Exploring new horizons - Jagan Institute of Management Studies · • Providing training and development services • Fostering research • Extending consultancy services to the

Volume V, April 2009Management Magazine Volume V, April 2009Management Magazine

A magazine by the students of PGDMJIMS Rohini

Exploring new horizons...Exploring new horizons...

The VisionThe VisionThe MissionThe MissionOur mission is to groom professionals of tomorrow by• ImpartinghighqualityeducationinManagementandInformationTechnology

• Developingintellectualcapabilitiesthroughachallengingcurriculum• Providingtraininganddevelopmentservices• Fosteringresearch• Extendingconsultancyservicestotheindustry• Disseminatinginformationthroughthepublicationofbooks,journalsandmagazines

TobeanInstituteofAcademicExcellenceknownfortotal

commitmenttosuperiorityinmanagementandITeducation

andresearchwithaholisticconcernforqualityoflife,

environment,societyandethics.

A magazine by the students of PGDM, JIMS Rohini

Volume V, April 2009Management Magazine

Exploring new horizons...

Globalmeltdown,economicrecession,shrinkingmarkets,businessdownfalls,layoffs….have been the much talked about issues over the last few months.When economicintegrationofthebigandthesmallnationsoftheworldwereconsideredasthemantratoprosper,thedownturnaffectingoneandallwaslookeduponasthesideeffectofthesameglobalintegration.Insulationisremotelypossible.Butonethingisforsure-thebadtimewillnotlastforever!Changeisboundtooccurandthemessagefromthedarkphasebrightenstheprospectsofahealthyrevivalandgrowth.Onecriticallearningthatneedstoberegisteredwellistheunexaggeratedimportanceofthesignalstoperceiveenvironmentalchanges.Capturingandassessingtheseindicatorscanmakeormarthegrowthchartsofbusinesses.Contemporarybusinessorganizationdoesnotrelyonintuitionorrestsonexperientialdecisionmaking.Scientificandlargelyobjective methods are available and availed for forming opinions and drawing outstrategiesinvariousfunctionalareasofmanagement.Thepresenteditionof‘Eldorado’isanunconventionaleffortofourstudentswhohavethrown in a diverse arrayof ideas ranging from ‘riskmanagement of a public sectorbank’to‘spirituality’.Thestrengthoftheideasliesintheiroriginalityandthewillfuldedication involved in designing case studies.And the basis of this strength is theawarenessgeneratedamongthestudentsbytheguidedaswellasvoluntaryexposuretothehappeningsaroundthem.Themagazineisdividedintovarioussections,eachspinningacombinationofknowledgeanddelight.‘ManagingPeople’isallabouthumanresources.ItincludesarticlesthattalkofEmployeeEngagement,EmotionalIntelligenceandSixsigma.‘MoneyMatters’isthesectiononarticlesthatrelatetothefinancialaspectsofbusinessmanagement.Keepingthecurrent‘hotcake’inmindthearticlesrevolvearoundthetheme–reformingfinancialsystemtoregain investorconfidence inIndia.Thenextsection‘WorldatWork’ isaninterestingmixof6casestudiesdevelopedbythestudents.Market(king) is thenextsectionthatdealswithbrands,advertising,plungingsalesandmore.The section ‘Field Innings’ is a collection of research based articles. They rangefrom‘studying thebehavior that involveschoicemaking forapre-primaryschool’ to‘creativity in retail banking’. The following section ‘Bookworth’ is the book reviewsectionontwobestsellersthatmakegreatreadingforstudentsofmanagementstudies.StudentswhoshowglimpsesofAGKinthemakingmaymasterthe7habits(plustheeighth)prescribedbyStephenCoveytoturntheirdreamsintoareality.‘SoulFood’isasectionthatsprinklesetheronmanagerialwrite-ups.Thearticlestalkofhigherneedsandtheroutetotheirattainment.Thelastsection‘IdeasGalore’isabouquetofarticlesthattouchuponavarietyofdimensionsoftheworldlylife–illiteracy,corporatesocialresponsibility,learningfromthemovie’Guru’etc.Alsoourstudentshavetriedtogarnishtheplatterofarticleswithsomethoughtprovokinginsertionsofpoems,onelinersetc.Wearegladtopresentthisissueof‘Eldorado’notonlyasaninformationgeneratingtoolbutalsoasaplatformtoprovidevisibilitytotheeffortsofthecontributorswithrespecttospecificareasofmanagementstudy.Wewouldliketoextendourthankstothestudenteditorsandthesupportingteamfortheirefforts.AspecialthumbsuptoAbhinavKansalwhoworkedtirelesslyalongwithalltheotherencumbrances.WewouldalsoliketothankthemanagementofJIMSfortheirconstantmotivationandsupport.Criticalfeedbackonthemagazineiswelcomewhichwillhelpusbringthefutureissuestoahigherlevelofacceptance.HappyReading!

Faculty Editors

Editorial

EDITORIAL TEAM

PatronProf. R.P. Maheshwari

AdvisorDr. J.K. Goyal

Faculty EditorsMs. Pratima DaipuriaMs. Deepti Kakar

Student EditorsAbhinav KansalAanchal Tyagi

Student SupportRuchi KallaShivaniDebashishAkanksha Ailawadi

ii nEldoradon April 2009

Section Page No.

Managing PeopleEmployeeEngagement...............................................................................................................................................................01Cultureasavehicleofchange....................................................................................................................................................03EmployeePotential..................................................................................................................................................................... 06SixSigmaandHRpractices.......................................................................................................................................................08EmotionalIntelligence................................................................................................................................................................14

Money MattersFeasibilityanddesirabilityofRegionalStockExchanges..........................................................................................................20MutualFundIndustry:Whatnext?.............................................................................................................................................23StrategiestoRegainInvestorConfidence...................................................................................................................................28BuildingSustainableglobalFinancialSystem...........................................................................................................................30DeepeningEquityparticipationofsmallInvestor......................................................................................................................34

World at workCase1:SmallTownRetailerWaryofRecession......................................................................................................................... 37Case2:EvergreenKnitwear........................................................................................................................................................38Case3:TurbulenttimesforSatyamToursTravels......................................................................................................................39Case4:CrisisManagementisnottocry.....................................................................................................................................41Case5:EnvironmentalimpactonaTrader..................................................................................................................................43Case6:Findingopportunitiesincrisis.........................................................................................................................................44

Market (King)!EthicsinAd-MadWorld............................................................................................................................................................. 45WomenandAdvertising.............................................................................................................................................................. 47Howtomakebrandssticky?.......................................................................................................................................................49Plungingsales,soaringrentals.................................................................................................................................................... 50

Field InningsBuyerSatisfaction(HondaSielCarsIndiaLtd)......................................................................................................................... 51CustomerPerception................................................................................................................................................................... 59ChoiceofPre-primarySchool.................................................................................................................................................... 62CreativityandInnovationinRetailbanking............................................................................................................................... 67

Book WorthDesiDreamMerchants............................................................................................................................................................... 72SevenHabitsofhighlyEffectivepeople..................................................................................................................................... 73

Soul FoodABitterTruth.............................................................................................................................................................................. 74VirtuealoneisHappiness............................................................................................................................................................ 75

Ideas GaloreMerger,AcquisitionsandJVsinIndia........................................................................................................................................ 77Learningsfrommovie‘Guru’.....................................................................................................................................................84AnEntrepreneur.......................................................................................................................................................................... 85MillenniumDevelopmentGoals................................................................................................................................................. 86Illiteracy......................................................................................................................................................................................88CSRatTataMotors.....................................................................................................................................................................90AReviewofTradeinHigherEducationfromIndia...................................................................................................................92

Contents

Contentsn iii

iv nEldoradon April 2009

KnowledgeKnowledge is = creativity + righteousness + courage.

Creativity“Learning gives creativityCreativity leads to thinking

Thinking provides knowledgeKnowledge makes you great”

RighteousnessWhere there is righteousness in the heart

There is beauty in the character.When there is beauty in the character,

There is harmony in the home.When there is harmony in the home.

There is an order in the nation.When there is order in the nation,

There is peace in the world.

CourageCourage to think different,

Courage to invent,Courage to travel into an unexplored path,

Courage to discover the impossible,Courage to combat the problems

and succeed are the unique qualities of the youth!

– Dr. APJ Abdul Kalam(During the Inauguration of New Bal Bhavan, 2009)

A positive attitude held by the employee towards theorganization and its values is Employee Engagement.An engaged employee works with colleagues to improveperformance within the job for the benefit of theorganization.The organizationmustwork to develop andnurtureengagement,whichrequiresatwo-wayrelationshipbetweenemployerandemployee.

Employee engagement is a partnership between a company and its employeesMostorganizations today realize thata satisfiedemployeeisnotnecessarilythebestemployeeintermsofloyaltyandproductivity.ItisonlyanENGAGEDEMPLOYEEwhoisintellectuallyandemotionallyboundwiththeorganizationwhofeelspassionateaboutitsgoalsandiscommittedtowardsitsvaluesthushegoestheextramilebeyondthebasicjob.Employee engagement is a powerful retention strategy.Anengagedemployeegiveshiscompanyhis100percent.When employees are effectively and positively engagedwiththeirorganization,theyformanemotionalconnectionwiththecompany.Employeeengagementisabarometerthatdeterminestheassociationofapersonwiththeorganisation.Itisaboutcreatingthepassionamongassociatestodothingsbeyond excellent performance through recognition letters,profitwhatisexpectedfromhim.EMPLOYEEENGAGEMENTstarts rightat the selectionstage:• Choosingtherightfit,givingarealisticjobpreview• Stronginductionandorientationprogram• Tokeepupthemoraleofpeopleanddrivethemtowards

sharingschemes,longperformanceawardsetc.• Regularfeedbacktoallpeople• Communicationforumslikethein-housemagazine,and

regularsurveysandconferences• By helping to maintain the quality of work-life and a

balance between personal/professional lives, there arerecreationalactivitieslikefestivities,get-togethers,sportsetc.

• Anopenandtransparentculturetoempoweritspeople.Theresultofthesepracticesisevidentthroughtheregularfeedbackfromemployeescollectedthroughsurveys.

EmployeeEngagement

Table 1:DiagnostictoolsforEmployeeEngagement

Training PayDevelopment BenefitsCareer HealthPerformanceappraisals SafetyPerformancemanagement CooperationCommunication FamilyorientationEqualopportunity FriendlinessFairtreatment Jobsatisfaction

Table 2:FactorsforHigherEmployeeEngagement

Understandingofcorporategoals/mission

Clearcommunicationofgoals,expectations,directions

Jobdesign JobfitSupportandtools Independence&innovationRelationshipwithboss/directreports

Clearfeedbackonperformance

Recognition Learninganddevelopmentopportunities

Opportunities for advancement

Prideinorganization

Employeeinput Employeeinvolvementindecisionmaking

Work-lifebalance Workplaceculture/moraleCo-workerrelationships/goodteamenvironment(enjoycolleagues)

FairHRpractices

Measuring the Impact of Employee Engagement

Shitiza Gupta, Neha Malik, Esha BhutaniPGDM(2007-09)

ManagingPeoplenEmployeeEngagementn 1

training, development and career

immediate management

performance and appraisal

communication

equal opportunities and fair treatment

pay and benefits

health and safety

co-operation

family friendliness

job satisfaction

feeling valued and involved

engagement

impo

rtanc

e

Approaches to Employee EngagementEmployee engagement approaches for all employeesbeyondinitialrecruitmentandinduction,canbebrokenintoanumberofgroups.Theseinclude:• Communicationactivities• Rewardschemes• Activitiestobuildthecultureoftheorganizational• Teambuildingactivities• Leadershipdevelopmentactivities

1. Communications activitiesThesehelpemployeesfindoutwhatisgoingonwithinthecompanyoutside their immediate team.They alsohelp tocreate an environment of trust and openness within theorganizationwheretheyareabletotalkopenly.Employeeswhofeeltheyarelistenedtoareabletoexpressdissatisfactionandworktogethertoresolvetheircauses,withoutitaffectingtheir performance. Good examples of communicationsapproachesinclude:• Communicationforumstoprovideregularfeedbacktoall

people,includingteammeetings,conferencesand“awaydays”.

• On-line communications, including discussion boardsand blogs by company personnel including seniormanagement.

• Monthlyupdatesoncorporategoalsanddirections.• Regularemployeeopinionandsatisfactionsurveys.• Active soliciting of employee feedback, including

opinionsandpetpeeves.

2. Reward schemesReward schemes are an important part of a company’soverall employee engagement program. Studies havelongshownthat,whilemoneyinitselfisnotamotivatingfactor,theabsenceoffinancialrewardcanbeasignificantdemotivator.Thus the roleof reward schemes inboostingemployeeengagementis:• Toremovebarrierstosatisfactionintheorganization;• Toprovide a framework for rewarding everyone in the

organizationfortheirperformance;• To give those who are motivated by financial gain an

opportunitytoachievethis.Typicalapproachesinclude:i. Compensationandbenefitprogramsii.Stockownershipandprofitsharingiii.Recognitionprograms

iv.Idea collection schemes linked to rewards for ideageneration

v. Longserviceandgoodperformanceawards

3. Develop the culture of the organizationGiving employees a feeling of belonging is crucial increatingathrivingorganizationthatpeoplefeelcommittedtoandotherswanttojoin.Someofthecommonapproachesinclude:• ClearandhumaneHRpolicies.• Pro-social corporate objectives and Corporate Social

Responsibility.• Equalopportunitiespoliciesandpractices.• Initiatives to maintain the quality of work life and a

balancebetweenpersonal/professionallives.• Developingasafe,cleanandinspiringworkenvironment.• Demonstratingacommitmenttoemployees’wellbeing

4. Team building activitiesCulture-buildingactivitiesaregreatforgeneratingafeelingof belonging, but all organizations are smaller teams who cangetonandworktogether.Popularapproachesinclude:• Small team recreational activities, such as bowling,

skating,tripstothecinema.• Social activities, such as family gatherings and

barbeques.• Communityoutreachactivitiessuchasvolunteeringand

fund-raising.

5. Leadership development activitiesAgreatorganizationneedsnotjustagreatleader,butpeoplewith leadership skills. This stimulates good performance,boostscreativityandeasessuccessionplanning.Goodpracticesinclude:• EffectiveLeadership.• EffectivePerformanceManagement.• Fairevaluationofperformance.• Empowermentthrougheffectivedelegation.• Coachingandmentoringactivitiestogivehonestfeedback

bysupervisorsandpeers.• Anopenandtransparentculturetoempowerpeopleand

developentrepreneurs

References1.www.citehr.com2.www.iupindia.org

“While money in itself is not a motivating factor, the absence of financial reward

can be a significant demotivator.”

2 nEldoradon April 2009

At the coreof each successful organization, youwillfinda culture that strives for better performance every day.Organizations that excel in their domain are nothing buttheresultoftheirleaders’painstakingeffortstoinculcateaperformancedrivenculture.

Organizational Culture is a framework within which thebehaviorsofthememberstakeplace.OrganizationalCulturehasbeendefinedasfollows:

“Organizational Culture is a set of assumptions, beliefs,values and norms that are shared by an organization’smembers.”

Thus, organization culture is a set of assumptions thatthe members of the organization share in common. Suchassumptions may be in the form of internally orientedcharacteristics like beliefs, values, attitudes, feelings,personalitytypesandsoonknownasabstractelementsofculture;orexternally-orientedcharacteristicslikebuildings,dresses,etcknownasmaterialelementoftheculture.

Everyorganizationbeingasocialentity,developswithinitaculturalsystemwithsomeuniquemodesofbehavior.Theseuniquemodesdistinguishanorganizationfromothers.Forexample, while defining TATA House, JRD Tata, FormerChairmanofTATAGroup,said:

“Iwouldcallitagroupofindividually-managedcompaniesunitedbytwofactors.First,afeelingthattheyareapartoflargegroupwhichcarries thenameofTATAS,andpublicrecognition of honesty and reliability – trustworthiness.Theotherreasonismoremetaphysical.There isaninnateloyalty,asharingofbeliefs.Weallfeelacertainpridethatwearesomewhatdifferentfromothers.”

Aperformancedrivencultureisdeeprootedatalllevelsintheorganization.Successfulorganizationshaveafocusonthe performance of their employees. Here employees arerewardedbasedpurelyontheirperformanceonasetcriteria.Theirperformancegoalsandtargetsareclearlydefinedandcommunicatedtotheminaformalway.Theemployeesfeelmotivatedandaccountablefortheirperformanceandstrivetoachieve/exceedthetargetssetforthem.Theonlythingthatpleasesthemanagersandleadershipishigherachievementsandperformancedelivery.

Here performance management is not only an HRresponsibility but all departments and managers takeownership of the performance management system.Employeesatgrassrootleveltakeself-initiativestoimprovetheirindividualandteamperformanceandareoftenengagedin a die-hard competition with their peers; and raise theperformancebarsonaregularbasisunlesstheyhavereachedorexceededtheindustrybench-mark.

CASE 1: Changing Work CultureThisisarealcasethathighlightshowcultureisavehicleininstitutionalizationofperformancemanagement.

Mr. Singh worked for XYZ Ltd for 30 years. He wasemployedasanexecutive.OvertheyearshegotpromotedtothepostofAreaSalesManager.Pastrecordsshowedthatthe total sales target that were achieved by the company,80percentof themwerebecauseofMr.Singh.Hewasaveryhardworkingandefficientemployeeandwasamasterofhisfield.Heknewhowtobuildcontacts,howtoretaincustomersinshortheknewthetradewell.

In2007XYZLtdwasacquiredbyABCLtd,amultinational.PreviouslytheemployeesofXYZLtdenjoyedflexihoursandwereneverunderthestressofreportingmanagers.Theyenjoyed complete freedom as far as decisionmakingwasconcerned.Theacquisitionbroughtarevolutionarychangeinthecultureoftheorganization.Oneofthebiggestchangethat employeesofXYZLtd resistedwas thatof reportingdailytotheirheadofficethatwaslocatedinMumbai.

Theemployeeshaveneverknown thisandMr.Singhhadalwaysgiventhefreedomtohisteamtoworkaspertheirnormstillthetimethetargetsweremet.NowMr.SinghwassupposedtoreporttotheHRdivisionevenwhenhewantedtotakealeave.

This sudden change in work culture was not acceptable.Eventually theproductivity starteddecreasing.Numberofemployeesstartedresigningduetothechangesinpolicyandworkcultureastheyfounditdifficulttogetaccustomedtothe new culture.However,Mr. Singh kept onworking inadverseconditions.Numberoftimeshefoundhimselfoutofplace.Henoticedthathewaslosing-hismentalpeace,

CultureasaVehicleofChange

Kriti SaigalPGDM(2007-09)

ManagingPeoplenCultureasaVehicleofChangen 3

satisfaction level, tieupwithcustomersandmoreoverhisfocus.

OnedayMr.SinghreceivedamailfromtheheadofficethatinformedhimaboutthetransferofoneofhisteammemberstoLucknow.Hefounditdifficulttoabsorbthatthecompanythattalkedabouttransparencyinworkanddecisionmakingwasnotfollowingthesame.Beforetransferringoneofhisbest member of his team, the management has not eventakenhisopinion.Thiswasnotacceptableforapersonwhohasbeenapartofthecompanysinceitsinception.Heshotamailtothemanagementon2ndSeptember08layingdownhisresignation.

CASE 2: Creating A High Performance Culture at SIEMENSThecultureofanorganizationis the typicalwayofdoingthingsintheorganization.Itparticularlyrelatestobehaviorpatternsandrelationships.

The culture of an organization develops over time. It iscreated by the people thatwork for the organization– itsmanagers and workforce. What the organization standsfor (its values) and the dreams that it seeks to turn into reality (its vision) are fundamental in creating a dynamicculture.

This case study looks at how theSiemensorganization isbuilt on a high performancework culture. This is sharedbyeveryonefromthemostseniorexecutive to thenewesttrainee. A ‘high performance work culture’ exists wheneveryone in the organization shares the same vision andwheretheytrustandvalueeachother’scontribution.

SiemensAGisaglobalelectricalandelectronicsbusinesswithaturnoverofnearly£60billion.Thecompanyemploysjustunderhalfamillionpeoplearoundtheworld.ItisbasedinMunich,Germany.

In the UK, Siemens has its headquarters in Bracknell,Berkshireandhasaround100sitesacrosstheUKemploying20,000people.

Siemens’ products affect our lives inmanyways.Wecantoast bread in a Siemens toaster powered by electricitygeneratedanddistributedbySiemens.TrafficlightsaremadebySiemens and people in hospitals have life-savingMRI scans using Siemens advanced medical imagingtechnology.

Delivering the human resource development strategyHumanresourcedevelopmentisallabouthelpingpeopletofulfillthemselvesatwork.Developmentisconcernedwithencouragingemployeestoidentifywaysinwhichtheywanttoimprovetheircareersandotheraspectsoftheirworkinglives.Forexample,theymaywanttoattendtrainingcourses,theymaywant to domore interestingwork, or theymaysimplywanttohaveabetterwork/lifebalance.

Range Of RolesAn organization is nothing without its people. As anemployerofoneoftheworld’smostefficientandmotivatedworkforces,Siemensiscommittedtoitsemployees.Itshalfamillionemployeesworkas:

• informationtechnologyspecialists

• mechanicalandelectricalengineers

• researchers

• newproductdevelopers

• managersandbusinessexecutives

• administrators

• securityguardsandhealthandsafetyexperts

• humanresourcespecialists.

Siemens believes in the full engagement of people in theworkplace. Excellent people need to be managed in anexcellent way. It believes that engagement combinescommitmentandorganizationalcitizenship.Engagementisanotherwayofsayingactivelyinvolved.

Excellent people need to be managed in an excellent wayAkeypillaroftheSiemens’strategy,alongsideperformanceand portfolio, operational excellence and corporateresponsibility,isthewayitmanages,developsandmotivatesitsemployees.

ForSiemens,people,likeitstechnologyandinnovation,areasourceofcompetitiveadvantage.Tomakethemostofthisadvantage,Siemensmakessurethatitsemployeesworkondevelopingthecompany’sheritageofinnovation.Siemensbelievesthattherearemanywaystomakepeoplefeelvaluedandengaged.Theserangefromapatontheback,apersonal

“People like technology and innovation are a source of competitive advantage

at Siemens.”


letteroraspecialmentioninameeting,toapromotionorahighersalary.

Almost without exception, people management theoristshave shown that real motivation comes from within anindividual.Individualsdevelopsuchmotivationwhentheyfeel that their efforts are valued and that they are doingsomething worthwhile. This is why People Excellence atSiemensissoimportant.

Creating a high performance cultureSiemens’operationsarebasedonateamworkculture.ThisemphasisontheteamissetoutclearlyinaquotefromtheglobalChiefExecutiveOfficerofSiemens,KlausKleinfeld:‘ManytimesinmylifeIhaveseenhowoneindividualcanmakeabigdifference,particularlywhenworkinginagreatteam.Thequalityofourpeopleandofourteamsisourmostvaluable resource, particularly in today’s changing worldwhere knowledge flows round the globe with lightningspeedandiseasilyavailable.’

Team and individual targetsTargets for individualsare related to targets for thewholebusiness. Everyone plays their part in achieving greatresults. Siemens states that ‘our business success dependson theperformanceof each individual, our teamsand thetotalorganization’.

Ahighperformanceteamisoneinwhichallmembersoftheteamworktowardssharedtargetsandhaveasenseofsharedresponsibilityfortheresultstheteamachieves.Astheteamperformanceimprovesovertime,thebettertheresults.

People ExcellencePeopleExcellenceisthepartofSiemens’globalactionplanconcernedwithhumanresourcedevelopment

Itconsistsoffourmainelements–

• Achievingahighperformanceworkculture(HPWC)

• Increasingtheglobaltalentpool

• Strengtheningexpertcareers

• Siemens’LeadershipExcellenceProgram(SLE)

ThehighperformanceworkcultureisthewayofworkingatSiemensanditinvolveseveryone.TheglobaltalentpoolismadeupofallSiemens’employees.WithinSiemenseveryonehastheopportunitytodeveloptheirownspecialismandtoacquire further expertise. The SLE provides the highestcaliberleadershipandmanagementtraining.

Siemens’ talent management philosophy involves makingsurethateveryemployeeisprovidedwiththeguidanceandsupporttoachievetheirfullpotential.Thisaidsthemtodotheir best, everyday.Everyoneworks together to achievetheorganization’sobjectivesaswellasmeeting theirownpersonalgoals.Everyonesharesthesamevisionanddreams.Within this culture they are able to progress and take ongreater responsibility within the company. For Siemens,matchingtalentwithtasksproducescompetitiveadvantage.

Siemens has created a standard process formanaging theperformance and development of all employees. This isreferred to as the PerformanceManagement Process.Theprocesscreatesadirectlinkbetweenthestrategyofthewholeorganizationandplansforeachindividual.Everyindividualisgiventargetsbasedontheirroleandresponsibilitywithintheorganization.Itisthroughmeetingpersonaltargetsthattheindividualisbestabletohelptheorganizationtoachieveits targets. Performance management in Siemens is theenginethatdrivesTalentManagement.Itisthecornerstoneof its high performance culture. When carried out in aconsistentway,thissystemmakessurethateveryoneistoldhonestlyabouttheirperformance.

Employeesareclearabouttheimpactoftheirperformanceand what the consequences are for their development.Everyone within the organization is pulling together toachievethebusinessstrategy.

Peoplereallymatter.Organizationalresultsstemfromhighperformance.Peopleonlyperformwellwhentheyoperateinaculturewhichnurturesandsupportsthemandhelpsthemtoworktowardstheachievementoftheirambitions.

Siemens’ high performance work culture provides theframework and support in which high performancepeoplecanshowtheircommitment toahighperformanceorganization.

“Almost without exception, people management theorists have shown that real

motivation comes from within an individual.”

ManagingPeoplenCultureasaVehicleofChangen 5

Potentialmanagement ispartofperformancemanagementsystem which ultimately helps in identifying many otheraspects as well. Identifying potential of an employee iscrucial foran individualaswellasorganizationalgrowth.Despitetheirfairlywidespreaduseamonglargecompanies,little information is available to those interested indesigning, managing, or evaluating high-potential (fast-track)managementdevelopmentprogrammes.

Potential ManagementPotential management helps to identify an employee’spotential for managerial success. Its aim is to identifytraining and development needs, provide guidance onpossibledirectionsinwhichanindividual’scareermightgo,andindicatewhohaspotentialforpromotion.AccordingtoExpertstherearefourtypesofinformationtodevelopasolidunderstandingofemployees’potential:1. Job challenges /Preparatory experiences (what one has

done).2.Organizationalknowledge(whatoneknows).3.Behaviorallydefinedcompetencies(whatoneiscapable

of).4.Executive derailers and other personal attributes (who

oneis).

1. Job ChallengesJob challenges are descriptions of the kinds of situationsthat an individual entering top management should haveexperiencedoratleasthadsomeexposureto.Examplesinclude:• Carryanassignmentfrombeginningtoend.• Solveadifficultproblem.• Assumeasignificantleadershiprole.• Buildandleadateam.

2. Organizational Knowledge AreasOrganizationalknowledge refers to theunderstanding thatmanagershaveabouthowthevariouspartsoftheorganizationoperate. There are four components of organizationalknowledge: functions; processes; systems; and products,services, and technologies. Using this breakdown helpsensure that no important knowledge areas are left out,

althoughthereissomeoverlapintheareas.• Functions:Toperformeffectively,anexecutivemusthave

atleastaworkingknowledgeofthecompany’sfunctionsaswellashowtheyinterrelate.

• Process: Activities that physically create a product orservicethatisofvaluetoexternalcustomers.Akeysourceofcompetitiveadvantage,corebusinessprocessesinteractwithinternalorexternalcustomersatthebeginningandend of the process. For instance, the auto industry’score process might be new car design, manufacturing,distribution,sales,andservice.

• Systems: The third component of organizationalknowledge is systems knowledge, the degree towhichamanager understands how the organization’s internalsystems work. For example organizational system includes Long range planning i.e. successionmanagement.

• Products, Services, and Technologies: The fourthcomponent of organizational knowledge is familiaritywithcoreproducts,services,andtechnologies.Becauseseniormanagersoftenmustdealwithissuesthatcutacrossthetotalorganization,theyneedaworkingknowledgeoftheseareasofthecompany.

3. Competencies (also known as dimensions)Competencies define clusters of behavior, knowledge,technical skills, andmotivations that are important to jobsuccess.Herearesomecompetencies:• AccurateSelf• BuildingOrganizationalTalent• Coaching• DevelopingStrategicRelationships• ExecutiveDisposition

4. Executive DerailersExecutive derailers are personal attributes that can causeexecutives to fade even when they have all the othernecessarydescriptors.• Argumentative(Defensive)• Impulsive• RiskAverse• Volatile

EmployeePotential

Supreet KaurPGDM(2007-09)


There are many ways to enhance the potential ofemployees:• Training• Casestudy• Classroomteaching• Seminars

“A smile, a ‘thank you’ or a well-deserved ‘Great Job!’ goes a long way

in keeping motivation high.”

Key #3BeConciseonWhatWarrantsRewards;Let’sfaceit,claritymotivates!Teammemberempowermentandfreedomcomefromknowingwhatneedstobedoneandwhattheygetasaresult.Don’tkeeprewardsasecretandletpeopleknowtheWIIFM(What’sInItforme).

Key #4Be aCoach,Not aCritic;No teammember finds the actoffailingrewarding.Walkalongsideteammembers-helpthemalong.Teamloyaltyandmutualrespectemergefromacollectiveeffort.RootforthehometeamandWIN!

Key #5BuildThemUpPublicly;Worktofindpeopledoingthingsright and let everyone know about it! Yell it from therooftops!You’ll be surprised how it motivates the wholeteam! Conversely, negative “publicity” should never begiven in front ofANYONE - it impacts the overallworkatmosphereandallteammembersendupgettingpunished.

Key #6BeFair;Keep thebalanceof rewards in checkwithopencommunicationandanatmosphereofcollaboration.

Key #7 HaveFun!Enjoyingwhatyoudoisarewardthatgoesfarbeyond the bottom line. 85% of Fortune 100 companiesconcernthemselveswithmakingsurethatemployeeshavefun and enjoywhat they do. Play a game, have a contestor justshare funnystories.Youwillfind that itwillboostloyalty,retention,andproductivity!

ConclusionThePotentialmanagementprovidesaninformativesummarythat helps to guide employees regarding their career andpersonalgrowth.AnevaluationofMarginal,Moderate,orStrongPotentialplusinterpretivedataareprovidedtogroomanemployeeforbetterlifeahead.Italsohelpsinachievingthebalancebetweenpersonalandorganizationalobjectives.So, proper identification and evaluation of employee’spotential is very essential to raise level of organizationalperformance.

References• www.articles.techrepublic.com.• www.citehr.com• www.google.com

Scale for evaluation• Performs adequately in basic key actions but has

significantdevelopmentneedsinseveralareas.• Performs well in some key actions but has significant

developmentneedsinatleastonekeyaction.• Performswellinthemoreimportant/criticalkeyactions

needs development in at least one or more subtle orcomplexkeyactions.

• Excelsinsomebutnotallkeyactionshasnosignificantdevelopmentneedsinanykeyactions.Excelsinallkeyactions,fullmasteryofallaspectsofthiscompetency.

7 Keys To Unlocking PotentialTo open the doors and release the potential that eachemployeepossesses,oneshouldtrythesedifferentkeys:

Key #1Reward People Differently; Just as performance differsbetween team members, so should the rewards you use.Rewardthebehavioryouwanttosee!Asmile,a‘thankyou’orawell-deserved‘GreatJob!’goesalongwayinkeepingmotivationhigh.

Key #2IgnoringItDoesn’tMakeItGoAway;Dealingwithacarrier?That person that “carries” their negativity around like adiseaseandtriestoinfecttheentireworkplace?Emotionsarecontagiousand thatnegativitycanquickly spread throughanentiredepartment.Don’tignoreit,addressit-talkwithyour teammember aboutwhat is going on andwhat youcandotohelp.Alwaysremembertoseekfirsttounderstand,thentobeunderstood.

Training CaseStudy

PotentialEnhancement

Seminars&ClassroomTeaching

ManagingPeoplenEmployeePotentialn 7

An increasing number of executives are proving thata revolutionary concept called Six Sigma producesunparalleledresultsinmeetingcustomerneedsbyachievingnearperfectioninthequalityofproductsandservicesofallkinds.TheSixSigmaprocess has become the newworldstandardforimprovingquality,reducingdefectsandcuttingcosts. A surprising bonus is that it also raises employeeprofessionalism and job satisfaction to new heights fororganizationsofalltypes.

Behindthisprogress,ofcourse,isthetremendouspressureonorganizationstorespondtointernationalcompetitionanddeveloping technologies by restructuring, reengineering,downsizing, implementing various quality initiatives, andotheractionstomaintainleadershiporjustsurvive.Inanyevent,onethingremainsconstant.Abusinessstrategythatfocusesoncustomersatisfactionisstillthemostimportantissuetoestablishfirstbeforedeterminingthedirectionandefficiencyofanybusiness.

What Is Six Sigma? Six Sigma is a data-driven method for achieving near-perfect quality by using a traditional set of quality toolsthathavebeenevolving foryears. In the1980s, everyonehad a different problem-solving method for improvingquality.Oneof themostuniversallyusedwasJuran’ssix-stepmethodthatprovidedastandardizedwayofachievingSixSigmaresults.Today,thankstomanypractitioners,thefive-stepapproachtoSixSigmahasbecomeastandardizedprocess.Itisdifferentfromotherqualityeffortsbecauseittargetshigherstandardsofqualityandlowerdefects,whichthecustomerdefines.Itcatchesmistakesbeforetheyhappen.More specifically, it is a disciplined effort that examinesa company’s processes for product designs, production,suppliersandservicesveryprecisely.

SixSigma’sfive-stepprocessis:

1.Definebyidentifying,prioritizingandselectingtherightproject(s).

2.Measurekeyproductcharacteristics,processparametersandperformance.

3.Analyze by identifying key causes and processdeterminants.

4. Improve by changing the process and optimizingperformance.

5.Controlbyholdingthegains.

Theprocess isamethodof translatingacustomer’sneedsintoseparate tasksanddefining theoptimumspecificationforeach,dependingonhowallofthetasksinteract.Basedonwhattheprocessreveals,thestepsthatfollowcanhaveapowerfuleffectonthequalityofproducts,theperformanceofcustomerservices,and in theprofessionaldevelopmentof employees. Six Sigma can reduce defects in productsandservices tounprecedented levelsbecauseof its strongemphasisonstatisticalanalysisandmeasurementforproductdesign, manufacturing and the entire area of customer-orientedactivities.

ThetoolsandtechniquesSixSigma’sprocessusesarethebasic fundamentals of quality management documentedby Dr. Juran. ButMotorola gave the Six Sigma name totheprocess.Sigma isusuallywrittenasa small sigma (s)in theGreekalphabetandusedasa symbol todenote thestandarddeviationorthemeasureofvariationinaprocess.Thetermalsoreferstoaphilosophy,goalormethodologytodriveoutwaste and improvequality, cost and the timeperformanceofanybusiness.Thegreaternumberofsigmaswithinspecifications,thefewerthedefects.Thesmallerthevariation,thelowerthecost.Thebestoforganizationsareatabout3to4sigma,whichisabout6,200defectspermillion.SixSigmameansdefectsoccurinonly3.4permillion!Thatcan translate into millions in dollars of savings after theinvestmentofafractionofthatamount.

SixSigmaisasignificantculturalchangethattakestimetocomplete. It isnot free. It requires resourcesand training.But it delivers customer satisfaction, quality products andservices; a healthy return on investment, and satisfactionthatallemployeeshavefrombeingonawinningteamandproudtobepartofsuchacompany.

The Role of Human ResourcesCompaniesthathitthegroundrunningwiththeSixSigmaprocessalreadyhaveaninternalenvironmentthatiswithoutboundaries and encourages employees to communicate

SixSigmaandHRPractices

Nupur GoelPGDM(2007-09)


openly. Six Sigma then becomes a culture that motivatespeople to even higher levels of professionalism with ateamwork focus that instills confidence and developscamaraderieandempowermentforeveryparticipant.

Technological developments have come a long way inmaking our society more efficient and productive. Withthatfoundationinplace,wearenowinanerawherehumanpotential - intellectual capital—can provide the magicbalanceinmovingalltypesoforganizationstomoreloftyplateausofperformanceinthequalityofwhattheyproduceandhowtheyserveconstituents.

Successfulleadershipandnavigationofthesenewdirectionsrequire unwavering dedication and balance inmaking thebest possible use of an organization, its processes and itsemployees-acompany’sintellectualcapital.Heavygoing?Notifthesurvivalofbusinesses,management,employeesanddomestic or international competitiondepend increasinglyonthekindsofcompetitiveresultsprocesseslikeSixSigmaproduce.

Humanresourceprofessionals,obviously,mustplayakeyroleinsupportinganyorganizationthatadoptsthisprocess.TheyareacriticallinktounderstandingSixSigmaandinworkingwithmanagementtofindtherightpeopletobuildand maintain a critical mass of talent. Human resourceadministrators must avoid becoming irrelevant in thisprocess by being at their professional best inmaking SixSigmawork.Itisthetickettoanewculturethatopensthewaytoacommonfocuswhosetargetisperfection.

Six Sigma in Human ResourcesSixSigmahasbeenwellappliedinmanufacturingthroughimproving processes that use the DMAIC methodology.SomelargercorporationshaveintegratedSixSigmasowellintothecorporateculturethatitcanbeconsideredtheDNAofthecompany.

However, even in such companies, the human resourcesdepartment has been practically untouched bySixSigma.InarecentconferenceofthehumanresourcesprofessionalsinChicago, itwas clear thatHR people are now lookingtobenefitfromSixSigmainitiatives.Twoofthequestionsthat have been asked are, “How doesHR implement SixSigma?,”and“WhatcanHRdotohelpSixSigmainitiativesinanorganization?”Businessesdevelopstrategiesforprofitand growth. The strategy is driven down through actionplansforexecution.Moststrategiesfailtogetdowntothe

floorlevelandgetlostinthemiddlelayersofmanagement,but HR can help execute the profit and growth strategythroughtheuseofSixSigma.Figure1showstheimportantroleofHRindrivingbusinessstrategythroughSixSigmaandincreatingtheSixSigmaculture.TheHRdepartmentinteractswithandinfluenceseveryemployee;therefore,it’sthedepartmentbestsuitedtofacilitatemanagementchange.ThefigureshowsthatanorganizationneedsHRtointegrateSixSigmamethodologyandabusinessscorecardtoachievegrowthandprofitability.

WhenMotorolafirst successfully implementedSixSigmafrom 1987 to 1992, its management program of settinggoals, sharing savings, risk-taking and linking personalgoals to corporate goals all played important roles.As aresult,thecompanygrew,madelotsofmoneyandrewardeditsemployeeswithbonuses.ThechallengeinimplementingSixSigmainHRincludesquestionssuchas,“WhatshouldIdo?,”“WhatshouldImeasure?,”“HowwouldIimprovetheHRprocess?”and“HowcanHRbeat3.4partspermillionasitdoesn’tdealwithamillionpeople?”

ItmustbeunderstoodthatHRisn’tahugepartofanybusiness,butithasahugeeffectoneverybusiness.Humanresourcesshouldbeconsideredashumancapital.HRmustensurethatthere’sgoodreturnoninvestmentinhumancapital.TypicalHRfunctionsincludebenefitsmanagement,compensation,recruitmentandskillsdevelopment.Innovationandchangemanagement must also become key functions in the HRdepartment. In addition tomanaging these functionswell,managing idea to innovation, improving HR functions,andaccountabilityofemployeesandexecutivesmustalsobe implemented. Onemust create a process map for HRdepartmenttoclearlyunderstandHRfunctionsandpreparefor implementing Six Sigma. For the critical steps in theHR functions, one can answer the following questions toidentifyopportunitiesforimprovementthatcanbeexploitedbyapplyingtheSixSigmamethodology:

• WhatisthepurposetheHRfunctionorsub-function?

• What are the expected deliverables (people, skills,services,value,reports,etc.)?

• Whatarethemeasuresofgoodnessofkey-deliverables?

• Whataretheerroropportunitiesforkey-deliverables?

• What improvement activities are carried out in theHRfunction?

Answering the above questions, one can identify output

“Six Sigma is the ticket to a new culture that opens the way to a common focus

whose target is perfection”

ManagingPeoplenSixSigmaandHRPracticesn 9

(unit),measuresofreliability,anditemsandelementsthatcan go wrong (opportunities for error). Having identified‘what’ to measure, one can establish a baseline for keyperformanceindicators,whichmayincludeoneormoreofthefollowing:

Six Sigma and Human Resources• HRResponsiveness• Employeeinvolvement• Ideaandinnovationforimprovement• HReffectivenessinfulfillingitsintendedfunctions

Implementing Six Sigma in HR is no different thanapplying it in other functions. The key is recognizinggaps or opportunities for improvement by breaking downprocessesinmanageablechunks.TheHRfunctioncantakethe following steps to implement Six Sigma in HR or tofacilitateimplementationofSixSigmaintheorganization:

• Establish a clear and significant role of HR forinstitutionalizingSixSigma

• EstablishSixSigmaobjectivesandroleinHR• Seek customer feedback and identify opportunities for

improvement• EstablishSixSigmagoalsforHRfunction• Formulate,prioritizeprojectsandformteams• ProvideSixSigmaGreenBelttraining• ImplementDMAICforbreakthroughsolution.

Examples of Six Sigma projects that companies’ HRdepartmentshavecompletedincludereductioninovertime,reduction in timeand cost tohire an employee, reductionin employee retention or turnover, reduction in safetyviolations,reductionincostofemployeeseparation,andHRresponsetointernalinquiriesforbenefits,payroll,promotionandfairness.

Six Sigma implies dramatic improvement throughreengineering or innovation of the HR function. HRinvolvementinachievingcorporategrowthandprofitabilitymustbedefined.TheHRrolemustsupportleadershipanddepartmentalactivities,providefeedback,andintellectuallyengageemployeesinachievingtheirpersonalandcorporateobjectives.Customersexpectbetter,fasterandcost-effectivesolutions.Unless every department performs better, fasterandcheaper,thecompanywillbeunabletomeetcustomerexpectations.HRisnoexceptiontothisexpectation.Itmust

besettoperformbetter,fasterandmorecost-effectivelybycreatingvalueratherthanjustrotesupportofmanagementortraining.Creatingvaluecouldbeaccomplishedthroughinnovative solutions and employee innovation. This is alow-hangingfruitforHR.

Six Sigma RolesAswith anymajor organizational initiative,many factorscontributetosuccess.SomeofthesefactorswillfallwithinHR’sareaofresponsibility,suchasthosediscussedbelow.

Table 1:SixSigmaRolesAndResponsibilities

Sponsor SeniorexecutivewhosponsorstheoverallSixSigmaInitiative.

Leader Senior-level executive who is responsiblefor implementing Six Sigma within thebusiness.

Champion Middle- or senior-level executive whosponsors a specific Six Sigma project,ensuring that resources are available andcross-functionalissuesareresolved.

BlackBelt Full-timeprofessionalwhoacts as a teamleaderonSixSigmaprojects.Typicallyhasfourtofiveweeksofclassroomtraininginmethods,statisticaltools,and(sometimes)teamskills.

Master BlackBelt

Highly experienced and successful BlackBelt who has managed several projectsand is an expert in Six Sigma methods/tools.Responsibleforcoaching/mentoring/training Black Belts and for helping theSixSigmaleaderandChampionskeeptheinitiativeontrack.

GreenBelt Part-time professional who participateson a Black Belt project team or leadssmaller projects.Typicallyhas twoweeksofclassroomtraininginmethodsandbasicstatisticaltools.

Team Member

ProfessionalwhohasgeneralawarenessofSixSigma(throughnoformaltraining)andwhobringsrelevantexperienceorexpertisetoaparticularproject.

ProcessOwner

Professional responsible for the businessprocess that is the target of a Six Sigmaproject.

“Six Sigma implies dramatic improvement through reengineering or

innovation of the HR function.”


LeadersandChampionsusuallyreceivehigh-leveltrainingonthetechnicalaspectsofSixSigmaandspecifictrainingonhowtoleadaninitiative.Atthe“Belt”level,eachcandidateisassignedaninitial“trainingproject”thathe/shewillworkon during the formal training period. Candidates attendclassroom training for aweek,work on their projects forthreeweeks,returntoclassforanotherweek,andsoonuntiltheyhaveacquiredalltheskillsappropriatetotheirrole.

Black Belt selection and retentionHavingtherightpeopleintheBlackBeltroleiscriticaltothesuccessofaSixSigmainitiative.Thetraininginvestmentis substantial for this pivotal role. Further, Black Beltsare the visible “face” of Six Sigma.They help shape theorganization’simpressionofSixSigma,and,consequently,thewillingnessofmanytoembracetheinitiative.Therefore,you want to pick Black Belts very carefully. (SomeorganizationsonlyselectBlackBeltsfromamongthosewhohavealreadybeenidentifiedas“highpotentials.”).

HRprofessionals can help the Six SigmaLeader find therightpeopleforBlackBeltrolesandensuretheyremaininthosepositions for the typical two-year rotation.PotentialHRcontributionsinthisareainclude:

• Building a competency model that will help identifycandidates with the right mix of technical, team, andleadershipskillsandabilities.

• Creating job descriptions that help candidates fullyunderstandthepositionandexpectationspriortosigningon.

• Developing a retention strategy that will help ensureBlackBeltscompletetheirrotationandtheorganizationrecoupsitsinvestmentintraininganddevelopment.

Rewards and recognitionRewardingandrecognizingBlackBeltsandSixSigmateamsismore complex than itmay appear.BlackBelts join theSixSigmainitiativefromvariousplacesintheorganizationwhere they are likely to have been at different job levelswith differing compensation arrangements. Determiningwhetherandhowtomakeappropriateadjustmentsinlevelandcompensationnowthatalltheseindividualsareinthesameroleisbothtrickyandcritical.

Similarcomplexitiesareinvolvedattheprojectteamlevel.Six Sigma projects led by Black Belts typically result in

savings in thehundredsof thousandsofdollars.Decidinghowtheteamshouldberewardedandrecognizedandwhoshould get credit forwhat is not easy.Yet ignoring theseissuescan result in resentment, reluctance toworkonSixSigma projects, and the potential failure of the overallinitiative.

HR professionals can help the Six Sigma Leader tacklethechallengeofestablishingtherightrewards/recognition.PotentialHRcontributionsinthisareainclude:

• AnalyzingexistingcompensationarrangementstoidentifytheextenttowhichthosearrangementswillsupporttheSixSigmainitiative.

• Creating a strategic compensation plan that will bettersupportSixSigma.

• Developing a non-monetary reward program for SixSigmateams.

Project team effectivenessTheworkofSixSigmaisdonemostlyattheprojectteamlevel by a Black Belt leading a small team through thesteps of the DMAIC method. If the team itself does notfunctionwellordoesnotinteracteffectivelywithothersintheorganizationwhoultimatelyhave tosupportandcarryout the process changes, the project probablywill not besuccessful. Given the typical project’s potential payback,failurecanbeexpensive.

HRprofessionalscanhelptheprojectteamsworktogethermore effectively. Potential HR contributions in this areainclude:

• Ensuring team leaders and members get trainingand/or coaching in teamwork, conflict management,communications, dealing with difficult team members,andotherteameffectivenessskills.

• Providingteamswithtools thatallowthemtodiagnosetheirownperformanceandidentifywhenandwheretheyneedhelp.

• ActingasaresourceforBlackBeltswhoencounterteam-relatedchallengestheycannotsurmount.

Creating a Six Sigma CultureManySponsors,Champions,andLeaderslooktoSixSigmaas a way to change an organization’s culture to one thatis more data-driven, proactive, decisive, and customer-

“HR professionals can help the Six Sigma Leader tackle the challenge of establishing

the right rewards/recognition.”


“HR professionals can help executives approach culture change in a way that addresses the underlying business goals

without creating organizational resistance.”

ofSixSigma,itdoesn’tautomaticallyfollowthattheywillbe asked toparticipate.Unlessyouare in anorganizationthat viewsHRas a partner in all business initiatives, youmayhavetopushtobeincludedinSixSigma.

HRcangreatlyincreaseitschancesofbeingincludedintheSixSigmainitiativeby:

• Ensuring HR professionals have the right skills andknowledge.

• Marketing its potential contribution early in theinitiative.

Gaining the Right Skills and KnowledgeIn addition to HR/organizational development-relatedareas,HRprofessionalsneedafamiliaritywithSixSigmaitself.Without abasicknowledgeof theDMAICmethod,supporting tools, roles, jargon, and even simple statisticalmethods, HR will not have the credibility it needs to beconsideredapotentialcontributortotheinitiative.

The time to get this knowledge is now. Even if yourorganization is not rollingout--or even considering --SixSigma today, there are two reasons why it’s worth a HRprofessional’s time to become familiar with the conceptsnow. If the organization does decide to implement SixSigma,therewon’tbeenoughtimetocatchup.HRhastobeinvolvedattheverybeginningoftheinitiative.Inaddition,therearemanyapplicationsofSixSigmatoHR’sprocessesthemselves,e.g.,thepayrollprocess,benefitsadministration,selection, and recruiting. HRmight even consider settinganexamplefortherestoftheorganizationbyadoptingSixSigmatechniquestoenhanceitsownprocesses.

Marketing HR’s Potential ContributionThemarketingchallengeistwofold.First,seniorexecutivesmaynotbelievethatthepeopleissuesarejustascriticaltoSixSigma’ssuccessasareitsmanytechnicalcomponents.In that case, HR will need to sell the importance of thepeopleside.Second,executivesmustperceiveHRasbeingable tomakea significant contributionon thepeople sideofSixSigma.Besidesensuringthatithasboththerequiredskills and knowledge described above,HR can alsomeetthesechallengesby:

• GatheringdatathatsupportstheneedforattentiontothepeoplesideofSixSigma.PotentialsourcesincludeSixSigmapublications,casestudies,conferencesessions,and

oriented.Buttheyoftenhavelittleideaabouthowtoachievesuccessfulculturechange.

HR professionals can help executives approach culturechange in a way that addresses the underlying businessgoals without creating organizational resistance. PotentialHRcontributionsinthisareainclude:

• Working with Six Sigma Sponsors, Leaders, andChampionstoidentifyelementsoftheculturethatmighthindertheachievementofSixSigmagoals.

• Advisingonchangeplansthatwill targetthosespecificculturalelements.

• IdentifyinghowSixSigmacanberolledoutinawaythatworkswith,ratherthanagainst,thecurrentculture.

Change Management and CommunicationsIntroducing Six Sigma into an organization is a majorchange thatwill have aprofound effect on abroadgroupofstakeholders.Managersandemployeesatmanylevelsoftheorganizationwillbeaskedtoengageinnewbehaviors.Inmanycases, those leadingother initiativeswill seeSixSigmaasa sourceofcompetition for resources,executiveattention,andorganizationalpower.Othersmayseeitasanindictmentoftheirpastperformance.Manywillbeconfusedabout howSix Sigma fitswith the large number of otherongoingorganizationalinitiatives.

HR professionals can help reduce the uncertainty andanxiety surrounding Six Sigma and increase the levels ofacceptance and cooperation in the organization. PotentialHRcontributionsinthisareainclude:

• Drafting a change management/ communications planthataddressesthepeoplesideoftheSixSigmarollout.

• Helpingcreatea“caseforchange”thatdescribes:

1.ThereasonsforandbenefitsofSixSigma.

2.Howtheorganizationwillhelpemployeessucceedinnewwaysofworking.

3.HowSixSigmafitswithotherongoinginitiatives.

• CounselingSixSigmaLeadersandChampionsonhowtheirbehaviorcanhelporhinderSixSigma’sacceptancethroughouttheorganization.

Being Included in Six SigmaJustbecauseHRprofessionalscanplayaroleinthesuccess


executivesincompaniesthathavealreadyimplementedSixSigma.

• Derivinglessonsfrompreviousorganizationalinitiativesin which people issues and/or HR actions played anacknowledgedroleinsuccessorfailure.

• Meetingwithseniorexecutivestodiscusstheirbusiness/Six Sigma goals and then identifying areas where HRcouldprovideveryspecificandmeasurablehelp.

• Speaking to Six Sigma Leaders and Champions inthe language of Six Sigma, not the language of HR.These executives are typically interested in improving

efficiency(i.e.,internalcost)andeffectiveness(i.e.,whatthecustomerseesas“defects”).HRneedstounderstandwhattheexecutivescareaboutandpitchHR’sservicesinrelevantterms.

• Taking the lead and applying Six Sigma successfullywithintheHRfunction.

HRhasasubstantialroletoplayinthesuccessofaSixSigmainitiative.ButitwillhavetheopportunitytocontributeonlyifitsprofessionalshavetherightskillsandknowledgeandareabletoshowSixSigmaexecutivesthevaluetheycanadd.GainthoseskillsnowandmakesureseniorleadershipknowshowHRcanhelpsupportthesuccessoftheinitiative.

“HR needs to understand what the executives care about and pitch HR’s

services in relevant terms.”


Theterm“EmotionalIntelligence”wasfirstcoinedbyPeterSaloveyandJohnMayerin1990.

EmotionalIntelligence(EI),oftenmeasuredasanEmotionalIntelligence Quotient (EQ), describes an ability, capacity,skillor(in thecaseof thetraitEImodel)aself-perceivedability,toidentify,assess,andmanagetheemotionsofone’sself,ofothers,andofgroups.Itisarelativelynewareaofpsychological research. The definition of EI is constantlychanging.

EIisimportantinshapingone’spersonality,behavior,styleand abilities. It has been studied scientifically in the pastdecade. Goleman’s book “Emotional Intelligence” (1995)substantiallyaddedtothepopularinterestsinaccumulatingknowledgeregardingEI.

Business organizations have used EI for organizationaldevelopmentandforenhancingorganizationaleffectiveness(Lowe, Kroek, and Sivasubramaniam,1996). EI improvesmanagerial practices as well as helps in leadershipdevelopment (Druskat andWolff, 2001). EI is often usedto motivate employees and to create a culture of highperformingworkplace.

It also plays an important role in helping organizationalleadersmakegooddecisionsaboutnewproducts,markets,and strategic alliances. It influences organizationaldevelopment in a number of areas such as emotionalrecruitmentandretention,developmentoftalent,teamwork,employee commitment, morale, innovation, productivity,efficiencyetc.

Defining Emotional IntelligenceAccordingtoGoleman(1998)“Emotionalintelligenceisthecapacityforrecognizingourownfeelingsandthoseofothers,formotivatingourselves,andformanagingemotionswellinourselvesandinourrelationships.EIdescribesabilitiesdistinctfrom,butcomplementaryto,academicintelligenceorthepurelycognitivecapacitiesmeasuredbyIQ”

AccordingtoBar-On(1997)“Emotionalintelligencereflectsone’sabilitytodealwithdailyenvironmentchallengesandhelps predict one’s success in life, including professionalandpersonalpursuits”

According to Freedman (1998) “Emotional intelligence isawayofrecognizing,understandingandchoosinghowwethink,feelandact.Itshapesourinteractionwithothersandourunderstandingofourselves.Itdefineshowandwhatwelearn,itallowsustosetpriorities,itdeterminesthemajorityofourdailyactions”

According to Peter Salovey and John D. Mayer (1990)“EIistheabilitytomonitorone’sownandothers’feelingsandemotions, todiscriminateamongthemand touse thisinformationtoguideone’sthinkingandactions.”

There are three main models of EI• AbilityEImodels

• MixedmodelsofEI

• TraitEImodel

The ability-based model

Theabilitybasedmodelviewsemotionsasusefulsourcesofinformationthathelponetomakesenseofandnavigatethesocialenvironment.Themodelproposesthatindividualsvaryintheirabilitytoprocessinformationofanemotionalnature and in their ability to relate emotional processingtoawidercognition.Thisability isseentomanifest itselfincertainadaptivebehaviors.Themodelproposes thatEIincludes4typesofabilities:-

1. Perceivingemotions—theabilitytodetectanddecipheremotionsinfaces,pictures,voices,andculturalartifacts-including the ability to identify one’s own emotions.Perceivingemotionsrepresentsabasicaspectofemotionalintelligence,asitmakesallotherprocessingofemotionalinformationpossible.

2.Using emotions — the ability to harness emotions tofacilitate various cognitive activities, such as thinkingandproblemsolving.Theemotionallyintelligentpersoncancapitalize fullyuponhisorher changingmoods inordertobestfitthetaskathand.

3.Understanding emotions — the ability to comprehendemotion language and to appreciate complicatedrelationshipsamongemotions.Forexample,understanding

EmotionalIntelligence

NidhikaPGDM(2007-09)


emotionsencompassestheabilitytobesensitivetoslightvariationsbetweenemotions,andtheabilitytorecognizeanddescribehowemotionsevolveovertime.

4.Managingemotions—theabilitytoregulateemotionsinbothourselvesandinothers.Therefore,theemotionallyintelligent person can harness emotions, even negativeones,andmanagethemtoachieveintendedgoals.

Mixed models of EI

The Emotional Competencies (Goleman) model

ThemodelintroducedbyDanielGolemanfocusesonEIasawidearrayofcompetenciesandskillsthatdriveleadershipperformance. Goleman’s model outlines four main EIconstructs:

1. Self-awareness—the ability to readone’s emotions andrecognizetheirimpactwhileusinggutfeelingstoguidedecisions.

2. Self-management—involves controlling one’s emotionsandimpulsesandadaptingtochangingcircumstances.

3. Socialawareness—theability tosense,understand,andreact to others’ emotions while comprehending socialnetworks.

4.Relationship management—the ability to inspire,influence,anddevelopotherswhilemanagingconflict.

Goleman includesa setof emotionalcompetencieswithineachconstructofEI.Emotionalcompetenciesarenotinnatetalents,butratherlearnedcapabilitiesthatmustbeworkedon and developed to achieve outstanding performance.Goleman posits that individuals are born with a generalemotional intelligence that determines their potential forlearningemotionalcompetencies.

The Bar-On model of Emotional-Social Intelligence (ESI)

Bar-On (2006) developed one of the first measures ofEI that used the term Emotion Quotient. He definesemotional intelligenceasbeingconcernedwitheffectivelyunderstanding oneself and others, relatingwell to people,andadaptingtoandcopingwiththeimmediatesurroundingsto be more successful in dealing with environmentaldemands. Bar-On posits that EI develops over time andthatitcanbeimprovedthroughtraining,programming,andtherapy. Bar-On hypothesizes that those individuals with

higher thanaverageE.Q.’s are ingeneralmore successfulinmeetingenvironmentaldemandsandpressures.HealsonotesthatadeficiencyinEIcanmeanalackofsuccessandthe existence of emotional problems. In general, Bar-Onconsidersemotionalintelligenceandcognitiveintelligenceto contribute equally to a person’s general intelligence,whichthenoffersanindicationofone’spotentialtosucceedinlife.

The Trait EI model

Trait EI is “a constellation of emotion-related self-perceptionslocatedatthelowerlevelsofpersonality”.Inlayterms, traitEI refers to an individual’s self-perceptionsoftheiremotionalabilities.ThisdefinitionofEIencompassesbehavioral dispositions and self perceived abilities and ismeasured by self report, as opposed to the ability basedmodelwhich refers to actual abilities,whichhaveprovenhighlyresistanttoscientificmeasurement.TraitEIshouldbeinvestigatedwithinapersonalityframework.

ThetraitEImodelisgeneralandsubsumestheGolemanandBar-Onmodelsdiscussedabove.

The following 19 points build a case for how emotionalintelligence contributes to the bottom line in any workorganization:

1. The USAir Force used the EQ-I to select recruiters(the Air Force’s front-line HR personnel) and foundthat themost successful recruiters scored significantlyhigher in the emotional intelligence competencies ofAssertiveness, Empathy, Happiness, and EmotionalSelf Awareness. The Air Force also found that byusing emotional intelligence to select recruiters, theyincreased their ability to predict successful recruitersbynearlythree-fold.Theimmediategainwasasavingof $3 million annually. These gains resulted in theGovernmentAccounting Office submitting a report toCongress,which led to a request that theSecretary ofDefenseorderallbranchesofthearmedforcestoadoptthisprocedureinrecruitmentandselection.(TheGAOreport is titled, “Military Recruiting: The DepartmentofDefenseCould Improve ItsRecruiter Selection andIncentive Systems,” and itwas submitted toCongressJanuary30,1998.RichardHandleyandReuvenBar-Onprovidedthisinformation.)

2. Experiencedpartnersinamultinationalconsultingfirm

“Self-management—involves controlling one’s emotions and impulses and

adapting to changing circumstances.”

ManagingPeoplenEmotionalIntelligencen 15

“Research by the Center for Creative Leadership has found that the primary

causes of derailment in executives involve deficits in emotional competence.”

wereassessedontheEIcompetenciesplusthreeothers.Partnerswhoscoredabovethemedianon9ormoreofthe20competenciesdelivered$1.2millionmoreprofitfrom their accounts than did other partners – a 139percentincrementalgain(Boyatzis,1999).

3. Ananalysisofmorethan300top-levelexecutivesfromfifteen global companies showed that six emotionalcompetencies distinguished stars from the average:Influence,TeamLeadership,OrganizationalAwareness,self-confidence, Achievement Drive, and Leadership(Spencer,L.M.,Jr.,1997).

4. Injobsofmediumcomplexity(salesclerks,mechanics),atopperformeris12timesmoreproductivethanthoseat thebottomand85percentmoreproductive than anaverageperformer.Inthemostcomplexjobs(insurancesalespeople,accountmanagers),atopperformeris127percent more productive than an average performer(Hunter, Schmidt, & Judiesch, 1990). Competencyresearch in over 200 companies and organizationsworldwidesuggeststhataboutone-thirdofthisdifferenceisduetotechnicalskillandcognitiveabilitywhiletwo-thirdsisduetoemotionalcompetence(Goleman,1998).(In top leadership positions, over four-fifths of thedifferenceisduetoemotionalcompetence.)

5. At L’Oreal, sales agents selected on the basis ofcertain emotional competencies significantly outsoldsalespeopleselectedusing thecompany’soldselectionprocedure.Onanannualbasis,salespeopleselectedonthe basis of emotional competence sold $91,370morethan other salespeople did, for a net revenue increaseof $2,558,360. Salespeople selected on the basis ofemotional competence also had 63% less turnoverduring the first year than those selected in the typicalway(Spencer&Spencer,1993;Spencer,McClelland,&Kelner,1997).

6. Inanationalinsurancecompany,insurancesalesagentswhowereweakinemotionalcompetenciessuchasself-confidence, initiative, and empathy sold policies withanaveragepremiumof$54,000.Thosewhowereverystrong in at least 5 of 8 key emotional competenciessoldpoliciesworth$114,000(Hay/McBerResearchandInnovationGroup,1997).

7. Inalargebeveragefirm,usingstandardmethodstohiredivision presidents, 50% leftwithin two years,mostly

becauseofpoorperformance.Whentheystartedselectingbasedonemotionalcompetenciessuchasinitiative,self-confidence, and leadership, only 6% left in twoyears.Furthermore,theexecutivesselectedbasedonemotionalcompetencewerefarmorelikelytoperforminthetopthird based on salary bonuses for performance of thedivisionstheyled:87%wereinthetopthird.Inaddition,division leaderswith thesecompetenciesoutperformedtheirtargetsby15to20percent.Thosewholackedthemunder-performedbyalmost20%(McClelland,1999).

8. Research by the Center for Creative Leadership hasfoundthattheprimarycausesofderailmentinexecutivesinvolve deficits in emotional competence. The threeprimaryonesaredifficultyinhandlingchange,notbeingable to work well in a team, and poor interpersonalrelations.

9. After supervisors in a manufacturing plant receivedtraininginemotionalcompetenciessuchashowtolistenbetter and help employees resolve problems on theirown, lost-time accidents were reduced by 50 percent,formalgrievanceswerereducedfromanaverageof15peryearto3peryear,andtheplantexceededproductivitygoalsby$250,000(Pesuric&Byham,1996).Inanothermanufacturingplantwheresupervisorsreceivedsimilartraining,productionincreased17percent.

Therewas no such increase in production for a groupofmatchedsupervisorswhowerenottrained(Porras&Anderson,1981).

10.One of the foundations of emotional competence,accurateself-assessment–wasassociatedwithsuperiorperformanceamongseveralhundredmanagersfrom12differentorganizations(Boyatzis,1982).

11.Another emotional competence, the ability to handlestress,waslinkedtosuccessasastoremanagerinaretailchain.Themost successful storemanagerswere thosebest able to handle stress. Success was based on netprofits,salespersquarefoot,salesperemployee,andperdollarinventoryinvestment(Lusch&Serpkeuci,1990).

12.Optimism is another emotional competence that leadsto increased productivity. New salesmen at Met Lifewhoscoredhighonatestof“learnedoptimism”sold37percentmorelifeinsuranceintheirfirsttwoyearsthanpessimists(Seligman,1990).


13.Astudyof130executives found thathowwellpeoplehandled their own emotions determined how muchpeoplearoundthempreferredtodealwiththem(WalterV.ClarkeAssociates,1997).

14.Forsalesrepsatacomputercompany,thosehiredbasedon their emotional competencewere 90%more likelytofinishtheirtrainingthanthosehiredonothercriteria(Hay/McBerResearchandInnovationGroup,1997).

15.Atanationalfurnitureretailer,salespeoplehiredbasedonemotionalcompetencehadhalfthedropoutrateduringtheir first year (Hay/McBer Research and InnovationGroup,1997).

16.For515 senior executives analyzedby the searchfirmEgonZehnder International, thosewhowereprimarilystrong in emotional intelligence were more likelyto succeed than those who were strongest in eitherrelevant previous experience or IQ. In other words,emotionalintelligencewasabetterpredictorofsuccessthan either relevant previous experience or high IQ.Morespecifically, theexecutivewashigh inemotionalintelligencein74percentofthesuccessesandonlyin24percentofthefailures.ThestudyincludedexecutivesinLatinAmerica,Germany,andJapan,andtheresultswerealmostidenticalinallthreecultures.

17.Thefollowingdescriptionofa“star”performerrevealshow several emotional competencies (noted in italics)were critical in his success: Michael Iem worked atTandemComputers.Shortlyafter joining thecompanyasajuniorstaffanalyst,hebecameawareofthemarkettrendawayfrommainframecomputerstonetworksthatlinked workstations and personal computers (ServiceOrientation).IemrealizedthatunlessTandemrespondedto the trend, its products would become obsolete(InitiativeandInnovation).HehadtoconvinceTandem’smanagersthattheiroldemphasisonmainframeswasnolongerappropriate(Influence)andthendevelopasystemusingnewtechnology(Leadership,ChangeCatalyst).Hespentfouryearsshowingoffhisnewsystemtocustomersand company sales personnel before the new networkapplicationswerefullyaccepted(Self-confidence,Self-Control, Achievement Drive) (from Richman, L. S.,“HowtogetaheadinAmerica,”Fortune,May16,1994,pp.46-54).

18.FinancialadvisorsatAmericanExpresswhosemanagers

completedtheEmotionalCompetencetrainingprogramwere compared to an equal number whose managershadnot.Duringtheyearfollowingtraining,theadvisorsof trained managers grew their businesses by 18.1%compared to 16.2% for those whose managers wereuntrained.

19.Themostsuccessfuldebtcollectorsinalargecollectionagencyhadan averagegoal attainmentof163percentoverathree-monthperiod.Theywerecomparedwithagroupofcollectorswhoachievedanaverageofonly80percentoverthesametimeperiod.Themostsuccessfulcollectors scored significantly higher in the emotionalintelligence competencies of self-actualization,independence, and optimism. (Self actualization referstoawell-developed,innerknowledgeofone’sowngoalsand a sense of pride in one’swork.) (Bachman et al.,2000)

The Importance of Emotional Intelligence at WorkEmotional Intelligence Quotient is defined as a set ofcompetenciesdemonstratingtheabilityonehastorecognizehisorherbehaviours,moods,andimpulses,andtomanagethembestaccordingtothesituation.

Anemployeewithhighemotionalintelligencecanmanagehisorherownimpulses,communicatewithotherseffectively,manage changewell, solve problems, and use humour tobuildrapportintensesituations.Theseemployeesalsohaveempathy,remainoptimisticeveninthefaceofadversity,andaregiftedateducatingandpersuadinginasalessituationandresolvingcustomercomplaintsinacustomerservicerole.

This“clarity”inthinkingand“composure”instressfulandchaotic situations is what separates top performers fromweakperformersintheworkplace.

As managers and business executives we have oftenasked ourselves the following questions:Why do certainemployeesgetintoaccidentsmoreoftenthanothers?Whydotheyviolatecompanyethicsandpolicies?Whydotheyignoretherulesoftheorganization?Whydotheyuseillegaldrugswhileonthejob?

Whydosomepeoplecauseconflictwhileothersaresogiftedat resolvingit?Whydotheyputself-interestaheadof theorganizationalvalues?Whydosomesalespeoplebuildlargebooksofnewbusinesswitheasewhileothersstruggletodo

“Those who were primarily strong in emotional intelligence were more likely to succeed than those who were strongest in

either relevant previous experience or IQ.”


soeven though theyseemtobeputting forth the requiredeffort?

In many cases the answer to the above questions liesin “emotional intelligence” rather than the individual’s“personalitytype.”

“Unmet emotional needs cause the majority of problems at work.”

—EQI.org

Thefollowingoutlinesasetoffiveemotional intelligencecompetencies that have proven to contribute more toworkplace achievement than technical skills, cognitiveability,andstandardpersonalitytraitscombined:-

1. Intuition&Empathy:Ourawarenessofothers’feelings,needs,andconcerns.Thiscompetencyisimportantintheworkplaceforthefollowingreasons.

• Understanding others: an intuitive sense of others’feelings and perspectives, and showing an activeinterestintheirconcernsandinterests

• Customerserviceorientation:theabilitytoanticipate,recognize,andmeetcustomers’needs

• Peopledevelopment:abilitytosensewhatothersneedinordertogrow,develop,andmastertheirstrengths

• Leveragingdiversity:cultivatingopportunitiesthroughdiversepeople

2. Political Acumen and Social Skills: Our adeptness atinducingdesirableresponsesinothers.Thiscompetencyisimportantintheworkplaceforthefollowingreasons.

• Influencing:usingeffectivetacticsandtechniquesforpersuasionanddesiredresults

• Communication: sending clear and convincingmessagesthatareunderstoodbyothers

• Leadership:inspiringandguidinggroupsofpeople

• Changecatalyst:initiatingand/ormanagingchangeintheworkplace

• Conflict resolution: negotiating and resolvingdisagreementswithpeople

• Building bonds: nurturing instrumental relationshipsforbusinesssuccess

• Collaboration and cooperation: working withcoworkersandbusinesspartnerstowardsharedgoals

• Teamcapabilities:creatinggroupsynergyinpursuingcollectivegoals

3. Self Awareness: Knowing one’s internal states,preferences, resources, and intuitions.This competencyisimportantintheworkplaceforthefollowingreasons.

• Emotionalawareness:recognizingone’semotionsandtheireffectsandimpactonthosearoundus

• Accurate self-assessment: knowing one’s strengthsandlimits

• Self-confidence: sureness aboutone’s self-worthandcapabilities

4. SelfRegulation:Managingone’sinternalstates,impulses,and resources. This competency is important in theworkplaceforthefollowingreasons.

• Self-control: managing disruptive emotions andimpulses

• Trustworthiness:maintainingstandardsofhonestyandintegrity

• Conscientiousness: taking responsibility and beingaccountableforpersonalperformance

• Adaptability:flexibilityinhandlingchange

• Innovation: being comfortable with an openness tonovelideas,approaches,andnewinformation

5. SelfExpectationsandMotivation:Emotionaltendenciesthatguideorfacilitatereachinggoals.Thiscompetencyisimportantintheworkplaceforthefollowingreasons.

• Achievement drive: striving to improve or meet astandardofexcellenceweimposeonourselves

• Commitment:aligningwiththegoalsofthegroupororganization

• Initiative: readiness to act on opportunities withouthavingtobetold

• Optimism: persistence in pursuing goals despiteobstaclesandsetbacks

Emotional Intelligence’s Impact on the Bottom LineTill date, many companies have focused their selectioncriteriaandtrainingprogramsonhardskills(e.g.,technicalexpertise,industryknowledge,education)andtheassessmentofpersonalitytraits.

“This ‘clarity’ in thinking and ‘composure’ in stressful and chaotic situations is what

separates top performers from weak performers in the workplace.”


Topics including competencies like stress management,assertiveness skills, empathy, and political/social acumenwere never measured in the selection process or focusedon in traininganddevelopmentprograms. Inreality, thesearecriticalsuccessfactorsthatshouldnotbedismissedorignored,andhaveadirectimpactonthebottomline.

Forexample,theHayGroupstatesonestudyof44Fortune500 companies found that salespeople with high EQproducedtwicetherevenueofthosewithaverageorbelowaverage scores. In another study, technical programmersdemonstratingthetop10percentofemotionalintelligencecompetency were developing software three times fasterthanthosewithlowercompetency.

One recent study conducted by a Dallas corporationmeasuredthattheproductivitydifferencebetweentheirlowscoring emotional intelligence employees and their highscoringemotionalintelligenceemployeeswas20times.

ATexas-basedFortune500Companyhadutilizedpersonalityassessments for candidate selection for years with littleresultsinreducingturnoverintheirhighturnoversalesforce.After turning to an emotional intelligence based selectionassessmentandEQtraininganddevelopmentprogram,theyincreasedretentionby67percentinthefirstyear,whichthey

calculatedadded$32milliontotheirbottomlineinreducedturnovercostsandincreasedsalesrevenues.

A large metropolitan hospital reduced their critical carenursing turnover from65percent to 15percentwithin18monthsofimplementinganemotionalintelligencescreeningassessment.

Acommunitybankthatreducedstaffby30percentduetothesluggisheconomyassessedtheremainingworkforcefortheir emotional intelligence competencies, placed them intherightroleforthosecompetencies,andthebankisnowproducingmorewithlesspeople.

Lastly, through a series of recent studies conducted byZERORISKHR,Inc.,acorrelationwasfoundbetweenlowemotionalintelligenceandtheftandshrinkage.

Oneotherstudyintheconstructionindustryyieldedresultsshowing workers with low emotional intelligence had ahigherlikelihoodofgettinginjuredwhileonthejob.

Allofthesecasesarestartingtoprovethevalueofhavinghighly emotionally intelligent employees make up yourworkforceifyouwantacompetitiveadvantageinthishighlycompetitivebusinessworld.

“One study of 44 Fortune 500 companies found that salespeople with high EQ produced twice the revenue of those

with average or below average scores.”

“T he air is full of ideas. T hey are knocking you in the head all the time. You only have to

know what you want, then forget it, and go about your business. Suddenly, the idea will

come through. It was there all the time.”

— Henry Ford (American industrialist and pioneer of the assembly-line production method)

“Freaking out does not fix businesses. Learning from lessons, coupled with a laser focus

on finding solutions, does.”

— Karen Post, Founder, OddpodzSource: Shifting Gears at 105 mph

Without Flying off a Cliff


Inthepresentscenarioofeconomiccrisisthemajorchallengefacedbyeconomiesallovertheworldistoregainthelostconfidenceof investors.Regionalstockexchanges (RSEs)are thosewhich operate outside themain financial centreofacountry.TheobjectiveofestablishingtheRSEswastoenable regional companies in the respective geographicallocations to raisecapital for thedevelopmentof thesmallandmiddle level enterprises in amore cost efficientway.Thereare24stockexchangesinIndiaoutofwhichonly2major stock exchanges namelyBSE&NSE are handlingthemajority of the business and rest stock exchanges arestrugglingforsurvival.CurrentlyRSEsarenotabletofulfilltheveryobjectivesforwhich theywereestablished,somewithnearlynotrading.ThefeasibilityofRSEsisindangerwith SEBI taking the decision of either combining themandmakingthemastrongseparatebodyinlinesofBSE&NSEormakingseparatesubsidiariesofRSEswhichisevencurrentlyfollowedandisgeneratinggoodreturnsaswell.Intheviewofsomeexpertsitisnowthetimetoderecognizethese exchanges but with this the problem of division ofassetswilloccur.

Regional Stock ExchangesStock Exchanges are an organized marketplace, eithercorporation or mutual organization, where members ofthe organization gather to trade company stocks or othersecurities.Regionalstockexchanges(RSEs)arethosewhichoperateoutsidethemainfinancialcentreofacountry.Themain financial centre of India isMumbai so all the stockexchangesthatoperateinothercitiesarecalledasregionalstockexchanges.Thereare22RSEsinIndianamely:

Table 1:StockExchangesinIndia

AhmedabadStockExchange

BangaloreStockExchange

BhubaneshwarStockExchange

CalcuttaStockExchange

CochinStockExchange CoimbatoreStockExchange

DelhiStockExchange GuwahatiStockExchange

HyderabadStockExchange

JaipurStockExchange

LudhianaStockExchange MadhyaPradeshStockExchange

MadrasStockExchange MagadhStockExchangeMangaloreStockExchange

MeerutStockExchange

OTCExchangeofIndia PuneStockExchangeSaurashtraKutchStockExchange

UttarPradeshStockExchange

VadodaraStockExchange

Present Status of Regional Stock Exchanges of IndiaOutof the22 recognized stock exchanges in India (SEBIhas refused renewal of recognition to Mangalore StockExchange),NSEandBSEaccountforalmost100%ofthetotalturnover.AsfarasRSEsareconcerned,exceptfortheCalcuttaStockExchange(CSE)andtheUttarPradeshStockExchange (UPSE), there is no trading on any other stockexchangeandevenontheCSEandUPSE,thebusinessisdowntoatrickle.ThefinancialconditionoftheRSEsisbyandlargealsoweak.Thisstateofaffairshasbeenprevailingforthepastseveralyears.

In2008,businessfrom19regionalcommodityboursesfelldrasticallyby31.83percentatRs84,342croreascomparedtoRs1,23,729crore in thepreviousyear, theofficialdatashowed.TheshareofregionalboursesislessthanonepercentofthetotalcommoditymarketturnoverofRs50,33,857crore.

Government interventions to revive regional stock exchanges

Considering that the RSEs had invested substantially inthe infrastructure, which included building, hardware andsoftware for automated trading, several initiatives weretaken to revive these exchanges so that the infrastructurecouldbeputtoproductiveuse:

• The first among them was the setting up of the Inter

FeasibilityandDesirabilityofRegionalStockExchanges

Rashi Chaudhary, Himanshi SachdevaPGDM(2008-10)


ConnectedStockExchangeofIndia(ICSE)platformtoregrouptheRSEstoprovideathirdnationalmarket.

• ThesecondinitiativetakentorevivethestateofregionalstockexchangewassettinguptheIndonextexchange.

• Thethirdeffortwastosetupbrokingsubsidiaries

• Thefourthefforttorevivethesestockexchangeswasthedemutualizationofthesestockexchanges.

• ThenewFDInormswereformulated.

1. Inter Connected Stock Exchange Of India

Inter-connectedStockExchangeofIndiaLimited(ICSE)isanational-levelstockexchange,providingtrading,clearing,settlement,riskmanagementandsurveillancesupporttoitsTradingMembers.ICSEaimstoaddresstheneedsofsmallcompaniesandretailinvestorsbyharnessingthepotentialofregionalmarkets,soastotransformthemintoaliquidandvibrantmarket.

TheICSEwaspromotedin1998by14RSEsforprovidinganadditionaltradingplatformwheretheshareslistedonanyofthese14exchangeswouldbetraded.

Thus it provides the investors in smaller cities, a one-stop solution for cost-effective and efficient trading andsettlementservicesinsecurities.

2. Indo Next

SEBI took the initiative to encourage the BSE and thesmallerstockexchangestosetUptheBSEIndoNexttradingplatform as a separate trading platform under the presentBOLT trading systemof theBSE. Itwas a joint initiativeof theBSEandtheFederationofIndianStockExchanges(FISE)ofwhich18RSEsaremembers.TheBSEIndoNextmarketwasintendedtobeanSMEspecificmarket.

ThemainconceptofIndonextwasthat

• TheRSEswhichparticipate in theprojectwillstop thetradingonthelocalplatform.

• Therewillbeacentralisedtradingplatform.

• Existing function of the RSE and their existence willcontinue,exceptforthetradingatthelocalplatform,

• ItwasproposedthatthecompanieshavingpaidupcapitaluptoRs.20CroresbeexclusivelybeallowedtotradeatIndonextplatform.

3. Broking Subsidiaries

The thirdeffortwas topermit theRSEs tosetupbrokingsubsidiaries which could pool the financial resources ofregionalbrokersandoftheexchangesandobtainmembershipof theBSEandNSE.Theregionalbrokerscould thenactassubbrokerstothesubsidiaries(whichhadregisteredasbrokers)andhaveaccesstothemarketsofBSEandNSE.EventheICSEsetupsuchabrokingsubsidiary.

4. Demutalization

Demutualization refers to the transition process of anexchangefroma“mutually-owned”associationtoacompany“ownedby shareholders. Inotherwords, transforming thelegal structure of an exchange from a mutual form to abusinesscorporationformisreferredtoasdemutualization.

AspertheguidelinesofSEBIinAugust2007allthebroker/tradingmembers,whohad100%shareholders in regionalexchanges,hadtobringdowntheirstakeintheseexchangesto49%.

5. New FDI Norms

The new FDI norms, which allow foreign investmentsup to 49% in stock exchanges, depositories and clearingcorporations, with a cap on single investment, direct orindirectat5%.Thesenormshaveresultedinmanyforeigncompanies to invest in the stock exchanges. For instancetheGermanmultinational bank,DeutscheBank is eyeingownershipof5%stakeintheDelhiStockExchange(DSE).

Redefining RSEs role

RSEs were established with the objective of providinga regionalmarket for raising capital by companies in therespective regions by garnering regional savings to helpachievebalancedregionaldevelopmentinthecountry.Thisobjectivehasbeen fairly servedby theRSEs for a lengthof time. But with the advent of modern technology thescope of the RSEs became limited till they virtually losttheirrelevance.Theirfeasibilityinthecurrentsituationisindangeraspeoplearenotconfidentenoughtoputtheirhardearned money in the defunct stock exchanges. Presentlytheyarenotdesirablebythegovernmentasalreadyalotofmoneyhasbeenputintheinfrastructuraldevelopment&inthepresentcreditcrunchthegovernmentisunabletoputinmorefundsinthesestockexchanges.

“ICSE provides the investors in smaller cities, a one-stop solution for

cost-effective and efficient trading and settlement services in securities.”

Money Matters nFeasibilityandDesirabilityofRegionalStockExchangesn 21

“A third platform for the trading of stocks is very much needed in India so that the

SMEs in India would have new avenue for raising capital from the public.”

Inthesetimesoffinancialcrisisthesestockexchangescouldbeofgreathelpiftheyareconsolidatedtogetherandformaseparateplatformtocatertotheneedsofthesmallinvestors.These exchanges have awide geographical reach so theycanactasaboonforthesmall&mediumcompaniesgivingthem additional avenue to raise capital. This help in thegrowthoftheSMEsinthecountryandwillalsoprovidethemuchneededliquiditytotheeconomy.

Problems Faced By RSEs: Reasons Of Failure OfMajorGovernmentInitiatives

• With demutualization, a single investor cannot acquiremore than 5% stake.Thismeans every single regionalstockexchangehastosearchfor10-11unrelateddifferententitiesthatarereadytoacquirea5%stake.

• In case of demutalisation, the new owners might notnecessarily be interested in running an already defunctstockexchange.

• SEBIhaslaiddowntheprovisionthatalltheseexchangeshavetoprovideforminimumtradinglotofRs.100,000.AndtheexchangetohaveanetworthofRs.100crores(Rs. 1,000,000,000). Most of the companies listed onthese exchanges are small caps companies so it it verydifficultforRSEstocomplywiththeseregulations.

• The advent of automated trading and extension ofnationwidereachofBSEandNSE.

• Theabolitionoftheconceptofregionallisting.

• Highoperationalcost.

How to improve the state of RSEs

• Itcansurviveisiftheyofferspecialisedandnicheservicesorproducts.

• A thirdplatformfor the tradingof stocks isverymuchneeded in India so that the SMEs in Indiawould havenewavenueforraisingcapitalfromthepublic.

• Encouragementshouldbegiventoforeigninvestors.

• Investor education and awareness regarding the stockexchanges & their functioning should be encouraged.For example Vadodara Stock Exchange Ltd (VSE),in association with Bombay Stock Exchange (BSE),will launch short-term training courses to educate theuninitiated about the nitty-gritty of stock exchangeoperations.

• Upgrading the systems of trading with high speedtechnologyforbetterconnectivity.

• Those RSEs that are willing to exit the business offunctioningasastockexchangeshouldbepermitted toreversemergewiththeirsubsidiaries.

• The members of RSEs who are also the member ofnational stock exchanges, should not be allowed to beontheboardofanyRSEsastherewillbeconflictingofinterest.

ConclusionRSEsinitiallybroughtbusinessforitselfbutwiththenewadvancement in technology the NSE/BSE captured thewholemarket.With thepresent conditionofRSEsexceptfor the few we can conclude that the desirability is lessamongtheinvestorsaswellasthegovernment.Alotofstepsshouldbetakenbythegovernmenttogenerateamarketforthem.The feasibility of RSEs presently is very less withinvestors not even showing confidence in investing in thenationalmarkets.Withtheexitoptionsprovidedtothemtheproblemofdistributionofassetsshouldbefirstsolvedandthecapitalinvestedintheinfrastructureshouldbeputtoaproductiveuse.Thefinancialcrisishamperedtheinterestofthebiginvestorsuptoalargeextendsosmallinvestorscanactasagreatassetfortheeconomy.

References• www.google.com• www.economictimes.com• www.livemint.com• www.financialexpress.com• www.financeinfo.com• www.investopedia.com• www.sebi.gov• www.wikepedia.com• ICFAIjournalofmanagement• FinancialblogsbyMrSammerParekh,advocatesupreme

courtofIndia&visitingfacultyIIM-A.


MutualFundIndustry:What’sNext?Marina Ghosh, Mariyam Suzanne

PGDM(2008-10)

Amutualfundisatrustthatpoolsthesavingsofanumberofinvestorswhoshareacommonfinancialgoal.Thus,thepaper begins by providing a basic definition of a mutualfundand lists itsbenefits, trendsanda look to the future.Mutualfundvehicleexploitseconomiesofscaleinallthreeareas-Research, Investments and Transaction processing.The paper uses the methodology from secondary sourcesandexaminesthelowerriskinvolvedinmutualfundsthanstocks.Duringlasttenyears,theyhaveattractednearlyhalfof thenetgrowthofhousehold savings.While small timedeposits inbankshavedeclinedsignificantly,mutual fundholdingshaverisenspectacularly.Therecentdeclineinstockpricesraisesaconcernaboutthefragilityofnewfinancialorder and how safe are themutuals?How vulnerable arethey to the financial crisis?We explore paper details theemergingopportunitiesasaversatileinvestmentavenueforretailinvestorsandthechallengesofnotpromisingareturn,theguaranteeofthecapitalandregulatoryaspects.Thetruthis thatmutual funds canbe an ideal tool for the commonmanaswellasaseasonedequityinvestor.Finally,whatisrequired is the inflowof freshmoney.Once thesentimentturns around and a fear of further fall is stopped, peoplewillstartcominginasMFsreduceexposure to low-gradecorporate debt.Mutual funds industry has ability to grow35-40%fornext2-3yrs.Inclusionofpensionsectorfunds,investoreducationanddistributionpenetrationinruralcitiescanhelpitfinally‘comeofage’.

Introduction to Mutual FundsMutualfundsareopen-endinvestmentcompaniesthatoffertheirsharestothepublicandredeemthemondemand.Theypool the savings of their shareholders and invest them instocks,bonds,governmentsecuritiesandshort-termmoney-marketinstruments.Thus,aMutualFundisthemostsuitableinvestmentforthecommonpersonasitoffersanopportunitytoinvestinadiversified,professionallymanagedportfolioatarelativelylowcost.Anybodywithaninvestiblesurplusofas littleasa few thousand rupeescan invest inMutualFunds.Theprofitsor lossesaresharedby the investors inproportiontotheirinvestments.Thepaperfurtherexplainsthat amutual fund provides investorswith diversificationoftheirportfolios,therebyspreadingriskandprovidingthe

Figure 1:WorkingofaMutualFund

Whiletheconceptofindividualscomingtogethertoinvestmoneycollectivelyisnotnew,themutualfundinitspresentformisa20thcenturyphenomenon.Infact,mutualfundsgainedpopularityonlyaftertheSecondWorldWar.Globally,todaymutualfundscollectivelymanagealmostasmuchasormoremoneyascomparedtobanks.TheAssochamstudiesshowthatinvestorsinfuturewouldprefermutualfundsfortheirinvestmentdestinationratherthanstockmarkets.

convenienceofbuyingandsellingsharesinthefundonanybusinessday

Money Matters nMutualFundIndustry:What’sNext?n 23

Concept of Mutual Fund

Many investors with common financial objectives pool their money

Investors, on a proportionate basis, get mutual fund units for the sum contributed to the pool

The money collected from investors is invested into shares, debentures and other securities by

the fund manager

The fund manager realizes gains or losses, and collects dividend or interest income

Any capital gains or losses from such investments are passed on the investors in

proportion of the number of units held by them

Trend for last 10 years• During the last ten years, Mutual Funds (MFs) have

attractednearlyone-halfofthenetgrowthofhouseholdsavings.Whilesmall-timedepositsinbankshavedeclinedsignificantlyasapercentageoftotalsavings,mutualfundholdingshaverisenspectacularly.

• Despite the absence of government-backed depositinsurance, mutual funds have succeeded in becomingfiercecompetitorstothetraditionalbankinginstitutions.

• Therecentdeclineinstockpricesraisesaconcernaboutthefragilityofthenewfinancialorder.

• Accordingto theInvestmentCompanyInstitute(“ICI”)the totalnet assetsofmutual fundshavedeclined22%betweenOctober 31, 2007 andOctober 31, 2008. Theglobalfinancialcrisishascauseduncertaintyinthemindsof investors, which is reflected in rising cash levelsmaintainedbymutualfunds.

• During2008,themutualfundindustry’sAUMshrankby24.19 per cent. But during the same year, the industrygrewtoitsbiggestsizeofRs6trillion(Rs6lakhcrore)inMay2008.

• AnoverallstudyshowsthatMutualfundshaveincreasedexposureinPSUbanks,privatebanks,constructionandpowergenerationsector.

• The two pie charts below show the total net assets ofmutualfundsontheaforementioneddays,brokenoutbyassetclass.

Mutual Fund Total Net Assets

Are your Mutual Funds safe?Howsafearethemutuals,andhowsafearethefundsinvestedin the mutuals? How vulnerable are they to the financialcrisis and panics that are the inevitable concomitants ofboom-and-bustconditions?isamajorconcern.

During themid-’90s,more than adozenmutuals sufferedsubstantial losses amounting to hundreds of millions ofdollars. They experienced portfolio losses primarily as aresultoftheirineptuseofhighlyleveragedderivativessuchasfuturesandoptionscontracts.

In1997, for instance,when interest rates roseandmarketvolatilityincreasedsignificantly,moneyflowedintomoney-marketmutualfundsastheyserveasparkingplaceswheninvestorsarenervousaboutthestockmarkets.Despitethecrisisthemoneymarketmutualscontinuedtoredeemtheirsharesinfull.Afterall,thereislittledangerofbankruptcy,becausemutual funds have no legal obligation to redeemtheirsharesatanyvaluebutmarket.Whenstockpricesfall,theyarelikelytosell.Whenstockpricesplummet,theywillrushtoliquidate.Theyarethepower-packofthecrash.

RegulationMutual funds are highly regulated, restricting the use ofshort selling and derivatives. These regulations serve ashandcuffs,makingitmoredifficulttooutperformthemarketortoprotecttheassetsofthefundinadownturn.

Economies of scaleIndeed, the total number of mutual funds increased from1,038to6,235inlast10years(Fortune,2008),amutualfundfamilymay obtain greater economies of scale. If the costelasticityislessthanone,mutualfundexpensesincreaselessthanproportionatelywithfundassets,implyingeconomiesofscale.Iftheelasticityisgreaterthanone,diseconomiesofscaleexist.Ifthecostelasticityequalsone,thereareconstantreturnstoscaleasfundcostsincreaseproportionatelywithassets.

• Thefirstandtypicallylargestisthemanagementfeepaidtothefund’sinvestmentadvisor.

• Second are the “other” administrative expenses e.g.recordkeepingandtransactionsservicestoshareholders.Theseservicesincludeprovidingstatementsandreports,disbursing dividends, providing custodial services, and

“Despite the absence of government-backed deposit insurance, mutual funds have

succeeded in becoming fierce competitors to the traditional banking institutions.”


payingstateandlocaltaxes,auditing,legal,anddirectors’fees.

• Thirdistheresearchfeespentonadvertising,marketing,and distribution services or on commissions to salesrepresentatives?

Stocks vs. Mutual FundsAcorrelationbetweenstockpricesandmutual fundflowsiscreated,butthecausalrelationshipisfromhighexpectedstockpricestomutualfundflowsasaprimaryinvestmentvehicle. There is lower risk involved inMFs than stocksprimarilyduetodiversification.

Muchofthenewmoneyflowingintomutualfundsisfromretirementplans,andthismoneyisguidedbya long-termperspectivenotunsettledbyshort-termfluctuations.

Inastockmarketfree-fall,shareholdersmightnotgettheircashbackbutinvestorsinmutualfundscangettheirmoneybackbyredeemingtheirshares.

Mutual Fund: Advantages ThemajorbenefitsofinvestinginMFsare:

• MFs ensure good long-term health of portfolio andoffer good post-tax returns, reasonable safety anddiversification.

• MFscanbean ideal tool for thecommonmanaswellasa seasonedequity investor since theyofferavarietyof products like diversified, specialty, thematic, sector,opportunitiesandexchangetradedfunds.

• It is easier to track the performance, as an investor, ofonlyoneprice,netassetvalue(NAV),insteadofseveralstockprices.

• Professional fund management, efficiency, low costs,liquidityandeaseofinvestingmakesthemabetteroptionforbothexperiencedaswellasinexperiencedinvestors.

• With stocks, one worry is that the company you areinvesting in goes bankrupt. With mutual funds, thatchanceisnexttonil.Sincemutualfunds,typicallyholdanywherefrom25-5000companies,allofthecompaniesthatitholdswouldhavetogobankrupt.

Mutual Funds: DrawbacksMutualfundshavetheirdrawbacksas:

• No Guarantees: Investors encounter fewer risks whentheyinvestinmutualfundsthanwhentheybuyandsellstocksontheirown.

• Fees andcommissions:All fundschargeadministrativefees and sales commissions to cover their day-to-dayexpenses.

• Taxes:Ifyourfundmakesaprofitonitssales,youwillpaytaxesontheincomeyoureceive.

• Managementrisk:Whenyouinvestinamutualfund,youdependonthefund’smanagertomaketherightdecisionsregardingthefund’sportfolio.

Future Challenges for Mutual Fund industryDuetotheaforesaidextremeliquidityconditions,themutualfunds(MFs)werefacingthefollowingproblems:

i) Redemption pressure from corporates due to lack ofcredit inflows through banks and external commercialborrowingroute.

Figure 2:StockmarketandMutualFund

Theshiftfromdirectinvestmentinindividualstockstosharedinvestmentthroughmutualfundshasresultedinincreasedinvestor willingness to hold during downturns. The stockmarket,whichhas lost over26percentbyFebruary2009onglobalslowdownandinflationarypressures,ispropellingfundhousesinthecountrytolookforgreenerpasturesintheoverseasmarket(fig.)

Figure3:TrendsofInvestmentinSecurities

“In a stock market free-fall, shareholders might not get their cash back but investors in mutual funds can get their money back

by redeeming their shares.”


“The ongoing global financial turmoil and its impact on markets around the world have undoubtedly had an impact on the valuations of the assets held by the

mutual fund industry in India.”

ii)Shift from MFs to bank deposits in view of thecomparatively higher interest rate being offered byBanks.

iii)Freezingupofthemoneymarketsduetolackofbuyersfor assets including certificates of deposits of privatesectorbanks.

iv)Drying up of credit lines from banks to mutual fundsdespitetheirhavingcreditlines.

The ongoing global financial turmoil and its impact onmarketsaroundtheworldhaveundoubtedlyhadanimpacton the valuations of the assets held by the mutual fundindustryinIndia.Evennewschemes,launchedintherecentpast,have failed toattract investors,whichseems tohavelefttheindustrystrugglingforfunds.

Future of Mutual Funds in India- an overviewIfwe categorize 2007 as the blue-moon forMutual Fundindustry, in2008 it lost all its sheenbut the storydidnotdepict so gloomy picture.Mutual Fund Industry in Indiasaw its highestAUM inMay 2008 crossing Rs 6 trillion (Rs6lakhcrore).ItgotjostledduetotheliquiditycrisisinOct2008whenitlost18.34percent.

• Thesizeof themutualfundsindustryisexpectedtobeworthRs.4lakhcroresby2010fromitscurrentlevelofoverRs.2lakhcrores,accordingtoastudyconductedbytheAssociatedChambersofCommerceandIndustryofIndia(Assocham).

• The study says that investors in future would prefermutualfundsfortheirinvestmentdestinationratherthanchoosing to park their funds in stockmarkets becauseofsaferreturnsandlowerdegreeofriskascomparedtoothermarkets.

• MFswould be one of themajor instruments ofwealthcreationandwealthsavingintheyearstocome,givingpositiveresults.

• TheIndianmutualfundsindustryhasbeengrowingatahealthypaceof16.68percentforthepasteightyearsandthetrendwillmovefurther.

• FinancialexpertsbelievethatthefutureofMutualFundsin Indiawill be very bright. It has been estimated thatby March-end of 2010, the mutual fund industry ofIndiawillreachRs40,90,000crore,takingintoaccountthe total assets of the Indian commercial banks. The

estimationwasbasedontheDecember2004assetvalueof Rs1,50,537crore.

• Inthecoming10yearstheannualcompositegrowthrateisexpectedtogoupby13.4%.Sincethelast5years,thegrowthratewasrecordedas9%annually.Basedonthecurrentrateofgrowth,itcanbeforecastedthatthemutualfundassetswillbedoubleby2010.

Benefits and opportunities for India• 100%growthinthelast6years

• Oursavingrateisover23%,highestintheworld.Onlychannelizing these savings in mutual funds sector isrequired.

• Wehaveapproximately29mutualfunds,whichismuchlessthanUShavingmorethan800.Thereisabigscopeforexpansion.

• ‘B’ and ‘C’ class cities are growing rapidly. Soon theywillfindscopeinthegrowingcities.

• Mutualfundcanpenetraterurals.

• SEBI allowing theMF’s to launch commodity mutualfunds.

• Emphasisonbettercorporategovernance.

• IntroductionofFinancialPlannerswhocanprovideneedbasedadvice.

ConclusionLooking at the past developments and combining it withthe current trends it can be concluded that the future ofMutualFundsinIndiahaslotofpositivethingstooffertoits investors.Mutual Funds had seenCAGR at 47%nextonlytoRussiaat97%andChinaat67%duringtheperiodof2003-08.Someofestimatessaythatinthenext2-3years,Mutualfundindustrywouldgrowat35-40%.

MutualFundneedstobecomeaconsciouschoiceofthelargeuntapped investor community through investors educationundertakingthroughthemodelofPPPtomakeMutualFundInvestment to the households in the tier II and III cities.Mutualfundsinsightshouldbeondevelopinginstitutionalmarketlikepension/insurancefundsandsustaininggrowthinamaturingmarket.Thefutureperformanceofmutualfundsisdependentonthedirectionoftheequitymarkets.Itcanbecomparedtoputtingacorkonthesurfaceoftheocean-the


corkwillgoupanddownwiththewaves.Therefore,whatwe require is inflow of freshmoney. Once the sentimentturnsaroundandafearoffurtherfallisstopped,peoplewillstartcomingin.Investorswithalong-termperspectivewillcertainly start investing now.The once-hot Indianmutualfund industry has cooled amid the 2008 global economicdownturn. Yet Indian mutual funds nevertheless have abrightfutureontheirhometurf.Onefundmanagerpointsoutthatthe30millionIndianswhoalreadyinvestinmutualfunds represent less than 10% of India’s growingmiddleclass—avastsourceofpotentialcapital.

References• http//www.financialexpress.com/news

• http//www.forbes.com/2001/08/07

• http//www.marketsmonitor.com

• http//www.essaytown.net/lib

• http//www.mutualfundanalysis.com

• Bers, M. and T. Springer, 1998, Sources of scaleeconomiesforREITs,RealEstateFinance14,47-56.

TheDifferenceOnceuponatime,therewasawisemanwhousedtogototheoceantodohiswriting.Hehadahabitofwalkingonthebeachbeforehebeganhiswork.Oneday,ashewaswalkingalongtheshore,hesawahumanfiguremovinglikeadancer.Ashegotcloser,henoticedthatthefigurewasthatofayoungman.Theyoungmanwasreachingdowntotheshore,pickingupsmallobjects,andthrowingthemintotheocean.

Hecamecloserstillandcalledout‘Goodmorning!MayIaskwhatitisthatyouaredoing?’

Theyoungmanpaused,lookedup,andreplied‘Throwingstarfishintotheocean.’

‘Imustask,then,whyareyouthrowingstarfishintotheocean?’askedthesomewhatstartledwiseman.

Heanswered.“BecauseifIdon’t,they’regoingtodie.”

“Buttherearethousandsofstarfish.You’renotgoingtomakemuchofadifferencetoallthesestarfish..”TheWritersaid.

Theyoungmanlookedupathim,stoopeddownagaintopickupanotherstarfishand,gentlybutquickly,flungitbackintotheocean.“It’sgoingtomakeabigdifferencetothatone!”hereplied.

Morale : Our Attitude makes a difference


“30 Million Indians who already invest in mutual funds represent less than

10% of India’s growing middle class— a vast source of potential capital”

ItallstartedwiththesubprimecrisiswhichledtothefailureofbiginvestmentbankslikeLehmanbrothersandeffectednot only theWesternmarkets but also hit the developingAsianmarketstoo.

Before the Government of India could have taken stepsto regain or restore investors’ confidence, the Satyam (orAsatyam)fiascotookplace,whichfurtherhittheinvestors’confidence.

ItisbecauseacompanylikeSatyamwhichhasreceivedtheWorldCouncilforCorporateGovernance’sGoldenPeacockAward for excellence in corporate governance, twice, andalsowasbeingauditedbyarenownedInternationalauditingfirm-PwC(PriceWaterhouseCooper’s)couldcommitsuchahugecorporatefraudthenwhatisthepossibilitythatanothersuchcompanywillnotbreaktrustofinvestors.

Someofthestepswhichhavebeentakenbythegovernmentfor regaining financial stability and hence try to ensureinvestorconfidenceare:

1. In early 2008, booming Indian economy experiencedanincreaseininflation,whichultimatelyledtoincreaseinpricesofessentialcommodities.Thesehighlevelsofprices moved beyond the affordable level of commonpeople.ThisforcedthegovernmenttoincreasetheCRRtocontroltheflowofmoneyinthemarket.AtthesametimeFIIswere alsowithdrawing theirmoney.This situationledtosteepdecreaseinflowofmoneyinthemarket.ThegovernmentthenagainsteppedinbydecreasingCRR(inaphasedmanner),thusprovidingsupporttothemarket.

During this course of period not even a single IndianBank required any government financial aid, vis-à-viscompared many other banks in developed world, outofwhichsomecouldnotevenstandinthiscrisis.SuchsituationindicatedtotheinvestorsthathowstrongIndianeconomyis,whichultimatelyboosttheirconfidence.

2. FollowingtheSatyamfraud,SEBIhasdecidedtomakeitmandatoryforpromoters(includingpromotergroups)of companies tomake full disclosures of their pledgedshares(ifany).

The circular dated January 28, SEBI said that thesepromotershavetodisclosethedetailstocompanywithinseven days of such a transaction. Further, the market

regulatoradded thatcompanies shouldalsodiscloseallthe details pertaining to promoters share pledge, if attheendofthequarter,thetotalnumberofsuchpledgedshares exceeds 25,000 or 1% of the total shareholdingwhicheverislower.

FurtherSEBIalsodecidedthatstakessoldbythelenderswouldalso fallunder thisdisclosure,as thesalewouldresult in change in stake holding. Lenders are notnecessarilyinsidersbutiftheytradeoninsideinformationortips,theycomeunderthepurviewoflawagainstinsidertrading.

Beforetheserulings,itwasnotmandatorytodisclosethepledgingofsharesbypromotersanditthususedtoactasabackdoorexitrouteforpromoters.

Since this ruling came into effect, promoters of somecompanieslikeAsianPaints,GodrejConsumerProducts,MindTree, JSW Steel and so on have immediatelyprovideddetailsofthepledgedshares.

Thesemandatorydisclosureswillprovideinvestorswithdetails of any move by promoters and/or lenders andhenceincreasedtransparency.

3.ThemainsteptakenbythegovernmentwastotakeovertheSatyammanagement.Thenewboardconsistsofthefollowingwellrenowneddignitaries:

Mr.DeepakS.Pakreh,ChairmanofHDFC

Mr.KiranKarnik,formerPresidentofNASSCOM

Mr.C.Achuthan,DirectorattheNationalStockExchange,former Member of SEBI, and former Chairman ofSecuritiesAppellateTribunal.

Tarun Das, Chief mentor of leading industry lobbyConfederationofIndianIndustry(CII).

T.N. Manoharan, Former president of the Institute ofCharteredAccountants of India (ICAI), the governingbodyofaccountantsandauditorsinIndia.

S. Balakrishna Mainak, Nominee of India’s largestinsurer,thestate-runLifeInsuranceCorporationofIndia(LIC).

As per the decision of CorporateAffairs minister Mr.P.C.Gupta, all these new directorswill be given legal

Strategiesto RegainInvestorConfidence

Abhinav Kansal, Pranjul SrivastavaPGDM(2008-10)


immunity.This implies thatnoneof thestateorcentralgovernment agencies will exercise their regulatory,enforcement or such power and initiate any action-civil, criminal, punitive or coercive against the presentdirectors to ensure that the present Board of Directorsdischarge their functions without any apprehension ofbeingsubjectedtocivil,criminalorpunitiveaction.

4. SEBI in addition has also decided to ease the buyoutrule.

Underthecurrentrule,anypotentialinvestorwhohasastakeof15%ormoreinatargetcompany,hastomakeanopenoffertoothershareholderstobuyanadditional20%oftheshareholdingatnotlessthantheaveragesixmonthprice.CapitalmarketregulatorSEBIhasdecidedtoamendthetakeoverregulationstoarriveatafairopenofferpriceinspecialcases.Thenewregulationsaysthatthenewpricingwillbebasedontheaveragepriceofthelasttwoweeks.Iftheserulesofacquiringareeasedoutthen itwouldactasan incentive forseveralbidders. Ifmultiplebiddersemerge,itwouldensuretheinterestofinvestorsareprotectedtosomeextent.

These pro-active actions taken by the governmentadditionallyretainedinvestors’confidence.

Additionally some of the strategies which should beimplementedtoregainfinancialstabilityandhenceensureinvestorconfidenceareasfollows:

1. Independentdirectors shouldbeheldmoreaccountablefortheirjobsandnotmerelyactasspectators.

2.The institutionof independentdirectors is sought tobejustifiedonthegroundthatitbringstobearnon-partisanadviceonavarietyofissuesfacingacompany,whenthepromotersandmanagersareinclinedtobeenthusiasticinpushingthroughvariousproposals.

3.The independent directors must be provided withadequatedetailsonvariousaspectswhichmust includeallmacroeconomiccircumstancesofthecompanyaswellastechnicalandfinancialdata.

4.These details will help the directors to be qualified tomaketheirbestjudgments.

5.CorporateauditinIndiashouldbereformed.

One of the regulations being followed successfully inUK for the last23years, that the auditorhas toobtainindependentcertificatesorreportsdirectlyfromthebanktoauditvariousbusinesstransactionsoftheirrespectivecompanies.WecanalsoadoptthispracticeinIndia

Currently the auditors, audit thefirmsbasedon certainsamples selected by them randomly. If no errors arefoundinsuchsamplesthenthebalancesheetareacceptedcompletely based on these samples. The auditorsmustavoidthissamplingstrategyasthissamplingisjustadropintheoceanofinvoicesanddocumentsthatthecompanyproduceswhichdoesnotgivethecompletepicture.Theauditorsaskformorereceiptsonlywhentheyfindcertaindiscrepanciesintheinitialroundofchecks.

Toavoidthesesituations,theregulatorsaysthatauditingfirmsshouldacceptfewerauditassignmentandmusttrytoconductathoroughcheckasfaraspossible.

6.TheIndiangovernmentcanalsoconstituteaboardlikeaonethatwassetuptheUSgovernment(PublicCompaniesOversightBoard)postEnroncaseintendedtobeadevicetoreviewtheauditofvariouspubliccorporate.Themaingoalofthisboardis tostrengthentheeffectivenessandcoordinating the audit oversight efforts to all the USbasedcompanies.Itisintendedtopromoteconfidenceofthepublicinauditor’sfinancialstatementsofpublicfirmsthrougheffectiveuseofasupervisoryprocedure.

7.Another strategy which the government should take isto increasepublicspending in infrastructureso that thedemandforrawmaterialslikesteel,iron,cementmetalsetc.increases.Thisleadstoincreaseintheflowofmoneywhichultimatelyraisesinflowofcapitalinthecompany.Thisinflowwillmakethefirmfinancialstableandhencegenerateinvestors’confidence.

Lastly, investors should adopt a “ZERO TOLERANCEPOLICY”againstsociallyunacceptablecorporatebehaviorasalsosuggestedbyMr.SunilMittalinanevent.Moreoverinvestorsmustnotbeshortsighted,expectingquickreturnsbecause it often leads to investors’ paying very littleimportancetocorporategovernance.

Moreover,accordingtheIndianIncomeTaxsection10(38),the investor who holds the equity share for more then11monthsgets totalexemptionof taxonlongtermcapitalgains.

References1.EconomicTimes2.BusinessStandard3.TheHindustanTimes4.TheTimesOfIndia

“Following the Satyam fraud, SEBI has decided to make it mandatory for promoters (including

promoter groups) of companies to make full disclosures of their pledged shares (if any).”

Money Matters nStrategiestoRegainInvestorConfidencen 29

What makes for a thriving financial system–one that canmobilize capital for? Entrepreneurs smooth spending forconsumers andgovernments; provide saverswith a returnontheirfunds,anddoallofthisinaworldrifewithfraudandpredation?Sadly,noconsensushasasyetemergedaboutwhatthebestfinancialsystemis!Inthelastfewyears,withasoaringstockmarket,significantforeignportfolioinflowsincluding the largest private equity inflows inAsia, and arapidlydevelopingderivativesmarket,thefinancialsystemhasbeenwitnessinganExcitingeraoftransformation.ThebankingsectorhasseenmajorchangeswithDeregulationofinterestratesandtheemergenceofstrongdomesticprivateplayersaswellasforeignbanks.Thispaperprofilessomekey ideas how to designmarket and regulatory structurestoenhancetheirchancesofsuccess.Thispaperinvestigatesthetypesofrisksinthefinancialsystem,includingmeasuresthat would dramatically expand government control overbankingand investment in theUnitedStates, attributesofcurrentinternationalfinancialcrisiswhichincludesmassivefailure of regulatory and supervisory mechanism, failureofriskmanagementintheprivatefinancialinstitutionsandfinallybecauseoffailureofmarketdisciplinemechanism.

IntroductionEverydaythemainheadlineofallnewspapersisaboutourfallingsharemarkets,decreasingindustrialgrowthandtheoverallnegativemoodoftheeconomy.

Sowhat has caused thismajor economic upheaval in theworld?Whatisthecauseoffallingsharemarketstheworldoverandbankruptcyofmajorbanks?Inordertounderstandthepresentfinancialscenario,weneedtounderstandwhatglobalfinancialsystemis?

Theglobalfinancialsystem(GFS)isafinancialintegrationof all world economies consisting of institutions andregulations that act on the international level, as opposedtothosethatactonanationalorregionallevel.Theprocessoffinancial integration isaverychallengingandcomplexendeavour which results from the effective interplaybetween public and private action. The main players aretheglobalinstitutions,suchasInternationalMonetaryFundandBank for InternationalSettlements, national agencies,

centralbanksandfinanceministries,andprivateinstitutionsactingontheglobalscale,e.g.,banksandhedgefunds.TheGFSincludescross-bordercapitalflows,includingthenewrole of emerging markets, the globalization of financialinstitutions, and financial markets. Global cross borderflows are estimated to have reached around $9 trillion oralmost a fifth ofworldGDP.Globalization is introducingprofound changes in the way that financial systemsoperate.Households, financial institutions, policymakers,supranationalbodies,andinternationalfinancialinstitutionsliketheIMFeachhaveourownroletoplayinprotectingthepublicgoodoffinancialstability.

Inthelastfewyears,withasoaringstockmarket,significantforeign portfolio inflows including the largest privateequityinflowsinAsia,andarapidlydevelopingderivativesmarket,thefinancialsystemhasbeenwitnessinganeraoftransformation.

The global financial crisis, brewing for a while, reallystarted to show its effects in themiddle of 2007 and into2008.Around the world stock markets have fallen, largefinancial institutions have collapsed or been bought out,and governments in even thewealthiest nations have hadtocomeupwithrescuepackagestobailouttheirfinancialsystems.The few basic reasons for global financial crisiswere sub prime crisis resulted out of the regulatory andsupervisory failure in developed countries. The crisissurfacedduetoafailureofriskmanagementintheprivatefinancialinstitutionsandfinallybecauseoffailureofmarketdiscipline mechanism. The resulting crisis of liquidity,accumulation of bad assets, and shortage of capital andcollapse of confidence threaten to spill over into the realeconomyofmanydevelopingnations.

Haditremainedamatterbetweenthelendersandunreliableborrowers then probably itwould remain a local problemofAmerica.Butthefactisthatintheageofglobalization,no country can remains isolated from the fluctuations ofworldeconomy,theworldisnomoreDecoupled.Theheavylosses suffered by major International Banks affected allcountriesoftheworldasthesefinancialinstituteshavetheirinvestmentinterestinalmostallcountries.

Theglobalfinancialcrisisassessesandquantifiesthefinancial

BuildingsustainableGlobalFinancialSystem

Saravjot Kaur, SanjeedaPGDM(2008-10)


and business risk involved in lending or dealingwith ourclients.Tomanage financial risk, banks need to calculateboththeMarketRiskandCreditRisk.MarketRiskassessesthepotentialimpactofchangesinthemarketandevaluatesanymarketmovingagainstthefirmandaffectingthefirm’sfinancial position. Credit Risk assesses and quantifies thefinancial and business risk involved in lending or dealingwith our client’sHowever, these changes are notwithoutrisks and pitfalls. Liquidity risk is the risk that clearing,or settlement,paymentswillnotbemadewhendue,eventhoughoneormorecounterpartiesdohavesufficientassetsandnetworthultimatelytomakethem.Settlementriskistheriskthatapartywilldefaultonclearingobligationstooneormorecounterparties,thisriskmaycontainelementsofeithercreditriskorliquidityrisk,orboth.Theusageoftheterm“settlementrisk”variesconsiderably,andmayalsodependonthesituationbeinganalyzed

International Monetary Fund (IMF)It came into being towards the end of the SecondWorldWar, in July 1944, representatives of the United States,GreatBritain, France,Russia, and 40 other countriesmetat BrettonWoods, a resort inNewHampshire, to lay thefoundation for the post-war international financial order.Such a new system, they hoped, would prevent anotherworldwide economic cataclysm like theGreatDepressionthat had destabilizedEurope and theUnited States in the1930s and had contributed to the rise of Fascism and thewar.

The IMF would be aimed at stabilizing global financialmarketsandnationalcurrenciesbyprovidingtheresourcestoestablishsecuremonetarypolicyandexchangerateregimes,whiletheWorldBankwouldrebuildEuropebyfacilitatinginvestmentinreconstructionanddevelopment.

Role of IMFThe IMF is responsible for the creation andmaintenanceoftheinternationalmonetarysystem,thesystembywhichinternationalpaymentsamongcountriestakeplace.It thusstrives to provide a systematic mechanism for foreignexchange transactions in order to foster investment andpromotebalancedglobaleconomictrade.

To achieve these goals, the IMF focuses and advises onthemacroeconomic policies of a country,which affect itsexchange rate and its government’s budget, money and

creditmanagement.TheIMFwillalsoappraiseacountry’sfinancialsectoranditsregulatorypolicies,aswellasstructuralpolicieswithin themacroeconomythatrelate to the labormarketandemployment.Inaddition,asafund,itmayofferfinancialassistancetonationsinneedofcorrectingbalanceofpaymentsdiscrepancies.TheIMFisthusentrustedwithnurturingeconomicgrowthandmaintaininghighlevelsofemploymentwithincountries.

Article I of theArticles ofAgreement sets out the IMF’smainresponsibilities:

• promotinginternationalmonetarycooperation;

• facilitating the expansion and balanced growth ofinternationaltrade;

• promotingexchangestability;

• assistingintheestablishmentofamultilateralsystemofpayments;and

• makingitsresourcesavailabletomembersexperiencingbalanceofpaymentsdifficulties

The IMF works to promote global growth and economicstabilityandtherebypreventeconomiccrisis,byencouragingcountriestoadoptsoundeconomicpolicies.Intheeventthatmembercountriesdoexperiencecrises, theIMFresourcesmaybetappedtohelpfinancebalanceofpaymentsneeds.

Strategies to build Sustainable Global Financial SystemThe meeting of leaders representing the Group of 20economicpowersandothersuchconferencessuggestsfewstrategicmeasurestorebuildtheglobalfinancialsystemareasfollows:

1.Thelimit,sizeandscopeofthebanksshouldberestricted:The plan calls for vastly increased oversight of majorbanks,goingas far as to recommend theendofaneraofmegabankswhosesizemakestheirfailurepotentiallycatastrophictotheglobalfinancialsystem.Tolimittheirsize and scope, banks, the document states, should beprohibitedfrommanagingprivate-equityorhedgefunds.Anddepositsshouldnotbeconcentratedinthehandsoftoofewbanks,sothatanyfailurewon’thavesystematicimportance.

2.Oversightonmoneymarketmutualfund:Money-marketmutualfundsthatofferservicessimilartobanks,includingdollar-for-dollarwithdrawalatanytime,shouldbesubject

“IMF focuses and advises on the macroeconomic policies of a country, which affect its exchange rate and its government’s

budget, money and credit management.”

Money Matters nBuildingsustainableGlobalFinancialSystemn 31

to increasedgovernmentoversight,But thosebank-likemutualfundsthatwanttoavoidtighterregulationshouldsellrelativelysafecooperation,allfinancialinstrumentsandclearlystatetocustomersthatthevalueoftheirfundsmayormaynotremainstable.

3. InternationalCooperation:Thewholeworld economiesshouldcome together to facefinancial crisis aswell aswheneverycountryisinvolvedthenonly,itisglobal.Tobuildsustainableglobalfinancialsystemwehavetostandtogether.

4.Newgovernanceframeworktosupportafairglobalizationprovidingopportunitiesforall:Weneedtostarttheworldeconomy down a path to sustainable economic, socialand environmental development – with low carbon,employment intensive, poverty-reducing strategies.Thatwill requireanewbalancedcombinationof smartregulation and intelligent public policy, responsibleinnovationandcreativityofthemarket,inclusivesocietiesandafocusondecentworkasthekeytoadecentlife.

5.Normalizing the reward systemsoffinance sector:Thefoundationofmarketeconomiesistheethicthatgoodhardworkdeservesafairreward.Salariesandrewardstothefinancesectorhavebecomegrosslyinflatedandunrelatedtotheproductivityoftherealeconomy.Bringingrewardsystemsback into the rangeof normality is part of therebuildingofpublicconfidence in thefinancial system.Executive compensation at banks in general should belimited,andtheroleofbonusesinremunerationsystemsshould be changed so as to reward long-term financialsuccess and the implementation of environmental andsocial policies and programs.Banks perverse incentivestructures, like stock-options and short-term, volumeoriented bonuses, stimulated excessive risk taking andeffectively led to greed oriented decision-making atbanks.

6.Transparency,publicoversightshouldbeincreased:willhelptorebuildpublicconfidenceinthesystemandhelptoensurethatethicalvaluesarenotforgottenbutwealsoexpectleadersinbusinessandfollowamoralcompass.Allpeopleshouldhavefullandmeaningfulparticipationinnationalandinternationaleconomicdecision-making.Thepublicmustbeanequalstakeholderindeliberativeand final decision-making processes. Banks shouldbe completely transparent about their risk assessmentprocesses, decision-making procedures, clients, and

transactions. For example, banks should fully disclosetheirfinancingactivitiesintheextractiveindustriesandinfrastructuresectors.

7.Developing a new, stronger international institutionalarchitecturethatfostersabalancedandintegratedapproachto sustainable development can andmust emerge fromthepresentcrisis.Developingintegratedpoliciesamongrelevant international organizations to generate decentworkopportunitiesworldwideisoneofthefoundationsofasustainablerecoveryandafairglobalization.

8.Bank Supervision: Sustainability-oriented standardsshould be incorporated into all bank Supervision,including thegrantingof licenses,and theextensionofcentralbankprovidedCreditandinsurance.

9. Screening of customers: Usage of Know YourCustomer (KYC) guidelines are anti-money laundering(AML) mechanisms used by banks to screen potentialdepositors.

10.Listing Standards: Stock exchanges and securitiesregulatorsshouldrequirecorporatecompliance.

11.UN-led process: A major international conferenceconvenedbytheUNtoreviewtheinternationalfinancialand monetary architecture, its institutions and itsgovernance,butonlyifthemeetingfollowsaprocessthatis inclusiveandparticipatoryofallgovernmentsof theworld.

12.CurbingthepoweroftheWorldBank,theIMFandtheWTO:Muchof thecurrentdebateamonggovernmentsinvolves enhancing the roles of the Breton Woodsinstitutions.ButtheWTO,forexample,continuestopressforfurtherderegulationandprivatizationofthefinancialsector, principally through its General Agreement onTrade in Services.Not only should theWTO’s currentDohaRoundbesuspended,butalsoexistingWTOrulesconstraining regulation of financial services should berolledback.

13.Get banks out of politics: Decreasing the politicalinfluence of financial institutions (and all corporations)iscritical.Muchoftheinadequacyofcurrentregulationsandregulatorystructuresistheresultoffinancialmarkets’politicalinfluence.Inmanycountriesthroughcampaigncontributions, these deeper political reforms, includingcampaign finance reform, are an essential part of anysuccessfulregulatoryreform.

“We need to start the world economy down a path to sustainable economic, social and environmental

development – with low carbon, employment intensive, poverty-reducing strategies.”


14.Regulatealternative investors,suchashedgefundsandprivateequityfunds,whichhaveforsolongsuccessfullyevaded regulation, by introducing significant newtransparency,reporting,andfinancialrequirements.

15.Eliminatetaxhavens:Tighteningupaccountingstandardsandeliminatingoffshoretaxhavensiskeytoendingtheshadow banking system.20 Secrecy jurisdictions areestablishednotonly toallowcompanies,financiersandindividuals to evade taxes, but to avoid regulations aswell.Nojurisdictionshouldbeallowedtocontinuewithits tax haven status.As part of the effort to eliminatesuchhavens,banksshouldbeexplicitlyprohibitedfromestablishing or conducting transactions with entitiesbasedinthesejurisdictions.

16.Reorient finance from speculation to long-terminvestment:The rulesand institutionsofglobalfinanceshoulddiscouragespeculationandencourage long-terminvestment in the realeconomy ina form thatsupportslocal economic activity, sustainability, equity. Forexample; tax benefits could be given for longer-termequityinvestments.

17.Tax on international financial transactions: Thegovernments of the world’s major currencies shouldlevy a taxon certain international transactions so as todiscouragespeculativeandherdbehaviorininternationalcapitalflows.

ConclusionThepillarsofasuccessfulfinancialsystemhavecrumbledtheability toassessrisk,adequatecapital toabsorb lossesand trust among banks, investors and traders. Underlyingthese ills has been the consistent in underestimation oflosses.Thusbuildingasustainablefinancialmarketrequirespolitical and economic institutions, regulators, judicialsystems (both help prevent corrupt practices) and soundmacroeconomic policies In an era of globalization, onlyinternationalfinancialcooperationandfinancialsupervisioncan help establish a new and effective global financialsystem,whichhasbeenagreeduponbybothadvancedandemergingeconomies.

References• http//riskinstitute.ch/141810.htm• www.inf.org/external/pubs/ft/aa/index.htm• http//nbswk.hbs.edu/item/5745.html• www.investpedia.com/terms/f/foreigncurrencyeffects.

asp • http://www.huffingtonpost.com/2008/10/11/imf-global-

financial-syst_n_133885.html• http://economistsview.typepad.com/

economistsview/2009/01/reconstructing-a-failed-global-financial-system.html

• http://www.ecb.int/press/key/date/2009/html/sp090109.en.html

“The rules and institutions of global finance should discourage speculation

and encourage long-term investment in the real economy.”

Psychologists claim it takes seventeen positive statements to offset one negative statement!

I have no idea if it is true, but the logic holds true. It might take up to seventeen compliments

to offset the emotional damage of one harsh criticism !

— Former President A.P.J. Abdul Kalam

Money Matters nBuildingsustainableGlobalFinancialSystemn 33

“Who claims to be concerned about the small investor? Answer: Everyone. The truth: No one gives a damn.”

• The markets are far from buoyant. As for yourneighbourhoodsmallinvestor,heorsheisstayingasfarawayfromthecapitalmarketsaspossible.Why?

Having burnt his/her fingers more than once in recentyears, the individual investor belonging to themiddle-class, he/she is not exactly poverty-stricken, appearstohavebecomeextremelycynicaland, forallpracticalpurposes,losthis/herfaithinthestock-marketsingeneralandequityissuesinparticularasavenuestoparkhis/herhard-earnedsavings.

• Ongoing global financial crisis has severely dampenedinvestor’ssentimentsduringthepastfewmonthsandasaresultequityparticipationofsmallinvestorshasstarteddeclining.

• Thebigquestion,whatshouldsmallinvestorsdoduringsuchstockmarketcrashes,needsanswer?

MethodologyFollowingarethenamesofwebsitesandJournalfromwherewehavecollectedthedata:

www.investopedia.com

Thissiteisasourceofinvestingeducationandonlinestockandfinancialdictionarywithinvestinglinksandtips.

www.bostonapartments.com

Itisbasicallyanonlinemagazineinformingaboutfinance,loans,moneyandcredit.

ICFAI reader, February 2009

It is a reader published by the ICFAI university presscontaining latest and relevant articles related to finance,economy,accounting,varioussectors.

Major FindingsA look at the findings of a survey conducted by PrimeDatabaseheadedbyPrithviHaldeadriveshomeoneprecisepoint, namely, that the small investor in this country is

andhasbeenbeinggrosslyneglected,thankslargelytoanunfriendlypolicyregimeframedbyapatheticofficials.

Beforeproceedingfurther,thefirstquestionthatneedstobeansweredis:Whoexactlyisasmallinvestor?

“The watchdog of the capital markets, the Securities and Exchange Board of India (SEBI), defines a small investor as an individual who applies for up to 1,000 equity shares in a public issue.”

Haldeaisoftheviewthatthisdefinitionneedstobechangedsince it ignores the facevalueof thesharesoffered to thepublic.

The benchmark remains 1,000 shares even if the price ofeachshareisRs10,Rs100orRs1,000.Hearguesthatthelimitshouldbespecifiedintermsofaceilingamount,say,Rs25,000.

Bethatasitmay,overthelastfiveyears,variouscompanieshave raised an aggregate sum close to Rs 50,000 crore (Rs500billion)—tobeprecise,Rs49,993crore(Rs499.93billion)—throughpublicoffersofcapital.

Ofthetotalamount,ameagre5percentorRs2,503crore(Rs25.03billion)wasofferedtosmallinvestors.

Theproportionwasanevenlower3percentinthecaseofbook-buildinginitialpublicofferings.

Ofthetotalcapitalraised,only16percentorRs7,836crore(Rs78.36billion)wasofferedthroughpublicissues—10percentinthecaseofthebook-buildingIPOsand28percentinthecaseofthefixed-priceIPOs.

The‘desirable’proportion,accordingtoHaldea,shouldhavebeen25percent—thispercentageismandatoryinthecaseoffixed-priceIPOs.

Despitethegeneralpolicyprescriptionthathalftheamountofferedthroughapublicissueshouldbereservedforsmallinvestors,theresearchconductedbyPrimeDatabaserevealsthat this figure was a much-reduced 32 per cent in theaggregateandanevenlower20percentinthecaseofbook-buildingIPOs.

Haldea says it is ‘ironical’ that while a lot of concern isexpressed about the declining participation of the small

DeepeningTheEquityParticipationofSmallInvestor

Ashish Pandey, Meghna GuptaPGDM(2008-10)


investor in the capitalmarket, official policies are in factresponsibleforkeepinghimout.

First,theminimumpercentageofthecapitalissuedthathastobeofferedtothepublichasbeencomingdownsteadilyover theyearsfrom60percent to40percentand25percent. In certain cases, this level canbe further reduced toonly10percent.

According to Haldea, “The guidelines relating to book-building, reservations and allocations have increasinglyfavouredthelargeinvestor.”

Consequently,inthe10percentroutespecificallydesignedfor big blue-chip companies, the allocation for smallinvestorsnowworksouttoaniggardly2.5percentofthetotalissuedcapital.

This is on account of the fact that of the company’s totalcapital,10percentisofferedthroughtheIPO,ofwhichonly25percentisearmarkedforsmallinvestors.

Of greater concern, says Haldea, is the fact that asmoreandmorepublic issues areusing thebook-building route,thiswould result in a progressively smaller amountbeingallottedforsmallinvestors.

Over the past five years, while only 20 IPOs (or 10 percentofthetotalissues)usedthebook-buildingroute,theseissuesaccountedformorethanhalf(53percent)ofthetotalamountraised.

Alowpublicfloatmakesiteasierforpromoterstomanipulatepricesandalsoleadstolackofliquidity.

One view is that small investors are not just uninterestedbutalsolackresources.Boththesecontentionsareincorrect,saysHaldea.

AtatimewhenSEBIhasframedneweligibilitycriteriatoallow only ‘good’ companies to enter the capital market,Haldeafeelstheregulatormustturnitsattentiontothesmallinvestorandoffersanumberofsuggestionsinthisregard:

• The definition of a small investor should be changedand the minimum public offer proportion should beincreased.

• He feels the minimum public offer proportion shouldnot be less than one-fourth under all circumstances ifhousehold savings are to be channelled to the stockexchanges.

• Inthecaseofbook-buildingIPOs,Haldeaisoftheview

thattheallocationforsmallinvestorsshouldbeincreasedfrom25percentto45percentandinthecaseoffixed-priceIPOs,preferenceshouldbegiventosmallinvestors,hesuggests.

• The final and most important suggestion is that theUniongovernmentshouldmandate thatall instancesofdivestment of the government’s equity in public sectorundertakings—including the forthcoming or proposedpublic issues of Maruti Udyog, Bharat Petroleum andNationalAluminium—shouldbemadethroughthefixed-pricerouteandbeearmarkedforsmallinvestors.

Althoughvanishing companies and scamsters galore haveshatteredtheconfidenceofthesmallinvestor.Yetitisalsoclearthatitwouldbeunrealistictoexpectthestockmarketstoreviveorremainhealthywithouttheactiveparticipationofsmallinvestors.

Broader ImplicationsStock Market Crash

Indianeconomywhichwasfaringconsistentlyintherecentyears, had to facemany problems of late. Nobody at thebeginningofthe11thfiveyearplanwouldhavethoughtthattheinflationwouldreachthedouble-digitmarkandthestockmarket indexwouldevergobelow the9000mark.While2007 was a dream run for a small investors with equitymarkets generating 46%return, 2008 has been a horrorstory for them so far. Stockmarket is all about investorsconfidence.Therehavebeenanumberoffactorswhichhaveaffected their confidence adversely. These include weakEuropeanmarkets,highoilprices,riseininterestratesandfearsofinflation.

Performance of the Mutual Funds industry

Generally Mutual Funds have been considered as thefavorite investmentavenue formostof thesmall investor.TherehasbeenatremendousgrowthinIndianmutualfundsindustryasmostof the investorswhowerenotwilling toinvestinriskystockmarketspreferredtoinvestinMFs.Butsuddenly, during 2007-08, NAVs ofmost of the schemeshavegoneto52-weekslow.Thisisobviousasmutualfundsultimately invest instockmarketwhich iscurrentlygoingthroughatoughtime.Eventheseschemescannotguaranteepositivereturns.

“The guidelines relating to book-building, reservations and allocations have

increasingly favoured the large investor.”

Money Matters nDeepeningTheEquityParticipationofSmallInvestorn 35

What should small investors do?

Afterhavingalookatvariousavenuesofinvestment,weneedtoidentifythebestavenueforthesmallinvestorstoinvesttheirmoneyduringthetimeofmarketcrash.Generallyretailinvestorsfindtwopopularavenuesofinvestments,namely,equityandrealty,tobeatinflation.Butunfortunatelybothofthemaredoingwell.Thishasmadeitverydifficultforthesmallinvestorstodecidewheretoputtheirfunds.Ononehand,theIndianstockmarketisfallingeveryday,andontheotherhand,therealstatemarketisalsodull.

Onethingthatcanbesurelysaidisthatnoneoftheavenuesatthismomentcanberegardedasthebest.Sosmallinvestorsshouldnotputalltheirmoneyinonebasketandtheyshouldtrytospreaditinamaximumpossibleway.Manyexpertsopine that investing inSIPsofmutual fund,wherebyonecaninvestacertainamountofmoneyeverymonth,isagoodidea.TheSIPproductsaverage the investmentagainst thevagariesofthemarketconditionsandinflation.

Anothersignificantinvestmentavenuewhichhashistoricallybeen a good hedge against both falling stockmarket andrising inflation is gold and it still continues to give that“doublehedgeadvantage”eventoday.

Stockmarketsmighthavebottomedoutintherecentpast,buttheystillofferbestintermsofreturn.So,smallinvestors

whichhavealreadyinvestedsomemoneyinthestocksandhave suffered losses, need to have some patience. Theyneedtostayinvestedinstockmarketsorbuyfreshequitywithalongtermview,foratleastfortwoyears,togetgoodreturns.Accordingtosomeexperts,ifonehasgotRs.100asinvestiblefunds,heshouldallocate40%todebtinstrumentswithfixedmaturityplans,30%inequity,20%inrealestateand10%ingold.

Onethingwhichisveryimportantforsmallinvestorsistohave some investmentknowledge.Theyneed topick fewqualitystocksfromthemarketbycarefullystudyingthem.Onecannotrejectfixeddepositscompletely.Theystillhavetheirownsignificance.Smallinvestorscaninvestaportionoftheirfundsintheformoffixeddepositsduetotheireasyliquidityandguaranteedreturns.Thoughrealstatemarketisnotperformingexceptionallywell,onemayinvestinthemifthepricessoftenastheyarelikelytoyieldgoodreturnsinthefuture.

Key References• http://www.bostonapartments.com

• http://www.investopedia.com

• ICFAIreader,February2009.

“A significant investment avenue which has historically been a good hedge

against both falling stock market and rising inflation is gold.”

“T here are two primary choices in life: to accept conditions as they exist; or to accept the

responsibility for changing them.”

— Dennis Waitley

“Social organizations are flagrantly open systems in that the input of energies and the

conversion of output into further energetic input consists of transactions between the

organization and its environment.”

— Daniel Katz and Robert L . Kahn in The Social Psychology of Organizations (1966)


BahlSonsModelTownRohtak,operatesthreeretailoutlets:a toy cum utensils shop spread over two storeys with avarietyofvarietyofgiftitemsanddecorativeshowpieces;readymadegarmentsshopmainlysellingwesternoutfitsandsomeaccessories(purses,banglesetc.)forteenagegirls;andkids’clothingandbabycareproducts’shop.

Overthelastfiveyears,therehasbeenahugejumpinthesalesvolume,andtheoverallmarginshaveincreasedbutthemarginperproductsoldhasdecreasedowingtocompetitivepricing.TheaveragesalesrangefromRs.60000toRs.80000perdayfromallthethreeshopsascomparedtoearliersalesofRs.30000toRs.35000.

ChinesetoysarecheaperascomparedtoIndiancounterparts,sotheysellmoreandalsotheyaremoreattractiveandareavailable in greater variety. Indian toys are superior intermsofqualityyetpreferenceforthemislow.Healthcareproducts for infants are finding greater preference amongthe young parentswith increasing concern for health andmodernityoflife.Manyatimestheseproductsareusedforthepurposeofgifting.

Teenagersarenowmoreforthcomingwiththeirdemandstotheirparents.Alsotheexposuretonewerfadsandfashionsislarger.Nowtheyounggirlsmostlycomealone(withouttheirfamilies)toshopforclothes.Withthischangetheshopownershaveshiftedtheshopforgirls’garmentstoasmallershopandtheshopwhichgotvacantduetothischangehasbeengivenonrentwhichisgeneratingadditionalrevenue.

Cartoons have a very strong relation to sales of toys andgames.InearlieryearsGIJoe,andMickeyMousewerethecraze,thenashiftwasseeninfavourofPokémon,BabyladeandShinChan.OflatetheJatsofHaryanaaresellingtheirlandandtheyalsohaveatendencytospendhugelyoncarsandtheirchildren.

The recent wave of recession has left the business andprofits of Behl Sons unruffled. In fact the owners smilequestioningly when asked about their experience in theprevailingmarketsdownturns.

Yogesh SehgalPGDM(2008-10)

SmallTownRetailerWaryofRecession

WorldatWorknSmallTownRetailerWaryofRecessionn 37

PantaloonleadingtheretailbusinessPantaloon isheadquartered inMumbaiwith450storesacross thecountryemployingmore than18,000people. ItlaunchedthefirsthypermarketBigBazaarinIndiain2001.Pantaloonsoccupyanall-Indiaretailspaceof5millionsq.ft.whichisexpectedtoreach30millionby2010.ItisnotonlythelargestretailerinIndiawithaturnoverofoverRs.20billionbutispresentacrossmostretailsegments-Food&grocery(Bigbazaar,Foodbazaar),Homesolutions(Hometown,furniturebazaar,collection-i),consumerelectronics(e-zone),shoes(shoefactory),Books:music&gifts(Depot),Health&Beautycareservices(Star,SitaraandHealthvillageinthepipeline),e-tailing(Futurbazaar.com),entertainment(Bowlingco.)

Oneoftheirrecentinnovationsincludee-commerce’hybridformatof’small’shops,theareaforthesestoreswillbe150sq.ft.fittedwith40digitalscreens.Customerswillbeencouragedtobrowsethroughtheentirerangeofproductsondigitalscreen.Theywillbeabletoplacetheorder,thedeliveryofwhichwillbearrangedbytheshoptotheirhomeswithinafewhours.

(Source: www.chillibreeze.com)

ADelhibasedbusinessman,Mr.SanjayKhuranahasbeenintomanufacturing of hosiery undergarments andwooleninnerwears,forthelast20years.Hosieryisaknittedfabricandmodernhosieryitemsprovideatightfittingbyvirtueofthestretchyfabric,whichmakesitidealforbeingstitchedintoundergarments.

Manufacturingofvariousproducts“EvergreenKnitwear”isworkingontwobroaddimensions.HosieryundergarmentsaremanufacturedoncontractbasisatTirupurinTamilNadu,whereasmanufacturingofwinterinnersisdoneattheirownfactoryinBudhVihar,DelhiwhereMr.Khuranapersonallylooks after the work done by a small group of workers.Variousissuessuchasthedemandforhigherwages,bonus,vacationsetc.bythelaboraredealtwithmutualconsultation.ProductioniscarriedoutusingtraditionalmethodsandthereislittleinvestmentinR&D.However,costcanbereducedifbettertechnologyandefficientmethodsofproductionareused.

Finalmanufactured products fromTirupur are transferredtoDelhivia trucks.Sometimeswhenthe truckdriversareonstrikethentransportationisdonethroughtrainsbutthisincreases the cost of production. Mr. Khurana has beentradingwiththesamerawmaterialsuppliersandusingsamedistributionchannelforthelast15years.Productsaresold

toretailersinGandhinagar,Delhiatapricewhichincludesafixedprofitmarginoverthecostofproduction.Thisisinturnsoldtofinalcustomersatapricewhichfurtherincludestheretailer’smargins.LastyearinthemonthofDecember,cloth(rawmaterial)pricesdecreasedwhichfurtherreducedtheproductioncostandincreasedtheirrevenues.

Thebusinessisseasonalinnatureandduringsummerstheydeal in hosiery undergarments and in winters in wooleninnersandthermocots.Alsothedemandfortheseproductsvarieswiththedurationoftheseasons.Ifwintersareshorterthan expected then huge inventory of unsold inners pilesupwhichisdifficulttomaintainandsellwhereasifwinterslast long then the imbalance between increased demandand less supply results in an increase in the priceswhichbring in higher revenues.When summer season prolongsmorethanusualthentheyloseonincreaseddemandduetolowmanufacturingcapacityandseasonalavaibilityofrawmaterial (thread).Also the inconsistent rainfalls during ayearaffecttheavailabilityofthreadwhichinturnaffectsthesupplyofclothusedinmanufacturinggarments.Realizationoftheentiredemandfortheirproductsinthemarketinmostfruitfulmanner ispossibleonly if forecasting thedemandfor forthcoming season is reasonably accuratewhichwillgivethemanedgeovertheotherplayersintheindustry.

Akanksha SawantPGDM(2008-10)

EvergreenKnitwear

“If an institution wants to be adaptive, it has to let go of some control and trust that people

will work on the right things in the right way.”

— Robert B. ShapiroCEO of chemical company Monsanto in HBR, Jan-Feb 1997


Indian service sector has grown tremendously in the lastfewyears.Todayithasbeengloballyrecognizedforitshighgrowthanddevelopment.The fact that in the last 5yearsthissectorhasbeengrowingatanannualrateofabout28% speaks volumes of its success.At themoment servicesectorcontributesnearly55%ofIndia’sGDP.TheservicesectoralsocontributesheavilytoIndia’sforeignexchange.By2012,itisexpectedthatserviceexportsisalsogoingtobearound6%by2012,iftheannualgrowthrateof28%ismaintained.

TodayIndiahasawiderangeofprofessionalsandversatileexpertiseinthefieldofHealthCare,Education,Engineering,Information technology, Banking, Finance, Tourism, andManagement. Phenomenal growth has been recorded inInformationTechnologyandBusinessProcessingoutsourcing(BPO).AtthesametimesomeoftheotherleadingservicesectorsofIndiaarethatofcommunityservices,HotelsandRestaurants,Telecommunicationsetc.

TravelandtourismisamajorindustryinIndiaandisatthetop of the league of invisible earners of foreign currency.Components,e.g.hotelrooms,meals,coachorairlineseats,carandbusrentalsetcareboughtandputtogetherbyatouroperatortoproduceholidays.Thesearesoldtothepublicbyretailtravelagents,withrepresentativesofthetouroperatorprovidingtheaftersalesservicetotheconsumer.

Atravelagencymayeitherbeoneofachainofretailoutletsor a single operation. Some agencies limit their activitiesto arranging travel and/or holidays to a specific area, butmostcaterforaverymuchwiderdemandandfulfilallthefunctions associated with acting as intermediary betweenthe providers of holidays, transport, accommodation etc.,andtheclient.

Satyam ShivamTours Travels, located at District Centre,JanakPuri,Delhi,cameintoexistenceon13thApril1993withaworkingcapitalofRs2.5lakhsandafleetof5carstobeusedforthebusinesspurpose.Thebusinessisofairandrailticketbookings,carandbusrentals,hotelbookings,holidaypackagesanddealinginforex.Withastrongbeliefin God and determination to carry on the business withhonestyforalongperiodoftime,MrVKAnand,theowner

of the business hasmanaged not only to survive but alsocreateamarkknownforreliability,despitestiffcompetitioninthemarketplace.

Thetravelagencyisconnectedwithanetworkofothertravelagentsinthemarkettoprovidethecustomerswithhighclasstimelyservicessothatalongtermrelationiscreatedbetweenthecustomerandtheorganisation.Customer’ssatisfactionisthemainpriorityintheirbusinessbesidesearningprofits.

Inthelastfewyears,informationtechnologyhasadvancedsomuchthatforsomebodyithasprovidedaplatformtogrowwhile for someone it has been a cause for their downfall.The advancementof computer, specifically internetmediahas made our life more comfortable. One click and youget your air and rail ticket booked. Everything has beencomputerisedandelectronicallydonethatyouneednotgotoanytravelagenttogetyourticketsbooked.Youcandoityourselfsittingathomeandtomakeitamoreeasyjob,therearewebsitesontheinternetlikemakemytrip.comwhichnotonlybookyourticketsbutalsoofferyouthebestdealsandprices.This has adversely affected the business of all thetravelagentsatlarge.Notonlytheirsalesandprofitshavegonedownbutsomeofthemareforcedtoshutdowntheirbusinessastheirworkisnowbeingdonebycomputers.

AnotherchallengeisthecomingupofRadioTaxiandJustDialscabwhichhavefurtherworsenedthemarketpositionforthetravelagentsasthebusinessofthecarrentalshavealsobeenaffected.StillSatyamShivamToursTravelshassurvivedthoughworkingonlowprofitmargins.

Todosoithastriedtominimizeitscostsonadvertisements,electricity,deliverycostsandotheravoidablemiscellaneousexpenses.Toattractmorecustomersithasintroducedmanyexciting holiday packages offering best deals and prices.Thishasshownagoodresponsefrompeople.

Introduction and implementation of service tax by thegovernmentanditsfurtherupwardsrevisionisalsoaffectingthebusinessasitsaburdenonthefirm.Itislegallyimposedonthepersonprovidingservicestopaytheservicetaxevenifthecustomersdonotpayforit.

The economicmeltdownhas affectedmanybusinesses. Ithas lead to the closureofmanycompanies and leftmany

Neha AnandPGDM(2008-10)

TurbulenttimesforSatyamShivamToursTravels

WorldatWorknTurbulenttimesforSatyamShivamToursTravelsn 39

people unemployed. The entire tourism industry too hasbeen adversely affected by recession.Many airlines havebeen taken over by the other strong players or have evenstoppedtheiroperations.RecentlyaprominentcasewasoftheJetAirwaysandKingfisherAirlineswhowereunabletorecover theircostsdue to lowpercentageofpeopleflyingand the high cost of aviation fuel. So in order to attractpassengers,alltheairlineshaveavoidedthecommissiontothetravelagentsandhavestartedpassingonthiscommissiontothecustomersdirectlyintheformofreducedticketprices.

Thusthealreadylowprofitmargingiventothetravelagentshasbeenbroughtdowntonil.

Onenquiringtheownerabouthisnextmoveinordertofightwith this tough time, he said that he is hoping aswell aswaitingforthemarkettocomebacktoitsnormalposition.Hehadexpectedthatthebudgetthisyearwouldbringasighofrelieftothebusinessbutthereductionofservicetaxby2%seemstobeaminoroneasstillthecustomersarereluctanttospendtheirearningsonenjoymentandtravelling.Sotheoverallpositionofthebusinessistightasofnow.

“Travel and tourism is a major industry in India and is at the top of the league of

invisible earners of foreign currency.”

TheRealTestOnedayaknownpersonapproachedChanakyaandenthusiasticallystartedsaying,“Doyouknow,justawhileago,Iheardfewthingsaboutyourfriend?”

Chanakyawasfamousforhiswisdom,knowledgeandgoodbehavior.Hesaidtohisknownperson,“BeforeIlistentowhatyouhavetosay,Iwouldliketotestitthroughmythreesteptesting.”

“Whatisthisthreesteptest?”,thepersonsaid.

Chanakyamadehimunderstand,“Beforeyoutellmeaboutwhatmyfriendhassaid,letustestit.Icallthistesting–athreesteptest.Thefirsttestisoftruth-ness.Isitsurethatwhateveryouaregoingtosayisatruth?”

“No”,thepersondais,“Ihavehearditfromsomewhere.”

“Okay”,Chankayaanalyzed.“Ifyoudon’tknowwhetherthisistruthornot,wewilldoanothertest.Thesecondtestisforgoodness.Areyougoingtotellmesomegoodthingaboutmyfriend?”

“No,it’soppositetoit…..”

“Then”,Chanakyaaskedfurther.“Whateveryouaregoingtosay,isnotthetruth,isnotpositiveaboutmyfriendthenletsdothethirdtest.Thethirdtestisofusefulness.Whateveryouaregoingtotellme,isthatusefultome?”

“No,it’snotlikethat.”Chankyathensaidthelastthing.“Whateveryouaresupposetotellme,itisnottrue,itsnotpositiveanditsnotusefulalso,thenwhyyouwanttotellme?”

Morale: Any information must be checked on these three parameters- truthness, goodness and usefulness.


ForthefirsttimeinUShistoryacommercialplanecrashedinariverwithnofatalities,afteritstwoenginesweredisabledallegedlyafteraflockofgeesehittheplane.

Narrow EscapeUS Airways Flight 1549 took off from New York’s LaGuardiaAirportandbeganclimbingovertheEastRiver.150passengers,includingamotherwithababy,hadbeensettlinginto their regularflight toCharlotte,NorthCarolina.Thencame every traveler’s worst nightmare - somewhere overtheBronxat3200 ft theplane jerked.Less thanaminuteaftertheAirbusA320tookoff,CaptSullenbergerreportedadoublebirdstrikeandaskedtoreturntotheground.Aflightattendantasked for afireextinguisher, saying therewasafireontheboard.Controllersaskedpilottolandatasmallairport,TeterboroinNewJersey.An“eeriecalm”definedthecommunicationsofairtrafficcontrollerswiththecockpitastheiroptionsdwindledandthepilotdecidedtoditchintotheHudsonRiverhavingair temperatureof -7.7’Candwatertemperatureof1.6’C.

Suddenly people heard a loud bang. Both engines cut,oneof themapparentlyonfireandthepilot issueda terseinstructionforeveryonetobrace.Theplanewasnowglidingominouslyoveroneofthenation’sheavilypopulatedareas.Somesmelledsmoke,tangyscentofjetfuelandwonderedwheretheplanewasheading.OncetheplanebeganglidingtoEarth,theloudestsoundwasofpeoplepraying.TheplaneploughedintotheHudsonRiver,justoffManhattan’s42ndStreet.

Planedidn’tsinkinsteaditfloated,twistinganddriftingsouthinstrongcurrents.Afterthehit,passengersjoltedfrontwardandsideways.Peoplewerebleedingalloveras the jethitfreezingwaterveryhard.Theystartedrunninguptheaisle,crawledacrossthetopoftheseatsandclamberedout.Waterwas seeping in from exits that would open only a crack.Frigid riverwaterwas swirling in and seat cushionswerefloatingbetweenthepassengers.Passengersallwearingthelifevestswalkedthroughthewatertowardtheexits.

Passengersintheemergencyrowsopenedthedoorsalmostimmediately. They exited the plane from doors near the

cockpit on both sides of the plane, aswell as emergencyexitsoverthewings,thefrigidwaterslappingaroundtheirfeet.Everyonemadesurethatwomenandchildrengotontoaraft.Asthecabintookonwater,Sullenbergerclimbedoutof the jetonlyafter thefourothercrewmembersand150passengersmadetheirorderlyexit.Hecheckedthroughtheincreasinglywaterloggedaircrafttomakesurethateveryonewas safe.Hewalked theplane twiceafter everybodyelsewasoff.Whenhereachedaraft,someoneonaferrytossedhimaknife,andhecutawaythetethertothejet.

Brittany Catanzaro, captain of a commuter ferry wasshockedtoseeaUSAirwaysjetbobbingonthetidebutsheknewwhathadtobedoneastheyaretrainedtwiceamonthforman-overboard situations.Theyapproachedcautiouslyto avoid swamping the jet and sending the frightenedpassengersstandingonitswingintothefreezingwater.

Within minutes of the crash, several US Coast Guardvessels, ferry boats (that ordinarily take commuters andtouristsaroundNewYorkharbor),water taxis thatply theHudsonRiver surrounded thecrippledplane to rescue thepassengers,whilecrewthrewlifejacketsintothewater,andrushedsurvivorstoshorefortreatment.

Onebyone,thepassengerswerepluckedtosafetyfromtherafts,HoodandSullenbergerthelastonesleft.Hehadbeenthelastofftheplane,andhewouldbethelastofftheraft.Thefastactionsofthecrewscombinedwithheroiceffortsofemergencyrespondersproducedanamazingresulti.e.all155peopleontheboardwerepulledtosafety.

Minutes after the pilot guided the jet into the water;firefighters and emergencymedical crews boarded ferriesandheadedtotheplane.ThefiredepartmentsofNewYorkweretherewithinfiveminutesofemergencycall.Attheend,somewere smiling and happy to be alivewhereas otherswerealittlestunned.Tofewobserversitremindedof9/11whereassomethoughtthatitisaterroristattack.

Halfofthepeopleonboardwereevaluatedforhypothermia,bruisesandotherminorinjurieswhereasonevictimsufferedtwobrokenlegs.TheinvestigationintowhyaUSAirwaysAirbuscrashedintotheHudsonhasbeenhamperedbythelossofbothenginesintheriverandtheinabilitytoreachthe

CrisisManagementIsNotToCry,CrisisManagementIsToTry

Akanksha Sawant, Nidhi Gupta, Raman Khattar, Ipshita Chakrovarty, Manpreet Kaur, Karan Kapoor

PGDM(2008-10)

WorldatWorknCrisisManagementIsNotToCry,CrisisManagementIsToTryn 41

plane’sblackbox.

NewYorkMayorMichaelBloomberghandedoutmedalsandcertificates to thosewhoworked to rescue155passengersand crew of the USAirways plane that crashed into thefrigidwatersoftheHudsonRiver.Aviationexpertssaysuchamaneuveristricky.Anangleofdescentthatistoosteepcouldbreakoffthewingsandsendtheaircrafttothebottom.Therefore, landing a commercial jet onwaterwithout theplanebreakingapartwasextraordinary.

Everyone, from President George W Bush to astonishedonlookers,praisedthepilot’sskillinmanagingthatlanding,whohad spentpracticallyhiswhole lifepreparing for thefive-minutecruciblethatwasUSAirwaysFlight1549.Hehas over 40 years of flying experience.He got his pilot’slicense at 14, was named best aviator in his class at theAir Force Academy, flew fighter jets in the Air Force,investigated air disasters,mastered glider flying and evenstudied thepsychologyofhowcockpit crewsbehave in acrisis.

Sullenbergergrewup inDenison,Texasandserved in theAirForcefrom1973to1980.HeflewF-4PhantomIIfighterplanesandwasaflightleaderinEuropeandthePacificandledwar-gameexercisesoverNevada.Hebecameacommercialpilotin1980foranairlinelaterboughtbyUSAirways.Twoyearsago,SullenbergerstartedaCaliforniaconsultingfirm,SafetyReliabilityMethods. It advertises itself as offeringcompanies ways to apply the latest safety advances from“theultra-safeworldofcommercialaviation.”Inthecockpitwith Sullenberger on that daywas a 49-year-old co-pilot,JeffreySkileswhoselifestoryboresomeofthesamemarks:Skileshadalsobeenflyingsinceage15,andhadbeenwithUSAirwaysalmost26years.

WhentheultimatetestcameonadescentovertheHudsonRiver,Sullenbergerspokeintotheintercomonlyonceandgaveperhapsthemostterrifyinginstructionapilotcangive,“Brace for impact,”with remarkablecalm.Hesaid it inacalm,cool,controlledvoice.Itwasatestamenttoleadership.Had he let any tension leak into his voice, itwould havebeenmagnifiedinthepassengers.

“Sullenberger spoke into the intercom only once and gave perhaps the most terrifying

instruction a pilot can give, ‘Brace for impact’, with remarkable calm.”

India’s11largestM&AdealsTheproposedmergerbetweenBhartiAirtelandSouthAfrica’sMTNwouldbeIndia’sbiggest-everM&Adeal.ThepotentialvalueoftheBhartiAirtel-MTNdealwouldamountto$23billion.

1. TataSteel-Corus:$12.2billion

2. Vodafone-HutchisonEssar:$11.1billion

3. Hindalco-Novelis:$6billion

4. Ranbaxy-DaiichiSankyo:$4.5billion

5. ONGC-ImperialEnergy:$2.8billion

6. NTTDoCoMo-TataTele:$2.7billion

7. HDFCBank-CenturionBankofPunjab:$2.4billion

8. TataMotors-JaguarLandRover:$2.3billion

9. Sterlite-Asarco:$1.8billion

10. Suzlon-RePower:$1.7billion

11. RIL-RPLmerger:$1.68billion

Source: http://business.rediff.com


Any business organization during its lifetime may faceproblemswhetheritbepolitical,social,legalorinternalandmostofthetimeschangingitsownstrategiesturnsouttobethebestwaytofightthoseproblems.M/sUrvashiEquipment&Accessories is located inMaliPara, Jaisalmer (Rajasthan) and is owned&managed byRishiAgarwal.EstablishedinJaisalmerinJune2002,ithasnowbecomeakeyplayerinthefieldofCommunicationsinthisregion.Theactualworkofthefirminvolvestradingincommunicationitems requiredbyBorderSecurityForce (B.S.F),MilitaryEngineer Services (M.E.S), and Air Force (LogisticsBranch). The business organization trades in variouscommoditieswhichitpurchasesfromDelhi,Jaipur,JodhpurandJaisalmerandthensuppliesaccordingtothedemandsofpartiesinJaisalmer,Barmer,Bikaner(Rajasthan).Procurementofgoodsandsupplyingitfurtherareaffectedby direct taxation, increase & decrease in freight prices,postalpricesetc.butsomeofthesecanbeforeseen.External factors for instance a increaseor decrease in theImport Duties, Excise Duty, Special Taxes, Central SalesTax,FreightTaxesLikeOctroi,increasesanddecreasestheorganization’sinputpricesandhenceeffecttheoutputtoo.

Reductionintheexcisedutyimplementedfewmonthsagohasloweredtheinputpricesandthedecreaseinmetalpriceshasalsoaffectedthepurchasingcostofthefirmandsothegoodscanbeprovidedatacheaperpricetotheendusers.AbolitionofOctroidutyfromthestateaffectedthefreightcostmakingitcheaperthanbefore,alsotheimplementationofprovidingForm47duringInter-stategoodstransportationhas affected the delivery period of the firm since it alsobringsgoodsfromDelhi.Located in a remote area like Jaisalmer there is limitedsupportfromoutsideincomparisontoanotherplayerfromJodhpur,JaipurorDelhi.Butbeingalocaloperatortheunitalsoenjoysbetterpublicrelationandhenceencashmentofthishelpsachievemorethantheothers.Businesscyclesalsoaffecttheworkingoftheorganizationlikeduringgoodtimesbetter credit facility from the sellers and a good paymentstatusfromthebuyersbutduringrecessionlargerinvestmentsbringlessoutput.Suddenclimaticchangesandverytoughweather conditions also affect the business - the flood inJaisalmer few years back killed out all the transportationlinksof Jaisalmer fromnearest cities.Religiousactivities,communal fights & communal activities also effect theorganization’s working and the unit has to work keepingitselfneutraltoallcommunities.

Shivani ChaudharyPGDM(2008-10)

EnvironmentalImpactonaTrader

WorldatWorknEnvironmentalImpactonaTradern 43

TheBlueEarthDream:Eco-livingwithSAMSUNGmobileSamsung’svisionforenvironmentalsustainabilityisreinforcedbyitscommitmenttoprotecttheenvironmentthroughthedesignof eco-friendlyproduct,BlueEarthCellphone.Thephone is equippedwitha solarpanelon thebackthat’llchargeitupanytimeyou’reoutinthesunshine.Thephoneisatouch-screenphonewithoutphysicalbuttons.BlueEarthismadefromrecycledplasticcalledPCM,whichisextractedfromwaterbottles,helpingtoreducefuelconsumptionandcarbonemissionsinthemanufacturingprocess.Thedevice,includingcharger,isfreefromharmfulsubstancessuchasBrominatedFlameRetardants,BerylliumandPhthalate.ThepackagingforBlueEarthisdesignedtobebothsmallandlight,madefromrecycledpaper,andcomeswitha5starenergyefficientchargerwhichusesstandbypowerlowerthan0.03W.

TheBlueEarthDream conveys hope and sets goals for sustainable growth and life. In increasing environmentalawareness,SamsungisdevelopingwaystoreduceCO2emissionsandtosaveenergyateverystageoftheproductlifecycle,asaneffectiveresponsetoclimatechange.

(Learn more about ‘The Blue Earth Dream’ and other eco-friendly initiatives at www.samsungmwc.com)

In the lastfiveyears,wehaveseen tremendousgrowth inmany industries, glass Industry has also grown by over10%duringthesametime.Itisaveryflexibleindustryanddependsheavilyuponthegrowthofrealtysector, lifestyleandstatusofcustomer.

ThefirstglassplantinIndiawassetupinAugust1908byfreedomfighterLokManyaBalgangadharTilakatTelegaon(Maharashtra) near Pune. The plant was financed bycollectingonepaiseperfamilypermonthfromthemassesand was named as ‘paisa fund glass works’. Now Glassindustry contributes around 3 billion rupees a year to theeconomy.

StartingfromscratchMukeshGlassHousewasestablishedin 1993 dealing only in plain glass. Initially low demandofglass,lowcontactsandwastageswerebasicproblemoffirm.With around 16 employees under its arm and goodcontactsalloverDelhitheyaregraduallyheadingtowardstheirgoal.

Glass is a complex product and needs good analytical,calculative and managerial workforce is a major issue.Understandingtheconsumerbehaviorwithchangingdemandand delivering variety is also challenging but customizedsupervisionwithpersonalinvolvementyieldsgoodresults.WiththestrategyofdivisionofworkMukeshMittallooksatsalesandcustomerrelationshipandcoownerandbrotherManishMittallooksatpurchasesandemployeerelationshipforbetterunderstandingandgoodmanagement.

WithincreasednumberofglassfirmsinDelhi(aroundthreetimes)within7to8yearshasnotaffectedfirmmuchbecause

ofincreasingdemandofglassesandincreasingvariety.Theglasses with enormous variety and services like colourfusion,be-riling,etching,V-grooming,OG.Thedemandforstained glass, coloured glass, toughened glass, bend glasshasincreasedmanyfoldsinrecentyears.

Mukesh Glass focuses on delivering best services atcompetitiveprices,ontimewiththeobjectiveofcustomersatisfaction. The competition in glass is mainly focusedon the kind of services and variety which is provided tocustomers.Interiorofhouseisahighinvolvementproduct.TheassociationwithGujaratGlassandFlexi-loan facilitybyStandardCharteredBankhas solvedproblemof fundsandboostedfirm’scompetitiveness.Eventhefirmalsohasinkling towards Chinese glasses because of its demand.Price fluctuations, high breakage risk andmanaging fundaremajorissues.

Likeotherindustries,glassindustryhasalsobeenaffectedbecauseofeconomicslowdown.60%oftheworkhasbeenaffected because of its dependency on real estate. In thisturbulent time, Mukesh Glass is looking more on retailcustomersandengagingemployeesincreatingandsearchingnewerdesignsandpatternsofglasses.TheyareplanningtobuildanewshowroominRohiniandgooddisplaywillhelpthefirmtoincreasesalesandunderstanddemandforfurtherinnovation.

Aphorisms linking cries and opportunities abound, butexamplesofentitiesthatfindopportunitiesincrisessituationsarerare.OneofthemisMukeshGlassHouse.

Deepak Kr. MittalPGDM(2008-10)

FindingOpportunitiesinCrisis


Become a possibilitarian. No mater how dark things seem to be or actually are, raise

your sights and see possibilities-always see them for they’re always there.

— Norman Vincent Peale

Intoday’sconsumermarketwhenthereisnomonopoly,withlargenumberofproductsfloodingthemarket,itisdifficultfor the consumer to decide on the brand that he wishesto acquire. In order to promote sales of their product, themanufacturers have the interesting option to aggressivelyand continuously influence the minds of consumers byrepeatedlyadvertisingthroughvariousmediumslikeprint,radio,electronics,televisionetc.

However,theconsumerisindilemmaaseachmanufacturerclaimshisproducttobethebestavailable.Theadvertisingagencies are guided to highlight only some facets of itsefficiency,whichattracttheeyeoftheconsumerwhereasalotofinformationishidden.Ethicsareinvariablyviolatedasmostly theproducts are advertisedby commoditizationof young females although the productmayhave nothingtodowiththesame.Advertisementsareaccusedoftakingadvantage of children, of manipulating our behaviour,of using sex to sell, and of generally contributing to thedownfallofoursocialsystem.

Thenthereisnegativeadvertisingtoo.Incasetherearetwoproducts that have equalmarket share, thenone companytries topromote its salesbyshowing theothercompany’sproductinpoorlightwhichisnotdirectbuttheintentionofthe ad-agency is conveyed through certain activities.Thisball game continues to be played by large multinationalcompaniestoensureamarkethold.Evenamarginalswinginthesalesresultsinmillionsofrupees.

There are some examples of advertisements,whichmadenews for their questionable taste and priority levels.Howevertherearemanylessnoticeablepopularads,whichpoint to thevalidityof the topicunderdiscussion.E.g. inFairandLovelyad,agirlisshownunsuccessfulinlife.Butafterapplyingthiscreamshebecomesacompetentgirlwithtriumph at her feet.AmulMacho advertisement shows awomanholdingthegarmentandmakingredolentgestures.Isn’tthatridiculous?OfcoursewhocanforgettheinfamousMadhu Sapre and fellow supermodel Milind Soman inextremelysteamyprintadforTuffShoes!Theaddidn’tgodownwellwiththereligiousgroups.Isthistheonlywaytoselltoughshoes?

Governmentshaveanegativeattitudetowardsadvertising;

theyfeelthatconsumersareataseveredisadvantagetotheskills of advertising experts and, therefore, they deservespecialprotection.Consumerprotectionisoneofthemajorrationalesusedforregulatingadvertisingaroundtheworld.

Someregulationshavebeenformedtocontrolsuchimmoraladvertisements likeMTVEuropecannotshowbeeradsinNorway.Brazilrequiresthatalladvertisementshownintheircountrymust have some local content.Australia prohibitsall foreign commercials, whereas direct comparisonadvertisementsarenotallowedinAustria.Butstilltherearenofixeduniversallawsrelatingtotheadvertisement.

Inordertoenforceanethicalregulatingcode,theAdvertisingStandardsCouncil of Indiawas set up.ASCI follows thefollowingbasicguidelinesinordertoachievetheacceptanceoffairadvertisingpracticesintheinterestoftheconsumer:

• Toensurethetruthfulnessandhonestyofrepresentationsand claims made by advertisements and to safe guardagainstmisleadingadvertising;

• Toensurethatadvertisementarenotoffensivetogenerallyacceptedstandardsofpublicdecency;

• Tosafeguardagainstindiscriminateuseofadvertisingforpromotionofproductswhichareregardedashazardoustosocietyortoindividualstoadegreeorofatypewhichisunacceptabletosocietyatlarge;andconsumer-oriented,advertisement will have to be truthful and ethical. Itshould notmislead the consumer. If it so happens, thecredibilityislost.

• To ensure that advertisements observe fairness incompetitionso that theconsumersneed tobe informedonchoicesinthemarketplacesandcanonsofgenerallyaccepted competitive behaviour in business are bothserved.

Few Complaints filed with ASCI

• NovartisIndiaclaimedthattheirdisposablecontactlensesensurethereisnoproteinbuild-up.Thisclaimwasfoundtobetotallyfalse.Thetruthisthatbuildupisanaturalbiological phenomenonwith all contact lenses.The adwasdiscontinued.

Varuna MadaanPGDM(2008-10)

EthicsInTheAd-MadWorld

Market(King)!nEthicsInTheAd-MadWorldn 45

• HUL’sClinicAllClearDandruffshampooclaimedthatithadZPTO,thespecialingredientinClinicAllClearthatstopsdandruff.ThisclaimwasfoundtobeuntruesinceZPTOisamicrobiocide,andinreality,dandruffisknowntobecausedbyseveralotherfactors,besides,microbes.HUL’s multi-crore research wing ‘clearly overlooked’thisaspect.Theadvertisementhasbeenwithdrawn.

Butdoes the formationof lawmeans thatbeyond this thecompaniescandoanythingtheylike.Certainlynot!

It has to be understood that the law is confined by limitations on government authority, primarily through the constitution, while ethics bear no such limitations. Ethics, therefore, should be subject to a higher standard of expectations than law.

Inpubliclifethelinebetweenacceptableandunacceptableisthin.Thenatureoftheadbusinessissuchthattheethicsautomatically takeabackseat.Theadagency in theusualbusiness model gets a flat commission on the total adspendingofthecompany.

It can then be precisely said that it is a crowded marketplacewithumpteenbrandsandasmoreavenuesopenup,itisdecreasingtimeandmindsharethattheaudiencedevoteto advertising. So, the advertising business is relying onbizarre,desperatetacticstoensurebrandrecallandofcourseethicsbedamned!!

IndiatoshapeEmergingWorldOrderMyconclusionisverysimple-Indiashouldhavetherightandtheabilitytoshapetheemergingworldorder,beitinenvironmentalstewardship,whetheritisinenergypandemics,whetheritishumanrights,whetheritisinworldtrade,whetheritisinagriculturalpolicyorIP,Ibelievethereisawholehostofissuesthattheworldisgrapplingwithinthedevelopedandthedevelopingworld,andIndiashouldhaveitsrightfulplace,notunilaterallybutcollectivelywithafewothercountries,tosetthestageforhowtheworldcanbeforthenext50to60years.

ButinordertodothatIthinkweneedthreepillars.TwoofthemgetnoticedanddebatedanddiscussedinIndia,butthethirddoesnot.Firstiseconomicstrength.IfIndiaisnoteconomicallystrong,itwillnothaveavoice.Second,wemust have technological vitality, not just innovation in a traditional sense, not just science, but a capacity tocontributefundamentallynewideasnotonlyforIndia’sdevelopmentbutalsofortheworld’sdevelopment.Thesetwobythemselvesarenecessarybutnotsufficientconditionsforcreatingtheworldofthefuture.IbelievemoralleadershipisfundamentalandcriticalforIndiatotakeitsrightfulplace.Youmayaskme–“whymoralleadership”?IwouldliketoremindyouthatNaziGermanyhadtechnologicalvitalityandeconomicstrength,sodidfascistItalyandsodidtheerstwhileSovietUnion.Withoutmoralleadershipyoucannotbealeaderfortoolong.AndthereforeIsayallthreeareimportant,andifyounoticeIputmoralleadershipinitalics.Itmeansthatitismaybeevenmoreimportantthaneconomicstrengthandtechnologicalvitality.IwillputtogetheranumberofideaswhichallowustothinkaboutwhatIndiacanbe.IfwecantotallyleveragethestrengthofIndia,whichisthishugepopulationbase,wecancreate200milliongraduatesand500milliontrainedprofessionalsineveryfieldofhumanendeavor.Whetheritisacarpenter,whetheritisanelectrician,whetheritisacabdriver,whetheritisabricklayer,itdoesnotmakeanydifferencetome.Professionallytrained,professionalconductandethicsandatthesametimecompensatedappropriately,andeachoneofthemwillbeabletocompetewithanybodyelseintheworld.Thatmeans,wetrainthemwithglobalstandardsinmind.Thereareveryfewcountriesthatcanevenaspiretolikeus.WecandoitbecauseofIndia’ssize.Andifwedoitwecanbecomeanintellectualhub,notonlyforIndia’sdevelopmentbutforglobaldevelopmentanditwillmakeahugedifferencetothequalityoflifeforeveryIndian.

Source: Excerpt from Address by Prof C K Prahlad at ISB, Hyderabad


“In order to enforce an ethical regulating code, the Advertising Standards Council

of India was established.”

Throughouthistory,womenhavealwaysaimedforaplaceofrecognitioninsociety.

Guidedbytheirownknowledgeandexpertise,womenlikeRaniLaxmiBaiinfreedommovementofIndia,MarieCuriein science,Anita Desai in literary writing, PT Usha andSaniaMirzainsports,tonameafew,havebroughtaboutanawarenessintheroleofwomeninvariouswalksoflife.

Theroleofwomeninoursocietyhaschangeddramaticallyinthelast3-4decades.Womenarenowplayingadiversifiedroleinthesocio-economiccontextofoursociety.Theyhaveemergedasapowerfulandinfluentialgroup.Theirroleintheeducational,socialandculturalsetuphasgivenanewdimensiontooursocialstructureandmindset.

Advertisingisthemeansofinformingaswellasinfluencingthe general public to buy products or services throughvisualororalmessages.Aproductorserviceisadvertisedtocreateawarenessinthemindsofpotentialbuyers.SomeofthecommonlyusedmediaforadvertisingareT.V,Radio,websites,newspapers,magazines,billboards,hoardingsetc.Asaresultofeconomicliberalizationandthechangingsocialtrends,advertisingindustryhasgrowninthelastdecade.

Advertising isoneof theaspectsofmasscommunication.Advertising is actually brand building through effectivecommunication and is essentially a service industry. Ithelps to create demand, promote marketing system andboost economic growth.Thus advertising forms the basisofmarketing.Advertisingplaysasignificantroleintoday’shighlycompetitiveworld.Acareerinadvertisementisquiteglamorousandatthesametimechallengingwithmoreandmoreagenciescomingupeveryday.

Whether it’s brands, companies, personalities or evenvoluntary organizations, all of them use some form ofadvertising in order to be able to communicate with thetargetaudience.Thesalarystructureinadvertisingisquitehighandifyouhavetheknackforitonecanreachthetop.It is an idealprofession for a creative individualwhocanhandlework-pressure.

Today,newareasareemergingwithinadvertisinglikeeventmanagement, image management, internet marketing etc.Internetmarketinghasalsobroughtaboutalotofchangesin

advertisingasInternetmeansthatoneiscateringtoaselectgroupofaudienceratherthanamassaudience.

WomenarepossiblythegreatestgiftGodhasbestoweduponthisearth.Theyareverycomplexandbeautifulcreations.Because of this women have many roles and powers insociety. Business owners and advertising agencies haverecognizedthepowerthatwomanpossess.

Advertisements have become a very common part of ourday today lives.Theyareseen inall formsofmediaandare placed throughout our environment. Advertisementsare seen on televisions as commercials, in magazines asads, and throughout the streets on billboards. Throughmyobservations of eachof these formsof advertisement,wefindoneof themostcommonfeature, i.e. inclusionofwomeninalmosteveryadvertisement.

Lookaroundanywhere,mostoftheadvertisementsincludewomen.Whether these are of jeans, shoes, cars,mobiles,washingmachines,skinwhiteningcreams,lotions,perfumesor watches. There is a revolution in advertising industry.Slowlybutsurely,ouradvertisingindustryisdefiningoutanewwomanforus.Ifwelookatonlyoneadvertisementortwo,itdoesn’thityou.Butifyoulookatadvertisementonadvertisement,thepatternemergesclearly.Thereisnodoubtthattheadvertisingindustryisaimingtocreateadifferentlook– thatofawesternized, fair,blonde, light-eyed, slimandhigh–cheek-bonedwoman.

Thebasiccriterionissimple:Anythingthatusesanimageofawomantoselltheproduct,sells.Theadsarecategorizedintotwo,thosethatusewomanintraditionalroles(mothersandwives) ;ads thatuse the imageofabeautifulwomansomewhat out of context ; and of course, a categoryspecificallysellingbeautyproducts.Womenplayakeyrolein advertising campaign.Not only to promote the sale ofgoodsbutalsoinotherfields,likeawarenessinoursocietyregardingdiseaselikeAIDSetc.,womenplayagreatrole.Forexample,actorDiyaMirza,urgespeopletotalkopenlyaboutthediseaseonWorldAIDSDay1stDecember,2005“BetterSafe thanSorry”.Sheattracteda lotofpeopleonroads.

Thebasicaimofeveryadvertisementistocatchtheeyeof

Esha KukrejaPGDM(2008-10)

Woman&Advertising

Market(King)!nWoman&Advertisingn 47

thebuyerorincaseofradioadvertisement,tocatchtheirear.Thereisatendencytoexploitthefemaleformasanadjuncttoallkindsofadvertisement.Itiscertainlyamisconceptionthatthefemaleformcansellanything.

WilliamShakespearesaid,“Goodwineneedsnobush”.Buttodaywithoutpublicity,wewillnotbeinapositiontosellorincreasethesaleofnewproducts.

But arewomenbeingexploitedbyadvertisingeven thoseproductswheretheyareportrayedforanornamentalvalue?Are we thriving on the hypothesis that appearance ofsomethingattractivesuchasa female inanadvertisementmakes a man more apt to purchase a good? give it athought!

“Slowly but surely, our advertising industry is defining out a new women

for us”

IndianManagementPersonality: RamCharan

Famousforputtingdownaconcepttoitscoremeaningandthenputitintoaction,workofRamCharancomesintoplay.He is ahighlyacclaimedbusiness advisor, speaker, andauthor.Ramhascoached someof theworld’smostsuccessfulCEOs.For35years,hehasworkedbehind the scenesat companies likeGE,KLM,BankofAmerica,DuPont,Novartis,EMC,HomeDepotandVerizon.

Ramisalsoa favouriteamongexecutiveeducators.Hewon theBellRinger (best teacher)awardatGE’s famousCrotonvilleInstitute.HewonsimilarawardsatWhartonandNorthwestern.Heisconsideredtobeoneofthebestresourcesforin-houseexecutivedevelopmentprograms.

Apartfromauthoringfinebooks,healsotailorshisbooksforspecificclientcompaniessuchasGateway,Ford,andEDS.His articleshavebeenpublished inHarvardBusinessReview,Fortune,Time, InformationWeek,Leader toLeader,Director’sMonthly,Directorship,TheCorporateBoardandUSAToday.RamisadirectorofAustinIndustriesandTheSixSigmaAcademy.

Heisknownforhispractical,realworldperspective.Hisexpertiseentailsareasofbusinesslike:ProfitableGrowth,BusinessAcumen,Leadership,Execution:DisciplineofGettingThingsDone,ToolsforChangingaSocialSystem,GlobalMatrixOrganization, Innovation,CorporateGovernance, Succession&LeadershipPipeline,BuildingTopManagementTeams.

Books by Ram Charan

• ConfrontingReality(October2004)

• Execution:TheDisciplineofGettingThingsDone.ExecutionreachednumberoneontheWallStreetJournallist,andhasbeenontheNewYorkTime’sbestsellerlistformorethanfiftyweeks.

• WhattheCEOWantsYoutoKnow

• BoardsatWork

• EveryBusinessIsaGrowthBusinessandProfitableGrowth.

• Profitablegrowthiseveryone’sbusiness.


Maggi-FasttocookGoodtoeatThehistoryofthisbrandtracesbacktothe19thcenturywhenindustrialrevolutioninSwitzerlandcreatedfactoryjobsforwomen,whowerethereforeleftwithverylittletimetopreparemeals.DuetothisgrowingproblemSwiss Public Welfare SocietyaskedamillernamedJulius Maggitocreateavegetablefoodproduct,quicktoprepareandeasytodigestwholateroncameupwithaformulatobringaddedtastetomeals.

Stickybrandingisthetypeofbrandingwhereyou’rehookedonthebrandasmuchfortheemotionalattachmentasforthenavigationalproperties,makingitalmostimpossibletotryanother.HaveyouevertriedsubstitutingMicrosoftWordorPowerPointwithPersuasionorWordPerfect?Thereisnorationaloremotionalargumentthatcouldpersuadeyoutochange.

AbrandsuchasMicrosoftWindowsisstickybecauseyoubecomedependentonit.Onceyou’veusedPowerPointorWordyoucan’tchangetoanotherasnootherprogramsopenyourexistingfiles.You’relost.That’sstickiness.

Other examples are frequent flyer points: once you’vehookedontoafrequentflyercardit’shardtousesomeoneelse’s program. And also iPod: you can only downloadiTunesfromApple’siTunes.

Thebenefits are clear.Onceyou catch the customer, theycan’t leave you (unless you really, really upset them). Inshort, theupfront investment toget themishigh,but thenit’slowtomaintainthem.Notthatitisastrategyeveryonecanuse,butyoucouldsay thatbothAppleandMicrosofthavedonesowithsuccess.

Gillette forces you to use its bladeswhich only fit into aspecialGillettehandle.Itchangesthehandlesonceayear,forcingyoutobuyanewhandle,withnewblades.

Don’tgetmewrong. IfaGilletteshaverwasof theworstpossiblequality,orbythesametokenifMicrosoftproductswere unusable, the storywould be different.However, asbothproductsaremostlikelyonaparwiththeircompetitors,thestickybrandingstrategyistheirtrumpcard.

Intheonlineworld,therearetwocompaniesthatstickout

tomeassticky:Amazon.comhasbecomeamarketleaderinonline retail;acompanywhichstartedoutasanonlinebookstore has become a global leader in everything retailfrom books, andCDs to toys, perfume, clothes… the listgoeson.Oneofthereasonsforitssuccessisthelay-out;itissimple,andeasytouse.Itsone-touchorderfeaturemakesordering so easy that people do not want to use anotherservice.

AnothercompanywhichhastakentheonlineworldbystormisGoogle.Thiscompanystartedasasimplesearchengine,andhasquicklygrowntobecomethelargestsearchenginein theworld. Itssimpleandeasy-to-usesearchenginehasbecomeamarketleaderandpeoplehavebecomesousedtoitthattheycouldnotswitch,eveniftheywantedto.

Sticky branding works across many disciplines, but inprinciple it creates a bond between the consumer and theproduct based on navigational and distribution criteria.TakeaNokiaphone.Ifyourbatteriesareout, thechancesareyou’llfindacolleaguewithachargeryoucanhookupto. Nokia’s universal charging plug is just but one of itsmanystickybrandcomponents.Itsnavigationissointuitiveandhas remained so consistent that theuserfinds changeparticularly disconcerting.Again, the weak link inApplecomputerswasonceitsdistribution.ButeversincetheiPodhitthemarket,thishaschanged.

Stickybrandinghascomeaboutbyleveragingacombinationofhumanhabit,strongdistributionandconsistentnavigation.It is a technique where the consumer finds it hard tochangebrands,andremains locked inbecauseof theeasyaccessibilityofthebrand.

Shweta GeraPGDBM(2008-10)

Howtomakebrandssticky?

Market(King)!nHowtomakebrandssticky?n 49

Mallsarethebattlegroundswherethebrandssmall,mediumandbig,theknownandnotknownfightitfortheconsumer’sattention.Gonearethedayswhenpeoplehadtobuydifferentthingsfromdifferentplaces.Nowthescenariohaschangedcompletely andalmost every thing is available forus justunderjustoneroof.Thankstotheplethoraofmallsopenedacrossthecountryinlastfiveyears.Eachmallhasitsowndistinctattractivenessthatmakesitacrowdpuller.BrandslikeRebok,Nike,andAdidasetcarenowavailableatmuchaffordablerates,thankstoconsumerism.

Someoftheoutletownersarehappytobeapartofanymallbecauseaccordingtothemmallsgenerallyopenedatprimelocationsandhighfootfallareas.Thechanginglifestyleofconsumerandincreasingstandardoflivingalsoplaysavitalroleingivingwingstomallculture.Howeverthebubblehasnowburstandwefindconsumershyingawayfrombuyingfromanoutletinmall.Asaresultthesalesintheseoutletsisplunging toanall time low.Themaintenanceofamallrequirehugecapital,asaresulttherentalsofanoutletarealso high.Malls now a days, in order to recover runningcost,arehikingrents,whichretailersareunabletopay.Asa consequence the numbers of retailers who are quittingmalls are increasing day by day.The survival is going tobedifficultbecause thedeveloperschargeahigh rentandretailersfacelowerfootfall.

AccordingtointernationalconsultancyJONESLONGLASALLEMEGHRAI,JLLMthenoof retailersquitting themallshasgoneup50%inlasttwoyears.Acrosssectionofretailerstold,thefootfallhasdropped20–25%inlastsixmonthsinmostofthemallsinthecountry.

Inordertofindouthowisthescenario,werandomlyselectedMETROWALK mall, situated near RITHALA METROSTATION,ROHINIDELHI.This is a big and openmallanditsinfrastructureisverygoodwithtwentyeightoutlets,includinggarmentsandfoodoutlets.ThemallalsohasanAdventureParkwithartificialpondforboating.Parkingis500meterapart.

Although the footfall in METROWALK is high, yet wefindthatretailerarequitting.Wetriedtofindoutthereasonand administered a questionnaire to the existing retailers.Followingreasonswerecitedbyretailersasprimereasons

toleave:

• Highrent(retailershavetopays3-5lakhsperoutlet)• Adventureparkcouldbeanotherreasonascustomersare

attracted toward it, they are just coming for enjoymentandnotfortheshopping

• Oneof themajorflaw is theparkingaspeoplehave towalklongdistancetoreachthemall

• Beingbuiltonanopenformat,peoplecan’tsitanywhereduringsunnydays.

• The last and most important reason is that there is acontractperiodbetweentheretailersanddevelopersfor1year.Ifthecontractiscompletedretailershavetorenewthatatahighcost.Iftheyfailtodothistheyhavetoquitthemall,eveniftheyhavegoodsales.

Asperastudydonebyus,thereweremorethan10outletswhichhave been closed inmetrowalkmall, even thoughtheywereofwellknownbrandslike:• Levi’s• Adidas• MonteCarlo• KFC• Timex• YoChina• Vasundhrajewelers

Someoftheretailersarealsoplanningtoleavethemallastheyarefacingahugeloss.Oneofthemwasverydepressedforhavinglost10lakhrupees.

Theretailersgenerallygetattractedbytheinfrastructureofanymall; theymust conduct research on the Indianmindsetfirst.Basically Indiansarecostconsciousand lookforvaluebuying.Indiancustomerenjoysbargainingtilldatesoretailershavetofindoutcompetitive,cheaperandrevenueorientedplace.

Themallsthesedaysarefacingapinchandtheretailersneedtoreevaluatetheirstrategies.TheaverageIndianbuyergoestoamallforwindowshopping,forenjoyingtheambiencebut they hardly buy. In order to generate more revenue,the malls should be a platform for reasonable pricing ofproduct.

Aanchal Tyagi, Deepak Jain, Priya LuthraPGDM(2008-10)

PlungingSales,SoaringRentals,SeeRetailersQuit


Theautomobile industry isoneof the largest industries inIndia as inmany other countries. It plays amajor role inthe growth of economy in India. The industry comprisesautomobilesandautocomponentsectors,whichencompasspassenger cars, two-wheelers, three-wheelers, tractors,commercialvehicles,multi-utilityvehiclesandcomponents.Today,theIndianautomobileindustryistheworld’slargestmotorcycle manufacturer, the second largest two-wheelerandtractormanufacturer,thefifthlargestcommercialvehiclemanufacturerandthefourthlargestcarmakerinAsia.Apartfromservingthedomesticmarket,theIndianautosectorhasalsobecomeasourcinghubfortheglobalautogiants.

Automobile Usage In IndiaThe automobile sector has been contributing its share tothe shining economic performance of India in the recentyears.Withcomparativelyhigherrateofeconomicgrowthrate index against that of great global powers, India hasbecame hub of domestic and exports business. With theIndianmiddleclassearninghigherpercapitaincome,morepeoplearereadytoownprivatevehiclesincludingcarsandtwo-wheelers. Product movements and manned serviceshaveboostedinthesalesofmediumandsizedcommercialvehiclesforpassengerandgoodstransport.

Automobile Domestic Sales Trend

Category Number of Vehicles sold in 2007-08

PassengerVehicles 1,547,985

CommercialVehicles 486,817

ThreeWheelers 364,703

TwoWheelers 7,248,589

Grand Total 9,648,094

Objectives Of The StudyTodayprogressandprofitshighlydependsuponcustomersatisfaction. They are directly proportional to each other.ContinuouslyprogressingonSalesSatisfactionIndexgraph“Honda”hadalwaysshownimprovedrankincomparisonto

itslastyearbutintheyear2007itcamedownlikeanything.It registered the largest decline in the total industry.Thatbroughthighestconcerntothecompany.Soourreportwellexhibitsthechallenges,reasonsandsolutionsofitandalsosomeuniqueways to improve satisfaction. It also focusesonwhatourmajoritybuyers’value.Thisreportsuggeststhecompanythathowtoregainlostposition.

MethodologyThestudyisbasedontheprimarydata,secondarydataandthenecessarydatarequiredforthestudywascollectedthroughstructuredquestionnaires.FiftyHondabuyersusingdifferentsegmentofHondacarswereselectedassamplerespondentsforthestudyonthebasisofconvenientsamplingmethod.In order to find out the factors that influence the level ofsatisfaction derived by the respondents on the services ofHondacardealers,Chi-Squaretesthasbeenemployed.

Distribution Of The Sample RespondentsTheDistributionofthesamplerespondentsonthebasisoftheirsexgroup,age,literacylevel,OccupationStatus,HondaDealers,ModelandUseispresentedinfollowingtables:

Sex Group Wise Distribution Of The Sample Respondents

ThesexgroupwisedistributionoftheSampleRespondentsisgivenintable:1anditrevealsthatoutoffiftyrespondentsforty one (82%) are males and nine (18%) are femalerespondents.

Table 1:Sexgroupwisedistributionoftherespondents.

Gender Of The Respondents

Number Of Respondents Percentage

Male 41 82

Female 9 18

Total 50 100

Age Wise Distribution Of The Sample Respondents

The agewise classification of the SampleRespondents is

Prateek Duggal, Vinay Kapoor, Ankur Pandey, Rohit Sehgal, Shivani Choudhary, Neha Anand, Smriti Sharma, Priyanka Sapra, Priyanka Sharma

PGDM(2008-10)

BuyerSatisfaction (HondaSielCarsIndiaLtd.)

FieldInningsnBuyerSatisfaction(HondaSielCarsIndiaLtd.)n 51

givenintable:2anditrevealsthatoutoffiftyrespondentsthirteen(26%)belongtoagegroupbetween(20-30),thirteen(26%)belongtoagegroupbetween(31-40),sixteen(32%)belongtoagegroupbetween(41-50),eight(16%)belongtoagegroup(above50).

Table 2:Agewisedistributionofsamplerespondents.

Age Of The Respondents


20-30 13 26

31-40 13 26

41-50 16 32

Above50 8 16

Total 50 100

Literacy Level Wise Distribution Of The Sample Respondents

The literacy level wise classification of the SampleRespondents isgiven in table:3and it reveals thatoutoffiftyrespondentsone(2%)havebeeneducateduptoSSC/HSClevel,four(8%)havebeeneducatedasundergraduate,twentyfive(50%)havebeeneducateduptograduation/postgraduationgenerallevel,twenty(40%)havebeeneducateduptoGraduation/PostGraduationProfessionallevel.

Table 3:Literacylevelsofthesamplerespondents.

Literacy Level Of The Respondents


SSC/HSC 1 2

Somecollegebutnotgraduate

4 8

Graduate/Postgraduategeneral

25 50

Graduate/Postgraduateprofessional

20 40

Total 50 100

Occupation Wise Distribution Of The Sample Respondents

TheoccupationwisedistributionoftheSampleRespondentsisgivenintable:4anditrevealsthatoutoffiftyrespondents

two(4%)areinpublicSectorservices,fourteen(28%)areinPrivateSectorservices,twentyseven(54%)arebusinessmen,seven(14%)areselfemployedprofessional.

Table 4:Occupationalstatusoftherespondents

Occupation Of The Respondents


ServiceinPublicSector

2 4

Serviceinprivatesector

14 28

Businessmen 27 54

SelfEmployedProfessionals

7 14

Total 50 100

Model Wise Distribution Of The Sample Respondents

The model wise classification of the Number of SampleRespondents is given in table:4 and it reveals that out offifty respondents fourteen(28%) have Honda City ZXmodel,five(10%) have Honda City I-V tech, six (12%)have Honda Civicmodel, two (4%) have Honda Hybrid,nine(18%)haveHondaAccordmodel,six(12%)haveHondaCR-Vmodel,two(4%)haveHondaCR-VI-Vtechmodel,six(12%)haveHondaCity-GXImodel.

Table 5:Modelsownedbytherespondents

Model Number Of Respondents Percentage

HondaCityZX 14 28

HondaCityI-Vtech 5 10

HondaCivic 6 12

HondaHybrid 2 4

HondaAccord 9 18

HondaCR-V 6 12

HondaCR-VI-Vtech

2 4

City-GXI 6 12

Total 50 100

“The automobile sector has been contributing its share to the shining economic

performance of India in the recent years.”


Dealer Wise Distribution Of The Sample Respondents

ThedealerdistributionofSampleRespondentsisgivenintable:6anditrevealsthatoutoffiftyrespondentstwelve(24%)have purchased from Ring Road Honda, Delhi six(12%)havepurchasedfromHeroHonda,Gurgaon,six(12%)havepurchased from Pearl Honda, Gurgaon,eight(16%) havepurchased from Southend Honda, Delhi, five(10%) havepurchased from Prime Honda, three(6%) have purchasedfrom Courtesy Honda, four(8%) have purchased fromPrestige Honda, four(8%) have purchased from PrestigeHonda,two(4%)havepurchasedfromExcelHonda.

Table 6:Thedealersofthearea.

Dealer Number Of Respondents

Percentage

RingRoadHonda,Delhi 12 24

HeroHonda,Gurgaon 6 12

PearlHonda,Gurgaon 6 12

SouthendHonda,Delhi 8 16

PrimeHonda 5 10

CourtesyHonda 3 6

PrestigeHonda,Gurgaon

4 8

PrestigeHonda 4 8

ExcelHonda 2 4

Total 50 100

Usage Wise Distribution Of The Respondents

TheusagewisedistributionofSampleRespondentsisgivenintable:7anditrevealsthatoutoffiftyrespondentstwentyfive (50%)use it as additionalvehicleof theirhousehold,nine(18%)useitashousehold’sfirstvehicleever,sixteen(32%)useitasreplacementvehiclefortheirhousehold.

Table 7:Useswisedistributionoftherespondents.

Use Number Of Respondents Percentage

AdditionalvehicleofMyHousehold

25 50

MyHousehold’sfirstvehicleever

9 18

ReplacementvehicleforMyHousehold

16 32

Total 50 100

Factors Influencing The Satisfaction Derived By The Sample BuyersInordertofindoutthefactorsthatinfluencethesatisfactionderivedbybuyersontheservicesofferedbyHondadealerstothem,theopinionoftheusersonvariousservicessuchassales personknowledge, pre sale experience, sales personcourtesy,paperwork&Loandocuments etcwas collectedthrough structured interview schedule. The associationbetweentheopinionoftherespondentsontheabovestatedfactorsandthelevelofsatisfactionderivedbythemontheservicesofHondadealerswastestedwiththehelpofchi-squaretest&FactorExtractionProcessandtheresultsofthetestarepresentedinthefollowingtables.

(a) Pre sales satisfaction derived by the buyersThedistributionoftherespondentonthebasisofpresalesexperienceofHondadealersandtheirlevelofsatisfactionderivedbythemisgivenbelow:

Ratings Frequency

HighlyDissatisfied 0

Dissatisfied 2

Moderate 4

Satisfied 31

HighlySatisfied 13

Null hypothesis: the association between the pre salesexperienceoftherespondentandtheirlevelofsatisfactiontowardstheservicesofHondadealersisnotsignificant.

Tablerevealsthatmajorityofrespondents(31)aresatisfiedwith the pre sales experience of the Honda dealers. Asthe calculated chi square value (21.16) at 1% level ofsignificance for 9 degree of freedom is greater than tablevalue (15.56) therefore null hypothesis is rejected and itcouldbeconcluded that associationbetween thepre salesexperienceoftherespondentandtheirlevelofsatisfactiontowardstheservicesofHondadealersissignificant.

“Apart from serving the domestic market, the Indian Auto sector has become a sourcing

hub for the global auto giants.”


“With the Indian middle class earning higher per capita income, more people

are ready to own private vehicles including cars.”

(b) Sales person knowledge satisfaction derived by the buyers

ThedistributionoftherespondentonthebasisofsalespersonknowledgeofHondadealersandtheirlevelofsatisfactionderivedbythemisgivenbelow:

Ratings Frequency


Dissatisfied 2

Moderate 5

Satisfied 26

HighlySatisfied 17

Null hypothesis: the associationbetween theSalespersonknowledgebytherespondentandtheirlevelofsatisfactiontowardstheservicesbythesalespersonisnotsignificant.

Tablerevealsthatmajorityofrespondents(26)aresatisfiedwith the services by the sales person and his knowledge.As the calculated chi square value (14.38) at 5% level ofsignificance for 6 degree of freedom is greater than tablevalue(13.83)thereforenullhypothesisisrejectedanditcouldbeconcludedthattheassociationbetweentheSalespersonknowledgebytherespondentandtheirlevelofsatisfactiontowardstheservicesbythesalespersonissignificant.

(c) Sales person courtesy satisfaction derived by the buyersThedistributionoftherespondentonthebasisofsalespersoncourtesy of Honda dealers and their level of satisfactionderivedbythemisgivenbelow:

Ratings Frequency


Dissatisfied 1

Moderate 5

Satisfied 23

HighlySatisfied 20

Null hypothesis: the associationbetween theSalespersoncourtesy by the respondent and their level of satisfactiontowardstheservicesbythesalespersonisnotsignificant.

Tablerevealsthatmajorityofrespondents(23)aresatisfiedwith the services by the sales person and his courteous

behavior.Asthecalculatedchisquarevalue(17.03)at5%levelofsignificancefor8degreeoffreedomisgreaterthantable value (18.89) therefore null hypothesis is acceptedanditcouldbeconcludedthattheassociationbetweentheSales person courtesy by the respondent and their levelof satisfaction towards the services by the sales person issignificant.

(d) Paperwork process and satisfaction derived by the buyer:

ThedistributionoftherespondentonthebasisofPaperworkprocess of Honda dealers and their level of satisfactionderivedbythemisgivenbelow:

Ratings Frequency


Dissatisfied 1

Moderate 18

Satisfied 19

HighlySatisfied 12

Null hypothesis: the association between the Paperworkprocess by the respondent and their level of satisfactiontowardstheprocessisnotsignificant.

Tablerevealsthatmajorityofrespondents(19)aresatisfiedwiththepaperworkprocess.Asthecalculatedchisquarevalue(11.08)at5%levelofsignificancefor6degreeoffreedomisgreaterthantablevalue(10.38)thereforenullhypothesisis rejected and it could be concluded that the associationbetweenthePaperworkprocessbytherespondentandtheirlevelofsatisfactiontowardstheprocessissignificant.

(e) Loan document and satisfaction derived by the buyer:

The distribution of the respondent on the basis of loandocument ofHonda dealers and their level of satisfactionderivedbythemisgivenbelow:

Ratings Frequency


Dissatisfied 1

Moderate 14

Satisfied 25

HighlySatisfied 10


Nullhypothesis:theassociationbetweentheloandocumentbytherespondentandtheirlevelofsatisfactiontowardstheprocessisnotsignificant.

Tablerevealsthatmajorityofrespondents(25)aresatisfiedwith the loan document services. As the calculated chisquarevalue(15.69)at1%levelofsignificancefor6degreeof freedom is greater than table value (14.48) thereforenull hypothesis is rejected and it could be concluded thattheassociationbetween the loandocumentprocessby therespondentandtheirlevelofsatisfactiontowardstheprocessissignificant.

(f) Paperwork queries and satisfaction derived by the buyer:

ThedistributionoftherespondentonthebasisofPaperwork

queries of Honda dealers and their level of satisfactionderivedbythemisgivenbelow:

Ratings Frequency


Dissatisfied 1

Moderate 20

Satisfied 17

HighlySatisfied 11

Null hypothesis: the association between the Paperworkqueries by the respondent and their level of satisfactiontowardstheprocessisnotsignificant.

Factor AnalysisTotal Variance Explained

ComponentInitial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings

Total % of Variance

Cumulative % Total % of

VarianceCumulative

% Total % of Variance

Cumulative %

1 6.328 37.221 37.221 6.328 37.221 37.221 3.207 18.866 18.866

2 1.953 11.491 48.712 1.953 11.491 48.712 2.895 17.031 35.897

3 1.348 7.932 56.644 1.348 7.932 56.644 2.867 16.864 52.761

4 1.227 7.220 63.864 1.227 7.220 63.864 1.887 11.102 63.864

5 .924 5.435 69.299

6 .885 5.208 74.507

7 .765 4.502 79.008

8 .660 3.882 82.891

9 .609 3.585 86.475

10 .550 3.236 89.711

11 .400 2.355 92.066

12 .348 2.047 94.114

13 .305 1.797 95.911

14 .255 1.503 97.413

15 .181 1.063 98.476

16 .150 .885 99.361

17 .109 .639 100.000ExtractionMethod:PrincipalComponentAnalysis.

“Progress and profits highly depend on customer

satisfaction”


“Most remarkable thing for a Company to gain satisfaction is to

build its brand.”

Tablerevealsthatmajorityofrespondents(17)aresatisfiedwiththepaperworkqueries.Asthecalculatedchisquarevalue(15.21)at5%levelofsignificancefor8degreeoffreedomisgreaterthantablevalue(16.082)thereforenullhypothesisis acceptedand it couldbe concluded that the associationbetweenthePaperworkqueriesbytherespondentandtheirlevelofsatisfactiontowardstheprocessisnotsignificant.

(g) Payment option and satisfaction derived by the buyer:

ThedistributionoftherespondentonthebasisofPaymentoption of Honda dealers and their level of satisfactionderivedbythemisgivenbelow:

Ratings Frequency


Dissatisfied 0

Moderate 12

Satisfied 25

HighlySatisfied 13

Nullhypothesis:theassociationbetweenthepaymentoptionbytherespondentandtheirlevelofsatisfactiontowardstheprocessisnotsignificant.

Tablerevealsthatmajorityofrespondents(25)aresatisfiedwiththepaymentoption.Asthecalculatedchisquarevalue(11.97)at1%levelofsignificancefor4degreeoffreedomisgreaterthantablevalue(11.16)thereforenullhypothesisis rejected and it could be concluded that the associationbetween the Payment option by the respondent and theirlevelofsatisfactiontowardstheprocessissignificant.

Thismethodisveryhelpfulmethodasitreducesthenumberoffactorsto4variablesandalsotheRotatedsumofsquaredloadingsis63.86whichmeansthatourextractionprocessisuptothemark.

FactorAnalysishelpstoreduceavastnumberofvariablestoameaningfulinterpretableandmanageablesetoffactors.Thefactoranalysishastwostages.

Stage1isfactorextractionprocesswhereintheobjectiveisto identifyhowmany factorsare tobeextracted from thedata. The most popular method used for this is principalcomponent analysis. There is also a rule of thumb basedoncomputationofaneigenvaluestodeterminehowmany

factorstoextract.

Stage 2 is factor rotation process and themethod used isVarimaxrotation

There are four factors which have influenced consumerpreference towards sales satisfaction of HONDA i.e.,63.864%from100.00%.WehaveusedprincipalcomponentmethodandVarimaxrotationmethodtoreduce17variablesinto four variables. We study only rotation componentmatrix

Asevidentfromtheoutputtablei.e.,salessatisfactionindexwhenwe look at cumulative%column in rotated sumofsquared loadings, we find that our four factors extractedtogetheraccountsfor63.864%oftotalvariance.Hencewehavereducedtheno.ofvariablesfrom17to4factors.

LookingatthetablerotatedcomponentmatrixweseethatthevariablesTransaction,commitments,timeperiod,overallexperience,promisehaveloadingonfactor1.Thissuggeststhatfactor1isacombinationofthese5variablesandwecangroupthemunderthisfactorwiththenameCommitment.

Factor 1:Commitment

S. No. Particulars Loadings

1 Transaction 0.577

2 Commitments 0.571

3 Timeperiod 0.652

4 Overallexperience 0.820

5 Promise 0.708

Whenwe look at the table rotated componentmatrix wesee that factor 2 has 4 loadings i.e. ease, paperwork loandocuments,queries.So,wecangroupthesevariablesunderthisfactorwiththenameEase.

Factor 2:Ease


1 Ease 0.765

2 Paperwork 0.779

3 LoanDocuments 0.706

4 Queries 0.589


The third factor has 4 variables i.e. Presale, Sales personKnowledge, Courtesy and maintenance schedule. So, wecangroup thesevariablesunder this factorwith thenameServices.

Factor 3:Services


1 Presales 0.731

2 Salespersonknowledge 0.727

3 Courtesy 0.864

4 MaintenanceSchedule 0.605

The fourth factor has 4 variables i.e., Facility, paymentoption, Exterior and Ceremony. So, we can group thesevariablesunderthisfactorwiththenameFacility.

Factor 4:Facility


1 Facility 0.645

2 Paymentoption 0.513

3 Exterior 0.405

4 Ceremony 0.738

Factors Influencing The Satisfaction Derived By The Sample Buyers Of Honda (Findings):

Thestudyrevealsthatthesatisfactionderivedbythesamplebuyers ofHonda inDelhi andNCR has influence by thefollowingfactors

1. presalesexperience

2. salespersonknowledge

3. paperworkprocess

4. loandocument

5. Paymentoption

6.Commitment

7.Ease

8. Service

9. Facility

ThestudyalsoindicatedthatthefactorssuchassalespersoncourtesyandpaperworkqueriesservicesofferedbyHondadealers do not influence the satisfaction derived by thesamplesubscribers.

SuggestionsMost remarkable thing for a company togain satisfactionis to build its brand. Maintaining consistent levels ofexcellenceacrosseverytouchpointismust.Customerjustexpectsbetterserviceeachyear.FollowingaresomeofthesuggestionstohelpHondainbuildinghighlevelofcustomersatisfactionandhighdegreeofcustomerloyalty.

1. Snacks and drinks: Availability of chocolate, wafers,beverages, juices specially for children who comewith their parents. This will contribute in maintainingrelationship with customer, as children are majorinfluencersinanypurchasedecision.

2.Makeachecklistof all the itemsneededand inspect iton weekly basis or numbers of visits of customers atdealerships.Sothatthereshouldnotbeshortageofanymaterial.

3.RegularinspectionofdealershiptokeepallthethingswellstructuredandmaintainedrightfromA/Ctocleanlinessofrestrooms.

4. ‘Thanks’greetingtothecustomerswhobringbusinesstoadealership.Thatwillincreasecustomerrelationshipandalsobringsomemorebusiness.

5. PickupandDropfacility:-Taxiwithadriveravailableatdealershipto‘pickupanddrop’customerifrequired.

6.Test drive issue:- Sometimes car is not availablewhencustomerasksfortestdrive.Thisresultsinfrustration.Sointhatcasetestdrivecanbeprovidedbydealershipbysendingcartothecustomersplaceifpossible.

7. Solvingthedrivingissuesanddriver:-Itisforthepeoplewhodon’tknowhowtodrive.Makingcontractwiththelocaldrivingtrainingschoolcansolvethisproblem.

ConclusionDealersofHondacarsareoneoftheleadingserviceprovidersinDelhiandNCRregion.TheStudyrevealedthelevelofsatisfactionderivedby thebuyers ofHonda cars inDelhiandNCRandthefactorsinfluencethesame.Thestudyalsoofferedasomeconstructivesuggestionsfor improvingthe

“Maintaining consistent level of excellence across every touch is

must”


satisfactionoftheusersofHondacars.AsthereisasteadyincreaseinthenumberofCarBuyers,theimprovementintheQualityofserviceofthedealerswillattractmorenewsubscribersandwouldhelptoretaintheexistingusersinthefuturecompetitivemarket.

BibliographyBooks:

1.Ravi Shankar, Service Marketing: The IndianPerspective

2. S.M.Jha,ServicesMarketing

Websites:

1.www.hondacarindia.com2.www.hondaindiadirectfeedback.com3.www.jdpower.com4.www.cars.com/go/index.jsp5.www.economictimes.com6.www.hindustantimes.com7.www.indiacar.com

“Customer expect better service everytime”


AVintageCarAvintagecariscommonlydefinedasacarbuiltbetweenthestartof1919andtheendof1930.Thereislittledebateaboutthestartdateofthevintageperiod—theendofWorldWarIisanicelydefinedmarkerthere—buttheenddateisamatterofalittlemoredebate.TheBritishdefinitionisstrictabout1930beingthecut-off,whilesomeAmericansourcesprefer1925sinceitisthepre-classiccarperiodasdefinedbytheClassicCarClubofAmerica.Othersseetheclassicperiodasoverlappingthevintageperiod,especiallysincethevintagedesignationcoversallvehiclesproducedintheperiodwhiletheofficialclassicdefinitiondoesnot,onlyincludinghigh-endvehiclesoftheperiod.SomeconsiderthestartofWorldWarIItobetheenddateofthevintageperiod.

Thevintageperiodintheautomotiveworldwasatimeoftransition.Thecarstartedoffin1919asstillsomethingofararity,andendedup,in1930,wellonthewaytowardsubiquity.Infact,automobileproductionattheendofthisperiodwasnotmatchedagainuntilthe1950s.Intheinterveningyears,mostindustrializedstatesbuiltnationwideroadsystemswiththeresultthat,towardstheendoftheperiod,theabilitytonegotiateunpavedroadswasnolongeraprimeconsiderationofautomotivedesign.

Carsbecamemuchmorepractical,convenientandcomfortableduringthisperiod.Carheatingwasintroduced,aswasthein-carradio.Antifreezewasintroduced,allowingwater-cooledcars tobeusedyear-round.Four-wheelbrakingfromacommonfootpedalwasintroduced,aswastheuseofhydraulicallyactuatedbrakes.Powersteeringwasalsoaninnovationofthisera.Towardstheendofthevintageera,thesystemofoctaneratingoffuelwasintroduced,allowingcomparisonbetweenfuels.

(source : wikipedia.com)

Jeans as they are called today had their origin in U.S.A.Today jeans have become the worlds most sought aftercasual-wear,a“passioninthematerialworld”.

However, with times due to increasing awareness andinfluenceofwesternculture, there is ahuge shift in trendingarmentsindustryofIndia.ThejeanscultureoftheUSAfounditswaytoIndiaaroundlatesixtiesandimportedjeanswere much in demand. The jeans market has expandedsubstantiallyinIndiasincethemid1970’s.Growthofjeansculturewithsatelliteinvasion,evergrowingstrongmiddleclassandjeansasasymbolofcasuallifestylehasattractedseveraljeansmanufacturertojoininthemarket.

Until 1992 the jeans market in India was dominated byunbranded items andminor Indian brands. Only later thecustomersbecamebrandandqualityconscious.TodayjeanshavefoundanimportantplaceinthewardrobeoftheIndianYouth.

Multi-brandoutletsarerecenthappeningsandinitiallytheyfacednon-acceptancefromIndianconsumers.Thismainlyhappened due to huge success of Exclusive Showroomin India. Today, both Multi-brand Showroom as well asExclusive Showrooms are growing in India. Both aregainingacceptanceprimarilyfromIndianyouthandyoungergenerationsandhasbecomeahugeprofitablebusinesstoday.KeepinginviewtheIndianhabitsandchangingpreferencestowardslifestyle,thisstudyhasitsfocusonunderstandingthe factors affecting the perception of consumers forbuying jeans fromMulti-Brand Showroom andExclusiveShowroom.

Objectives Of Study1.To identify the factors affecting the shopping decision

of jeans from multi-brand outlets and exclusiveshowrooms.

2.Toidentifytheperceptionofconsumersforbuyingjeansfrommulti-brandoutletsandexclusiveshowrooms.

Methodology Of The StudyTheentireresearchisbasedonPrimarydata.

Sampling Unit

Samples for the study consisted of randomly selectedconsumersatvariousMallsoftheDelhi.

The data were collected using a structured questionnaire.Datawerecollectedfromthetargetedcustomerwhiletheywereinmalls.Questionnaireswerehandedovertothemwitharequestforfillingatthespot.Duecarehasbeentakentoreducepossiblebiasesinselectingtheyoungcustomersforthepurposeofdatacollectionbywayofaskingfewquestionstotheminrelationtotheirdressingsenseanddemographicprofile. In addition, a thorough analysis was done foreach filled-in questionnaire to see the consistency of dataprovided by targeted customer specifically for customerswhohadfilledthequestionnairewhentheywerewiththeirpeers. Insuchcasesmanyincompletequestionnaireswerefound. Such questionnaires were not considered worthyfor analyses andwere rejected.Thequestionnairehad thefollowingdimensions:• Demographicsoftherespondentsuchasage,qualification

andSECgrid;• Behaviourofvisitingshowroomsofclothessuchastime

oftheday,gettinghomedelivery,pressurefromfriends.• Factors affecting selection of showrooms on various

parameterssuchasservicespeed,price,hygiene,seatingspace,variety,andambience.

Sample Size

Sinceitisanexploratorystudy,asamplesizeof80thoughttobeanadequateone.Accordingly80respondentsfromthetargetpopulationwereapproachedtofillintheQuestionnaire.Outof80respondent’sdataonly75datawerevalid.

Methods Of Data AnalysisDataweresubjecttostatisticalanalysissuchasdescriptivestatisticalanalysisandfrequencydistribution.Thisanalysiswasapplicabletomainlycategorizeddata.Forscaleddata,reliabilityanalysisisappliedbeforesubjectingthedatafortestingmeandifferenceusingt-test,andcarryingoutfactoranalysis.Use of SPSS also has been done to find out theresults.

Anindita Dey, Aseem Gupta, Atif Rasul, Prateek Gupta, Preeti Kaur Bhatia, Ruchi Anand, Ruchi Kalla, Shveta Gera, Swati Chhetri, Tushar Arora

PGDM(2008-10)

CustomerPerceptiononExclusiveAndMulti-BrandShowroom

FieldInningsnCustomerPerceptiononExclusiveAndMulti-BrandShowroomn 59

Analysis Of Study Data1. Age Group

Mostoftherespondentsarelyingintheagegroupof15-30whichcompromiseof56%oftotalrespondents.

2. Marital Status

Fromthepiechartitisseenthatmostoftherespondentsaresinglewhichcompromiseof52%oftotalrespondents.

3. Occupation

Mostofourrespondentsarestudentswhichcompromiseof40%ofourtotalrespondents.

4. Income Group

Mostofourrespondentsarestudentsanddonotearnwhichcompromiseof43%ofourtotalrespondents.

5. Response From Multi-Brand Outlet

Forthecustomers,Quality,Price,DiscountandVarietyarefactorsthatareequallyappreciated.Thustheseshowroomsshouldmaintainthesefactorstotheoptimum.Moreovertheyshouldaddontheadvantagestheyprovideinmembershipschemes so that thecustomerscanbe lured towards theseshowrooms.

6. Response For Exclusive Showrooms

For the customers, Quality, Price and Variety are factorsthatareequallyappreciated.Thustheseshowroomsshouldmaintainthesefactorstotheoptimum.Moreovertheyshouldadd on the advantages they provide in membership anddiscount schemes shouldbeoffered so that the customerscanbeluredtowardstheseshowrooms.

7. Influence Factor

The data reveals that most of our respondents are notinfluencedbyotherswhileshoppingwhichcompromiseof72%ofourtotalrespondents.

8. Driving Long Distance For Exclusive Purchase

62%ofourrespondentsarereadytodrivefaroffdistancesforpurchasingfromexclusiveshowroom.

9. Window Shopping Preference

69%of our respondents prefermulti-brand showroom forWindowShopping.

10. Window Shopping Influence

The respondents are tempted bywindow shoppingwhichcompromiseof55%ofourtotalrespondents.

11. Shopping Time Preference

Most of our respondents prefer to shop for usual reasonswhichcompromiseof44%ofourtotalrespondents.

12. Shopping Frequency

Wecanseethat50%ofourrespondentsprefertobuyjeansonceinthreemonths.

13. Dependency Factor

Mostoftherespondentsareindependentwhichcompromiseof55%oftotalrespondents.

14. Branded Jeans Preference

55%oftherespondentspreferbrandedjeans.

15. Brand Used

42%respondedthattheyprefertowearlevi’sjeans.

Factors Influencing Decisions1.ExclusiveShowroom:

• TheFactorsQuality,AmbienceandVarietyareclubbedunderthecommonfactor‘Features’.

• The Factors Discount and Membership are clubbedunderthecommonfactorServices.

• ThefactorPriceisclubbedexclusivelyunderthehead‘Price’.

2.Multi-BrandShowroom:

• The Factors Membership, Ambience, Discountand Variety are clubbed under the common factor‘Features’.

• TheFactorsDiscountandPriceareclubbedunderthecommonfactorCost.

• The factor Quality is clubbed exclusively under thehead‘Quality’.

Limitations Of Study• Thisexploratorystudyhassomelimitationsthathowever

donotliquidatethepurposeofthestudy.

“The jeans culture of the USA found its way to India around late sixties and imported jeans were much in demand.”


• Data for the study are collected fromNational CapitalRegion(NCR)thatincludesthecapitalofIndiawithfoursurroundingcitieswellconnectedwiththecapital.

• Fewoftherespondentswereinhurrysotheymighthavefilledthequestionnairecasually.

• Sampling units are primarily of young unmarriedconsumerswhoareastudent.

Findings Of Study• MajorityofpeoplepreferBrandedJeansoverUnbranded

Jeans

• Majority of the People prefer to buy from ExclusiveShowroom

• MajorityofpeopleprefertodrivefaroffdistancestobuyfromExclusiveShowrooms.

• FavoritejeansbrandisLevi’s.

• Majority population is tempted to window-shop andprefermulti-brandoutletforwindowshopping.

• Themainfactorwhichisofmuchmorepriorityisquality,varietyandpriceinexclusiveshowroom.

• Themainfactorwhichisofmuchmorepriorityisquality,variety,priceanddiscountsinmulti-brandshowroom.

ConclusionBasedontheanalysisandresults,wecansaythatwithmoreandmoreacceptabilityofbrandedjeansandchangeinlifestyle,competitionamongbrandedjeansexclusiveoutletsandmulti-brandoutletswithrespecttoquality,price,availability

andvarietyofbrandedjeanswillbemoreprominentinthedaystocome.

TheMajorfindingsofthisstudyare:

In General, respondents were single, unmarried anddependent.Theywere inagegroupof15-30.Mostof themajorrespondentswantedtobuyjeansonceinthreemonths,for that they preferred to buy from exclusive showroomirrespective of the distance factor. However, for windowshopping,theypreferredMulti-Brandoutlets.

Discountandmembershipplayanimportantfactorincaseofexclusiveshowroom.Thusthesefactorsifmaintainedcanhelptoattractcustomerstowardsexclusiveshowrooms.

Qualityisanimportantfactorincaseofmulti-brandoutlet.Thusthisfactorshouldbemaintainedwellbytheoutletssothattheycanattractcustomersbecausetheperceptionofthecustomersisthatthisfactorishighintheseoutlets.

BibliographyBooks

1.Kotler Philips, Marketing Management : Analysis,PlanningImplementation&Control,12thEdition2007,PrenticeHallofIndiaLtd.,NewDelhi.

2.C.R.Kothari, Research Methodology: Methods &Techniques,Revised2ndEdition,NewAgeInternationalPublishers,Delhi

Internet

1.www.nielsen.com2.www.researchwikis.com

“Discount and membership plays an important factor in case of exclusive

showroom.”

FieldInningsnCustomerPerceptiononExclusiveAndMulti-BrandShowroomn 61

HowtobeaGoodManager?1.ManagebyObjectives2.BuildanIntegratedTeamandCoachMembers3.ManagingRisks4.EnablingFastandClearCommunication5.MotivatePeople6. SecuretheResponsibleParticipation

7. SeeBusinessAsaWhole8.Constantly Identify ImportantTrendsandElements

oftheTrade9.Liveahealthy,balancedlifetosetagoodexample10.Applyprincipleof“integrity”inallactions

Choosingapre-primaryschoolhasalwaysbeenadifficulttask and parents are rightfully concerned about the type,andmannerofeducationprovidedandalwayslookoutforschoolswhichprovideanallrounddevelopmentofthechild.Theyearsspentinpre-primaryschoolaretheformativeyearswhereachildformsimpressionabouttheworldaroundhim/herand thiscanonlybeachievedbygivinghimthe rightenvironmentandsupport.

Scope of the studyIneducationsector,demandismorethansupply,It leaveslotofscopetofurtherexplorefactorsaffectingdemand.

The Basic Objective of this research project is to:

1.Toidentifythefactorsconsideredformakingachoiceofschool.

2.To study different perception in different workingclasses.

3.To identify the impact of decision with the level ofsatisfaction.

4.To understand why parents feels practical knowledgemoreimportantthantheoretical.

MethodologyThe entire research will be based on Primary researchmethod.

Sampling Unit

Samplesforthestudyconsistedofrandomlyselectedparentsat various school bus stops, outside pre-nursery school oftheNorth-Delhiregion.

The data were collected using a structured questionnaire.Datawerecollectedfromtheparentsattheirresidentsandmorning at school bus stops.Questionnaireswere handedovertothemwitharequestforfillingatthespot.Duecarehasbeentakentoreducepossiblebiasesinselectingtheparentsforthepurposeofdatabywayofaskingfewquestionstothem in relationwith their child and their preferences. Inaddition, a thorough analysis was done for each filled-in

questionnaire to see the consistency of data provided bytargetedcustomerspecificallyforparentswhohadfilledthequestionnairewhentheywerewiththeirchildatbusstop.In suchcases some incompletequestionnaireswere foundby the authors. Such questionnaires were not consideredworthy for analyses andwere rejected.The questionnairehadthefollowingdimensions:

• Demographics of the respondent such as Gender,qualification;

• Factors considered for making choice of school onvariousparameterssuchasco-curricularactivities,sportsactivities,studentteacherratio,feesstructure,attractivebuilding,brandvalue,busservice,teacheretc.

Sample Size

Since it is an exploratory study, a sample size of 30thoughttobeanadequateone.Accordingly32respondentsfrom the target population were approached to fill in theQuestionnaire.

Methods Of Data Analysis

Dataweresubjecttostatisticalanalysissuchasdescriptivestatisticalanalysisandfrequencydistribution.Thisanalysiswasapplicabletomainlycategorizeddata.Forscaleddata,reliabilityanalysisisappliedbeforesubjectingthedatafortestingmeandifferenceusingt-test,andcarryingoutfactoranalysis.Use of SPSS also has been done to find out theresults.

Chi square Analysis between discipline and environment

Ho: Thereisnosignificantrelationshipb/wDiscipline&environmentofschool.

H1: There is a significant relationship b/w Discipline &environmentofschool.

Shreyance Jain, Abhishek Singh, Sakshi AggarwalPGDM(2008-10)

MakingAChoiceof Pre-PrimarySchool


Chi-square=14.093It indicates that there is significant relationship b/wDiscipline & environment of school at 99% level ofconfidence.

Co-efficientcorrelation=.553It shows there is strong association b/w Discipline &environmentofschool.

Lambda=.320Errorofreductionis32%.so,byimprovingthedisciplineinschooloverallenvironmentofschoolcanbeimproved

Chi square Analysis between Environment and Overall level of school satisfaction

Ho: Thereisnosignificantrelationshipb/wEnvironment&Overalllevelofsatisfaction.

H1: Thereisasignificantrelationshipb/wEnvironment&Overalllevelofsatisfaction.

Lambda=.583Errorofreductionis58.3%.so,byimprovingtheoverallenvironmentinschool,overalllevelofsatisfactionfromschoolcanbeimproved.

Co-efficientcorrelation=.679It shows there is strong association b/w overallenvironmentandlevelofsatisfactionofparents.

Factor AnalysisThemainobjectiveoffollowingtheextractionprocessistoidentifythemainfactorsfromtheexistingsetofdata(i.e.feesstructure,attractivebuilding,schoolbusservice,brandvalue,discipline,teacher,Innovation,distancefromhouse,environment,satisfaction).

Total Variance Explained

Component

Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings

Total % of Variance

Cumulative % Total % of

VarianceCumulative

% Total % of Variance

Cumulative %

1 2.381 23.806 23.806 2.381 23.806 23.806 2.135 21.353 21.353

2 2.218 22.179 45.986 2.218 22.179 45.986 1.971 19.710 41.063

3 1.340 13.400 59.386 1.340 13.400 59.386 1.573 15.731 56.794

4 1.049 10.489 69.875 1.049 10.489 69.875 1.308 13.081 69.875

5 .912 9.120 78.995

6 .733 7.330 86.325

7 .572 5.716 92.041

8 .385 3.849 95.890

9 .278 2.777 98.667

10 .133 1.333 100.000

Source:surveydataExtractionMethod:PrincipalComponentAnalysis.

“The years spent in pre-primary school are the formative years where child

forms impression of the world.”

FieldInningsnMakingAChoiceofPre-PrimarySchooln 63

“Choosing a pre-primary school has always been a

difficult task.”

Looking at total variance explained table. Under thecumulative percentage column.We find that Four factorsextractedoutoftenfactors.Accountsfor69.875%oftotalvariance.Hence10factorswhichwereaccountedfor100%variancenowgetsreducedto4factorsandreducedvarianceof69.875%.

Lookingatrotatedcomponentmatrixweseethatloadingofeigenvalueofallthe10factorson4extractedfactors.

Rotated Component Matrix(a)

Component

1 2 3 4

feestructure –.448 .485 .360 –.288

building –.139 .267 –.818 –.140

schoolbus .169 .661 –.001 .086

brand .130 .079 .126 .868

discipline .066 .780 –.039 .126

teacher .058 .530 .614 .193

innovation –.251 .516 –.008 .617

distance –.439 .158 .581 –.101

environment .878 .184 –.122 .025

overallschool .914 .087 .163 –.023

ExtractionMethod:PrincipalComponentAnalysis.

Lookingateachcomponentwefindlowandnegativeeigenvaluetobeeliminatedorwedoesn’tconsidersuchvalues.

Thesefactorcanbeinterpretas

Factor 1:“Behavioralaspect”

S. No. Factors Loading

1 Environmentofschool .878

2 Satisfactionfromschool .914

Factor 2:“conveniencewithrespecttobehavior”


1 SchoolBusservice .661

2 Disciplineintermsofbehavior .780

Factor 3:“Teaching”


1 TeacherorFaculty .614

Factor 4:“Branding”


1 Brandvalueofschool .868

2 UniquenessorInnovation .617

AspertheRotatedComponentMatrixtheothereigenvaluesare not considered in factor because either they are lessthan.600orinnegativestate.So,itsnotfeasibletointerpretsuchfactors.

Anova Analysis1. Analysis between Level of satisfaction and Co-curricular activity

H0: Cocurricularactivitiesrelatedthelevelofsatisfactionofparents.

H1: Co curricular activities doesn’t related the level ofsatisfactionofparents

Anova

Sum of Squares

df Mean Square

F Sig.

BetweenGroups .308 5 .062 .187 .965

WithinGroups 8.567 26 .329

Total 8.875 31

Analysis:

As p-value is.965, which is greater than.05, thereforeweacceptthenullhypothesis.Sowefurtherinterpretthattherecanbesamplingerrororthisvalueariseasamatterofchanceaswecan’tanalyzethelevelofsignificance.


2. Analysis between fees structure and level of satisfaction

H0: Fees structure is important factor for level ofsatisfactionofparents.

H1: Feesstructureisnotimportantforlevelofsatisfactionofparent.

Anova

Sum of Squares

df Mean Square

F Sig.

BetweenGroups .974 4 .244 .832 .516


Total 8.875 31

Analysis:

p-valueis.516,whichisgreaterthan.05.Thereforeweacceptthenullhypothesis.Sowefurtherinterpretthattherecanbesamplingerrororthisvalueariseasamatterofchanceaswecan’tanalyzethelevelofsignificance.

3. Analysis between Brand and level of satisfaction

H0: Brand is closely relatedwith level of satisfaction ofparents.

H1: Brand closely related with level of satisfaction ofparents.

Anova

Sum of Squares

df Mean Square

F Sig.

BetweenGroups 2.621 4 .655 2.829 .044


Total 8.875 31

Analysis:

The F-value is 2.829. As p-value is.044, less than.05 atgiven level of significance. Therefore we reject the nullhypothesisandacceptalternativehypothesis.SowefurtherconcludethatBrandofaschoolandlevelofsatisfactionofparent corresponding to school are significantly related toeachotherandthereisacauseandeffectrelationship.This

furtherinterceptthatthedependentvariablei.e.Satisfactionis significantly affected by the independent variable i.e.Brand.

4. Analysis between Faculty and Level of satisfaction

H0: Good Faculty improves the level of satisfaction ofparents.

H1: GoodFacultydoesn’timprovesthelevelofsatisfactionofparents.

Anova

Sum of Squares

df Mean Square

F Sig.

BetweenGroups 2.191 3 .730 3.059 .044


Total 8.875 31

Analysis:AsF-value is 3.059. P-value is.044, less than.05 at givenlevelofsignificance.Thereforewerejectthenullhypothesisand accept alternativehypothesis.Sowe further concludethatFacultyofaschoolandlevelofsatisfactionofparentcorresponding to school are significantly related to eachother and there is a cause and effect relationship. Thisfurtherinterceptthatthedependentvariablei.e.Satisfactionis significantly affected by the independent variable i.e.TeacherorFaculty.

5. Analysis between Innovative skills and level of satisfaction

H0: Innovative skills reflect the level of satisfaction ofparents.

H1: Innovative skills reflects doesn’t affect the level ofsatisfactionofparents

Anova

Sum of Squares

df Mean Square

F Sig.

BetweenGroups 1.542 4 .385 1.419 .255


Total 8.875 31

“Brand of school is related to the level of satisfaction of

parents.”

FieldInningsnMakingAChoiceofPre-PrimarySchooln 65

Analysis:

Asp-valueis.255,whichisgreaterthan.05.Thereforeweacceptthenullhypothesis.Sowefurtherinterpretthattherecanbesamplingerrororthisvalueariseasamatterofchanceaswecan’tanalyzethelevelofsignificance.

Factors In A Nutshell• Overall environment of school can be improved by

improvingthelevelofdisciplineinschool.

• Byimprovingtheoverallfactorslevelofsatisfactionofparentscanbeimproved.

• Bus service, faculty, co-curricular activities are keyfactorsforupbringingofachild.

ConclusionBy using SPSS we have been able to derive level ofsatisfactionof parentswith the respected factors andhowthissatisfactioncanbeimprovedbasedonvariousanalysisandinterpretationdonewiththehelpofcoefficient,lambda,chi-squareandANOVAanalysis.

AsresearchwasdoneinNorthDelhiregionuponBusiness,service,professionalclassgrouppeople, thepreferenceofeach group differs as they have different states of mind.So, it’s possible that one factor importance may not thatimportanttootherassamplewastakenwithamixtureofallthesegrouprandomly.

“Innovative skills reflect the level of satisfaction of

parents.”


RecessionProofBusinessesTheseare thebusinesses thatwill thrivenomatterwhat theeconomyisdoing,quitesimplybecause theyprovideservicesthatsocietyingeneralcannotgolongwithout.

1.Health Care:Healthservicesoccupationsincludingmedicalassistants,homehealthaides,physicaltherapistsandmedicalrecordstechniciansaccountforclosetohalfofthe30fastestgrowingoccupations.

2.Education:Teachingisgenerallyimmunetoashakyeconomy,particularlyifyou’reteachinginanareawithahighgrowthrate.

3.Energy:Anythingrelatedtoalternativefuelsources,oilandgasandotherenergysourceswilllikelyflourishincomingyears.

4.Environmental: If you have “green” skills in sustainability and other environmental issues, you will be indemand.

5.Security:Policeofficers,internationalsecurityexpertsandotherswhofightcrimewillstillareinneedeveniftheeconomyturnssour.

6. International Business:Workinginanothercountry,orsimplybeinganexpertaboutanothercultureorlanguage,willworktoyouradvantageduringarecession.

(Source : wikipedia.com)

Abankisafinancialinstitutionwhoseprimaryactivityistoactasapaymentagentforcustomersandtoborrowandlendmoney.Itisaninstitutionforreceiving,keeping,andlendingmoney.Currently,Indiahas88scheduledcommercialbanks(SCBs)-27publicsectorbanks(thatiswiththeGovernmentofIndiaholdingastake),29privatebanks(thesedonothavegovernmentstake;theymaybepubliclylistedandtradedonstockexchanges)and31foreignbanks.Creativity impliesevolutionof ideas:generationofnew thinking,newaims,andperspectivesandinturntheabilitytothinkbeyondtheunthinkable.Creativethinkingabilityfacilitatestheabilitytorealizeinnovation.

Inour studywehavedone the studyofpublic sector andprivate sector bank (one from each sector) about the Customer Satisfaction and Innovation in retail bankingby these banks vizSTATEBANKOF INDIAandHDFCBANKLtd.

STATE BANK OF INDIA is the leading public sector bank in India as well as Delhi with 189 branches in Delhi.

HDFCBANKLtd.istheleadingprivatesectorbankinDelhiwith66branchesoperationalinthecapitalofIndia.

Objectives of the StudyThebasicobjectiveofthisresearchprojectistocomparethelevelofinnovationintheproductlineofferedbythePublic&PrivateSectorbank.

Methodology of the StudyThebulkofallmoneytransactionstodayinvolvetransferofbankdeposits.Depository institutions,whichwenormallycall BANKS, are at the very center of our monetarysystem.Thegeneralobjectofagoodbankingsystemwillbe to provide for all advantages and to guard against allthe dangers inherent in bank credit. In order to stimulateeconomic growth, we need strong, aggressive bankingsystem.Themainreasonforselectingthistopicistocompareandhighlight the starperformers in thefinancialproductsofferedbySBIandHDFCbankandtoidentifythecreativeandinnovationsintheirofferings.

Aanchal Tyagi, Harneet Kaur, Menu Sharma, Ankit Mehta, Priya Luthra, Priyanka Chadda

PGDM(2008-10)

Creativity&InnovationinRetailBanking

Research ApproachThereporthasbeenpreparedonthebasisofbothprimaryandsecondaryresearchmethods.

The product innovation analysis is done entirely throughthe secondary methods. The data was collected from thewebsitesof the respectivebanksand the leaflets availableatthebankcounters.FortheanalysisPie&Barchartshasbeendrawnbasedon thenumbersofproducts in theeachcategory.

Creativity and Innovation

The performance and the product range of these banks isoneofthefinestinthebankingindustry.STATEBANKOFINDIAistheleadingpublicsectorbankinIndiaandDelhialsowithtotalof189branchesinDelhi.HDFCBANKLtd.istheleadingprivatesectorbankinDelhiwith66branchesoperational in the capital of India. There is exemplarycreativity,innovationinproductsofthesebanks.Thusitisappropriatetocomparetheofferingsofthesetwobanksanddeterminetheircompetencetowardseachother,astwobanksareoneofthemostpre-dominantinthebankingsector.

The elaborate discussion along with the identification ofinnovative products shall be undertaken, tabulation of theproductrangeisprovidedinordertodepictproductportfolioin each segment .wherever theseproducts are comparableappropriateanalysisisprovided.

Analysis1. Deposit Schemes

TheHDFCandSBIareprovidingvariousdepositschemeswhichareinnovative.Theseareshownasbelow:

FieldInningsnCreativity&InnovationinRetailBankingn 67

Deposits Loans Cards Services

Parameter of Analysis

Amongtheabovementionedaccounts,HDFCdistinctivelyoffers Defense Salary Account. It also provides accountfor kids and senior citizen which SBI does not provide.HDFC has maintained good relation with corporates byofferingvarietyofsalaryaccountsfortheiremployes.Itisalsoofferingaccountsforfarmers.PublicsectorsbankslikeSBIarepreferredforFDsbecauseoftheirrangeofoptionsin FDs. But for saving accounts and currents accounts,customersgetbetteroptionsfromaprivatesectorbanklikeHDFC.NoFrillaccountsbybothbanksareintendedtooffersimplicityinbanking.

Table 1:HDFCDepositschemes

Savings a/c Current a/c Fixed Deposits Salary a/c

Regularsavinga/c PlusCurrenta/c RegularFixedDeposit PayrollSalarya/c

SavingsPlusa/c TradeCurrenta/c SuperSaverFacility ClassicSalarya/c

SavingsMaxa/c PremiumCurrenta/c Sweep-inFacility RegularSalarya/c

SeniorCitizena/c RegularCurrenta/c HDFCBankPreffered PremiumSalarya/c

NoFrillsa/c RFC-Domestica/c DefenceSalarya/c

RetailTrusta/c FlexiCurrenta/c PensionSavingBanka/c

KisanClubSavingsa/c ApexCurrenta/c

Kid’sAdvantagea/c MaxCurrenta/c

KisanNofrillsa/c ReimbursementCurrent

FamilySavingsGroup

Table 2 :SBIDepositscheme

Savings a/c Current a/c Fixed Deposits Salary a/c

SavingBanka/c RegularCurrenta/c RecurringDeposita/c CorporateSalaryPackage

SavingPlusa/c Nofrillsa/c CapainsPlusa/c

PremiumSavingsa/c SBI1000

CapainsPlusa/c SBIMODS

NoFrillsa/c SBITaxSavingsScheme

MultiOptionDeposit

ReinvestmentPlan

SpecialTermDeposita/c

“Creativity thinking ability facilities the ability to realise

innovation.”


2. Loans

Thereisvarietyofloansofferedbythesebanksasshownintablebelow:

Table 3:LOANSprovidedbyHDFCandSBI

HDFC SBI1 Personalloans 1 SBI-flexihomeloan2 Two-Wheelerloans 2 SBImaxgainhomeloan3 NewCarloans 3 SBIrealtyhomeloan4 UsedCarloans 4 SBIfreedomhomeloan5 ExpressloansPlus 5 SBIoptimaadditionalhome

loan6 Goldloan-Termloan 6 SBIhomelinespecialpersonal

loan 7 Goldloan-Overdraft 7 SBIcareerloan8 Educationalloan 8 LoanforEarnestMoney

Deposit9 Loanagainstsecurities 9 Carloan10 Loanagainstproperty 10 Educationalloan11 Tractorloans 11 SaralPersonalloan12 Commercialvehicle

finance12 SBIloanforpensioners

13 WorkingCapitalFinance

13 Loanagainstmortgageofproperty

14 Constructionequipmentfinance

14 Loanagainstshares&debentures

15 RentPlusScheme(Termloan)16 Medi-plusScheme17 Propertyloanscheme18 LoanforESOPs19 EasyTravelloan20 Festivalloan21 Teacher-Plusloan22 Sainik-Plusloan23 Tribal-Plusloan24 CreditKhazana-Tractorloan25 CreditKhazana-Scoomloan26 SBIreversemortgageloan27 Shorttermhousingloan28 GramNivasScheme29 Scholarloans

SBIhasawiderangeofhomeloanswith7typesofoptionsSBI also offers special loan facilities for employees of

corporate sector, teachers, soldiers and rural people.Comparatively the range of loans provided by HDFC isless innumber thanSBI.ThisshowsSBI isarisk– takerascomparedtoHDFC.Becauseofprevailingsocialnormsandpreferencetotakeloansfrompublicsectorbanksduetosafetyoffundsandlowerinterestrates.

The tabledepicts theproductsoffered in thiscategoryaremoreinnumberforSBIascomparetoHDFC.

3. Services:

Thissegmentincludesdepictionofservicesofferedbybothbanks.

Table 4:ServicesofferedbyHDFCandSBI

HDFC SBI1 NetSafe 1 MobileBankingServices2 SmartPay 2 DematServices3 Forexservicesbranch

locater3 ATMServices

4 MerchantServices 4 InternetBanking5 PrepaidRefill 5 ForeignInwardRemittance6 BillPay Telegraphic/wireTransfers7 VisaBillPay 6 Lockers8 DirectPay 7 PublicProvidentFund

Scheme19689 Instapay 8 MagneticInkCharacter

recognition10 Visa Money Transfers 9 e-Invest11 e-MoniesElectronic

FundsTransfer10 MultiCitycheques

12 ExiseandServicesTaxPayments

11 CustomerCare

13 OnlinePaymentOfDirectTaxes

14 DonatetoCharity15 NetBanking16 InstaAlerts17 MobileBanking18 ATM19 PhoneBanking20 EmailStatements21 BranchNetwork22 One View23 CreditCardsonline

“The bulk of all money transactions to day involve transfer of bank

deposits”


TheservicesofferedbyHDFC(Aprivatesectorbank)aremorethantheservicesofSBI(Anationalizedbank).HDFCprovides special services to pay bills and taxes on theircustomersbehalf. It isalsoofferinginnovativeservicesofprepaidrefillandsmartpay.

OntheotherhandSBIdespitebeingtheoldestbankinthecountry has notmademuch innovative efforts to provideservices differently. HDFC however has all the servicesrendered by SBI along with their package of innovativeservices.

“The general object of good banking system will be to provide for all

advantages and to guard against all the dangers inherent in bank credit.”

B. Prepaid Cards B. Prepaid Card

1 ForexPlusCard 1 SBIVishwaYatraForeignTravelCard

2 GiftPlusCard 2 GiftCards

3 FoodPlusCard 3 eZ-PayCard

4 MoneyPlusCard

C. Debit Card C Debit Card

1 EasyShopInternationalDebitCard

1 SBIInternationalATM-Cum-DebitCard

2 EasyShopGoldDebitCard

2 SBIGoldDebitCard

3 EasyShopInternationalBusinessDebitCard

3 SBIATMCumDebitCard

4 EasyShopWomen’sAdvantageDebitCard

4 SBIYuvaCards

5 EasyShopNRODebitCard

D Others D. Others

1 CompareCard 1 PayRollCard

2 AddOnCard 2 SBICashPlusCard

3 MyCityBenefitCard

HDFChasawiderangeofcreditcardsfordifferentsegmentsof targetmarket.However in prepaid cards both SBI andHDFChasdifferentrangeofcards.Exceptforcreditcards,the number of cards offered by each of the two banks ismoreorlesssame.

Figure 1:Comparisonofservices

ThisisevidentfromabovethatstarperformingproductsaremoreinHDFCascomparetoSBI.

4. Cards

The range of different cards offered by both banks is asbelow:

Table 5 :cardsofferedbyHDFCandSBI

HDFC SBI

A. Credit Cards A Credit card

1 SilvercreditCard 1 SBICreditCard

2 Goldcreditcard

3 TitaniumCreditcard

4 ValuePlusCreditCard

5 Woman’sGoldCreditCard

6 PlatinumPlusCreditCard

7 CorporatePlusCreditCard

8 CorporateCreditCard

9 BusinessCreditCard

Figure 2

Fromtheabovefigure2,itisclearthatrangeofcardsofferedbyHDFCismoreascomparetoSBI


Limitations• Respondents were reluctant to provide adequate

information.• Responsesofsomecustomerswerenotuptothemarkof

thequestionnaire.• Paucityoftimecouldn’tallowdetailedstudyandthusvast

studyinformationcouldnotbeincludedintheproject.• Lack of availability of required data about banking

industryindifferentjournals.

Recommendation And Suggestion1.HDFC should introduce more number of ATM and

branches,astheyarecomparativelylesserthanSBI.2. SBI should increase types of saving accounts, should

havevariationinsalaryaccount3. SBIshoulddo360degreeanalysisofemployees

Future perspectiveAfterhavingabroadviewofvariousservicesprovidedbySBIandHDFCbank, it canbe said that the conventionalscenarioofretailbankinghasundergoneadrasticchange.These banks are ruling the retail roost in the country. Infuture, a rangeof products should be introducedby thesebanksandtrytoincreasecustomersatisfaction

Bibliography • www.sbi.co.in• www.hdfcbank.com• www.rbi.org.in• www.google.com• BusinessResearchMethods,ICFAI.• BusinessResearchMethodology,Coopers.

“In order to stimulate economic growth, we need strong aggressive

banking system.”


DeterminationIn1883,acreativeengineernamedJohnRoeblingwasinspiredbyanideatobuildaspectacularbridgeconnectingNewYorkwith theLong Island.However bridge building experts throughout theworld thought that thiswas animpossiblefeatandtoldRoeblingtoforgettheidea.Roeblingcouldnotignorethevisionhehadinhismindofthisbridge.Heknewdeepinhisheartthatitcouldbedone.HesharedthedreamwithhissonWashington,anupcomingengineer,thatconvincedhimthatthebridgeinfactcouldbebuilt.Workingtogetherforthefirsttime,thefatherandsondevelopedconceptsofhowitcouldbeaccomplishedandhowtheobstaclescouldbeovercome.Theyhiredtheircrewandbegantobuildtheirdreambridge.Theprojectstartedwell,butwhenitwasonlyafewmonthsunderwayatragicaccidentonthesitetookthelifeofJohnRoebling.Washingtonwasinjuredandleftwithacertainamountofbraindamage,whichresultedinhimnotbeingabletowalkortalkorevenmove.EveryonehadanegativecommenttomakeandfeltthattheprojectshouldbescrappedsincetheRoeblingsweretheonlyoneswhoknewhowthebridgecouldbebuilt.InspiteofhishandicapWashingtonwasneverdiscouragedandstillhadaburningdesiretocompletethebridgeandhismindwasstillassharpasever.Ashelayonhisbedinhishospitalroom,withthesunlightstreamingthroughthewindows,anideahithim.Allhecoulddowasmoveonefingerandhedecidedtomakethebestuseofit.Bymovingthis,heslowlydevelopedacodeofcommunicationwithhiswife.Hetouchedhiswife’sarmwiththatfinger,indicatingtoherthathewantedhertocalltheengineersagain.Thenheusedthesamemethodoftappingherarmtotelltheengineerswhattodoandprojectwasunderwayagain.For13yearsWashingtontappedouthis instructionswithhisfingeronhiswife’sarm,until thebridgewasfinallycompleted.Today the spectacularBrooklynBridgestands inall itsgloryasa tribute to the triumphofoneman’sindomitablespiritandhisdeterminationnottobedefeatedbycircumstances.Itisalsoatributetotheengineersandtheirteamworkandstandstallasatangiblemonumenttotheloveanddevotionofhiswifewhofor13longyearspatientlydecodedthemessagesofherhusbandandtoldtheengineerswhattodo.

‘DesiDreamMerchants’ sketches the life ofMudra fromits modest beginning to the struggle and then finally therunawaysuccess.ThebookdealswithAGKrishnamurthyexperiences,achievementsandinsightsfrom1980to2003inthreeparts.Inthefirstpart,called‘DesiDreamMerchants’,AGK’sex-colleaguesshedlightonhowtheygotassociatedwithMudra and what it took to establish the brand. ThesecondpartshedslightonAGK’slearningsandexperiencesintheworldofadvertising.ThethirdandthelastpartisacompilationofhisfavoriteadvertisementssuchastheBoostadvertisementfeaturingSachinTendulkarandBrettLee,AirDeccan,McDonald’sHappyPriceMenuadandCadbury’s‘Pappu Pass HoGaya’ ad. The book also has extracts ofAGKSpeakcolumninBusinessStandard.Hespeaksofhisbygone days, remembering DhirubhaiAmbani, who waybackin1980handedhimthemandatetobegintheMudraAdAgencyandcreatethebesttextileadvertisinginIndiawithRs.35,0000.Dhirubhaiputalorryloadoftrustandenoughfueltolasttillthenearestpetrolpump,Krishnamurthysaysas he got to task, the right people. Those who obviously

‘walked English, talked English and Advertised English’weretherulersofthemarketatthattime.Fortunately,withtimeheandhisteamwereabletochangethatandtheyhiredthosepeoplewhohadastrongcommandovertheirregionallanguagesandhad‘fireintheirbelly’.

Themainfocusandmoralofthebookis:‘Dreambig’.AGKsays,“KeeptheFaithinyourown-selfandbelieveinyourownDreams-Ifyoudreamandworkhard,soonerorlater,successisatyourowndoor-step”

TheDesiDreamMerchantsBackcoverbegins“Managementtheoristshaveopinedthatleadersneedfollowers.Andhavingadreamteamisoneofthelatentdesiresofallmanagersandleaders.”

In his amiable style, Krishnamurthy enlivens the bookinvolving the team spirits with anecdotes and stories ofthe team.Overallagoodbook to readandmust read forstudentsofmanagementwhohaveanentrepreneurialdrivetomake amark. It has somequintessential lessonswhichmakeusthinkinanewlight.

Saba ShafiPGDM(2008-10)

DesiDreamMerchants


Doyouknow?1. TheworddreamisderivedfromDreme.Dremestandsforjoyandmusic.2. Peopleoftensaythatwedon’tdreams.But,thefactisthateveryonedreams.3. Youwouldbeastonishedtoknowthatmajorpartofyourlifeisspentinsleeping,i.e.approximatelyone-thirdof

life.4. Kidsuptotheageof3and4neverdreamaboutthemselves.5. Youwouldbeamazedtoknowthatusuallychildrenwatchnightmares.Theusualagegroupis3anditcontinues

upto8.6. Peoplewhobecomeblindafterbirthcanalsoviewdreams.Theirimagesareinaccordanceofthetimewhenthey

gotblind.7. Youcannotdreamwhilesnoring.8. Dreamsarealsoessential forahealthy life. Ifyoudon’thaveadequatedreamactivity then it signifies lackof

protein.Italsosignifiesprobleminone’spersonality.9. Within5minutesofwaking,halfofyourdreamifforgotten.Within10,90%isgone.10.Afull12%ofsightedpeopledreamexclusivelyinblackandwhite.Theremainingnumberdreamincolor.

(Compiled from various sources on Internet)

Thebooktalksaboutsimplehabitswhich,whenimplemented,canpositivelytransformandenrichpeople’slivesbylendingthemanaltogethernewperspectivetoviewtheworld.

This358-pagebook,throughitssevenchapters,givesanewdefinitiontotheterm‘effective’andembodiesfundamentalprinciplesthatcontributetoeffectivenessofanindividual.What is remarkable is the manner in which the authordiscussesdecisionsthatareprimaryandyetsopowerful,thatinternalizingthemcanactuallypaveone’spathtohappinessandsuccess.

Unlikemostmanagementbooks,‘TheSevenHabits...’doesnottargetanyspecificreadergroup.Conversely,thefluidityofitslanguageensuresthatthisstore-houseofinformationcaneasilybereadbyanyoneandeveryone!

In its introductory chapter, the book says that ‘BeingProactive’ is the first step towards our ultimate goal ofbecomingeffective.ThesecondchapterhighlightsHabit2,whichisto‘BeginwiththeEndinMind’.Chapter3dealswith thehabitofpersonalmanagement i.e.putfirst thingsfirst.

The next is the concept of ‘ThinkWinWin’ describes anattitude whereby mutually beneficial solutions for all theparties involved can be sought. Chapter 5 focuses on thepowerof‘Empathyi.e.Seekfirsttounderstandandthentobeunderstoodandchapter6discusses theSynergyeffect,which helps to unify the immense powers within people.

In the last chapter, the author focuses on balanced self-satisfaction & discusses the four dimensions (physical,mental,emotionalandspiritual)of‘Renewal’.

Amajorstrengthofthebookisitscentralthemeitself,i.e.,simple habits that are capable of positively transformingan individual’s life. The easy, consistent and logical flowof ideas will definitely appeal to people from all fields -students, academicians. Covey needs to be complimentedforartfullyhighlightingissueswithoutbeingpreachy.

However,certainconceptsrequirefurtherclarification.Forinstance,inanexampleofaWinWinsituation,theauthorsuggestsrewardingeveryoneoraverylargenumberofpeopleastherightapproach.This,however,maybeunrealisticand,therefore,maynotfindapplicationinreallife.

Furthermore,mostexamplesinthebookareUS-centricandconsequentlyreadersinotherplacesmaynotfinditeasytorelatetothem.Also,whiletheuseofcharts,diagramsandtablesismeanttoclarifyconcepts,theirover-useatcertainplaces puts the book in the danger of being labeled as asciencetext-book.

To conclude, ‘The Seven Habits...’ comprehensivelydescribes thehabits thatcan trulyandpositively influenceand transform our lives. Over all, the book makes aninterestingread,anddeserves tobereadandimplementeduponagainandagain.

Nidhi GuptaPGDM(2008-10)

Sevenhabitsof HighlyEffectivePeople

BookWorthnSevenhabitsofHighlyEffectivePeoplen 73

The 8thHabitCovey’sbookThe 8th Habit: From Effectiveness to Greatness(publishedin2004)functionsasthesequeltoTheSevenHabits.Coveyclaimsthateffectivenessdoesnotsufficeinwhathecalls“TheKnowledgeWorkerAge”.Heproclaimsthat“[t]hechallengesandcomplexitieswefacetodayareofadifferentorderofmagnitude.”The8thhabitessentiallyurges:“Findyourvoiceandinspireotherstofindtheirs...”Somanypeople feel frustrated,discouraged,unappreciated,andundervalued --with littleornosenseofvoiceoruniquecontribution.The8thHabitistheanswertothesoul’syearningforgreatness,theorganization’simperativeforsignificanceandsuperiorresults,andhumanity’ssearchforits“voice.”

Source: Wikipedia

Once upon a time therewas an intelligent person, tastingsugarcane.Afoolishpersoncameandaskedhim,”whyareyoulookingsohappy?”“Ihavetastedsugarcaneanditwasvery sweet,” the intelligent person replied. Then the foolasked “how did sugarcane look like?” Former answered,“like bamboo”. Immediately, the foolish person startedsearchingforthat.Everythingwhichlookedlikeabamboo,hechewedandtasted.Buttherewasnosweetness.

Inthesamemannerwearesearchingforhappiness.Somewayor the other, we have linked money and luxuries withhappiness.Butwearenolessthanthatfoolishperson.Wedon’tknowfromwheretogethappinessweallarerunningafteritmadly.Actuallythereisnothingwrongwithearningmoney.The faults are in the process.We are educated insuchamannerthatanyhowwehavetosecuregoodmarks.It develops competition, which leads to enviousness andto non- cooperation further. Now just imagine a societywherenoonelikesother’sgrowthandprosperity.Butthisis not something new; actuallywe are living in the samesociety.Peoplewanttomakeasmuchmoneyastheycan.Theyevendon’tbotherabouttheprocess,whattotalkoftheconsequences.Evenwhat to talkofotherswhenwedon’tbotheraboutit.ThenIfeelmoreshockedwhenpeoplesaythatourpoliticiansarecorrupt.Andthatisslowingdownourgrowth.Wesaythatourpoliticiansaregreedyforpowerandwealthetc.Theywanttolivetheirlifelavishly.

Sodearfriends,wearealsointhesamequeue.Theremaybe a difference in level of corruption. We are also self-centered;wealsowanttohavepower,money,andallthatwhatpoliticianswant.Andthesamewillcontinueforever.Wearealwaysaredrivenbythisasweareneglectingourpreciousheritagei.e.TheVedasandScriptures.

Everyone is full of anxiety despite possessing money,comforts,andluxuries.Everyonewantstoincreasehappinessunlimitedly and put a stop to all sufferings.Despite theirhardworkday andnight, peopleonlyfind their problemsincreasing.Why?Thewestern countries have reached thesummitofmaterialcivilization-Mobiles,ComputerSystem,Broad highways, Fine cars, Fast flights andmachines foreverything–butpeopleareunhappyanddissatisfied.Thenumber of divorces, suicides, mental illnesses, crimes,allare increasing inAmerica,arenotasignofhappiness.The government has difficulty controlling crimes, drugsaddiction, adultery, etc.Not onlyAmerica, but all aroundtheworldsituationisthesame.Whyismanunhappyevenafter possessing practically everything necessary for acomfortableandluxuriesliving?

The reason is that there is no clarity of the goal of one’slife. Rushing to reach the destination is good but oneshouldknowwhatone’sdestinationis,whereonewantstogo.Withoutknowing thedestination, if aperson isbusilyrunninghereandtheremindlesslyallhistime,hewillendupemptyhanded.Thereforeoneshouldknowfirst:“whyIambornintothisworld?”

ScripturesandVedasarethebasisofourlifeandculture;wegetallthenecessaryinformationthatisrequiredtolivethelifehappily.Aninsightintothesewillnotonlyhelpgainananswertotheabovequestionbutalsorevealthetrivialityofthe‘race’weallarerunning.

As confirmed inBhagvatGita byLordHimself that onlythosewhoareintelligentfollowmyinstructions.Sowemustbeintelligentenoughandtrytomakeourlifehappy.Andnotonlytobehappyforamoment,butforthelifetimealso.

Kapil SharmaPGDM(2008-10)

ABitterTruth


Happiness is not in our circumstance but in ourselves. It is not something we see, like a

rainbow, or feel, like the heat of a fire. Happiness is something we are.

— John B. Sheerin

Let me begin with simple question how many of us arehappyandsatisfiedwithourlife,ourjobandourexistence.Nodoubtwe are living in a progressiveworldwhichhasfarbettermeansof leisure than theprimitiveworld couldhaveprovidedusbutstillwearedissatisfied.Haveyoueverthought why people in older days used to be happy andcheerfulinspiteoffewerresources?Todaynomatterhowmanyresourceswehave,howmucheducationwehave,howmuchwealthwehavewearestillunhappyanddissatisfied.Formany people having these things in life is happinesswhichisjustanillusion.Truehappinessdoesn’tlieoutsideyoubut it lieswithinyou- it lies inyournature, soul andpersonality.Thesoulreasonofourunhappinessis thatwehavelostourfaithinourbasicvaluesandvirtueswhicharethetruemeansofones’happiness.

Letmeforegroundthispointwithasimplestory.Itisastoryof a boy whose life started from a countryside where heusedtolivewithhisfamily.Hisfatherwasanhonest,hard-workingandselfmademan.Hehadtofacealotofhardshipsinmaintaininghis family.Hewasanadherentofhonesty,truthand self respect.Hehada lotofhopes romhis son.Hewantedtomakehimamanofletters.Healmostdevotedallhislifetocollectmoneyandrespectsothatonedayhissoncouldgotometro-cityforfurthereducation.However,there was something which made him uncomfortableandthatwashissonwasnotabrightchild.Hewantedtolearnbut theproblemwas thathenever learntbecauseofhispoorunderstanding.Moreover,hewasaveryunhappychildbecausehisgoodeffortswereneverreciprocatedwithgratitudefromthepeoplehehelped.Everytimeheusedtocomplainhisfatherthathewouldnolongerbeanhonestandvirtuousboyaseveryonecheatedhimandmadefunofhim.Atthattimehisfatherusedtoreciteoneline:

Knowthenthistruth,enoughformantoknow, Virtue alone is happiness below

His father used to ask himwhat is likely to bring glory-honesty in a shopkeeperor corruption in aminister.Theninstead of getting response form the boy he used to say,‘nothinkingisneededtoanswerthatanhonestshopkeepercanwingreaterglorythanacorruptminister.Theboywasneversatisfiedwithhisfather’sphilosophy.Therewerelot

ofquestionswhichtroubledhimandhecouldn’tgetridofthem.

Theteachingshereceivedinhischildhoodfromhisfatheri.e. we should have faith in virtue, we should bequeathforgiveness,weshoulddevelopourCharactersoandsoforth;thesethingsalwayshauntedhimlikeanightmare.Onceheenteredinhisadolescencehemadeuphismindtotalkaboutitwithhisparents.Father,whenheheardhisboy’sproblems,regardinghisconfusedmindbecausehisfather’steachingsandhisworldlyexperienceandhispoorunderstanding,wasactuallyintearsashecouldn’tunderstandhim.Buthewasamanofgreatforbearance.HeagainsaidthatIwantmysonshouldbeamanofCharacterandCharactercannotbebuiltinaday.Ittakesyearsofself-exploration,self-suppressionandself-denialtodevelopaCharacter.

He helped his son in every way. Owing to his father’sreputationhegotadmissioninoneofthebestcollegesofhisarea.Manygoodteachersgavehimtuitionandhecompletedhis graduationwith 60%marks. Then he started learningthingwithdeepunderstanding.Heknewabouthisfather’ssecret ambition that hewantedhis son to go to a reputedinstituteof themetro-city. Inorder to fulfillhisdesireheburnt mid-night oil to get through with 85% marks. HisfathersendshimDelhiwithfollowinginstruction:

Honourandshamefromnoconditionrise; Actwellyourpart,thereallhonourslies.

The son took farewell from his family and started hisjourneywithhopeandhappiness.Butthesonwasslightlyuncomfortable in that new environment. He was utterlyconfusedwhattodoorwhatnottodo;becausewhereverwegowehadinteractionwithdifferentkindsofpeople.OntheveryfirstdayattheinstitutehewashandedaplannerwhoseveryfirstpageconsistedaletterofAbrahimLinconwhichhehadwrittentotheprincipalofhisson.Astheboywentthroughthecontentoftheletter,itseemedtohimasifhisfatherwascommunicatingwithhimthroughthisletter.Hisconfusionwasautomaticallydissolvedandhemadeuphismindtofollowhisfathersteachings.Initiallyhisfriendsusedtolaughathimbecauseofhistruthfulness,helpingnatureandhisdown-to-earthpersonality.Laterontheyrealizedthat

Deepak JainPGDM(2008-10)

Virtue alone is happiness

SoulFoodn Virtue alone is happiness n 75

itisnothisweaknessbuthisstrength.Graduallyeverybodyrealized thathewasaboyof substance.People thenheldhiminaweandrespect.

At this stage he realized theworth of thosewordswhichheusedtohearfromhisfatherandthesenseofsatisfactionwhichhedrovethroughpracticingthem.Thefourmantrasinhislifewere:

• Giverespect• Makerequest• Behonest• Dohumanity

Heusedtotakeprideinthesefourvirtuesandwasthehappiestmaneverafter.Nowletscometothebasicunderstanding;whatexactlyvirtueis?Virtuemeansgoodmoralqualityinaperson,orthegeneralqualityofgoodnessinaperson.Itisnotconfinedtomodestyinagirlandhonestyinaman.

Asweepercanbevirtuousifheishardworker;acorporatepersoncanbevirtuousifheisdisciplined;ateachercanbevirtuous if he is patient.Sometimeswecomeacross suchstatements like ‘virtue isaveryoverrated thingforme’. Iwanttoaskisitreallyso?Haven’tweseeninourdailylifelotofpeopleworshippingGods,Saintsand their religiousGurus-why?Theyworshipthembecausetheyadmiretheirvirtuewhichisnothingbuttheirholinessandpiousness.Atthattimetheynotonlyfeelhappybutalsofeelelated.Thosewhoareatheist,theyhaveatleastoneidealpersonintheirliveswhosevirtuestheyadmire.

Mypointisthatifwecanworshipthevirtuesinothers;whycan’twefindourvirtueswithinusandadmireandworshipthem. Small beginningsmake great endings.Mighty sky-scrapersareraisedoversmallfoundationstones.Ifsomeonewantshappinessinhislifetheyshouldstartupholdingtheirvirtueswhicharethetruesourceofhappiness.

“Honour and shame from no condition rise; Act well your part, there all honours lies.”


Business Virtues – By Seth Godlin Virtues of an Entrepreneur (www.angelsden.co.uk)

1. Ethics 1. Passion

2. Teamwork 2. Dedication

3. Honesty 3. Self-belief

4. Curiosity 4. Open-mindedness

5. HardWork 5. InspiredandInspiring

6. Intelligence 6. Cando,willdoattitude

7. Self-motivation 7. Focussed

8. Senseofhumor 8. WillingtoLearn

9. Initiative 9. Dedication

10. Creativity 10. StreetSmart

Virtues

One plus one makes three: this equation is the specialalchemy of amerger or an acquisition.The key principlebehind buying a company is to create shareholder valueoverandabovethatofthesumofthetwocompanies.Twocompanies together are more valuable than two separatecompanies-atleast,that’sthereasoningbehindM&A.

Ontheotherhand,ajointventureisacontractualbusinessundertakingbetweentwoormoreparties.

Automobile sectorIndia is a booming country. Now a day’s most of thecompanies’, world wide are not only selling but alsomanufacturing vehicles in India. This simply illustratesstrengthofIndiancustomerwhosecredentialsaspotentialbuyersincreased.ThishasforcedmostoftheinternationalbiggiestoeitherentertheIndianmarketdirectly(whichisacostlyproposition)or throughM&Aor JVswith Indianautomobilemajors.Thispartnershiphelpsboththeplayersasone isable toget the latest technologywhicharemorefuel efficient and more environments friendly and theotherbenefitsbytappingsuchahugemarketwhichisstilluntapped.

Some of the major movements in Indian market can betrackedasfollows:

Bajaj, KTM Power to jointly build bikes

BajajAutoisIndia’soneofthelargesttwowheelermakers.ThecompanyisnowreadytorolloutfirstofitsKTMbikeduringthefestiveseasonthisyear.ThenewKTMbikefromBajajwillmarkcompany’s foray in the750cc segment inIndia. The bikes will be launched as Completely KnockDown(CKD)unitsbythesecondhalfofthecurrentfiscal.

European sports motorcycle manufacturer KTM PowerSportsAG and BajajAuto Ltd, manufacturer of two andthree-wheelers,haveannouncedawiderangingco-operation.AccordingtoanofficialreleasefromBAL,theKTMGroupwouldprovidetheknow-howforthejointdevelopmentofwater-cooledfourstrokeengines(125ccand250cc)whichprovideKTM the basis formotorcycles in the new streetentry segment

Bajaj has 25 percent stakes in the Austrian bike maker,KTM.Thecompany feels that the IndianmarkethasnowmaturedtoabsorbthesuperbikesinIndia.Itisalsoplanningtobring250ccKawasakiNinja250RtoIndiawhichwillbepricedaroundRs.2.5–3lakh.

Bajaj will also assembler 690cc SuperMoto and 690ccDuke at its Chakan plant in Pune. BajajAuto managingdirectorRajivBajaj,saidthattheirChakanplantisthemosttechnologically advanced plant in the country.They havetheabilitytoassemblemostproductsattheChakanplant.

Althoughthecompanyplanstoassemblethebikeslocally,however,allthemodelswillbequiteexpensivefortheIndianmarkets.ThecompanyintendstostrengthenitspositioninthevaluesegmentinIndia.

ThejointdevelopmentswouldalsobeavailableasbasisforBajajproducts.Through thecooperationwithBAL,KTMwouldextenditsproductportfolioforthefuturewitha125-cc street product line, in addition to the present 1190-cc,990-ccand690-ccplatformsdevelopedandmanufacturedinAustria.

KTM is the company which is famous for its off-roadmotorcycle prowess and is rapidly gaining respect for itsexcellentstreetbikesaswell.Thestreetbikesarearecentphenomenon,whichwithBajaj’sequityinterventionshouldbeofgreatinteresttousaswell.

KTMhasbeenfiercelyindependentfromthestartandmuch-ifnotall-developmentisinhouse.TheotherthingKTMisfamousforisracing.KTM’staglineis‘ReadytoRace’andthatphilosophyisthereasonforthethrillingperformanceandcharacterofallitsmachines,fromthekiddie-motocrosserstothegiganticDakar-conqueringAdventure.

TheofficialwordontheBajaj-KTMtie-upisthattheIndiancompanywilltakeoverthedistributionforKTMsinSouthAsia,while the twowill jointlydevelop125cc and250ccproducts.TheseproductswillbereadytobebrandedBajajorKTMandcouldbesoldineitherformacrosstheglobe.WhileKTM’srangeofmachinesstartfrom50cconwards,three machines are of significant interest to us based onthe 800+cc CBU import rule. The first is the KTM 950Supermoto.

Abhinav Kansal, Pranjul SrivastavaPGDM(2008-10)

Mergers,AcquisitionsandJointVenturesinIndia

IdeasGalorenMergers,AcquisitionsandJointVenturesinIndian 77

This bikewas launchedonly last year and is a big 950ccV-twin in the supermotard format (dirt bike with streetwheelsandbrakes,moreorless).

WiththeintroductionofthenewEUdrivinglicense,whichallows riding of 125-cc motorcycles with a car drivinglicenseinallEUmemberStates,KTMwillbeinapositionto offer innovative premium entry models in the streetsegment,itnoted.ThesourcingfortheproductionandtheassemblingofthesenewmodelsinthestreetentrysegmentwouldbeinIndia.

KTMPowerSportsAGisamanufacturerofpowersportsvehicles.Withproducts inMotocross,Supermoto,EnduroclassesandwithonroadbikeproductssuchasSuperDukeKTMisa strongbrand inEuropeand theUS.Withmorethan 1,930 employees, the KTM Group earned revenueof €566.1 million in 2006-07. Over 23 sales subsidiariesdistributeKTMproducts to their1,400 independentKTMdealershipsworldwide.

Tata completes JLR buyout

In Mumbai Tata Motors said it had completed the $2.3-billionacquisitionofBritishluxurybrandsJaguarandLandRoverinanallcashtransaction.

TheactingChiefExecutiveOfficerof JaguarLandRoverDavidSmithwouldbethenewCEOofthebusiness,TataMotorssaidinastatement.

InMarch,atGaydonintheU.K,theIndianautomajorhadannounced that it has entered into a definitive agreementwithU.S.car-makerFordtobuyoutthetwoBritishluxurybrands.

ThiswasamomentoustimeforTataMotorsthatcompletesitbuyoutwithJaguarandLandRoverwhicharetwoiconicBritish brands with worldwide growth prospects. JaguarandLandRoverwill retain their distinctive identities andcontinuetopursuetheirrespectivebusinessplansasbefore,Tatasaidinastatement.

ThepurchaseconsiderationincludestheownershipofJaguarand Land Rover or perpetual royalty-free licenses of allnecessaryintellectualpropertyrights,manufacturingplants,two advanced design centres in the U.K., andworldwidenetworkofnationalsalescompanies.

TataMotorshasalsoenteredintolongtermagreementswithFordforsupplyofengines,stampingsandothercomponentstoJaguarandLandRover.

According to the statement, other areas of transitionsupportfromFordincludeIT,accountingandaccesstotestfacilities.

Both firms would continue cooperation in areas such asdesignanddevelopment throughsharingofplatformsandjoint development of hybrid technologies and powertrainengineering.

Further,FordMotorCreditCowouldcontinue toprovidefinancingforJaguarandLandRoverdealstocustomersforatransitionperiod.

The company is in advanced stage of negotiations withleading auto finance providers to support the Jaguar andLandRoverbusinessintheU.K.,EuropeandtheUS.

The financial services partners are expected to beselected shortly.Both the parties recognise the significantimprovementintheperformanceofthetwobrandsandlookforwardtothistrendcontinuinginthecomingyears.

ItistheTataintentiontoworkcloselytosupporttheJaguar,LandRoverteaminbuildingthesuccessandpre-eminenceofthetwobrands.

Asof27March2008,TataMotorsreachedagreementwithFord to purchase their Jaguar andLandRover operationsforUS$2billion.Thesale isexpectedtobecompletedbytheendofthesecondquarterof2008.TatawillalsogaintherightstotheDaimler,LanchesterandRover,brandnames.

Inadditiontothebrands,TataMotorshasalsogainedaccessto2designcentersand3plantsinUK.Thekeyacquisitionwould be of the intellectual property rights related to thetechnologies.

Power SectorIndiaisadevelopingcountryandisgrowingaroundtherateof7%annuallydespitethisrecession.Thisclearlyindicatestherisingneedsoftherequirementsofalltherawmaterials,labour,machineryandaboveallpowertorunthem.

Tocatertherisingneedsofourcountryasawholewenotonly need to increase power production but also need tomanageitprofessionallyintermsofitstrade.Alsosincethechangeofgovernmentpoliciestoallowprivateplayersnotonlytodistributebutalsotoproduceelectricity,thePowerSectorhasbecomeanextremely importantsector tostudyit.

TraditionallyIndiaproduceselectricityfromthermalpower

“India is a booming country. Now a day’s most of the companies’, world wide are not only selling but also manufacturing

vehicles in India.”


plants,hydropowerplants,windenergy,solarpowerplantsandtosomeextentfromnuclearpowerplants.Allofthemrequire huge amount to be spendboth in termsofmoney&spacebut themost efficient among them is thenuclearpower both in terms of production aswell as in terms ofenvironmentalconcerns.

Buttherecentsigningofthenucleardealfortheexpected80billion$marketsignalsthebeginningofanewera.NPCIL,the sole company in India dealing with nuclear powergenerationhassuddenlybecomeveryactiveandnowseemstobe among themost sought afterPSU.RecentlyNPCILsignedMoUswithcompaniesfromUS,Russia,FranceandKazakhstan.

AspromisedbytheIndiangovernment,someprivateplayershave also entered the fray. No doubt they’ll have majorcontributionsinnuclearpowerproductiononlyafter5yearsdowntheline.GMRawellrenownedinfrastructurecompanyplanstoinvestaroundRs.10Kcroretosetupnuclearpowerplantsinthenext5-7years.GMRisintalkswithequipmentandfuelsuppliersinFrance,UnitedStatesandKoreaforthepowerplant.NotonlynuclearbutGMRalsohasprojectstotakeupthecapacityto4,500MWinaboutfiveyearsfromnowfrom thecurrent800MW.Of theunderconstructionprojects, 1,500 MW would be hydroelectric power (twoinIndiaandthreeinNepal).Twocoal-basedpowerplantsadding2,200MWcapacityareunderconstructioninOrissaand Chattisgarh. Similarly, Videocon, Tata Power, GVKPower,JindalandReliancePowertoohaveevincedinteresttoinvestintheNuclearenergysectorpossiblythroughjointventureswithNPCIL.

But the biggest of all the deals in India will be betweenNTPCandNPCILwhere theyhave signedaMoU,underwhichthey’llformaJVcompany-whereNTPCwouldhold49percentofthestakeinthejointventurecompanyand51percentwouldbeheldbyNPCIL-tobuiltNuclearPowerPlants in India.Although the financial details of the jointventurewerenotdisclosed,Indianmediahasestimatedthatinvestmentinthejointventurewouldtotalsome150billionrupeesoverthenexteightyears.

Formakingthemarketmorecompetitiveapowerexchangeisbeingconstituted.Apowerexchangewouldfunctionlikecommodity exchanges and provide a platform for buyers,sellersandtradersofelectricitytoenterintospotandforwardcontracts.

NTPC isworking out the broad contours of the proposednationwide Power Exchange, with the consultants to theproject-NordPoolASAandCrisil-havingsubmittedtheirfinalproposalsforsettingupelectricitypoolingmechanisminthecountry.

MovingforwardaJVagreementhasbeensignedamongstNTPC,NHPC,PFCandTCS for incorporationof a JointVenture Company (JVC) to set up and operate a powerexchange at national level. The JV Company would beregisteredasaPublicLimitedCompanywithanauthorisedcapital of Rs 50 crore for setting up the power exchangeto provide neutral and transparent electronic platform forpowertrading.Theexchangewouldalsoensureclearingofalltradesinanefficientmannerwithaccesstoalltheplayersinthepowermarket.

NTPC has also taken a lead in the initiative to set up awholesalemarketforelectricity,whichisalsoexpectedtosee participation from trading major PTC India Ltd andPowerGridCorporationof IndiaLtd. It isalso likely thatthese companiesmay initially acquire some equity in theproject,Governmentofficialssaid.

Theworld’sonlymultinationalexchangefortradingpowerandoneofthemostefficientpoolingmechanisms,isownedby the national grid companies of Norway and Sweden.In view of the success of the pooling mechanism in theScandinaviancountries,abroadlysimilarstructurecouldbeconsideredforIndia,Governmentofficials involvedin theexercisesaid.

Ahigh-poweredtaskforcecomprisingofficialsfromPowerTradingCorporation(PTC),NTPC,PowerGridCorporationofIndiaLtd(PGCIL),CentralElectricityAuthority(CEA),and the Ministry of Power had visited the US, Norway,Canada,Australia,andtheUKlastyeartostudythepowermarketsinthesecountries.

Currently,inter-regionalpowertransfercapacityofaround6,000MW is available in the country, which is expectedto increase further toabout9,500MWin thecoming fewyears.

Withtransmissioncapacitybeingputinplaceforlargesizeinter-State projects, the inter-regional transfer capacity islikelytogetfurtherenhanced.

With greater optimization of capacities and increasedcompetition expected among generation, trading and

“India is a booming country. Now a day’s most of the companies’, world wide are not only selling but also manufacturing

vehicles in India.”


distributionfirms,power tariffsarealsoexpected tocomedowninthelongrun,anofficialsaid.

IT sectorIndianITsectorhasbeenoneofthemostprofitablesectorsin the recent past. One can view it as a sunrise sector,earningveryhighprofitsyearbyyear.Butasofnowtherearenomajortie-upslinedupintheindustry,whichmayalsobeduetotemporaryslowdownwhichisbeingexperiencedthroughouttheglobe.

Theonlymajordealwhichhappened in therecentpast inIndianmarketwasthatof:

HCL completes Axon purchase

On15December2008, IndianoutsourcingcompanyHCLTechnologieshascompletedits£440mcashacquisitionofUKSAPspecialistAxonGroupendingaprocessthatfirststartedbackinthesummer.

BothHCLandrivalIndianoutfitInfosysbidforAxonbutaftertheinitialsignsofabiddingwaronlyHCLremainedinthebiddingandhaditsofferacceptedbytheUKcompany’sboard.

Earlier this year the buyoutwas given the green light byAxonshareholders.ThefirmwillbeincorporatedintotheHCLfamilyunderthenewnameHCLAxon.

Inastatement,VineetNayar,CEOandmemberoftheboardat HCLTechnologies, said that the company had a trackrecordoflookingafterbusinessesitacquired.

Ablueoceanthinkingtocreateuncontestedmarketspacesis an underpinning of the HCL transformation story. ThemergerofAxonandHCLSAPpresentsagreatopportunitytobringnewcapabilities to themarketwitha trulyglobaldeliverymodelprovidingthefulllifecyclesuiteofservices.

Moreover,HCLhasalonghistoryofexperienceinensuringsmooth integrationandpreserving theunique identityandcharacter of the companies it acquire, andHCLwelcomeAxon employees into the its family in the form of HCLAxon

In response, Steve Cardell, president of HCLAxon saidthat it would combine its specialist consulting skillswiththe Indian player’s ability to deliver management andinfrastructuresupportglobally.

HCLAxonhasenormouspotentialgiventhecomplementarystrengths of Axon and HCL SAP practice. The currentcapability gap prevents vendors from addressing thefull opportunity. As HCL Axon, the company will becombining Axon’s strong business benefit-led consultingand implementation capabilitieswithHCL’s strong globaldelivery based application and infrastructuremanagementcapabilities.

Retail SectorRetail sector is the most booming sector in the Indianeconomy. Some of the biggest players of the world aregoing to enter the industry soon. It is on the threshold ofbringingthenextbigrevolutionaftertheITsector.Althoughorganizedretailmarketisnotstrongasofnow,itisexpectedtogrowmanifoldsbytheyear2010.ACRISILreportsaysthat theIndianretailmarket is themostfragmentedin theWorldandonly2%oftheentirebusinessisintheorganizedsector.

ButasthestandardoflivingofIndianpeopleisrising,anincreasedneedfororganizedretailsectorisbeingfelt.ButtheIndianretailerdoesnotpossesstherequisiteexperienceas well as enough capital to meet the above mentionedrequirements. So some of the big corporate houses havedecidedtojointheirhandswithvariousbiggies.

Fewarementionedbelow:

Bharti Wal-Mart names brand name for its Cash & Carry venture

BhartiWal-MartisajointventurebetweenBhartiEnterprisesandUSretailgiantWal-Mart.

‘BestPriceModernWholesale’isgoingtobethebrandnameoftheCash&CarrystorestobesetupinIndiaundertheretailjointventureagreementsignedtwoyearsagobetweenBharti Enterprises, the coutry’s largest mobile telecomplayer,andWal-Mart,theworld’largestretailer.

BhartiWal-Mart,awholesaleoperatorforservinggroceryandretailchainson

February 4th, 2009 said it has no plans to hold back its‘B2B’(business-to-business)operationsinIndiadespitethecurrentmarketslowdown.

Wal-Mart is incidentallyamongst the largestC&Cplayersin theU.S.,where itoperates itsC&Cbusinessunder the

“The Indian retail market is the most fragmented in the World and only 2%

of the entire business is in the organized sector.”


brandnameofSam’sClub.While,Sam’sClubstoresoccupybetween70,000and1,90,000sqftofspace,atypicalstoreis132,000sqftlarge.Apartfromofferingfoodandgrocery,the stores in the US also sell flowers, clothing, books,software, home electronics, clothing jewelry, art, optical,pharmacyandfurniture.

Thejointventure,whichisforwholesalecash-and-carryandback-endsupplychainmanagementoperations inIndia, isscheduledtoopenitsfirststoreinPunjabinthefirstquarterofthenextfiscal.ThecompanyisatpresentintheprocessofbuildingstoresinAmritsar,JalandharandLudhiana.

The joint venture is looking at setting up 10 to 15 cash-and-carrywholesale stores in the next sevenyears.Thesestores,offeringa rangeof6,000 to10,000productsunderbothfoodandnon-foodcategories,areexpectedtoprovideemploymentto5,000-oddpersonsacrossthecountry.

ThejointventureinpartnershipwithPunjabgovernmenthasalsoestablisha special skills trainingcentre for impartingtraininginretailoperationstolocalandotherpersonnelatAmritsar.

It has also opened an Operational Distribution Centre atBanurnearRajpura,occupyingspaceof90,000sq.Feet.

Expectingamajorpricecorrectionintherealestatesector,Raj Jain,MD andCEOofBhartiWalMart,said the jointventurewashopingtocapitalizeonsluggishnessprevailinginthissector.

Theyarehopingsignificantcorrectioninrealestateprices,including rentals,whichwill offer a great opportunity forthem to take advantage of the correction that 5-10 percent correction in priceswill not be enough. It should besignificant.

Under ‘Cash & Carry concept of wholesale, retailers tryto cater to service the need of intermediaries like smallunorganized retailers (mom-n-pop kirana stores), streethawkers, caterers, restaurants, hostels, among otherswhobuydifferent consumerproducts to either directly orindirectlymeettheneedsofconsumers.

IntheUnitedStates,Europe,andotheradvancedmarkets,C&Cwholesalers also supply the goods to consumers inbulk.ButinIndia,statutoryauthoritiesdiscouragedirecttosellingtoconsumers,evenifitisinbulk.Assuch,authoritiesinsistonregistrationofonly thosecustomers,whoin turnareregisteredwithlocal,state,orstateauthorities.Mostof

theseintermediarycustomerscarryvalidregistrationslike,VAT(SalesTax),Shops&Establishment,PublicHealth,etc.licences.

RajanBhartiMittal,Vice-ChairmanandManagingDirector,BhartiEnterprises,whoisresponsibleforretailverticalofBharti group, talking about the venture has said thatwiththisventure, theypropose tobringgreatvalueon theonehand tofarmers,artisansandsmallandbigmanufacturersand, on the other hand to retailers, kirana stores, and bigandsmallbusinessesthatwillhaveaccesstobetterqualityproductsatfavourableprices.

Currently,MetroAG ofGermany is quite active inC&Cbusinesswithfive of its stores operating fromBangalore,Hyderabad,Mumbai,andKolkata.Thesestoresareoperatedbythegroup’swhollyownedsubsidiaryinIndia.

Tescoplc, theUK-based third largestMNCretailer in theworld,hasrecentlyannounceditstieupTrentLimited,oneofthetworetailingarmsofTatagroup,toforayintoC&CspaceofIndia’sgrowingretailsector.TescoplcwillbesettingupthesestoresinalliancewithStarBazaarhypermarketchainofthegroup.

BhartiWal-MartPvtLtdisnotputtingitsplans(forlaunchingitscashandcarrystores)onholddespitemarketinstability.ItisfullycommittedtoitslongterminvestmentsforIndia.

The Marks & Retail Spencer- Reliance Joint Venture

InApril,2008,Marks&SpencerGroupplc(M&S),oneofthelargestretailersintheUK,announcedthatitwasenteringintoajointventure(JV)withRelianceRetailLimited(RRL),the retail arm of Reliance Industries Limited (RIL), withtheaimofexpandingitsoperationsinIndia.TheJVwouldhelpM&StoexpanditsoperationsinIndiabywideningitsportfolioandRRLtopositionitselfinthehigherstrataofthesociety, targeting premium customers. However, analystsfeltthattheJVcouldfacecompetitionfromexistingIndianretail major Pantaloons Retail India Ltd and other globalretailerssuchasWal-Mart,Tesco,andCarrefour,whoweretryingtogainafootholdinthecountry’sretailsector.

Thevalueoftheinitialinvestmentintheventurewillbeupto£29million(incashorinkind)orRs230crorebetweentheparties,withbothagreeingtoprovidefurtherfundinginthefuture.

Marks & Spencer Chief Executive Stuart Rose recently

“Under ‘Cash & Carry’ concept of wholesale, retailers try to cater to service

the need of intermediaries like small unorganized retailers.”


unveiledamajorpushintointernationalmarkets,whichheexpectswillaccountfor20percentofrevenuesinfiveyears,upfromlessthan10percentnow.

The new joint venture signals the major foray into Indiaof theUKretailer. Itwillhave the right tooperateMarks&Spencer stores in India selling items such aswomen’s,men’sandchildren’sclothingaswellashomewares.Itwillaimatopeningatleast50newstoresinIndiaoverthenextfiveyears.

Accordingtoapressrelease,theUKretailmajorhasenteredintoanagreementwithRelianceRetail(whichcurrentlyhasover500storesinover49citiesspanningover3.5millionsqft.)withthegoalofestablishingMarks&SpencerasamajorretailbrandinIndia.

Indiapermitssingle-brandretailerstoownupto51percentinajointventurewithalocalfirm.Multiple-brandretailersarerestrictedtofranchiseandlicenseoperations.

Moreover, subject to the satisfaction or waiver of certainconditions,includingthereceiptofapprovalfromtheForeignInvestmentPromotionBoard,Marks&Spencerwilltakea51percentinterestinMarksandSpencerRelianceIndiaPvtLtdwithRelianceRetailtakingtheremaining49percent.

M&S,whichcurrentlyhasabout20franchisesoperatedbyIndia’sPlanetRetail,willalsosellfoodandhomefurnishingsunderthenewformat.

ItisenvisagedthatPlanetRetail,Marks&Spencer’sexistingfranchisepartner in India,willcontinueasa franchisee inrespectofthe14existingfranchisestores.ThisannouncementispartofMarks&Spencer’splanstogrowitsinternationalbusinessto15-20percentofGrouprevenues(£8.5b(2006-07),withinthenextfiveyears,thereleasesaid.

Sir Stuart Rose, Chief Executive, Marks & Spencer, hassaid that India isaveryexcitingopportunityforMarks&SpencerandamarketwherethereisthepotentialforM&Stobecomeamajorretailbrand.RelianceRetailistheidealpartnerforthemtoacceleratetheirexpansionandcreatetheopportunitytoopenmuchbiggerM&Sstores.

MrMukeshAmbani,ChairmanofRelianceIndustries,hassaidthattheyareexcitedtopartnerwithM&StocombineReliance’s understanding of the Indian marketplace, andits traditional strengths in the areas such as technology,infrastructure,logisticsandtrainingwithM&S’slegendaryretailingandproductdevelopmentcapabilitiestodelivera

delightfulexperienceforIndianconsumers.

India’sfragmentedretail industry,estimatedatabout$350billion,isforecasttonearlydoubleinsizeby2015.Buttheentryofforeignretailersandlargelocalfirmshastriggeredpoliticalconcernsandprotestsbysmallshopowners.

Pharma sectorThis is the only sector among all which is considered tobe safest by all (investor as well as employee). Recentlythe pharmaceutical industry in India is witnessing someinterestingdeals.

To start ofwith, itwasRanbaxywhich sold off its entirepharma business to world’s 21st largest, Japanese drugmaker Daiichi-Sankyo. Ranbaxy which was prior to thisdealwasactingasahunter; itwashunted;thusindicatinghowglobalizationcanrapidlychangethescenario.

But this doesn’t indicate in anyway that the IndianPharmaceutical Industry has become less competitive,it simplyacts as apositive indicator to theworld that theIndian Businessman now think professionally & do nothesitate to take tough decisions when it comes to evenfamilybusiness.

Thisisaconsolidationtimeforthepharmaceuticalsmarket.For any pharmaceutical company to grow it either needstolaunchnewinnovativeproductsorstartM&Aprocess,otherwise they’ll become extinct in this fierce age ofcompetitionlikeithappenedwithSarabhaiPharmaceuticalswhichusedtobeatopcompany,butasitwasnotabletopaceupwithtimeithasnownearlyvanishedfromtheIndianPharmascene.

To prevent such situations now-a-days many companieshavestartedtakingtheabovementionedroutesofsurvival.

Daburforexamplesoldoffthenon-oncologyformulationsbusinesstoAlembicforRs159crorewayinJanuary2007,followedbysaleofitsrelativelysmallermolecularbusinesswhichwasalsosoldforRs2.25crore inDecember2007.Finally, thepromoters ofDaburgroupdecided to exit thepharmabusinessbysellingoffits65.3percentoftheequityinMarch2008toFreseniusKabi.

MorerecentlySunPharmaceuticals,aMumbaibaseddrugmaker is currently involved in a legal tussle with TaropharmaceuticalsofIsrael.Theyhadenteredintoacontractwhere Sun was to buy Taro, but some complexities later

“India permits single-brand retailers to own up to 51 percent in a joint venture with a local firm. Multiple-brand retailers are restricted

to franchise and license operations.”


emerged&adecisionisnowpendingintheSupremeCourtof Israel (which is expected aroundMarch, 2009) whosepreviousobservationinthecasewaspositivetowardsSun’sclaim.

ButtherealfightisbetweenGSKPharmaceuticalsLimited&PfizerthetoptwodrugmajorsintheworldmarketaswellasconsiderablepresenceinIndianmarket.

GlaxoSmithKlinePlc,forexample,hasagreedtobuyBelgianpharmaceutical group UCB’s operations and commercialrightsinanumberofemergingmarketsforeuro515million($667.2million).The two companies announced the cashdeal onFriday formore than 50 operations inAfrica, theMiddleEast,AsiaPacificandLatinAmerica,butexcludingBrazil,Russia,India,China,SouthKoreaandMexicoandUCB’snewcoreproducts.

Notonlythis,GSKisalsoplanningtoacquireIndiangenericdrugmakerPiramalHealthcareforaroundUSD1.5billion.Butasofnownoneofthepartieseitheracceptedordeniedthismediaspeculation.

Similarly,PfizerhasdecidedtodiversifyitselfintovaccinesbygobblingupWyethforaroundUS$68bn.ThiswillhelpPfizertocontinuethephenomenalgrowthratedespitesomeofitsmajorbrandsgoingoffpatentin2011.

Telecom SectorIndian telecom sector, like any other industrial sector inthe country, has gone throughmany phases of growth&diversification. Day by day, both the public player& theprivate player are putting in their resources and efforts toimprove the telecommunication technology and in lieu ofthis,useof advanced technologies likeGSM,CDMAand3Ghavebeen introduced so as to givemaximum to theircustomers.

JV between Unitech-Telenor

RealtymajorUnitech completed its dealwith theworld’sseventhlargestmobileoperator,TelenoronJan2009.

The Oslo-headquartered company, Telenor, is a globalproviderofhighqualitytelecommunications,dataandmediacommunicationservices.Fifty-fourpercentofitisowned

byMinistryofIndustryandTrade,Norway.IthasoperationsinEuropeandAsiancountries.

UnitechWirelesshaspan-India telecom licences in all 22circlesandplantolaunchitsservicesinfirsthalfof2009.Thecompanywasawardedpan-IndiamobiletelecomlicenceforRs1,651croreearlythisyearandhasgotGSMspectrumin13circles.

TelenorexpectsthattheinvestmentinIndiawillcontributewith marginal increase in organic revenues, an earningbefore interest and taxes loss in the range of 22.5 billionNorwayKronerandcapitalexpenditureintherangeof5.5-6.5billionKronerfor2009.

Onthesidelinesofannouncingitsquarterlyresults,Norway’sTelenorsaidthatitestimatesthatitsjointventurewithIndiannewentrantUnitechmay incur a capital expenditure of $onebillionin2009.

ModeforinfusingfundsintotheJV,hasbeendecidedthattheinvestmentinUnitechWirelessinIndiawillbefinancedthrough a combination of cash generated from operationsandadditionaldebt.

Unitech had announced the selling of 60% stake in itstelecomventureUnitechWirelessforRs6,120crore($1.23billion)toTelenor.

Both the parties have made significant progress on thetransaction.

Ifanyfirmwantstogrowinthiscompetitiveworldwillhaveto either come out with new& innovative products veryfrequentlyorwillhavetomergeoracquirenewbrandsorfirmsorwillhavetoformJointVentureswiththem.

References• THEECONOMICTIMES

• THEBUSINESSLINE

• MINT

• BUSINESSWORLD

• MONEYCONTROL.COM

• LIVEMINT.COM

• FOXBUSINESS.COM

“If any firm wants to grow in this competitive world will have to either come out with new & innovative products

very frequently or will have to merge or acquire new brands or firms or will have to form Joint Ventures with them.”


The movie Guru is the embodiment of the renaissancespirit–tolookwithinandreachbeyondone’slimitationsinpursuitoftheBigDream.Itbearsresemblancetotherags-to-richesstoryoftheiconoclasticbusinesstycoonDhirubhaiAmbani.

Thestorylineshowsthefranticpaceatwhichthesmall-timevillagerenter,overhaulsandcommandsthetextileindustryinMumbai,inspiteofthehostileveteransinthefield.

Guru exudes qualities befitting a true leader – a dreamerinconstantpursuit;anaspirantwhobecomesaremarkableachiever by the forceful combination of his indomitablespiritandzestfulfervour.

Learnings1.Clarity of vision and ability to realize the big dream

withinadeadline. Guru, the protagonist, is a visionary, a seer and seeker

ofhisdestiny,whonotonlyhasaclearmentalpictureorplanofwhattoachieve,butalsoawell-strategisedplanofhowtoreachthere.

ThehumblepetrolsellerinTurkeybecomesatextiledealerinMumbaiandthenthelargestmanufacturerofpolyesterfabric yarn in India. His single minded determinationhelpedhimmaketherightmovestosucceed.

2.Decisivenessandabilitytotakerisks. Hisdecisivenessisthetrueindexofhisself-confidence

asaleaderwhoneverhesitatestotakerisksforpotentialgains.Sensingagoodopportunity in India,hedeclinespromotionassupervisorinTurkey.HeestablishesShaktitrading,setsuphisfirsttextilemillandmakepolyesterahouseholdname.

3. Powertomotivateothersinpursuitofacommongoal. Heisaconvincingmotivator,aconfidencebooster,who

canmakehisindividualdreamthatofmillionsofothers.He convinced first- time retail investors to put in theirhard- earned money in his business, promising them,in exchange of their trust, substantial returns on theirinvestment. Each shareholder is a co-passenger in hisjourneytosuccess.

4. Innovation-thecluetoriseabovetoughcompetition

He is a master innovator who initiated equity cult inbusiness. He has the foresight to visualize the successofpolyester as a commodity, bringing rich returns in avirginmarket.

5. Indomitablespiritandnever-say-dieattitude. “No”and“Never”arewordsheneveruttersorunderstands.

Thispositiveattitudemakeshisjourneyfrom“Ican”to“Iwill”to“Ihave”soplausibleandpossible.

6.VersatilityinCommunicationskills. The exquisite panache with which he deals with

bureaucrats, rigid contractors, fellow investors, andhis mentor-turned-antagonist, reveals versatility of hiscommunication skills.Apart from being a good oratorheisalsoanactivelistener.Hespokebestwhenhewasstruckworstandemergedtriumphant.

7.AnInspiringteam-builder. Hebuildsateamofdedicatedco-workers,readytogive

morethantheir100percentinpursuitoftheircommongoal.Hisconsistency,competence,consideration,candourandconvivialityeggonhisteamtobeloyalforever.

8.Resiliencetobounceback. Hisresilienceintimesofmajorcriseshelpshimoverpower

intimidatingcircumstances.Hispolicy:“Tumjitnajorsebologemainutnahitejchaloonga”(thelouderyoushout,thefasterIwillmove).

9.Nevermixprofessionallifewiththepersonal. Heacts likea truemanagementGuru,whoseheartand

head both work at peak efficiency at all times, neverlettingoneinterferewiththeother.Indeed,hispersonalrelationships always provide the back- up towithstandchallenges.Hiswife, Sujata, a pillar of strength in thediresthour,Meenu,areciprocatorofunconditionallove,ManikdasGupta(Nanaji)hismentorwhomherespected,enviedandyetoutrageouslydared-allservetoconsolidatehisprofessionallifeneverweakeningit.

By embodying the qualities of an intrinsic leader, Guruinspires all those who dream with their eyes open. Hebeckons all to strive, to breathe in commitment and tobreatheoutconfidencewhiletreadingthepathtotheirgoal.Andtoforgeahead,relentlessly.

Meghna GuptaPGDM(2008-10)

LearningfromtheMovieGuru


Anentrepreneurisonewhorecognizestheopportunityandgrabs itwithhis innovative idea.Henever suppresseshisideasbutgiveslifetoitandleadstheworld.Generallysomebodywhocarvesoutanicheinthemarket;andcreatesvaluebyofferingaproductwhichsomebodyelsecouldnot.Theytendtoexploreunknownterritory,therebyexploitingopportunitiesandpoolingtheirresourcestomakethatventureasuccess.The story below is about a person, who showed a trueentrepreneurshipspirit.Therewasawatchmaninaninstitute.Hewasilliteratebutvery sincere and honest towards his work. He has beenworking therefor twentyyearsandwasnevercondemnedbyanybodyforhiswork.Hisemployerwasalsoveryhappywithhim.Whentheemployerretired,theentirebusinesswaspassedovertoson.Theyoungfellowwhohasgraduatedfromtopmostmanagementinstituteofthecountrysetaboutbringingstructuralandorganizationalchanges.Hefeltthatemployeesatthelowerlevelmustbeeducatedandhenceawatchmanwho interacts with all types of people should be literate.Hecalledhiminhisofficeandgavehimanultimatumthateitherheearnagraduatedegreeorleavethejob.Hegiveshimtwodaystimetothinkanddecide.Poorwatchmanwenthomeandnarratedtheentireepisodetohiswife.Hewasveryupsetbecausehe felt thatat thisstageneithercan’theenrollforacoursenorlearnanythingnewthisstage.Hewasalsoskepticalabouthisemploymentprospectselsewhere.Somehowaftertwodayshereachedtheofficeandresignedfromthejobwithaheavyheart.While

returninghomehewishedtosmoke(eventhoughhewasanabstainer),butdidnotfindanychainshopinthestreet.Hewenttothenextstreetbutdidnotfindanything.LastlyhefoundasmallshopinThirdStreetfromtheinstitute.Latein the night while thinking of possible things he can do,hestuckwithanidea,whydonotopenachainshopnearinstitute,becauseitwasverybusystreet.Hestartedashopwithhis savings there.Gradually the shop started reapingbenefits. Seeing the returns and good profit margin, hedecidedtoopenanothershopintheneighboringstreet.Withthatinspirationheopenedonemoreshopinanotherstreet.Heagaingot success in that.He startedopening shops indifferentpartsofcity&openedaroundseventyshopsinthecityvirtuallycoveringeachcornerofthecity.Hedepositrdtheprofitsearnedbytheseshopsinalocalbank.Oncehegotacallfrombankmanager.Managerwantedtodiscuss some investment opportunities.When he reachedbankthemanagertoldhimthathehadaccumulatedasumofRs.2.5croresinthebankwithinsixyears.Themanwassurprised.Themanagerofferedhimtoinvestthemoneyinotherschemesofbanktohavegoodinterest.Thewatchman,nowownerofchainofchainshops,“Idonothaveanyideaaboutthese,willyoubekindenoughtohelpme?”.Manageragreedandgavesomedocumentstosign.Thepersonaskedforthumbpad.Themanageragainaskedforsignature.Thepersonsaidthatheisilliterate.Themanagerjumpedfromthechairandsaid,“Althoughyouareanilliterateperson,stillyouaccumulatedsuchagoodsumwithinsixyears.Whatwonder you could have done, if you were literate?” Thepersonthoughtofhispast,smiled&said-“Awatchman”.

Deepak Kr. MittalPGDM(2008-10)

AnEntrepreneur

IdeasGalorenAnEntrepreneurn 85

Innovation is the specific tool of entrepreneurs, the means by which they exploit change as

an opportunity for a different business or a different service. It is capable of being presented

as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need to

search purposefully for the sources of innovation, the changes and their symptoms that indicate

opportunities for successful innovation. And they need to know and to apply the principles of

successful innovation.

— Peter F. Drucker, “T he Father of Modern Management”

TheMillenniumDevelopmentGoals (MDGs) are the endproductofnumerousUNdevelopmentconferencesfromthe1960sto1990s.

MDGs reflect the emerging role of human rights in theinternationalcommunity,focusingontheeconomic,socialandculturalrightsenumeratedintheUniversalDeclarationofHumanRights(rightstofood,education,healthcare,anddecentstandardofliving).

TheMillenniumDevelopmentGoalswereset in2000butstill they are not much known among the masses. Thesegoalshave immensepotential and shouldbepromotedonahighscale.

There are eight MDGsEradicate extreme poverty & hunger

Halve the proportion of people living in extreme poverty– and those suffering fromhunger – by2015 (from1990levels).

• Reduce by half the proportion of people living on lessthanadollaraday.

• Reducebyhalftheproportionofpeoplewhosufferfromhunger

Achieve universal primary education

Goal2of theMillenniumDevelopmentGoals setsoutbytheyear2015to:

• Ensure thatallboysandgirlscompleteafullcourseofprimaryschooling

Promote gender equality & empower women


• Eliminate gender disparity in primary and secondaryeducationpreferablyby2005,andatalllevelsby2015

Reduce under five child mortality by two-thirds


• Reducebytwothirdsthemortalityrateamongchildrenunderfive.

Reduce maternal mortality by three-quarters


• Reducebythreequartersthematernalmortalityratio.

More than half a million women die each year duringpregnancy or childbirth.Twenty times that number sufferseriousinjuryordisability.Someprogresshasbeenmadeinreducingmaternaldeathsindevelopingregions,butnotinthecountrieswheregivingbirthismostrisky.

Combat HIV/AIDS, malaria & other diseases


• HaltandbegintoreversethespreadofHIV/AIDS.

• Halt and begin to reverse the incidence ofmalaria andothermajordiseases.

Ensure environmental sustainability


• Integrate the principles of sustainable developmentinto country policies and programmes; reverse loss ofenvironmentalresources.

• Reduce by half the proportion of people withoutsustainableaccesstosafedrinkingwater.

• Achievesignificantimprovementinlivesofatleast100millionslumdwellers,by2020.

Create a global partnership for development, with targets for aid, trade and debt relief


• Develop further an open trading and financial systemthat is rule-based, predictable and non-discriminatory.Includesacommitmenttogoodgovernance,development

Rinki GroverPGDM(2008-10)

Millennium DevelopmentGoals


andpovertyreduction—nationallyandinternationally.

• Addresstheleastdevelopedcountries’specialneeds.Thisincludes tariff- and quota-free access for their exports;enhanceddebtreliefforheavilyindebtedpoorcountries;cancellationofofficialbilateraldebt;andmoregenerousofficialdevelopmentassistanceforcountriescommittedtopovertyreduction.

• AddressthespecialneedsoflandlockedandsmallislanddevelopingStates.

• Deal comprehensively with developing countries’ debtproblemsthroughnationalandinternationalmeasurestomakedebtsustainableinthelongterm.

• In cooperation with the developing countries, developdecentandproductiveworkforyouth.

• Incooperationwithpharmaceuticalcompanies,provideaccess to affordable essential drugs in developingcountries.

• In cooperation with the private sector, make availablethebenefitsofnewtechnologies—especiallyinformationandcommunicationstechnologies.

TheMillenniumDevelopment Goals are premised on sixcorevalues:freedom,equality;solidarity;tolerance;respectfornature;andsharedresponsibility.

Future of millennium development goalsThe future success of the MDGs is unclear – individualcountriesmusttakepreliminarystepsinordertoreacheachandeveryoneoftheGoals.Goal1requiresthatcountriesincrease access to food that they are already producingand stabilizemarketprices so that everyone can afford toeat.ToachieveGoal2countriesmustfirsttackledomesticresourcedeficiencies;thesuccessofindividualcountriesontheeducationfrontwilldetermineinternationalsuccessonGoals1and3-7.Sincewomenaretheprimarycaregiverinmost societies,Goal 3will be central to achieving all theotherGoals.Toreachgoals4-6countriesmustappreciablyincreasepublicaccesstohealthcare.Goal7dependslargelyonacountries’abilitytoprovidesafedrinkingwater,whichin turn requires the government to manage its nationalecosystem;withoutdoingso, sustaininghuman livelihoodwillbealmostimpossible.

AwebsitespeciallymentforMDGshavebeenstartedwhichisgainingmoreandmorepublicitynow-a-days.Peoplearewillinglycomingtogethertoputforwardtheirthoughtsandtheyaremakingdelibrateeffortstoachivethiscommongoalandmaketheworldabetterplacetolivein.

“The Millennium Development Goals are premised on six core values: freedom, equality; solidarity; tolerance; respect for nature; and shared responsibility.”

IdeasGalorenMillenniumDevelopmentGoalsn 87

JawaharlalNehruNationalUrbanRenewalMission,2005GovernmentofIndiahaslaunchedvariousurbanpovertyalleviationprogramssinceindependence.TheseincludesJawaharlalNehruNationalurbanRenewalMissionin2005.TheobjectivesoftheJNNURMare:(a)FocusedattentiontointegrateddevelopmentofinfrastructureservicesincitiescoveredundertheMission;(b)Establishmentoflinkagesbetweenasset-creationandasset-managementthroughaslewofreformsforlong-term

projectsustainability;(c)Ensuringadequatefundstomeetthedeficienciesinurbaninfrastructuralservices;(d)Planneddevelopmentof identifiedcities includingperi-urbanareas,outgrowthsandurbancorridors leading to

dispersedurbanization;(e)Scale-up delivery of civic amenities and provision of utilitieswith emphasis on universal access to the urban

poor;(f) Specialfocusonurbanrenewalprogramfortheoldcityareastoreducecongestion;and(g)Provisionofbasicservicestotheurbanpoorincludingsecurityoftenureataffordableprices,improvedhousing,

water supply and sanitation, and ensuring delivery of other existing universal services of the government foreducation,healthandsocialsecurity.

(For details visit www.jnnurm.nic.in)

Allow one to touch wisdom, May I be in temple of learning Allow me to beat the knowledge drum May I satisfy my inner yearning, Let me have a pen and a book Allow me to fly ad Infinitum

ItisaparadoxforthecountryoftheVedas,thelandofthewisdom, that its sevenmillionchildrenarestilloutof theschools,wanderingasstreetdwellersandbeggers.MypenacheswhenIwritesuchsadwordsaboutthefuturecitizensof India.Their cries couldbeheared in the streets, trafficsignals,wheretheyareseenbeggingjustforarupee.

The chief cause of this is our collapsing infrastructure ofsocial services, deteriorating effort of government andfallingstandardsofpoliticalthoughts.

The report of United Nations Development Project 2006discloses that Indiahasvery largenumberof illiterates. ItisaclearslaponthefaceofallthegovernmenteffortslikeSarvaShikshaAbhiyan,NationalLiteracyMission,Janshala,OperationBlackboard and the like.Rhetorics cannot hiderealityallthetime.

Despiteofclaimsofthegovernment,literacyinIndiaisonly64.84 Percent (census 2001). Rest of the Indians are stilldoomedwiththecurseofilliteracy.

Government spends very little on education, while thechildren in our country especially belonging to belowpoverty line families, are still considered vital due to theeconomicworthoftheirmanuallabor.

IncaseofSuratdiamondindustry;parentsforceupontheirchildren,atearlyageoften, theworkofcuttingpolishingdiamonds.Theydeliberatelymakethemchildlabourers.

In many schools in some states of India, books, sportsequipmentsetcarecontainedinasinglesteeltrunk.Humancapital,thequalityofwhichcanberaisedthroughinvestmentinprimaryandsecondaryeducation,hasbeenrealizesbuttoadismalextent.

TherapideconomicprogressthroughuniversaleducationinKorea,Thailand,andSingaporeetc.hasyettoopentheeyesofourleaders.

Itissaidthatliteratepopulationisneverpoorandnoilliteratepopulationisotherthanpoor.Moreoverspreadofeducation,particularlyamongwomen,reducesbirthrateasitisprovedinKerela.

Itisnotthatourleadersdon’trealizethatawell–fed,healthy,and educated population provides the best guarantee forrapideconomicgrowth.Howevertheyarescaredofeducatedpopulationwhowillresistexploitationofallkinds.

Illiteracymakeapersonenemyofmankind.Itislikeacurseonhislife,familyandnationbecausetheworkofilliterateisthatofaninhibitor.Themoretheilliteracyratetheharderitisforthecountrytodevelop.Americawhoseilliteracyrateisbelowthan5percentandCanada8percentaredevelopedcountries whereas countries like Turkey with illiteracyas high as 61 percentmake it one of the underdevelopednations.

Uneducatedpopulationisunskilledandlessproductive.Itis thefact that it isalwaystougherandmoreexpensivetotrainilliterateratherthantheeducatedone.

InSuratthelaborisilliteratethereforecompaniestakefulladvantage of them, they enforce them for overtime, givelowwages,novacations,nopromotions,theyremainpettywagersforwholelife.Inthiswaytheybecomeenemiesoftheirownandremainpoor.

WinstonChurcill said, “The empires of the future are theempiresofthemind…”

Illiteracy lessens the number of think tanks of a country,thusdebilitatingthepowerofdemocracy.Ontheotherhandliteracy empowers the citizen of country with weaponsof understanding, rational thinking, liberty and mutualharmony;literacyisabigforceinattenuatingundemocraticforces like cumbersome social and political problems ofterrorism,communalismetc.

WhenourleaderstalkofmakingIndiaadevelopednation,theyshouldkeepinmindthatwithoutliteracy,theireffortsinanyfieldareanunarmedcombatandIndiawouldbecomeabarrenlandinhabitedbyuselesspeople.

Theveryreasonthatdespiteachieving9percentGDPgrowthrateourcountryisstillinfestedwithpoverty,unemployment,

Harneet KaurPGDM(2008-10)

Illiteracy-ACurseOnMankind


inflation,smuggling,blackmarketingononehandandsocialproblemscommunalism,drugpeddlingandmanymoreontheother,isilliteracy.

Evenmoredemonicarethegeneticeffectsofilliteracy.

The son of an illiterate inherits poverty and illiteracy.Asthe father is either unemployed or a lowware earner, heisunabletofendfortheeducationofhischildren.Lackofawarenessmakes the various poverty alleviations projectsinaccessibleforthem.

Themonstrous nature of illiteracy is revealed by the factthatanuneducatedperson isnot satisfiedandharmoniouscitizen.Dissatisfiedandfrustrated,heeitherbecomesathieforachainsnatcherordrugpeddler,unabletoleadthenation,

morepronetomislead.

Ourpoliticalleaders–greatmassmoversandgreatorators–shouldmovetheIndianmasstowardsthelightofliteracy.

ThememorablewordsofformerBritishPrimeMinisterMr.TonyBlairshouldberemindedtothegovernmentrepeatedly,“AskmemythreemainprioritiesforGovernmentandIwilltellyou,education,educationandeducation”.

It is rightly said that action delayed is action denied. Itis imperative now for the government to abandon itslackadaisical approach and start illiteracy eradicationprogramonawarfooting.

“Ask me my three main priorities for Government and I will tell you,

education, education and education.”—Tony Blair

IdeasGalorenIlliteracy-ACurseOnMankindn 89

EffortstocurbIlliteracyinIndiaTheNationalEducationPolicy-1986,asmodifiedin1992,recognizedtheNationalLiteracyMissionasoneofthethreeinstrumentstoeradicateilliteracyfromthecountry.TheNationalLiteracyMissionhasbeenstrivingtospreadbasic literacy among adult illiterates in nearly 600 districts of the country through theTotal LiteracyCampaignsandPostLiteracyPrograms,strengthenedfurtherbytheContinuingEducationProgram.Inthe328districtscoveredundertheContinuingEducationProgram,morethan2lakhContinuingEducationCentreshavebeenestablished,witheachCentrecateringtoapopulationofapproximately2500persons.In198districts,JanShikshanSansthansthatis,InstitutesofPeoplesEducation,areenablingpeopletoacquirenewvocationalskillsandimproveuponoldones.StateResourceCentrescontinuetoprovideresourcesupporttotheStates,trainvolunteersandpublishalargenumberofliteracymaterialsforneo-literates.Theseinstitutionsneedtobestrengthenedsothattheyworkinconsonancewitheachother.

Theflagshipprogramme,SarvaShikshaAbhiyaan, addresses the issueof illiteracy in the6 to14years agegroupandaims toachieveuniversalelementaryeducation. Itensures that futuregenerationsbecomeeducatedbyproperimplementationandmonitoringofthisprogram.

“Wealthcametohiminfullmeasure,butheremainedtothelastwhat hewas by nature, a simple,modest, gentleman,seekingneither titlenorplaceand lovingwitha love thatknewnoboundsthelandthatgavehimbirth.”

JAMSHEDJINASSERWANJITATA,founderofTatagroupofcompanies,establishesTataMotorsatasmallcitycalledKalimati (now Jamshedpur) in Jharkhand, established in1945,TataMotorspresenceindeedcutsacrossthelengthandbreadthof India. It is India’s largestautomobilecompany,leaderIthecommercialsegment&world’ssecondlargestmediumandheavybusmanufacturer.

At the core of the company’s approach to doing businessis the Tata Business Excellence Model. In cooperatingsound business principles, like customer satisfactionquality, attention to detail, conservation of resources andprotectionof the environment, thismodel shapes thewayTataMotorsdesigns,manufacturesandmarketsitsproducts.Themanagementof thecompany is in thehandsof somerenowned people like Ratan Tata, J. J. Irani, Ravi Kant,Narsee Monjee and others. The brainstorming sessiontomanage the company is done at 24,HomiModi street,Mumbai. Being a leader in the global market, productsare diversified extensively.The products can be classifiedas light commercial vehicles (gross vehicleweight of 4-8tones) intermediate commercial vehicles (gross vehicleweight of 9-11 tones), medium and heavy commercialvehicles (gross vehicleweight of 12-50 tones) and heavycommercialvehicles(grossvehicleweightof12-50tones)anddefensevehicles.

If we look at the success story of Tata motors we willfindthat ithadattaineditaftera lotofhardships.Beingatechnological product and cut throat competition in theglobalmarket,ithadtogiveasecondthoughtforredesigningandrestructuring.RedesigningoftheTataCumminsengine,engineoil,mileage,ignitionproblem,visibilityareaetchadto be resolved.TheExperiment andResearch department(ERD) looked into it very closely and the redesignedengine came in the year 2003Viscosity of the engine oilwas improved. KMPLCC (KILOMETER PER LITRECHECKINGCAMPAIGN)was done in the year 2008 toimprovethemileage.Theignitionproblemthatwasfaced

bydefensevehicleswasremovedbyinjectingethyleneintothecombustionchamber thatwouldmixwithaerosol andleadingtofastfiring.

Healthissueswerethesecondmostimportanthardshipfacedbythecompany.WorldHealthOrganizationdefineshealthasastateofcompletephysical,mentalandsocialwell-beingand not merely the absence of disease or infirmity. Thehealthstatusisusuallymeasuredintermsoflifeexpectancyatbirth,infantmortalityrate,fertilityrate,crudebirthrateandcrudedeathrate.

Staffshortages,nonavailabilityofdrugs,inadequateOPDserviceswas found in thestate.So therefore thecompanydecided to achieve the MILLENIUM DEVELOPMENTGOALSwhich included antenatal care, anemia detection,combatingHIV/AIDs /MALARIA, immunization drivesforpolio,andmeasleswereconducted.

Education in India can be understood if the literacy ratiois lookedupon.The literacy ratio of India is 6538%withmale literacy at 75.85% and female literacy at 54.16%.Tremendous discrepancy in terms of availability ofeducationalfacilitiesinruralandurbanareasandevenfromoneregiontotheotherleadstopooreducationalfacilities.ShikshaPrasarKendra,aTataMotorssocietyatJamshedpur,supported18,000students (ofwhich7,500aregirls) fromacross33schools,Scholarshipsforhigherstudiesawardedto375students.Infrastructurewasimprovedat13schools,promotinghighereducationfor2,000childrenfromover25villages.

UnemploymentinIndiaisbasicallyunintermittent.Thisismainlybecauseof theabsenceof regular employment formany workers. United Nations Industrial DevelopmentOrganization’s ‘Industrial; Development Report 2002-03’, highlights that the country’s skill base is weak anddeterioratingandinthisregardhaswarnedthatIndiamayfaceskillconstraintswhenit triestoupgradetechnologiesin a large range of activities to complete in liberalizedmarkets.

Asapartofitsskilldevelopmentprogramme,thecompanyhas identified 10 it is across the country to upgrade theirfacilities and enhance the relevance of their programmes

Saumyadeep DalalPGDM(2008-10)

CSRatTataMotors


to industry needs. 1,085 youth from areas adjacent tothe Company’s plants, were trained in various technicaland vocational trades. 1,058women have been trained inmanufacturingfoodproductsandutilityitems,sewingandbeauticiancourses.Environmental issues facing theworldtoday is that ofClimateChange.The dominate factors towhich recent climate changehasbeen attributed all resultfromhumanactivity.Theyare:

• Increasing atmospheric concentrations of greenhousegrass

• Globalchangestolandsurface,suchasdeforestation• Increasingatmosphericconcentrationsofaerosol

Over 175,242 saplings have been planted with 80%survival rate smokeless chullahs constructed to promoteuseofenvironment-friendlypracticeofagriculturaltrainingimpartedtominimizetheuseofenvironmentallyhazardousmaterialsandmethods.BharatNirmanTargeti.e.tocreate10millionhectaresofadditionalirrigationcapacityby2009.

Thus we can see that the company has not forgotten theCORPORATE SOCIAL RESPONSIBILITY apart fromearrings profits and has done a lot to achieve the TATABUSINESSEXCELLENCEMODEL.

“The dominate factors to which recent climate change has been attributed all

result from human activity.”

IdeasGalorenCSRatTataMotorsn 91

CSRinitiativesbyIndianCorporateAptech Limited

To propagate education among all sections of the society throughout the country, especially the underprivileged,Aptechfosterstie-upswithleadingNGOsthroughoutthecountry,includingtheBarrackpur-basedNGO,Udayan,aresidentialschoolforchildrenofleprosypatientsinBarrackpur,establishedin1970.Thecompanystronglybelievesthateducationisanintegralpartofthecountry’ssocialfabricandworkstowardssupportingbasiceducationandbasiccomputerliteracyamongsttheunderprivilegedchildreninIndia.

ICICI Bank Ltd

TheSocial InitiativesGroup(SIG)of ICICIBankLtdworkswithamission tobuild thecapacitiesof thepoorestofthepoortoparticipateinthelargereconomy.Thegroupidentifiesandsupportsinitiativesdesignedtobreaktheintergenerationalcycleofpoorhealthandnutrition,ensureessentialearlychildhoodeducationandschoolingaswellasaccesstobasicfinancialservices.

Infosys Technologies Ltd

Infosys is actively involved in various community development programs.Infosys promoted, in 1996, the InfosysFoundationasanot-for-profittrusttowhichitcontributesupto1%PATeveryyear.Additionally,theEducationandResearchDepartment(E&R)atInfosysalsoworkswithemployeevolunteersoncommunitydevelopmentprojects.

Mahindra and Mahindra

TheK.C.MahindraEducationTrustundertakesanumberofeducationinitiatives,whichmakeadifferencetothelivesofdeservingstudents.TheTrusthasprovidedmorethanRs.7.5Croreintheformofgrants,scholarshipsandloans.Itpromoteseducationmainlybythewayofscholarships.TheNanhiKaliprojecthasover3,300childrenunderit.

(Source: www.karmayog.com)

ThelargestandthemostcomplexUruguayRoundoftradenegotiations was launched by the contracting parties oftheGeneralAgreement onTariffs andTrade (GATT)- theoutcomewasafullfledgedlegallyconstitutedorganization-WorldTradeOrganisation(WTO).Oneofthemostimportantachievementsofthisroundisincorporationofasignificantareai.e.Services(GeneralAgreementonTradeinServices)whichhasprovidedthemembernationsaccess to trade inservicesalso.Underthisgamutofnewagreement–GATS,variouscommitmentsweremadebythemembernationstoopen the different service sectors However liberalizationin Education Sector took place in later years. “Statistics reveal that over a five-year period, from 1999 to 2004 the number of students studying abroad rose by nearly 50 percent, from 1.64 million in 1999 to 2.45 million in 2004 and if, we indicate export of education in terms of revenue generated on account of the number of students enrolled in a foreign university the revenue of the five major exporters (USA, UK, New Zealand, Canada and Australia) accounted 71 percent increase in their export revenue from $ 16 billion in the year 1999 to $ 28 billion in 2005 (Bashir,2007).” No doubt, Indian institutes ofhighereducationhavealsobeenattractingforeignstudentsbutthepaceofgrowthofIndiainthisareahasalwaysbeenmarginalandnowdeclining.

Table 1:NumberofForeignStudentsinIndianUniversities

Indian Universities No. of Students in Indian Universities

1999–2000 6,988

2000–2001 7,791

2001–2002 8,145

2002–2003 7,738

Source: Education Statistics of India, Ministry of HRD, 2005, New Delhi

Ms. Rashmi TanejaFaculty, JIMS

AReviewofTradein HigherEducationfromIndia


Table 2:NumberofIndianStudentsinForeignUniversities

Year No. of Students Studying in Foreign Universities

1999–2000 51,414

2000–2001 61,977

2001–2002 87,987

Source: Compiled Organisation of Economic Co-operation and

Development – UNESCO Institute of Statistics

Table1exhibitsthatthenumberofstudentscomingfromthedifferent.Ontheotherhand,thestudentsgoingabroadfromIndiahasbeencontinuouslyrisingasshowninTable 2. Now, on seeing the difference a few issues can be raised-WhyIndianstudentsaremovingindifferentcountriestoacquirehighereducationandWhyIndiaisnotcapableofattractingmore number of foreign students in Indian Universities,in spite of possessing various distinctive competitiveadvantagesviz.vastpoolofknowledgeintraditionalareas,lowcostofeducation,secondlargestproviderofeducation,etc?Theanswer to thesequestions lies in theproblemsinIndianEducationSystem,fewoftheseproblemsare:1.Capacity Constraint i.e. in India there are just 4400

AICTE ( All India Council for Technical Education)approvedUniversities;

2.Lackofneedbasededucationand;3 Lack of good residential facilities, transport facilities,

absenceoflanguagetrainingfacility;4. Limited number of seats available to foreign students,

sometimeslimitedto5percentofthetotalstrength;

Inthiseraofglobalizationwhereeveneducationhasbecomeaglobally tradableactivityandamajorsourceof revenueforthemajorexporters,theneedhasemergedtoovercometheseexistingconstraintsandconsidereducationnotonlyasasocialactivitybutalsoasatradableactivity.ThisapproachmayleadIndia,tomakeeducationamajorsourceofearningforeignexchangefortheeconomy.

“T he history of the world

is full of men who rose to

leadership, by sheer force of

self-confidence, bravery and

tenacity.”

— Mahatma Gandhi

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