do. Aunt Sue goes to Europe on the returns of
money her husband put into the business before he died ten
years ago. Your brother goofs off and makes more than you
do. How do you resolve these complaints? You can't entirely,
but you can be as fair as possible.
Equity that recognizes contributions can be distributed by
restructuring the company.
Salaries are best handled by matching them to industry
guidelines. Determine local salary ranges for various jobs
and use these as a guide for paying both family and non-
family personnel. When you tie pay to a job description you
recognize the value the industry puts on jobs and you treat
all employees fairly.
Fringe benefits can also be useful in establishing equity
among family members. Deferred profit-sharing plans,
pension plans, insurance programs and stock purchase
programs offer excellent means to placate family members
and, at the same time, help them build personal assets. Own
the profit pie is divided is vital to growth in a small business.
Profits are the seedbed for expansion, and lenders are
influenced by what is done with them. Relatives should know
the consequences to the business if all profits are converted
into dividends. The learner got an opportunity to witness the
business of an organization the partners were father and five
brothers. They appointed a Diwanji (Accountant). The net
profit was distributed @ 12% to each partner. 12% was
reserved as 'reserve for emergency' balance 16 % of net
profit was ploughed back for expansion of the business.
WHERE DO YOU FIND MONEY ?
Another major challenge in managing a family business is
obtaining money for growth.
Generally speaking, if the company is profitable, you can
borrow from your local lender, but when growth is
substantial, the company may outgrow its local bank. When
you see prospects for expansion, you should begin to plan for
it and consider techniques for financing. Planned financing
may be a combination of :
Taking or refinancing a mortgage using the company's assets
as collateral.
Asking suppliers to extend credit on purchases.
Factoring (selling) the company's receivables.
Inventory financing.
Borrowing from friends on a personal note basis.
Borrowing the cash surrender value of life insurance policies
owned by relatives.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 043
Obtaining a long-term loan from an insurance company.
Working with a lender and the U.S. Small Business
Administration (SBA) to get a business loan.
Financing with a Small Business Investment Company
licensed by SBA.
If the business is a small corporation, the following
techniques also offer possible sources of money:
Selling a portion of the stock for cash to the company's
employees.
Selling some of the stock for cash to another company. In a
merger, you can use the credit of the larger company.
Contacting a regional investment banker who may privately
find a lender, using some of the company's stock as
collateral.
Contacting a national investment banker who will
underwrite some of the company's stock. This is called going
public.
Effective budgetary controls are important in seeking
growth funds. Such controls help the managing relative
determine the company's needs, and lenders regard them as
evidence of good management.
20 CHALLENGES FOR THE FAMILY BUSINESS
1. Emotions. Family problems will affect the
business. Divorce, separations, health or financial
problems also create difficult political situations
for the family members.
2. Informality. Absence of clear policies and business
norms for family members.
3. Tunnel vision. Lack of outside opinions and
diversity on how to operate the business.
4. Lack of written strategy. No documented plan or
long term planning.
5. Compensation problems for family members.
Dividends, salaries, benefits and compensation for
non-participating family members are not clearly
defined and justified.
6. Role confusion. Roles and responsibilities must be
clearly defined.
7. Lack of talent. Hiring family members who are not
qualified or lack the skills and abilities for the
organization. Inability to fire them when it is clear
they are not working out.
8. High turnover of non-family members. When
employees feel that the family “mafia”
will always advance over outsiders and when
employees realize that management is
incompetent.
9. Succession Planning. Most family organizations do
not have a plan for handing the power to the next
generation, leading to great political conflicts and
divisions.
10. Retirement and estate planning. Long term
planning to cover the necessities and realities of
older members when they leave the company.
11. Training. There should be a specific training
program when you integrate family
members into the company. This should provide specific
information that related to the goals,
expectations and obligations of the position.
12. Paternalistic. Control is centralized and influenced
by tradition instead of good management
practices.
13. Overly Conservative. Older family members try to
preserve the status quo and resist change.
Especially resistance to ideas and change proposed
by the younger generation.
14. Communication problems. Provoked by role
confusion, emotions (envy, fear, and anger),
political divisions or other relationship
problems.
15. Systematic thinking. Decisions are made day-to-
day in response to problems. No long-term planning
or strategic planning.
16. Exit strategy. No clear plan on how to sell, close or
walk away from the business.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 044
17. Business valuation. No knowledge of the worth of
the business, and the factors that make it valuable
or decrease its value.
18. Growth. Problems due to lack of capital and new
investment or resistance to re-investment in the
business.
19. Vision. Each family member has a different vision of
the business and different goals.
20. Control of operations. Difficult to control other
members of the family. Lack of participation in the
day-to-day work and supervision required.
LEARN HOW TO MANAGE FAMILY IN A FAMILY BUSINESS
1. KEEP AN OPEN AND CLEAR L INE OF
COMMUNICATION
When it comes to any business, communication is key. In a
family business it is absolutely crucial to your success. Make
sure before you start a business with a family member or hire
a family member, discuss individual roles and
responsibilities, clearly define expectations, and make sure
everyone is in agreement, before you proceed. If you take
the time to do this, you will avoid potential threats down the
road.
2. BE LOGICAL, NOT EMOTIONAL
It is often difficult to be objective when you are dealing with
family. Feelings are hurt easily, and it is a common reaction to
get defensive instead of taking the time to look at the issue
from a logical perspective. Before you make a decision or
comment, try asking yourself, “How would I handle this
situation if I were dealing with a non-family member.” Ask
yourself that same question every time you need to make a
decision regarding a family member. The goal is to train your
mind to be more logical when dealing with emotional
situations. Be sure to clearly explain your decision to your
family member as you would to a non-family member.
3. REWARD COMPETENCE, NOT GENETICS
A good business owner or manager will reward their
employees based on performance, family members should be
held to the same standard. If a family member is not qualified
to be the VP of your company, hire someone who is. You may
think you are doing a good thing by providing a family
member with a job, but if they are not qualified, they can do
more damage than good when it comes to the success of your
business. Not to mention that nepotism is a fast way to
alienate the non-family members that work for you.
4. BE FAIR, NOT BIASED
Family feuds are better left at home. If you have conflict
between family members at work, encourage them to work
it out, outside of the office. If they are unable to do that,
treat the situation as you would if it were between non-
family members. In some cases you may need to discipline
them or ask them to go home for the day. Under no
circumstances should you engage in the conflict. If you take
sides, you are now part of the conflict. The same rule applies
if you are dealing with a situation involving a family member
and a non-family member. To be an effective manager you
need to have the ability to be fair and rational when running
your business.
5. TAKE TIME FOR EACH OTHER OUTSIDE OF THE
OFFICE
Believe it or not, all work and no play will drive your business
and relationships into the red. Make sure you not only
nurture your business, but take time to nurture your family
relationships as well. Try going out to dinner together one
night during the week, taking a weekend trip away from your
home and office, or trying to plan at least one longer
vacation each year to get away from it all. Be sure that no
matter what you do, have fun, and do not discuss the
business. Take the time for yourself and your family, and as a
result it will be better for your business.
The success of family business inevitably comes down to the
fine art of integrating and balancing the needs between
ownership, family and business. Here are ten reasons why
family businesses struggle.
CONCLUSION
Successful management of the family business depends upon
the able leadership who cements the bonds of loyalty
amongst all concerned members. The decision taken should
be appropriate after considering all details minutely. S/he
must be transparent and must take every one in the
confidence. 'Trust' and 'Patience' are the most important
aspects. There must be consistent innovate be ideation to
implement the same, the head should organize the right
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 045
teams and inflame them with the right spirit to take the
decisions and implement them in the large interest of the
partners.
REFERENCES
1. Managing Family Business Edited by Rajender Singh Rathore ICFI
Books 2008.
2. www.google.com
3. Personal observations and experience.
4. Discussion with the concerned authorities from the family
members of the sample.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 046
GENERAL
MANAGEMENT
1.0 INTRODUCTION
rom day the student joins an educational institute, The institute
Fis responsible for their academic, personal and social growth. To
achieve this goal following activities are :
Class room teaching.
Practical work in Laboratories.
Invited lectures from Eminent thinkers, who motivate them ,
change their attitudes, and groom their personalities.
Excursion to different sites for exposing them to real life
scenarios.
During the above process, the students need to be managed. The Head
of the institution, the heads of the departments and teacher, and even
the supporting staff do complex task of student management in their
own way and in different capacities.
Effective and timely communicating with students, helping them,
guiding them , punishing them when they go wrong, communication and
statutory compliance with different government and other bodies.
Social media can be extremely beneficial in these activities and ignoring
power of social media in the dynamic world can be compared with ostrich
in the desert storm.
1.1 SOCIAL MEDIA
Social media refers to the means of interactions among people in which
they create, share, and exchange information and ideas in virtual
communities and networks [1].
“HARNESSING THE POWER
OF SOCIAL MEDIA IN HIGHER
EDUCATION INSTITUTIONS”
PROF. M. M. JUNAID F.
ASSISTANT PROFESSOR
AIMS, PUNE
DR. MANIK KADAM
RESEARCH GUIDE
AIMS, PUNE
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 047
Social media is a group of Internet-based applications that
build on the ideological and technological foundations of
Web 2.0, and that allow the creation and exchange of user-
generated content. [2].
Social media differentiates from traditional media in many
aspects such as quality reach, frequency, usability,
immediacy and permanence. According to Danah Boyd the
four properties that differentiate social networking from
any other form of communication are Persistence, Search
ability, Replicability and Invisible audiences: [3]. These four
Properties can be advantage or limitation of the social
media.
The students and teenagers use the social media for various
reasons few of the can be as follows :
Socializing or “hanging out” with their friends, for the most
part friends at school.
Day-to-day news about their f r iends,
acquaintances, relatives, and peer groups
Collaborating on school work
Validation or emotional support
Self-expression and the identity exploration and
formation that occurs in adolescent development
What sociologists call “informal learning,” or
learning outside of formal settings such as
school, including learning social norms and social literacy
Learning the technical skills of the digital age,
which many businesspeople feel are essential to
professional development
Discovering and exploring interests, both academic
and future professional interests
Learning about the world beyond their immediate
home and school environments
Civic engagement – participating in causes that are
meaningful to them. [4]
2 FORMAL THEORY OF SOCIAL NETWORKS
Social Network :(social sciences) A network (g)is defined as
a set of actors (or agents, or nodes, or points, or vertices)
that may have relationships (or links, or edges, or ties) with
one another.
Let A be the set N = {1,,n} of individuals (actors) , who are
connected in a network relationship, then
ij represents the link {I, j}
ij g indicates that i and j are linked under network g
G = {g gN} denotes the set of all possible networks or graphs
on N, with gN being the complete network g + ij : network
obtained by adding link ij to an existing network g
g - ij : network obtained by deleting link ij to an existing
network g
N(g)={I| j s.t. ij g} : set of individuals who have at least one
link in network g
Density = cardinality of (g) / ( n*(n-1) )
In its simplest form, a social network is a map of all of the
relevant ties between the nodes being studied. The nodes in
the network are the people and groups while the links show
relationships or flows between the nodes. Social network
analysis provides both a visual and a mathematical analysis
of complex human systems[7].
In addition to the use of relational concepts, the following
concept or assumptions are important :
Actors and their actions are viewed as inter
dependent rather than independent, autonomous
units
Relational ties (linkages) between actors are
channels for transfer or "flow" of
resources (either material or non-material)
Network models focusing on individuals view the
network structural environment as providing
opportunities for or constraints on
individual action
Network models conceptualize structure (social,
economic, political, and so forth) as lasting
patterns of relations among actors.
The unit of analysis in network analysis is not the
individual, but an entity consisting of a collection
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 048
of individuals and the linkages among them. Network methods focus on dyads (two actors and their ties), triads (three
actors and their ties), or larger systems (subgroups of individuals, or entire networks. [7].
Social network analysis has application in diverse fields like sociology, Anthropology, biology, communication studies, economics,
geography, information science, organizational studies, social psychology, sociolinguistics etc. social network analysis play a
critical role in determining the way problems are solved, organizations are run, and the degree to which individuals succeed in
achieving their goals. Of all the applied fields, national security is probably the area that has most embraced social network
analysis. Crime-fighters, particularly those fighting organized crime, have used a network perspective for many years, covering
walls with huge maps showing links between “persons of interest.[8]. Educational institute can take benefit from the all social
network analysis.
2.1 SMALL WORLD EFFECT (SIX DEGREE OF SEPARATION)
Six degrees of separation is the theory that everyone and everything is six or fewer steps away, by way of introduction, from any
other person in the world, so that a chain of "a friend of a friend" statements can be made to connect any two people in a
maximum of six steps. (i.e. maximun geodesic distance between any two nodes is six. Not a coincidence first social networking
site was named as sixdegrees.org
2. SOCIAL MEDIA IN EDUCATIONAL INSTITUTES
According to survey conducted by Comscore [5] in July 2010, There are more than 33 Million internet users in India, out which 84
% visit social networking sites, Most of the user are between age group of 15 to 24. Some institute allow free usage of social
networking sites while most of the institute does not allow social media using through institute infrastructure. However students
are surfing these sites either at their residence, through mobile or portable devices. Some students even go to the bypassing or
Sr. No
Researchers
Year
Methods
Findings
1
Ithiel, de Sola Pool (political Science) Kochen Manfred (Mathematics)
1978-79
Statistics And graphs
U.S.-sized population without social structure, "it is practically certain that any two individuals can contact one another by means of at most two intermediaries
2 Michael Gurevich 1973 Monte carlo simulations more realistic three degrees of separation existed across the U.S. population
3 Travers, Jeffrey and Milgram 1969 Small word technique the mean number of intermediaries observed was greater than five
4 Duncan Watts 2001 Experiments with email, the average (though not maximum) number of intermediaries was around six.
5 Jure Leskovec and Eric Horvitz 2007 Examination of dataset of 30 billion conversations among 240 million people.
average path length among Microsoft Messenger users tobe 6.6
6. Reza Bakhshandeh, Mehdi Samadi, Zohreh Azimifar, Jonathan Schaeffer
2011 Optimal search Algorithm an average degree of separation of 3.43 between two random Twitter users
7 Facebook data team document that amongst all Facebook users at the time of research (721 million users with 69 billion friendship links) there is an average distance of 4.74, 99.91% of Facebook users were interconnected, forming a large connected component.
8 social media monitoring firm Sysomos,
2010 the average distance on Twitter is 4.67. On average, about 50% of people on Twitter are only four steps away from each other, while nearly everyone is five steps or less away
9 Adamic, L. A., Buyukkokten, O. and Adar, E
2003 Small word phenomena exist in online social network
10 Mislove, A., Marcon, M., Gummadi, K. P., Druschel, P., and Bhattacharjee, B
2007 Existence of power law and small world in online social network
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 049
breaking the security barrier like firewall etc. Not allowing usage of social networking altogether is not solution. Social media has
become a part of teenage life, what is need is to the benefit of social media while overcoming its challenges.
When it comes to social media , it is important to avoid the extremes. Allowing full access with no restrictions is dangerous.
However banning social media is also bad decision , it will create new risk as the users will find ways to do it without the IT staff's
knowledge or protection. [6].
Institute should educate the students and employees about what they should do and should not do on social media. Teach them
about potential benefits and dangers of social media. Institute can develop its own social media policy, as it exists in many
universities, government and business organizations. Realizing the power of social media, Department of Information Technology,
Ministry of Communication and Information Technology, Government of India, Formulated Framework and guidelines for use of
social media in government organization in September 2011 in order to encourage and enable government agencies to make
effective and efficient use of this use of Social Media by government agencies.
Educationist and researcher in different parts of world, have conducted survey regarding social networking sites usage amongst
students, the common finding were, More than 60% of the student spent more than 2 hrs per day on these sites [9,10, 11,12], these
sites were used for more for social communication, relationship building as compared to Academic communication and Learning,
[9,10,,10,12, 13, 14].
4. CURRENT RESEARCH
In the current research a survey instrument was designed in Google forms to extract information about use of social media in
education during the period . This questionnaire was mailed to 1200 respondents, and they were asked to forward this
questionnaire to their references, snowball sampling was used 92 responses were received. The URL of the site of questionnaire
was posted on the wall of two social networking Sites Face book and LinkedIn., the 7 persons responded.
The 99 respondents can be categorized on the basis of their demographic profiles as follows :
TABLE 2 : DEMOGRAPHIC PROFILES OF THE RESPONDENTS
No of respondents
Demography of users
Profession of the user
Teacher
43
Student
29
Industry
27
Educational background
UG
34
PG 59
PhD
6
Gender
Male
70
Female
29
Age Young 91
Old 8
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 050
THE OPINIONS GIVEN BY THE DIFFERENT GROUPS OF USERS ARE GIVEN IN TABLE NO 3
From the above we can conclude that most of the users are positive opinion about use of social media in education.
Should youth use social
media
Should student and teacher be friends on
Social media Can Social media be used in education?
Profession of the user
Teacher Yes 31 21 33
No 7 6 2
cant say 5 16 8 Student
Yes 15 17 22
No 6 4 33
cant say 8 8 4 Industry
Yes 18 19 24
No 6 4 2
cant say 3 4 1 Education UG
Yes 20 17 25
No 7 7 5
cant say 7 10 4 PG
Yes 43 38 49
No 8 7 2
cant say 8 14 8 Phd
Yes 3 2 5
No 2 0 0
cant say 1 4 1 Gender Male
Yes 46 48 58
No 11 5 4
cant say 13 13 8 Female Yes 20 9 21
No 6 9 3
cant say 3 15 5 Age Young
Yes 61 52 71
No 15 13 7
cant say 15 26 13 Old
Yes 5 5 8
No 2 2 0
cant say 1 1 0 All users
Yes 66 57 79
No 17 14 7
Cant say 16 28 13
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 051
5. SUGGESTIONS FOR USING SOCIAL MEDIA FOR THE BENEFITS OF THE ORGANIZATION
There are different stake holders in educational institution, social media can beneficial for each of them. These stake
holders can utilize the social media in way suggested in Table No 4.
Stake-holder Suggestion Benefits benefits Derived Administration (Management)
Creating Institute own social media paged
This page/channel should Managed and administered by public relations or communication department of the institute, Trust or Institute
Institutions ‘s Brand Building in low cost Attracting Potential students Student Relation Management (SRM-Alumnis) Recruitment Getting feedback/complaints from students,
staff, parents etc Finding potentials of current employees, Innovation Competitive advantages Collaboration with other organization,
Institutions, NGO & Govt agencies Teachers/ Faculties Use of Social media by
teachers in teaching and communication
Separate Professional account should be maintained and must not be mixed with personal accounts
Multi-Modal Teaching Student Mentoring Creativity & Innovation Distance education Informal communication Connecting with researchers and Professionals in
the respective domain Students Use of social media as an
educational and communication
Students must be made aware about the potential benefits and threats before actually using social media.
Self Learning (st udents learn on their own how to manipulate this media)
Network Learning (communicating in such a way so as to support one another's learning)
Sharing of Educational and other resources Facilitates inter culture and intra cultural
communications Customized to suit learners’ learning style Improved student teacher & student student
Communication Employment opportunities Working on collaborative Projects (diminishing
time and space barriers) Encouragement of self expression (for those who
cannot express) Improvement of learning outcome Helpful for students with learning difficulties Exposure to global culture
REFERENCES
1. Ahlqvist, Toni; Bäck, A., Halonen, M., Heinonen, S (2008). "Social
media road maps exploring the futures triggered by social media".
VTT Tiedotteita - Valtion Teknillinen Tutkimuskeskus (2454): 13.
2. Kaplan Andreas M., Haenlein Michael, (2010), Users of the world,
unite! The challenges and opportunities of social media, Business
Horizons, Vol. 53, Issue 1 (page 61)
3. Danah Boyd, (2008) Why Youth Social Network Sites: The Role of
Networked Publics in Teenage Social Life -, University of
California, Berkeley, School of Information The MIT Press,.
119–142)
4. Anne Collier and Larry Magid “ A Parent's Guide to Facebook
(revised 2012), ConnectSafely.org February 2012
5. http://www.comscore.com/Press_Events/Press_Releases/2010/
8/Facebook_Captures_Top_Spot_among_Social_Networking_Site
s _in_India
6. Enabling Social Networking Applications for Enterprise Usage, A
SANS Whitepaper – December 2010 Written by Eric Cole, PhD
7. Wasserman, S. ,K. Faust, (1994) Social Network Analysis.
Cambridge: Cambridge University Press.
8. Stephen P. Borgatti, Ajay Mehra, Daniel J. Brass & Giuseppe
Labianca Network Analysis in the Social Sciences, Sciencemag.org
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 052
9. Justo de Jorge Moreno USING SOCIAL NETWORK AND DROP BOX IN
BLENDED LEARNING : AN APPLICATION TO UNIVERSITY EDUCATION,
Business, Management and Education 2012.
10. Keith Kirkwood, The SNAP Platform : social networking for
academic purposes Melbourne, Australia, Campus-
Wide Information Systems Vol. 27 No. 3, 2010 pp. 118-126
Emerald Group Publishing.
11. Shailja Agarwal, Monika Mital, AN EXPLORATORY STUDY OF INDIAN
UNIVERSITY STUDENTS' USE OF SOCIAL NETWORKING WEB SITES:
IMPLICATIONS FOR THE WORKPLACE, BUSINESS COMMUNICATION
QUARTERLY / March 2009.
12. Youmei Liu, Social Media Tools as a Learning Resource, Journal of
Educational Technology Development and Exchange, 3(1), 101-
114.
13. Ajagbe Akintunde Musibau, 2Eluwa Stephen Eyinnaya, Duncan
Edward E, Mkomange Claud Wantrudis, Lasisi Ayodele Nojeem,
THE IMPLICATIONS OF SOCIAL NETWORKING SITES IN EDUCATION IN
NIGERIA, INTERDISCIPLINARY JOURNAL OF CONTEMPORARY
RESEARCH IN BUSINESS Nov 2011 Vol.3 No. 7.
14. Ken Zula, Karen K Yarrish , walter Pawelzik, An Analysis of the
Difference between student age and social networking utilization
within A school of business, Americqal journal of businesses
education, sept 2011, 4,9, pg37.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 053
GENERAL
MANAGEMENT
I. INTRODUCTION
he first experiment of conducting quizzes using Moodle, an Open
TSource Learning Management System has been carried out at MCE
Society's Allana Institute of Management Science for MCA and
MCM course. Both the courses are approved by AICTE and UGC. MCA
course is of 3 years having two semesters each year. Each semester has six
subjects whereas MCM is of 2 years having two semesters each year. Each
semester has five subjects.
Moodle offers a wide variety of teaching tools [1, 3]. One of these tools is
quiz module. Quiz module represents an alternative to traditional face-
to-face courses and paper-based testing.
The aim was to elaborate power of Moodle quiz, to make use of Moodle
question pools and to design, implement and assess a series of quizzes.
The purpose of this study, therefore, was to examine the quality of our
MCA (II & III) and MCM (II) multi disciplinary true/false-type, MCQ tests,
and to see if there was any relationship between the item difficulty index
and the item discrimination index values in these MCQ tests.
II. LITERATURE REVIEW
Psychometric analysis is formal, structured exercises designed by
psychologists to measure psychological qualities such as reasoning ability
and personality factors. [4]
Prof. John Rust [5] recommended that Psychometric analysis needs to be
carefully researched and tested to ensure that they are fair, reliable and
valid, allowing results to be compared with people who have taken the
tests before.
“A STUDY OF MOODLE : OPEN SOURCE
LEARNING MANAGEMENT SYSTEM WITH
REFERENCE TO IT’S APPLICATION IN
TEST / EXAM MANAGEMENT”
PROF. SHEETAL UPLENCHWAR
ASSISTANT PROFESSOR,
AIMS, PUNE
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 054
According to McHenry [6] companies spend millions of
pounds a year on psychometric tests to measure personality
types, learning styles and the personal preferences of their
employees. His study states that the value of psychometric
tests sold every year to UK organizations is more than £20
million and that in 2003 they were used in most of the public
sector.
According to Zemke. R. [7], in the United States, the value of
sales of psychometric tests and inventories for recruitment,
team and personal development is in excess of 100 million
US dollars per year.
McCann.J. [8] has suggested use of Psychometric tests in the
growing arena of offender profiling and forensic science. He
has also suggested psychometric tests can be used for
classification of types of offender.
Hardingham, A and et.al [9] have used Psychometric tests in
coaching. They described positive impact of psychometric
tests for starting a coaching conversation and understanding
differences.
In UK psychometric test has been conducted for recruitment
process of train drivers. They used psychometric tests for
Training and development, Post trauma counseling, Pre-
incident counseling, Post incident investigation. [10]
Study reveals that test use in the first two of these was
sensible and conforms to good practice whereas it caused
problem in pre-incident counseling and post incident
investigation. [10].
III. NEED OF PSYCHOMETRIC TESTING
It is difficult to predict a description of teaching that does
not accord assessment as an essential role. Teachers need to
continually collect, synthesize, and interpret information
about their students' learning, state of knowledge and skills
before they can begin to plan instruction.
According to Airasian and et.al [11] as instruction proceeds,
it is necessary to collect evidence to reach to conclusion that
whether students are learning or not. This evidence is based
on teachers' own observations and monitoring of students in
the classroom.
These evidences are used for a variety of purposes like to
plan future instruction; to adapt teaching to learning styles,
skills, interests, and motivations of students; to provide
feedback and incentives; to place students in instructional
groups; and to diagnose problems that students may be
experiencing.
Black & Wiliam [12] have conducted research in examining
how the assessment capacity of teachers might be enhanced
to improve student learning. They suggested approach to
shift teacher dependence for assessment information and
standardized tests should be based on psychometric models.
IV. PSYCHOMETRIC TEST CONSTRUCTION
Psychometric tests are used to describe the domain or
construct, to check ability, body of knowledge, set of skills.
Bloom [13] has recommended requirement in the
construction of a psychometric tests, should involve a
review of curriculum documents, instructional materials,
and textbooks. This review process enables to represent the
domain in the form of table specifications or a blueprint.
Bloom [13] have suggested that it is extremely important
that the tasks/questions selected for the test need to
acquire curriculum area, even if test contains only a small
sample of the knowledge and skills.
According to Ferrao[15], the e-assessment system provide a
set of tools to analyze the reliability of the tests and,
consequently, to ensure the quality of the system.
Psychometric analysis is a great tool for assessing whether
the quizzes are a reliable instrument for measuring the
students' performance, attitudes and abilities. So all test
must provide an adequate representation of the curriculum.
Otherwise, it is not possible to predict student's
performance if it is based on the test.
Rust and et.al [14] have suggested principles of
psychometric study like Reliability -freedom from error,
Validity, Standardization, Equivalence.
V. RESEARCH METHODOLOGY
This research work focuses on to analyze students' answers,
to carry out a psychometric analysis i.e. measurement of
knowledge, abilities, attitudes, and to identify the
appropriateness of the questions stated in the quizzes.
This pilot study focuses on the set of Moodle's quiz module.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 055
Moodle's quiz module have several types of questions like multiple-choice questions, true/false, short-answer questions,
numerical questions, matching questions and embedded answer questions. The GIFT format was used for the creation of quiz.
PRIMARY DATA
With reference to above line, we carried out experiment at Allana Institute of Management Sciences for MCA course, The quiz was
conducted for MCA (II Year - Semester III) and MCA (III Year - Semester V) for each subject.
SAMPLE SIZE
Semester wise and subject wise total number of students those who have appeared for test are given in the table below.
TABLE 1 : STATISTICS OF QUESTIONS AND QUESTION TYPES FOR MCA-III (SEMESTER- V)
TABLE 2: STATISTICS OF QUESTIONS AND QUESTION TYPES FOR MCA-III (SEMESTER- V)
Question Types / Total no. of questions asked
Subject Name
MCQ
T/F
Desc
ripti
ve
Num
eri
cal
Tota
l. N
o
Att
ended
Students
Software Project Management
25 25 NIL NIL 54
Human Computer Interface
38
22
NIL
NIL
53
Application Development Tech 57 NIL NIL NIL 66
Emerging Trends in
Information Tech 48 1 NIL NIL 66
Programming Language
Paradigm 20 NIL NIL NIL 60
Advance Internet Technology
Advance Unix
41
NIL
5
NIL
NIL
NIL
NIL
13
66
5
Question Types / Total no. of questions asked
Subject Name
MCQ
T/F
Desc
ripti
ve
Num
eri
cal
To
tal.
No
Att
ended
Students
Web Support Technologies
42 NIL NIL NIL 96
Research Methodology
16
9
NIL
29
78
Data Communication & Network 60 NIL NIL NIL 111
Data Structure using C++ 43
NIL
NIL
NIL
110
Advance Database Management System 28 31 1 NIL 88
NIL
Object Oriented Analysis & Design 57 NIL
NIL 42
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 056
VI. EXPERIMENTAL RESULTS
Psychometric analysis is carried out with the help of item analysis report which gets generated by Moodle. Item analysis is the
process of collecting, summarizing and using information from students' responses to assess the quality of test items. Difficulty
index (P) and Discrimination index (D) are two parameters which help evaluate the standard of MCQ questions used in an
examination.
It has attributes like question type, question name, question text, partial credit, R count, R%, Correct facility, Discriminative
Index. The Definition of the attributes are given in the table below :
TABLE 3: ITEM ANALYSIS ATTRIBUTES
The Table below shows value of Facility index / Difficulty Index F (or Software Project Management System(SPM) subject.
TABLE 4: STATISTICS OF FACILITY INDEX AND DISCRIMINATION INDEX FOR SPM
It is observed from the table that only 16 questions and 3 questions were mistyped or may be ambiguous.
Range of Facility Index/
Difficulty
Index
Total No. of
Questions
Facility Index/ Difficulty Index
Level
Discrimation
Value
Total No. of
Questions
Discrimation
Level
<=30 16 High
(difficult) Negative Values
3
Miskeyed question/ ambiguous question
/confused question.
>=30 and <80 38 Moderate 0 to 0.2 16 Not Discriminating well
>= 80 43 Low 0.4 and above 63 Good dicrimation
Term Description Example
Partial Count
Credit that student receives for the attempted question.
Correct Ans : Assigned credit Incorrect Ans : 0
R Count
Total No. of students those who have selected specified response.
-
Specified as n/m. e.g. 10/15.Out of 15 students, 10 studentshave selected given response.
R%
It is n/m*100 If R count is 10/15, then R% is
67%.
Correct Facility /Facility / Difficulty
Index(FI/P)
Percentage of the total group who have responded correctly to the item.
Out of 15 students, if 10 students has answered correctly the FI = 67%.
Discrimination index(d)
Difference between the percent of correct responses in the upper group and the percent of correct responses in the lower group.
- D = (UG LG)/ n
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 057
CONCLUSION
Moodle quizzes can be considered as a convenient and
interesting tool to inform students of their performance
throughout the learning process. From this first and positive
experience regarding the use of the Moodle quiz module, we
intend to generate improved quizzes suitable enough for
assessing the teaching and learning of the subject.
Moodle quizzes also help to reduce various tasks like
supervision of examination, checking of question papers and
unbiased checking and also help teachers to organize,
manage and deliver course material.
MCQ items that demonstrate good discrimination tend to be
in the moderately easy to moderately difficult. range. On the
other hand, items that are in the moderately difficult to very
difficult range are more likely to show negative
discrimination. The wide scatter of discrimination needs
further investigation, and before we discard an MCQ for poor
discrimination, we must first look into the factor(s) that may
contribute to such poor discrimination.
REFERENCES
[1] Paul Kavangh, “Open Source Software Implementation &
Management”, Elsevier Digital Press, 2004, ISBN: 1-55558-320-2.
[2] Moodle Statistics, “https://moodle.org/stats/”, last accessed on th 24 Aug 2013.
[3] Cole, J. (2005), “Using Moodle's teaching with the popular open
source course management system”, Sebastopol (CA): O'Reilly
Community Press.
[4] Psychometric Analysis, “http://www.hw.ac.uk/careers/info/ th psychometric.pdf”, last accessed on 19 Aug 2013.
[5] Prof John Rust, “Psychometrics in Context: Test Construction”,
University of Cambridge, The Psychometric Center, last accessed rd on 23 Aug 2013.
[6] McHenry, Dr. R. (2003), “How to use psychometrics effectively”,
http://www.opp.eu.com/public/media/pdfs/Using%20psychometh tric%20tools%20effectively.pdf”, last accessed on 18 Aug 2013.
[7] Zemke, R. (1992), 'Second thoughts about the MBTI', Training, April th 1992, v29, n4, 43-48, last accessed on 18 Aug 2013.
[8] McCann, J. (1992), 'Criminal Personality Profiling in the
Investigation of Violent Crime: Recent Advance and Future
Directions', Behavioral Sciences and the Law, Vol. 10, 475-481.
[9] Hardingham and et.al. (2004), “The Coach's Coach: Personal
Development for Personal Developers”, London: CIPD.
[10] Psychometric Testing - A review of the train driver selection
process, “http://www.rssb.co.uk/SiteCollectionDocuments/
pdf/reports/Research/T340_rpt_final.pdf”, last accessed on17th
Aug. 2013.
[11] Airasian, P.W., Kellaghan, T., Madaus, G.F., & Pedulla, J.J. (1977),
“Proportion and direction of teacher rating changes of students
progress attributable to standardized test information.” , Journal
of Educational Psychology, 69, 702-709.
[12] Black, P and et.al (1998), “Assessment and classroom learning
.Assessment in Education,” 5, 7-74.
[13] Bloom, B.S. (1969), “Some theoretical issues relating to
educational evaluation: New rules, new means”. 68 Yearbook of
the National Society for the Study of Education, Part II. Chicago:
NSSE.
[14] Rust, J. & Golombok, S. (2009), “Modern Psychometrics (3rd
Edition): Taylor and Francis: London”.
[15] Ferrao, M. (2010). “E-assessment within the Bologna paradigm:
evidence from Portugal”. Assessment & Evaluation in Higher
Education. vol. 35, no 7, pages 819-830.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 058
GENERAL
MANAGEMENT
INTRODUCTION
cDaniel C (2009, pp 231) says that within a market, a market
Msegment is a subgroup of people or organizations sharing one
or more characteristics that cause them to have similar
product needs. At one extreme, we can define every person and every
organization in the world as a market segment because each is unique. At
the other extreme, we can define the entire consumer market as one
large market segment and the business market as another large segment.
All people have some similar characteristics and needs, as do all
organizations.
Market segment is therefore the process of identifying different groups of
users within market who could possibly be targeted with separate
products or marketing programmers. The concept has its origins in early
economic theory, where it has long been established that demand is
linked to the level of competition and to pricing, but it was Smith (1956)
who first extended the link to user differences.
According to Malcolm McDonald (2004, pp2) most companies
acknowledge the existence of segment of customers with similar needs
and market more than one group of customers. Many successful
companies attribute their success to identifying and meeting the needs of
certain kinds of customers. Few companies have the resources to offer
different products to all customer segments in a particular market.
Instead, they concentrate on the most lucrative or beneficial segments.
Joseph H Hair (2008, pp 213) says that market segmentation plays a key
role in the marketing strategy of almost all successful organizations and is
a powerful marketing tool for several reasons. Most important, nearly all
markets include groups of people or organizations with different products
“CHANGES IN THE FOCUS OF PARAMETER
OF MARKET SEGMENTATION IN AUTOMOBILE
INDUSTRIES IN INDIA”
ALI ASGHAR TABAVAR
PH. D., RESEARCHER,
PUNE UNIVERSITY, INDIA
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 059
needs and preferences. Market segmentation helps
marketers define customer needs and wants more precisely.
Because market segments differ in size and potential,
segmentation helps decision makers to more accurately
define marketing objectives and better allocate resources.
In turn, performance can be better evaluated when
objectives are more precise.
SEGMENTATION OF AUTOMOBILES IN INDIA
CURRENT SCENARIO
India is considered as one of the emerging automobile
markets since the launch of its first car in the year 1897, in
Mumbai.
India has one of the fastest growing automobile sectors in the
world today, with a cumulative growth rate exceeding 16%
for number of cars produced. Similarly in 2003-2004, the
commercial vehicle segment grew at 22%, and the two-
wheeler in demand for automobiles in the home market,
through the role of export is ever increasing. Today, India the
second largest populated country is ranked the sixteenth
largest automobile market in the world. The growth rates
suggest that India will be one of the largest markets in a few
decades.
According to Robbins Stephen P(2009) Indian automobile
manufacturers are building themselves up to make a gigantic
impact on the global auto manufacturing scene by leveraging
strong skill sets in engineering and manufacturing and their
equally strong balance sheets to build markets.
According to the Automobile Components Manufactures in
India (ACMA, 2006), India has the fourth-largest passenger
vehicles market in Asia, the second-largest two-wheeler
market in the world, as well as the fourth-largest tractor and
fifth-largest commercial vehicle market worldwide. The
vehicle market segments in India, with a total production
volume of 8.46% three wheelers, and 4% commercial vehicles
(ACMA, 2006).
According to World Bank data The Indian market is not
penetrated well in terms of car ownership. In countries like
the U.S., penetration level is 812 cars per thousand, but in
India, it is 18 cars per thousand of population which is lower
than even countries like Sri Lanka and Bangladesh.
Price based classification is widely accepted in the India
passenger car industry (Vibha Pingle, 1999) says that. Indian
customers are more likely to choose a car based on their
income, aspiration levels and lifestyles. Car sectors are
popularly segmented on the basis of the prices as shown.
Segment A – Cars Priced lower than Rs. 300,000
Segment B – Cars Priced Between Rs. 300,000 and Rs.
500,000
Segment C – Cars Priced Between Rs. 500,000 and Rs.10,
00,000
Segment D – Cars Priced Between Rs. 10,00,000 and Rs.
25,00,000
Segment E – Cars priced above Rs. 25,00,000.
SEGMENTATION OF AUTOMOBILE MARKET IN INDIA
Indian Automobile industry which was initially focusing
exclusively on family segment for a long time encountered a
change when Tata Sierra brought in a new segment by name
Sports utility vehicle (SUV) segment. The SUV segmentation
which was a failure in its initial stage has gained recognition
from customers today. However, Indian car market is family-
oriented to a great extent. Unlike countries like US in which
each person owns a car, normally Indians own a single car per
family. Hence, automobile marketers in India concentrate
on attracting the whole family towards their product rather
than an individual.
Saxena (2009) says that the Indian automobile industry has
come a long way from the days of the ambassador, premier
and standard cars and Bajaj and Lambretta two wheeler
scooters.
With the changing preferences of consumers India is today
the fourth largest car market in Asia. Topmost manufactures
from foreign countries have started entering into the Indian
automobile market. For years, demographic and income and
family segmentation were the principal modes of
segmenting automobile markets. Today many marketers
have begun to expand the segmentation strategies by
creating new profiles in automobile segment such as sports
utility vehicle segment, multi utility vehicle segment,
hatchback segment, small car segment etc.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 060
LITERATURE REVIEW
According to Stanton (2005) market segmentation consists of
taking the total heterogeneous market for a product and
dividing it into several sub markets or segments each of
which tends to be homogeneous in all significant aspects.
Kotler (2001) says that Market segmentation is the sub
dividing of a market into homogeneous subjects of customers
where any subset may conceivably be selected as a market
target to be reached within a distinct marketing mix. The
power of this concept is that individual sellers may prosper
trough creatively serving specific market segments whose
needs are imperfectly satisfied by the mass market offerings.
Ronald hasty and others argue that segment markets simply
divide the heterogeneous mass market into groups each of
which has one or more homogenous characteristics the
number and nature of which depends on the purposes and
imagination of the analyst. For example an industrial market
might be segmented as follows (1) By size of customer large
medium and small accounts in terms of purchases number of
employee's sales volume or other measures (2) By geographic
area (3) By method of distribution (4) By standard industrial
code (5) By amount of technical service required (6) By
reasons for buying and benefits derived from use and (7) By
nature of buying decision process. Market segmentation is a
method for achieving maximum marker response from
limited marketing resources by recognizing differences in the
response characteristics of various parts of the market (Clay
Camp H J, 1965; Brody R P and Cunningham S M, 1968). It is a
strategy of divide and conquer that adjusts marketing
strategy to inherent differences in buyer behavior. These
definitions show that market segments are grouping of
buyers who have common features as buyers of a product or
service so that their needs can be well served.
SEGMENTATION AND THE AUTOMOBILE INDUSTRY
Peters (1970), has proposed a variable called “relative
occupational class income”, where in, he analyses “the
relationship of a family's total income to the median income
of other families in the same occupational class”. His findings
showed that this variable could be used to show a more
generalized variation with regards to car purchases but not to
differentiate at a more micro level.
Sukhdial et al. (1995) suggested a method of segmentation
where they attempted to show the effect of values on the
purchase of luxury cars. Their reason for conducting the
study was that they thought luxury cars were purchased for
value expressive reasons just like other luxury products that
are conspicuously consumed. The findings showed that the
owners of luxury cars did differ in terms of values. They were
even able to attribute the values to luxury car owners based
on the car's country of origin. They were able to correctly co-
relate values with car owners in sixty five percent of the
cases.
Goodyear (1996), suggests that products must be different
as compared to other options available in the market and be
able to provide the consumer with an identity so as to allow
consumers to spot the product from amongst competing
brands. Keller (1993), says that it may not be easy to define
what luxury is for the simple reason that what may be luxury
for one consumer, may not be for another consumer.
“The Society of Motor Manufacturers and Traders Limited
(SMMT) classify cars into nine segments: mini, super-mini,
lower medium, upper medium, executive, luxury saloon,
specialist sports, dual purpose, and multipurpose vehicle
(MPV). Amongst these, one can notice that there is the
separate segment namely 'luxury saloon'. However, this may
not describe the whole aspects of luxury cars”, Anurit et al.
(1999). Which is to say, that luxury car manufacturers
produce luxury cars of various prices. They remain luxury
cars as long as they highlight the owner's status irrespective
of the price.
Fusile (1989), says that “the automobile industry has sold
cars in terms of everything other than the real function,
which was personalized transportation. Cars were sold
based on speed, on power, sex appeal, luxury, safety,
reliability, economy of operation and, obviously, price.”
Essentially Fusile is saying that cars have been sold based on
the values that people consider important based on their
varying personalities. Also, he says, that the advertising for
automobiles has been so effective that they have become
symbols for peoples lifestyles and values. So much so, he
says, that at one point of time “a college professor would
rather forfeit his tenure than be seen driving a Cadillac”.
According to him, segmentation in the automobile industry
today, is not just about studies, tests and focus groups.
Marketers need to look above and beyond mere
demographics, to find out the reasons as to why consumers
care, or for that matter do not care for their product. It
involves finding certain commonalities between the
consumers' lifestyles and the product being marketed, and
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 061
this is how market segmentation should be done.
Riesman et al. (1950, Revised - 2001), in their book 'The
Lonely Crowd', has developed a theory, which divides human
beings into three distinct categories based on the stage of
development of the society to which they belong. They have
thus divided the human population into “Tradition Directed”
people, “Inner Directed” people and “Other Directed”
people. They say that people, who are tradition directed,
largely belong to underdeveloped or developing countries
and are largely guided by the actions of the past, or
predecessors. With regards to inner directed people, they
say that the action of such people is based on their own
individuality and that they are not affected by what others
think. The other directed people they say, are people to
whom other's opinion matters. They wish to blend in and try
to keep up with those around them. Based on these three
states, he has tried to analyze people's behaviors.
Kassarjian (1962), based on the theory of Riesman, tried to
find a relation between various demographic variables and
the inner other directedness approach. His findings showed
that there was no co-variance sex, age, education, marital
status or any other demographic variable, and the inner
outer directedness.
SEGMENTATION AND THE INDIAN AUTOMOBILE INDUSTRY
“In 1991, the Government of India embarked on an ambitious
structural adjustment program aimed at economic
liberalization, based on the pillars of De-licensing,
Decontrol, Deregulation and Devaluation. Post-
liberalization, the Government of India's new automobile
policy announced in June 1993 contained measures, such as
de-licensing, automatic approval for foreign holding of 51% in
Indian companies, abolition of phased manufacturing
program, reduction of excise duty to 40% and import duties of
'Completely Knocked Down units (CKD)' to 50% and of
'Completely Built Up units CBU' to 110%, and commitment to
indigenisation schedules. The Government of India's new
automobile policy attracted a large number of automobile
companies to India”. As a result, there were a number of
international companies that were jockeying for entry into
the country. International heavies like General Motors and
Ford, thus gained entry into the then modest, Indian
automobile industry. Today, multi-national companies are
using India as a manufacturing “base for exporting vehicles to
other countries”. The growth rate of the Indian automobile
industry is well over 25 %, which is enormously larger than
other developing countries like Korea and Brazil .Mukherjee
(1997).
By the April of 1996, there were about eighteen automobile
companies that had either begun operations in India or were
in the process of launching in the country. As a result, while
initially there were only about three vehicles to choose
from, consumers now have wide variety of options.
Mukherjee and Sastry(1996).
Rathore and Swarup (2006), have estimated that the current
sales of vehicles in India is roughly around one million units
per annum. However, they say that this level of sales is
“abysmally low” of one were to take into account other
developing countries such as Pakistan and Sri Lanka where
the penetration level is still higher. The penetration level in
India is substantially low at seven cars per one thousand
people. They thus say, that even at the level of one million
units per annum, “this is just the tip of the iceberg”.
Mukherjee (1997), says that the automobile industry of India
is still in the process of evolution and growth. As a result, the
segmentation techniques used are not very refined or
evolved unlike the western countries. “There has hardly
been any kind of segmentation on psychographic or
behavioral parameters as seen in developed car markets.”
He further says that the “segments are quite different from
the segments known in the US, European or Japanese
markets.” The segmentation process, he says, is done
largely on the bases of the product type or the price range
the product fits into. Further, he found that there was a very
substantial difference in demand between “the four
geographical regions” of the country. This goes to show that
there is such diversity between the geographical reigions of
the country that product preference tends to differ. This is
so prominent, that companies can use geographical
segmentation in the initial process of segmentation. As a
testament to the geographical diversity, Mukherjee (1997),
has said that “North India is the largest market for cars in
India currently with 43% market share. Next come west with
27% and south with 22%. East has the lowest market share at
8%”. Mukherjee and Sastry (1996), have suggested “choice
of target market” as one of the first elements of designing an
“entry strategy”. Going as per the findings of Mukherjee
(1997), it would seem that geographic segmentation might
be an apt first step in doing so.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 062
As per the findings of Mukherjee and Sastry (1996) and
Mukherjee (1997), the current segmentation techniques used
in the Indian automobile industry, are primarily based on the
type or utility of the vehicle and the price range of the
vehicle. In so doing, they have been able to segment the
market into 'Off Road or Utility vehicles', 'Economy segment',
'Luxury Segment' and 'Super Luxury segment'.
However, with scarce research in the Indian automobile
industry, few know what it is that moves the consumers and
how the market should be segmented. Odekerken-Schröder
et al. (2003), says that there are several dimensions that
consumers take into account and attach different levels of
importance to each of those dimensions [38]. Therefore, to
be able to segment the market better and to use their
resources in the most effective manner, manufacturers must
know the dimensions, along with their varying importance,
that consumers take into account.
Rathore and Tilak (2006), have dedicated a substantial
amount of literature to explain the dealership networks of
the various automobile manufacturers in the country. Also,
they have concentrated on the prices offered by the
manufacturers on their products.
Kara, A., and Kaynak, E. (1997) says that from an extreme
perception of cars being an ultimate luxury, today it has
probably acquired the status of necessity to many city
dwellers. In 1960s cars were very expensive and only the
very rich could afford them. The styles available were
limited. Dealer's credits were mainly used to finance car
purchases. A gradual metamorphosis resulted in the
perception of cars being seen as a necessity in upper middle
class families in the 1970s. At this time, an expansion of
dealer networks was witnessed. The 1980s saw the
emergence of the “one car for the family “concept. Though
the market did not offer much choice, style orientation and
design became desirable attributes in a passenger car.
According to James M Rubenstein (2001) Maruti Udyog Ltd,
India's largest car maker in both volume and revenues ($2.2
billion for fiscal 2004-05). It controls 50% of the domestic
passenger car market share, selling half a million cars a year,
with the bulk of its offering comprising the smaller compact
vehicle. But it may look a lot different in the future, as it has
begun to seek an increased share of the market for premium
vehicles.
Only high sales of a product allow companies to cover their
high investment costs. Bauder H (2001) says that this is a
problem faced by every new entrant, be it an altogether new
company or be it a new model being introduced by an
established brand. Thus, a minimum economic size will be
required for the justification of launching a new product,
even to gain a foothold in the market.
The concept of high sale has been discussed, which shows
that today companies should think of new bases to segment
their products.
According to Anderson (2008) an important consideration in
defining the market to be segmented is estimating the
variation in buyer's needs and requirements at the different
product-market levels and identifying the types of buyers
included in the market. In the atlas Air example,
Management defined the product-market to be segmented
as air freight services for business organizations between
major global airports, segmentation the generic product-
market for air freight services was too broad in scope.
According to Sahaf M A (2008) The Indian automobile
industry has registered a tremendous growth over the past
one decade and has emerged as one of the most attractive
industries for investment. Once of the major reasons for the
growth of the automobile industry in India has been the
growing markets for different types of vehicles due to
increase in disposable income and standards of living of
middle class families. The growth and potential of such
markets in India has been the growing markets for different
types of vehicles due to increase in disposable of such
markets in India can be judged from the fact that India is the
fourth largest passenger vehicle market in Asia and Fifth
largest commercial vehicle market in the world.
According to Saxena (2009), Indian Automobile industry
which was initially focusing exclusively on family segment
for a long time encountered a change when Tata Sierra
brought in a new segment by name Sports utility vehicle
(SUV) segment. The SUV segmentation which was a failure in
its initial stage has gained recognition from customers today.
However, Indian car market is family-oriented to a great
extent. Unlike countries like US in which each person owns a
car, normally Indians own a single car per family. Hence,
automobile marketers in India concentrate on attracting the
whole family towards their product rather than an
individual.
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 063
He further said that with strong, upwardly mobile consumers
group, anti-pollution laws, easy availability of financing
facility at low interest rates, demand for new cars has
increased post 2003. With the expanding market and
enhanced competition in the industry, each manufacturer
has had to decide on the positioning of the car model. Today,
there are three segments in the passenger car segment.
These are economy, mid-sized and luxury car segments. The
economy segment, which is the largest, has been further
divided into the top end and the bottom end. Similarity, the
Mid-sized car segment has been further classified into
premium and non-premium models.
Configuring the sticker price for a car in the market today is
no more a functional decision. It has become a strategic
decision as it identifies the key segment's response elasticity
to the market offer. The two key inhibiting factors for the
poor response to the auto war fare in Indian Car Market are
basically the low per capita income at $350 (Rs 14,000 at
current prices) and the high manufacturing costs. (Panda
Tapan, 2012).
Traffic congestion and bad roads could deter potential buyers
from going for small cars particularly in small cities of India.
The future is not very heartening in this aspect. The market
will consolidate to few segments. The carmaker has to make
diverse models based on diverse and flexible platforms.
Products like the stripped-down economy car, the sports
utility vehicle or the van should be built on the same
platform. For the price-sensitive customers, there can be a
no-frills version; a loaded version for the middle customer
and luxury car manufacturers can target the high-end
customers.
Considering the marketing segmentation in automobile
industries in India from the review of literature based on the
mean value the existing parameter of segmentation in Indian
automobile industries are:
Price, number of seats, value for money, fuel efficiency,
style, parking (size of the vehicle), Convenience and brand
name.
RESEARCH METHODOLOGY
SAMPLE AND PROCEDURE
The data collection method involved in this study was
questionnaire and interviews from customers. Questions
structured including total 26 questions for manager and31
question for customer. Questions including: Dichotomous,
Rank order, Interval scale, multiple choices.
A pilot study was performed by distributing the
questionnaire to 10 customer and 5 managers of automobile
industries in Pune city.
The pilot test was conducted in order to improve the overall
quality of the questionnaire. Based on their feedback,
several minor changes were made to modify the
questionnaires. Self administered questionnaires were
distributed to the customer and managers of automobile
industries they were asked to answer their experience about
segmentation and rank the parameters of segmentation
based on their view of importance.
A total of 200 questionnaires for customer and 100
questionnaires for managers were distributed. Out of them a
total of 155questionnaire of customer and 65questionnaire
of manager has been selected for the purpose of data
analysis. However Out of them 135(with response rate of
67.5%) correct questionnaire of customer and 38(with
response rate of 38%) questionnaire of manager has been
selected for the purpose of data analysis, respondents either
answered the questionnaires incompletely or questionnaires
contained improper answers has been deleted.
THE MEASUREMENT
Multiple item scales were used to measure each construct in
this study. If possible, validated scales from previous
literature were employed after a slight modification. All
scale items were rated on a 5- point Likert scales ranging
from strongly disagree, which is weighted as 1, to strongly
agree, weighted as 5.
RESULTS
GOODNESS OF MEASURE
An Independent sample T-test, cluster analysis and
difference in mean rating was used to test was used in order
to determine the data validity and reliability. Independent
sample T-test we used to study if there is a difference in the
rating provided to reasons that persuades an Indian
consumer to select the vehicle between consumers and
manufacturer. Cluster analysis is used to determine whether
any changes in the clusters between customers and
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 064
managers of automobile industries in India, The results of
Independent sample T-test and cluster analysis and is
presented in Tables 1 and 2. All individual loadings were
above the minimum of 0.5 recommended by Hair et al.
(1998). Thus it can be concluded that the measures used in
this study are valid and reliable.
DISCUSSION AND IMPLICATIONS
Based on the finding of this study The factors which persuade
an Indian consumer most to buy an automobile are value for
money, brand name, style ,price, Parking(size of vehicle) ,
number of seats ,recommendation, Advertising (TV, radio,
newspaper etc),convenience, after sales service, durability .
The finding shows that there is a change in the focus of
parameter of segmentation in automobile industries in India,
whereas price range or product characteristics being most
important factor for segmenting automobiles in India, today
price is being lest important factor for most of the customers
as well as manufacture or managers for market
segmentation, this is may due to increase in disposable
income of Indian families.
Even though Indians are more family oriented, but there is a
change on the old concept of having one family car, the result
of this study show that in a family with working child there
are more than one car which leads this to increase in income
level of family.
From the personal interview as well as questionnaire its is
confirmed that congestion, parking and fuel efficiency put an
very important role in changing the focus of parameters of
segmentation in automobile industries in India.
Moreover, the result of this study confirmed the today's
segmentation strategy in India automobile in totally
changed, for success in this scenario in is advisable for Indian
automobile Industries to rethink on the bases of
segmentation and generate current segmentation
parameters.
The results of this study will be useful to the automobile
manufacturer in order to prevent failure in future and in the
case of failure know how to recover it more efficiently in
order to achieve and generate positive relationship with
customer in future. This study also provided empirical
evidence that which shows the changes in the focus of
parameters of segmentation in automobile industries in
India.
In addition to updating their segmentation analyses
periodically and making segment-by-segment invasions
plans, marketers should target markets in a socially
responsible manner in automobile industries.
LIMITATIONS AND FUTURE RESEARCH
The limitations of study are mainly related to the broadness
of the topic under investigation, time constraints, limited
access to information, Within the core processes of
sourcing, this study narrows its scope to focus upon the
sample size is another limitation of this study, The response
rate is another limitation; however, given the complexity
and subject matter, this is considered reasonable.
Based on the findings of this study, further study may be
conducted on the effect of changes on the bases of
segmentation in automobile industries. The finding of this
study will act as platform to conduct future study on the
segmentation strategies. The affect of urban physical
environments such as parking and infrastructure (like roads)
on the bases of segmentation is another scope of study. The
study in depth of some of the parameters of segmentation
which has been changed based on this study, is another
scope for future study. The customer profile and its affect on
the current bases of segmentation may be another study
which can be conducted near future. This study is focused on
automobile sector mainly 4 wheelers, and changes on the
focus of bases of segmentation in this sector other sectors
such as 2 wheeler and 3 wheeler is remains for further study
.The study of changes in the bases of segmentation in the
rural area still remains the scope for further study
.Importance of changes in the bases of segmentation for
Indian automobile industry is another aspect which may
conduct as a research near future.
CONCLUSION
This study investigate the changes in the focus of
parameters of segmentation in automobile industries in
India .based on the response from 138 customer and 38
manager of Indian automobile industries ,we found that in
changing trend of Indian consumers towards purchasing
automobiles, it is no more enough for automobile
manufacturers to rely upon conventional segmentation
bases. Understanding the same automobile marketers is
ALLANA MANAGEMENT JOURNAL OF RESEARCH /JULY - DECEMBER 2013 / PAGE NO. 065
moving towards changing the focus in segmentation bases.
Customer capabilities have become a worthwhile basis of
segmentation when customers vary significantly in what
competencies they posses, and what knowledge and skills
they want suppliers to provide. Customer business priorities
strongly guide which capabilities customer firm seek to
posses as source of competitive advantage, and they also
provide a progressive basis of segmentation themselves.
To conclude, it can be understood that, today, many business
automobile market mangers in India are finding that the
focus of parameter of segmentation no longer have the
vitality that they once had. Even though they made provide a
useful start, they are not enough to pinpoint groups of
customers with sufficiently similar requirements and
preferences. To gain a more detailed understanding of how
customer requirement and preferences vary, automobile
market managers use more progressive priorities, usage
situation, and customer profitability.
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