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In this issue
- Editorial: Research Statistics
• Shareholder
K. Rajyalakshmi
Activism
• Measuring Effectiveness of
Attendance Management Systems in Time Office
Prof CM Maran
• Corporate restructuring:
Causes, measurement methods and effects
Raju L Hyderabad
Board of Advisors
Prof. N.L. Mitra
Chancellor, KIIT University
Prof. P.P. Mathur
Vice Chancellor, KIIT University
Prof. Anil Bajpai
Director, KIIT School of Management, KIIT University
Editorial Board
Artatrana Ratha, St Cloud State University, USA
Ashish Dwivedi, Hull University Business School, Hull, UK
B. K. Mohanty, Indian Institute of Management Lucknow, India
Badar Alam Iqbal, Aligarh Muslim University, Aligarh, India
Damodar Suar, Indian Institute of Technology Kharagpur – India
Rajen K Gupta, M.D.I. Gurgaon, India
Sailabala Debi, KIIT School of Management, KIIT University, Bhubaneswar, India
Saswata Narayana Biswas, Institute of Rural Management (IRMA), Anand, India
Sushanta Mallick, School of Bus. & Management, Queen Mary, University of London
Wee Yu Ghee, University Malaysia Kelantan, Malaysia
Editor
R. N. Subudhi
(Professor, KIIT School of Management, KIIT University)
e-Mail: editor@ksom.ac.in
Disclaimer: The publisher and or editors cannot be held responsible for errors or any consequences arising out
from the use of information contained in this journal. The views and opinions expressed do not necessarily reflect
those of the publisher and editors.
Parikalpana
(KIIT Journal of Management)
Vol - 10 (I) 2014
CONTENTS
Editorial
Variations in the Flue cured Virginia Tobacco export 1-8
Performance of different regions of the world : An empirical study
P. Hari Babu
Managing Talent for Sustainable Competitive Differentiation 9-22
Nidhi Sharma
Shareholder Activism 23-36
K. Rajyalakshmi
Customer Perception on Performance of RRBs in Odisha 37-50
Jitendra Kumar Ram & Rabi N. Subudhi
Business Potential of Fish Parlours in Uttar Pradesh 51-60
Dr R K Panda
Service Quality Gaps Banking Industry : A Comparative Study 61-72
Manish Kumar Yadav & Alok Kumar Rai
Consumer Perception of Services for Retail Products : 73-78
A Case Analysis of State Bank of India
Himani Sharma & Ruhi Chawla
Perceived Risk and Consumer Behavior Towards 79-85
Online Shopping : An Empirical Investigation
Ajitabh Dash
Measuring Effectiveness of 86-94
Attendance Management Systems in Time Office
CM Maran
Behaviour of Individuals in Everyday Financial Decisions : 95-107
a study of Demographic Variables
Sunita Mehla & Suman Ghalawat
Corporate restructuring: 108-126
Causes, measurement methods and effects
Raju L Hyderabad
Climate Controlled Environment and Student Productivity : 127-141
An Empirical Analysis
Akankshya Patnaik & Ratnakar Mishra
- Case Study Section
Noamundi Steel Plant Ltd. (NSP) 142-146
Saroj K Routray
Editorial
Abstract
Tobacco has been a prime source of livelihood for millions of people and
the tobacco industry is providing employment to 36 million people
including 6 million farmers, engaged directly or indirectly in tobacco
cultivation, processing, manufacturing grading, marketing and other
allied activities. Indian tobacco industry is in a prominent place over the
past six decades. India is world’s second largest exporter of Flue cured
Virginia (FCV) tobacco. The sustainability of Indian tobacco industry,
especially FCV tobacco, mainly depends on exports. India is now facing
stiff competition from many developing countries. The global exports of
FCV tobacco fluctuated during the period under study. In the study period,
India’s FCV exports has wide fluctuations over the years. In
unmanufactured tobacco exports the share of FCV tobacco constituted
about 80 per cent. In the study period, there are wide fluctuations in
India’s FCV tobacco exports to all regions and within the regions except
South and South East Asia. This region has some growth in exports.
Key words : Flue cured Virginia; FCV
Introduction
Tobacco is one of the economically century, the type of tobacco was cultivated
and commercially significant agriculture by the natives of that area was Nicotiana
crops in the world. FCV Tobacco was rustica. Nicotiana tabacum was brought
introduced in India by one of the peripatetic by them from the West Indies, which later
teams that visited South America and India. on came to be known as Virginia tobacco.
When the Britishers settled in the Virginia By modification of cultivation practices and
Coast in North America in early 17th through selection process, the milder and
2 Parikalpana - KIIT Journal of Management
smoother type of tobacco was developed Sungetal;1994: Keelev etal: 1993) Most
by the settlers. It acquired a bright co lour of the studies, on the micro effects of
and sweet aroma after the invention of flue- tobacco consumption are concerned with
curing during 1860s. The flue-cured consumers economies, and very few on
Virginia tobacco is now an essential net tobacco producing economies. The
ingredient of cigarettes all over the world. focus of this study is on the variations in
Relevant studies the tobacco production, that many have
been effected by anti tobacco regulations
The effects in Tobacco consumption, in different regions of the world.
in its different forms, have been well
documented in scientific literature. The Tobacco is crop that is relatively less
information thus published have led to the labour intensive and cost intensive that
adoption several smoking led to the requires much less fertile soils than other
adoption several smoking regulations additional crops (Maraveanyika, 1998).
around the world. Smoking is regulated In addition production cost of tobacco
through different cost and non- cost where land and labour are relatively
oriented measures, which have significant abundant, as available in developing
effects on the production and consumption countries. This advantage of the developing
of tobacco, which affect of the economy countries help them enjoys a comparative
of a country. Although, these regulations advantage in the production of tobacco.
have significantly reduced health care cost (Smith and Maccarthy 1998) quoted
especially in developed countries, they record to show that an economy enjoy a
significantly improved the health and competitive advantage in tobacco
welfare of consumers (Sntto-1998). These production if it uses the available abundant
positive affects one evident mainly evident factors.
industrialized economies. This effect also According Heckschers Ohlin theory
significantly reduced world tobacco as cited by (yoffie and Gomes- casspres
consumption, by 2.7 percent between 1994) relatively has abundant factors of
1996 and 1999 and for the decline have produce tobacco at low cost. However
after until 2002 (FAO: 2004). this theory has been challenged by
Most of the literature on tobacco empirical findings which showed a bias,
focused mainly on the effectiveness price when dealing with outlines and also
measures especially in the form of taxes, because of the fact that inferences of
in reducing tobacco consumption. It has relative factor abundance depend on
been clearly shown that increased excise stringent assumptions (Bolossa and
taxes considerably reduced cigarette Bauweness, 1985). Because of these
smoking around the world especially limitations, estimation based on revealed
among youth ( Evance and Farrely ;1998: comparative advantage is considered more
reliable (Matemba Edward 2005).
Variations in the Flue cured Virginia Tobacco export Performance ... 3
TABLE -1
Descriptive statistics of quantity and value of exports;
Time trend and estimates of growth rates
Region Average Std. Parameter R Adjusted F P
Exporter Deviation of linear square R square Value value
(Quantity in of Exports fit B value
tonnes) in Tonnes
West Europe
Q 29114.55 11971.23 1661.31 0.674 0.656 37.22 0.000
V 27178.54 19672.53 2636.28 0.629 0.608 30.45 0.000
East Europe
Q 23259.41 7042.34 523.91 0.194 0.149 4.32 0.052
V 14914.37 6751.68 868.33 0.579 0.556 24.74 0.000
Middle East
Q 2487.70 1840.76 169.52 0.297 0.258 7.59 0.013
V 2059.53 1922.79 210.38 0.419 0.387 12.98 0.002
Variations in the Flue cured Virginia Tobacco export Performance ... 5
Analysis of growth rates that in quantity terms South and South East
In order to assess trend of the export Asia is having the highest growth rate than
performance of FCV tobacco has linear other regions. As regards to value terms
function growth rates by using OLS this occupies second place. But in value
method for the period 1989-90 to 2008- terms the highest growth rate is occupied
09. Here presented descriptive statistics by West Europe when compared to other
for the quantity exported and for the value regions. In quantity terms this regions
of exports in the study period. stands at second place. Growth rate of
African Region stands third in terms of
In this regard here identify the linear quantity and value of exports. While
function : Y = A + Bt + Ut growth rate of Middle East region occupies
Where Y is the dependent variable the least position in both quantity and value
which represents the value, t is the terms. North and South America,
independent variable it represents the Australasia regions even though growth
quantity A and B are the parameters and rates are high at the same time, quantity
Ut is the error term with the usual classical and value of exports are insignificant
properties. An overview of the data comparatively remaining regions.
presented that Western Europe is the major Hypothesis Testing
market for Indian tobacco followed by East
Europe, South East Asian region and Africa. The hypothesis that is there is no
variation of Export Performance among
The linear growth of FCV tobacco the different regions of the world was tested
exports in terms of quantity and value in using Time Trend analysis and results
the study period. It can be understood presented as under.
6 Parikalpana - KIIT Journal of Management
Nidhi Sharma
Assistant Professor, Delhi University
Abstract
Effective Talent Management is a matter of survival in today’s hyper competitive
world. Organizations compete by differentiating their products and services, from
other organizations; and the approach to managing talent cannot be any different.
This article explores why talent has come to be a strategic differentiator and how
leading organizations have adopted a differentiated approach to attracting,
developing and retaining talent.
The article delves into the interrelationship between talent management, leadership
ability and emotional maturity and ends with a case study of how a leading
multinational company has honed its differentiated approach to managing talent in
a fiercely competitive business environment.
Introduction:
Talent – The Strategic Differentiator he could use all these better products to
It is now universally recognized that produce better chips and sell them better
People are the most critical resource that if he had better people who could then go
an organization has. Whatever an and better communicate why you should
organization achieves is ultimately through buy and eat Lay’s chips.
people. In the words of Herman Lay What we are really talking about is
(founder of Frito Lay Inc.), “Like everyone competing through differentiation. Since
else, I’ve got the same trucks. Like differentiation originates at the level of
everyone else, I have the same potatoes. thought, and human beings are the only
Like everyone else, I have the same species endowed with this faculty, it is a
machinery. The only thing I can have natural corollary that people who can
different is better people.” differentiate through thought and action are
What Herman Lay probably meant the ones who can help organizations
but left unsaid was that it is possible to succeed.
have better trucks, better potatoes and Similar sentiments have been
better machinery if one had better people expressed by Conaty & Charan (2011)
who could better produce all these. Then when they say - Create a new product and
10 Parikalpana - KIIT Journal of Management
it can easily be copied. Lower your prices According to Michaels, Jones &
and competitors will follow. Go after a new Axelrod (2001), talent is some
market and someone will be right after you, combination of a sharp strategic mind,
being careful to avoid your initial mistakes. leadership ability, emotional maturity,
But talent is the differentiator between communication skills, ability to attract and
organizations that grow and those that inspire other talented people,
don’t- because replicating a high- quality, entrepreneurial instincts, functional skills,
highly engaged workforce is nearly and the ability to deliver results. Williams
impossible. (2000) refers to talent as people who
The fact that there is a scramble for regularly demonstrate exceptional ability
people with talent who can help to and achievement either over a range of
compete better is not surprising. In 1997, activities and situations, or within a
McKinsey & Company released a report specialized and narrow field of expertise;
summarizing a one year study titled “The and consistently indicate high competence.
War for Talent”. The report stated that the Still others, define Talent as “a special
ultimate corporate resource for the next aptitude or faculty” or “a high mental ability”
few decades would be “talent”, and that (Davis et al., 2007). According to them,
“battling for talent” would be more critical talented people have the ability to deliver
for an organization than managing capital, superior results in any allocated role; handle
R&D initiatives, and corporate strategy change, and consider change as a source
(Axelrod et al., 2001). In 2001 of a new challenge. They also have the
McKinsey consultants produced a book ability to learn. Talented people are
by the same name which stated that talent inherently curious and seek to expand their
is now a critical driver of corporate knowledge and skill sets. They learn
performance and that a company’s ability quickly and apply what they have learned
to attract, develop, and retain talent will in an effective manner. They have high
be a major source of competitive degree of self- confidence, good
advantage into the future. communication skills and focus. They are
problem- solvers rather than just problem-
Defining Talent – An Organizational identifiers. They know how to bounce
Perspective back from failures.
People in the context of an According to the differentiated
organization have been referred to in approach (Stahl et al., 2012); talent refers
different terms over the years - personnel, to those employees who have more value
human resource and now talent. There is or potential than others. In other words
no uniform definition of Talent either, and talent in the organization is the high-
authors provide their own shades and potential employees. The other is the
colors when talking of talent. inclusive approach (Stahl et al., 2012);
Managing Talent for Sustainable Competitive Differentiation 11
supply chain management could mean the CEOs and the senior leadership of
identification, nurture, progress, reward, organizations now spend considerable
and retention of key individuals who can portion of their time in identifying and
aid the development of organizational managing talent for their organizations
sustainability (Marchington & Wilkinson, (Martin & Schmidt, 2010; Stahl, 2012;
2012) – the aim being to get the right Conaty & Charan, 2011). They
people in the right jobs so that the systematically identify key positions which
organization as able to meet its objectives. differentially contribute to the
Depending on how competitive an organization’s sustainable competitive
organization is in the market place, the advantage, engage in developing a talent
importance it places on talent management pool of high potential and high performing
strategies may vary. Accordingly some incumbents to fill these roles, and ensure
organizations manage talent that is an their continued commitment to the
exclusive and elite batch of employees - organization (Collings & Mellahi, 2009).
the best and brightest, high potentials, top All this, because they believe that the key
performers, or “A” players. For other factor in determining the success of any
companies,” talent refers to all employees organization is its ability to use human
of the company (Stahl et al., 2012). The talent- to discover it, develop it, deploy it,
latter is a more democratic vision as it motivate and energize it. Talent, after all,
assumes that every employee has talent is the combined capacity and will of people
and that all employees have the right to to achieve an organization’s goal (Cheese
develop their abilities. Organizations that et al., 2008).
adopt a differentiated approach, hone Managing talent has assumed such
their talent management strategy to include huge importance that in the quest for
activities and processes that involve the identifying, developing and retaining talent,
systematic identification of key positions several successful organizations have
(Collings & Mellahi, 2009) which embedded in their culture the habits of
differentially contribute to the observing talent and making judgments
organization’s sustainable competitive about it (Conaty & Charan, 2011). Their
advantage and the development of rigorous, repetitive processes and intimacy
differentiated human resource architecture convert subjective judgment about a
to facilitate filling these positions with person’s talent into an objective set of
competent incumbents. observations that are specific, verifiable,
Whether organizations adopt a and just as concrete as the analysis of a
selective or a democratic approach to financial statement.
managing talent, all agree that managing The importance of managing talent
talent has assumed strategic significance. means that finding and nurturing talent is
Managing Talent for Sustainable Competitive Differentiation 13
now highest on the agenda of leaders in not much direct reference to talent
successful companies who believe that management. Also, there is a fair diversity
holistic talent management is key to of views on both subjects. In the following
developing effective leaders. For this sections we have captured the diversity of
reason it is considered critical enough for views on leadership ability and emotional
CEOs and other top leadership to earmark maturity.
a considerable amount of their time finding Talent Management and Leadership
and developing talent. They devise ways Ability
and means to provide identified talent with
experiential learning (Conaty & Charan, No two situations are the same. It is
2011; Martin & Schmidt, 2010; Ready et possible that what works in one set of
al., 2008; Cappelli, 2008; Kotter, 1990) circumstances may fail miserably in
through challenging stretch assignments different circumstances. The business and
that provide depth and breadth of economic environment is dynamic, people
experience and reveal the ones having come with varying aspirations, skills and
CEO potential. While good performance prejudices, and the competitive
and results are expected as a matter of environment is ever changing (Schneider,
course, they focus on values and culture 2002). The leader is surely to be called
as well (Stahl, 2012; Conaty & Charan, upon to adopt different leadership styles
2011; Ready et al., 2008). The strategic in different situations, with different people
significance of talent management (Collings to achieve different objectives at different
& Mellahi, 2009) has led to the process times during the professional life cycle.
being driven top down with leaders There is, therefore, an increased need for
emphasizing values such as integrity, leadership development to respond to
character, and self-awareness as essential changing environmental conditions.
requirements that will determine whether Goleman (2000) has articulated six
a person will rise in the organization or not different styles of leadership - coercive
(Conaty & Charan, 2011). leaders demand immediate compliance,
Since talent management has authoritative leaders mobilize people
assumed such importance due to talent towards a vision, affiliative leaders create
being a strategic differentiator, we emotional bonds and harmony, democratic
explored what successful organizations leaders build consensus through
focus on while developing talent. We found participation, pacesetting leaders expect
that the development of leadership ability excellence and self- direction and coaching
was central to talent management leaders develop people for the future.
practices. We also found that most theorists Studies have shown that the more styles a
and authors talk about emotional maturity leader exhibits, the better. Leaders who
when talking about leadership ability, but have mastered four or more- especially the
14 Parikalpana - KIIT Journal of Management
has been generated on the relationship with their followers, stimulating others to
element of leadership, as opposed to its produce exceptional work (Lai, 2011).
purely transactional nature (Burns, 1978). Pless (2006, 2007) & Maak (2006)
Transactional leadership takes place when have focused on the moral dimension of
“one person takes the initiative in making transformational leadership and called it
contact with others for the purpose of an Responsible leadership. It is espoused as
exchange of valued things.” This type of a ‘values-based and through ethical
leadership is best described as the politics principles’ driven relationship between
of exchange. Transactional leadership leaders and stakeholders who are
describes more of a “give and take” connected through a shared sense of
working relationship – rapport between meaning and purpose through which they
leader and follower is established through raise one another to higher levels of
exchange, such as a rewards system for motivation and commitment for achieving
meeting particular objectives. sustainable values creation and social
In contrast to the calculated change.
instrumental nature of transactional Talent Management and Emotional
leadership, the other form of leadership – Maturity
based on emotions - is referred to as
Transformational leadership (Avolio & The link between talent management
Gibbons, 1988; Carless, Wearing & Mann, and emotional maturity may not be
2000; Bass, 1990; Bass, 1997; Bar-On, apparent to start with. We will, therefore,
1997; Burns, 1978). “Charismatic first explore aspects of emotional maturity
leadership” (Conger & Kanungo, 1987; in isolation. Emotional maturity is referred
House, 1977; Shamir, 1991) is the most to differently by different authors and
frequent name given to the emotional theorists. Terms like emotional intelligence,
bonds between followers and leaders. social intelligence and emotional maturity
Transforming leadership also has a moral are often used interchangeably. Emotional
dimension. It may be said to occur when intelligence has turned out to be a very
“one or more persons engage with each emotive subject and theorists explain it
other in such a way that leaders and differently. The fact that the same theorists
followers raise one another to higher levels have refined their understanding of the term
of motivation and morality.” (Burns, 1978) over subsequent years also indicates that
The transforming leader is one who, though we are still trying to come to terms with
initially impelled by the quest for individual the subject. However, the ultimate sense
recognition, ultimately advances collective and import of all these definitions and
purpose by being attuned to the aspirations explanations is essentially the same – the
of his or her followers. Transformational sensitivity to respond to different situations
leaders exhibit charisma and shared vision and people in a manner that creates
16 Parikalpana - KIIT Journal of Management
positive vibes and a desire among people Goleman (1995) adopted Salovey
to work happily together to deliver results. and Mayer’s definition, and proposed that
Social intelligence comprises emotional intelligence involves abilities that
interpersonal and intrapersonal can be categorized as self-awareness,
intelligences (Gardner, 1993 and managing emotions, motivating oneself,
Thorndike, 1920). Interpersonal empathy, and handling relationships. He
intelligence is the ability to understand included abilities such as being able to
other people: what motivates them, how motivate oneself and persist in the face of
they work, how to work cooperatively frustrations; to control impulse and delay
with them. Intrapersonal intelligence is the gratification; to regulate one’s moods and
capacity to form an accurate, authentic keep distress from swamping the ability
model of the self and to be able to use that to think; to empathize and to hope. He
model to operate effectively in life. Since went on to assert that emotional
emotional intelligence also consists of these intelligence is a set of traits that can help in
two elements (Salovey & Mayer, 1990), understanding why one person thrives in
it is possible to suggest that social and life while another, of equal intellect, dead-
emotional intelligences are the same. ends. It determines how well one can use
Emotional intelligence encompasses self- whatever other skills one has, including raw
awareness, self-management, social intellect.
awareness or empathy and social skills Mayer & Salovey (1997) further
(Goleman, 2000), each of which comprise refined the definition of emotional
several competencies. intelligence to include a set of interrelated
Salovey & Mayer (1990) were skills concerning the ability to perceive
among the earliest to propose the name accurately, appraise, and express
“emotional intelligence” to represent the emotion; the ability to access and/or
ability of people to deal with their generate feelings when they facilitate
emotions. They defined it as “the subset thought; the ability to understand emotion
of social intelligence that involves the ability and emotional knowledge; the ability to
to monitor one’s own and others’ feelings regulate emotions to promote emotional
and emotions, to discriminate among them and intellectual growth. They asserted that
and to use this information to guide one’s before people can regulate their
thinking and actions”. They conceptualized emotions, they should have a good
emotional intelligence as composed of four understanding of these emotions. As
distinct dimensions: appraisal and many of our emotional responses are
expression of emotion in the self, appraisal stimulated by emotions of other
and recognition of emotion in others, individuals, our understanding of our own
regulation of emotion in the self, and use emotions is related to our ability to
of emotion to facilitate performance. understand the emotions of others.
Managing Talent for Sustainable Competitive Differentiation 17
Hughes & Terrell (2007) stated that important role of social intelligence in
the seven skills needed for emotional and organizational leadership. He developed
social intelligence are: team identity, a model of organizational leadership that
motivation, emotional awareness, identified the various performance
communication, stress tolerance, conflict requirements leaders needed to address
resolution, and positive mood. A leader at ascending levels in the organization.
can use these to generate the four According to him, such skills as flexibility,
collaborative results- empathy, trust, conflict management, persuasion and social
loyalty, and better decisions. reasoning became more important as
Emotional intelligence accounts for leaders advanced in the hierarchy.
more than 85% of exceptional achievement Bass (1997) and Bar-On (1997)
(Goleman, 1995). While technical skills echoed similar sentiments when he
are necessary for productivity, these are suggested that transformational leaders
insufficient to explain the difference achieved higher levels of success in the
between high and mediocre performers. workplace than transactional leaders. He
High performance individuals show attributed a transformational leaders’
emotional intelligence as task complexity superior work performance to high
increases. emotional quotient scores.
Authors agree that individuals with Goleman, Boyatzis & McKee
high emotional intelligence are motivated, (2002) opine that all leaders need enough
self-disciplined, aspire to excellence, and intellect to handle the tasks and challenges
continually seek re-skilling, learning and at hand. However, intellect alone won’t
adding value (Goleman, 1995, 1998, make a leader. Leaders execute a vision
2000; Ashforth & Humphrey, 1995; Gilad, by motivating, guiding, inspiring, listening,
1998 and Mayer & Salovey, 1997). Their persuading and creating resonance. As a
mental agility sustains long-term business result, the manner in which leaders act is a
development and builds organizational fundamental key to effective leadership.
culture of high morale, which prevents the Resonance implies that there is common
loss of talent. shared vision, that leaders and future
Leadership Ability and Emotional leaders are aligned, and that leaders will
Maturity propagate their own kind. One would
expect that such a process would require
So far we have looked at leadership a certain kind of maturity to flourish and
ability and emotional maturity in isolation. prompts us to explore whether leadership
We now explore what authors and ability and emotional maturity from a talent
theorists say about emotional maturity management perspective aren’t two sides
when they talk about leadership ability. of the same coin. This idea has also been
Zaccaro (1996 and 2001) emphasizes the propounded by Goleman (2000) – the
18 Parikalpana - KIIT Journal of Management
leadership framework revolves around the together to shortlist colleagues from among
elements of Me, Us, and IT. the high potential and high performing
“Me” is all about me, the leader living colleagues identified through a talent
the values. It involves one’s personal spotting process. The shortlisted
approach, integrity, drive and commitment. candidates are put through a rigorous
Leadership starts with the individual, their assessment process, and those who qualify
vision, mindset and role modeling. “Us” then go through a development program
is about taking people along. It involves that readies them to take up larger roles.
working through others, building teams, Tesco has been gradually broadening the
gaining commitment, building relationships scope of the Options program to identify
and supporting individuals and teams to leaders early in the pipeline.
achieve their full potential. “It” is about the Another program initiated by Tesco
business context. It involves customer is the Global Management Program
focus, maximizing contribution to business, (GMP) - a fast track program through
decision making, change management and which it identifies bright youngsters across
overcoming barriers. the group with the potential to scale up to
Tesco has a People Matters Group senior leadership positions within a span
(PMG) where Tesco’s leadership discuss of five years. These colleagues go through
and deliberate all people matters of fast paced learning programs that involve
significance – ensuring that its People Plan class room training, projects, and
reflects business priorities and that key experiential learning through assignments
processes and policies reflect Group in a variety of business functions and
principles and blueprints, governance geographies.
around business structures and headcount, Tesco understands that providing
and taking key decisions around Reward, promotional opportunities may have its
Talent and Performance related data for limitations. It has, therefore, devised a
senior level colleagues. Talent Planning program through which
The leadership actively engages in it explores both promotional and lateral
identifying and developing talent through the opportunities to retain its high
year through various programs. The ‘5-5- performing, high potential talent. This is
5’ program is designed for Directors. Each one way in which Tesco seeks to
of them invests in 5 days of training for enhance the colleagues’ breadth of
themselves, 5 days in training others and experience and prepare them to succeed
takes on the responsibility of 5 mentees. in larger roles. The Academy runs regular
scheduled programs for the masses as
“Options” is Tesco’s flagship well. These help colleagues build
program for developing future leaders. functional expertise and leadership
Every year, the leadership team gets capabilities.
20 Parikalpana - KIIT Journal of Management
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Parikalpana - KIIT Journal of Management, Vol - 10 (I), 2014 23
Shareholder Activism
K. Rajyalakshmi
Assistant Professor, IBS Hyderabad
E-mail: rajyalakshmik@ibsindia.org
Abstract
Shareholders are interested in how the company is being managed. In case of
dissatisfaction about the functionality or performance of the company; they take the
reins and monitor the management to ensure that it is managed in the best interests
of the company. Shareholders influencing the corporate behavior by exercising their
rights as owners are termed as shareholder activism.
Shareholder activism has earned its place in the financial press in the recent times.
Internet helps in coordination between different groups and reduces asymmetries of
information. Shareholders whose interests are diverse, aided by proxy advisory firms
are flexing their muscles in varied ways like proxy requisitions, request for shareholder
meetings, proxy fights to influence the behavior of the management. Presence of
media acts as a catalyst to activism. The author cites, as examples a number of wins
scored by activists in India and abroad. The challenge before corporate is to deal
with activism without compromising the fiduciary duty of acting in the best interests
of the company but not to specific activist shareholders.
Introduction:
Shareholder activism has become an to reduce the asymmetry of information,
increasingly important force in the hands internet based technology providing access
of the investor to create pressure on to information and connectivity, increased
corporate management to satisfy the dual participation of institutional investors like
interests of wealth creation and social hedge funds and augmented concerns
justice .This has received much attention about good corporate governance
in the financial press in the recent times. practices led to an upsurge in shareholder
Shareholder activism that has long been activism in the recent past around the
the privy of the United States has now globe. Shareholder voices which are
became popular in Europe, Australia and unheard of previously in the general
other parts of the world including India. meetings are heard more loudly and
Regulatory reforms aiming at increasing the regularly. Shareholder proposals,
rights of investors, greater disclosure norms shareholder requisitions for meetings and
24 Parikalpana - KIIT Journal of Management
proxy battles became more frequent with strategies including merger and acquisition
the activist investors scoring some wins are strategies, share buy backs, restricting
sending shivers down the spine of the executive packages, better corporate
erring management of companies. For social responsibility and sustainability etc.
instance, shareholders revolted to the to name a few.
extreme extent in the annual general Shareholder activism is not a new
meeting leading to the removal of the chief concept. It dates back to 1622 .Dutch
executive and the entire board in case of East India Company witnessed public
Euro tunnel. Under the pressure of foreign battles between the shareholders and
shareholders, Deutshe Borse dumped the management due to agency problems. In
proposal to purchase London Stock 1888, an activist shareholder of
Exchange. Metropolitan District railway lamented in
Shareholders being owners of the his letter to the editor in Financial Times
shares and residual claimants of the firm’s dated February 13, 1888, at the
income are endowed with a bundle of depressing character of the 6 monthly
rights by law with which they can safeguard financial reports and called for a
their interests. For a long period time they shareholder meeting to oppose the
were content with the economic benefits reappointment of chairman and demanded
they receive like dividend or capital the resignation of the board. Investopedia
appreciation at the time of exit. Earlier explains shareholder activism as ‘a way in
shareholders settled to the role of being which shareholders can influence a
silent spectators of the AGM or praising corporation’s behavior by exercising their
the chairman, applauding the company, rights as owners’. A shareholder
enjoying the lunch or day out provided by disappointed with the performance of the
the company and requesting for higher management company has three options
dividend. But this is all history and now in hand. One, to sell off the shares and
with activism taking its stride, the general exit the company, two, to be loyal to the
meetings are action packed. Shareholders company, be complacent and let the
who earlier showed interest only in management manage and third to show the
economic issues are now turning their dissatisfaction by way of activism.
attention to non-economic issues like Shareholders who finance risk capital and
transparency, good performance and social appoint board of directors to manage the
justice. Apart from seeking more dividends affairs of the company, owing to agency
and ROI ,they are flexing their muscles to problem, sluggish economy, increased
pursue the goals like changes in corporate corporate scandals, market volatility, roller
boards like removing underperforming coaster equity prices, poor corporate
management, seeking board governance practices followed by the
representation, changes in corporate organizations felt the need to opt for the
Shareholder Activism 25
third option of taking the reins to monitor shareholder activists and management was
the management to act in the best interests noticed like never before. Religious
of the company is the root cause of investors entered the fray and led the
shareholder activism. Greater disclosure shareholder activism movement in 1970s
norms and more information on internet in starting with the disinvestment campaign
the recent years enabled the shareholders in apartheid South Africa. Nowadays
more knowledgeable about the companies labor unions are shredding their passive
in which they invested to judge how they role and are becoming active shareholders.
are performing and are raising their voice In addition to these categories there are
against underperforming management by corporate gadflies who hold few shares in
following the recourse of activism. different companies file multiple
Hence, it is not out of place to refer shareholder proposals. Evelyn Y. Davis
to Calpers (The California Public and the team of Lewis D. and John J.
Employees’ Retirement System) which has Gilbert N are prominent in this cadre who
rightly used the term shareowners instead say they represent the interests of small
of shareholders recognizing the shareholders in the professional sense.
importance of actively exercising the Shareholder activist Jack Tilburn 86 year
ownership rights than passively holding the old, a former school teacher, attended 500
shares. They are ascertaining their rights AGMs and made his voice heard to uphold
by putting tougher questions to shareholder democracy. Dan Loeb, an
management and exercising their franchise activist shareholder is responsible for
to exert pressure on management to putting pressure and on the board of Yahoo
influence its behavior in order to ensure to dismiss Scott Thomson CEO, the
better management, less frauds, superior reason being a CEO is lying on his resume.
performance and improved corporate
governance. It creates an environment in
which management becomes more
accountable to shareholders. Shareholders
activism turned boring shareholder
meetings to action packed.
Fairly small stake in the company like
holding a single share is sufficient to launch
activism .A large variety of shareholders
like individual retail investor, institutional It is said the activist target companies
investors like hedge funds, pension funds, which are under performing measured by
mutual funds, strategic investors, not for earnings, having executive compensation
profit groups and the like are becoming issues, for carrying excess cash in the
26 Parikalpana - KIIT Journal of Management
balance sheet, and those that are poorly whole. All private gains are not social gains
governed and there is consistent failure on and all social gains are not private gains.
the part of the management to deliver as For example shareholders may put weight
per the expectations of the shareholders. to stop spending on sponsorships for
Out of these poor earnings are often cited public welfare; it can be a private gain but
as a principal motivation underlying proxy not social gain. Shareholder activism serves
contest (De Angelo, 1988.). Some the interests of not only the shareholders
investors like Warren Buffet purchase but also other stakeholders like workers,
block of shares in companies with an consumers, environment, society and
intention to profit in the future by improving future generations as a whole. Investor
their performance. They seek better capitalism based on the model of
financial and environmental performance responsible ownership developed to focus
by the companies. LENS Funds followed on environmental, social and governance
the strategy of ‘investing in a handful of (ESG) issues. A record number of
poor performers and then relentlessly resolutions were filed and numerous
pestering their managers to adapt a better shareholder campaigns are focusing on
strategy” (Economist, 1997). environmental and social issues. For
Shareholder activism is intended to instance, NGOs operating for the benefit
improve private and social gains. Private of cancer patients grilled LIC for investing
gains augment the shareholder wealth. Rs 3500 Crores in tobacco companies.
They can insist on improving performance High shareholder activism may force better
of the company, negotiate with the corporate governance.
management regarding the managerial
compensation and also the distribution of
the surplus to the shareholders thereby
increasing the shareholder wealth. It is
realized that executive compensation is
unfairly enriched the executives and eating
the corporate earnings hence ‘say on pay’
resolutions became a norm mostly in cases
if disconnect between pay and
performance. Nearly 55% of the
shareholders of Citigroup voted against the
board approved pay pack of $ 14.1 million
in 2011 as against $1 million awarded the
previous year to CEO Vikram Pandit. In
contrast to private gains, social gains
improve the welfare of the society as a
Shareholder Activism 27
which was unheard of in India three years other countries, it can be said that
back is showing its sparkling presence as shareholder activism is still in its infant state
the shareholders are assertive of their rights in India but is striding forward taking baby
.Institutional investors and FIIs are leading steps.
the show. Even minority shareholders Shareholder activism is encouraged
stared putting tough questions to the errant by the recent changes in the regulation.
management. U.K based children’s When the class action suit was filed against
investment fund which held only one Satyam by overseas investors, Indian
percent stake in Coal India has questioned investors who had no recourse under the
the management for succumbing to the law watched powerlessly. Now,
demand of the Indian government on coal Companies Amendment bill 2012 allows
pricing ignoring the fiduciary responsibility class action suits to be filed, if the affairs
towards its shareholders .It took a step of the company are conducted in a manner
further and threatened to sue the that is prejudicial to the interests of the
management. An equity research arm of company or its shareholders. These suits
Macquarie an Australian bank had can be filed when minimum 100
expressed its doubts about the accounting shareholders come together. Now,
policies followed by HDFC. Shareholders financial assistance is provided for class
of Vedanta Inc. faced protests from action suits by SEBI from investor
shareholders including minority protection and education fund established
shareholders when it announced in India following the provisions
restructuring decision. Minority Companies Act, 1956 for promotion of
shareholders of Crompton greaves forced investors’ awareness and protection of the
the company to give a commitment to sell interests of investors to the approved
the loss making jet. Investor activists investor associations, if they can prove that
questioned the transfer of tax liability worth at least 1000 shareholders are affected by
thousands of Crores from Essar Oil to fraudulent practices. The changes in the
Essar House and the reversal of the deal takeover code allow the minority investors
followed by supreme courts decision. to buy up to 24.99% without an open offer
Infosys faced shareholder activism. Veritas obligation which can enable them to have
Investment research of Canada made a more say in the affairs of the company. But
sensational report on Reliance legal protection alone may not ensure
Communications, India Bulls, King Fisher investor protection unless the shareholders
Airlines and DLF for which the stock recognize their ownership rights
market reacted sharply. Cases were filed
in courts of law against this report. These Small investors who invest in mutual
were only glimpses of what happened in funds delegate the decision making power
the recent past in India. But compared to regarding where the investment is to make
Shareholder Activism 31
and do not have a right to vote on the SEBI took a further step forward,
shares held on behalf of them. Mutual mandated 500 top class companies to
funds have a fiduciary duty to act in the provide for e voting facilities to enable
best interests of the fund holders. Mutual wider participation of the shareholders in
funds despite of having economic power, important decisions of the companies
played a passive and did not accomplish without being physically present at the
as active participants in the meetings of the general meeting. Clause 35A of the listing
companies in which investments were agreement provides that e voting is
made with fund holders money and pursue mandatory in case of all resolutions which
the companies to follow good corporate are transacted using postal ballots. Postal
governance practices and act in the best ballots are currently obligatory under
interests of the shareholders. According to section 192A of the Companies Act and
the report from Ingovern out of 23,482 in other regulations like ICDR
resolutions passed by the companies in Regulations, Takeover Code, etc. In a
which investments were made only 326 statement SEBI said, “In line with the
are voted against by mutual funds in the budget proposal of Finance Minister, to
financial year 2011-12. SEBI ‘s mutual make it mandatory for top listed
fund advisory committee felt that mutual companies to provide for electronic
funds should play an active role in the voting facilities, it has been decided to
governance of listed companies issued implement the said proposal by making
guidelines that AMCs should disclose their electronic voting mandatory for all listed
general policies and procedures regarding companies in respect of those businesses
the exercise of voting rights with respect to be transacted through postal ballot.
to the shares held by them. As per the The same would be implemented in a
directives of SEBI, it became obligatory phased manner,’’ NSDL and CDSL
on the part of asset management Ventures Limited are already providing
companies to disclose the actual exercise e-voting platform. This change provides
of proxy votes in the annual and a win -win solution to the shareholders
extraordinary general meetings on their as well as the company. This conversion
websites and annual reports. It further enables the shareholders to give their
prescribed the areas where they are to assent or dissent to the resolutions
exercise due diligence. The direction from proposed in any number of companies in
SEBI is a welcome move but until and which they hold shares within minutes in
unless the mandate of SEBI followed in the comfort of their home or office .It also
the true spirit of the words, it can only be reduces the administrative costs
“shareholder engagement¸”rather than associated with postal ballot to the
shareholder activism. company.
32 Parikalpana - KIIT Journal of Management
put the information in the public domain to Marcia Millon Cornett, Alan J. Marcus,
ensure full disclosure and transparency to Anthony Saunders, Hassan Tehranian
enable the shareholders understand the (2007), ‘the impact of institutional
situation as it is done in case of easy Jet ownership on corporate operating
which went to press to explain the performance, Journal of Banking &
remuneration policy. Shareholder activism Finance: 31(2007) 1771-1794
should also be included in the risk O’Rourke, Anastasia (2013), ‘A new
management strategy of the company. An politics of engagement: shareholder
integrated approach should be adopted in activism for corporate social
dealing with activism. Companies should responsibility’, Business Strategy and the
constitute a response team preferably Environment; Jul/Aug 2003; 12, 4; ABI/
consisting of key managerial personal INFORM Complete PAGE 227
including company secretary, public
relations personnel and legal advisors to Pascal Frantz (2007), ‘Socially and
facilitate discussions with activists. privately optimal shareholder activism’, J
Manage Governance (2007) 11:23-
The challenge before corporate is to 43DOI 10.1007/s10997-007-9013-x
deal with activism without compromising
the fiduciary duty of acting in the best Rehbein, Kathleen; Wad dock, Sandra;
interests of the company but not to specific Graves, Samuel B(2004),‘Understanding
activist shareholders. Shareholder Activism: Which
Corporations Are Targeted?’, Business
References and Society; Sep 2004; 43, 3; ABI/
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Parikalpana - KIIT Journal of Management, Vol - 10 (I), 2014 37
Abstract
Regional Rural Banks (RRBs), now spread all over India, play an important role in
the all round rural development of the nation, and also for the financial-inclusion
mission. To strengthen the functioning of these RRBs further, many committees have
given suggestions, for major reforms, including amalgamation. As considerable time
and effort have been given on this reforms-measure, time has come to check whether
‘amalgamation’ of RRBs has helped improving service-quality?
The present paper reviews the growth of Indian banking sector and, particularly the
Regional Rural Banks (RRBs) of Odisha. The paper uses both secondary and primary
data to study and check, whether there has been any significant improvement in
functioning of RRBs, in the state of Odisha.
Introduction:
The importance of banking-system, their performances. The committees had
in the socio-economic development of a specific suggestions, to bring about
nation, has been a well researched topic. requisite amendments in the working of
But, as compared to other commercial these banks so that the scope of their
banks, the performance of Regional Rural functioning can be improved both
Banks (RRBs) has been a worry-some qualitatively and quantitatively. The
case for the Government, at least until suggested reform-measures included
recently. In the recent past, more focus was amalgamation (of RRBs), which was
been given on how to improve both the implemented throughout India, including
efficiency as well as the very credibility of Odisha, in phases.
such RRBs, which were established (by a The present paper aims at studying
special RRB Act, in 1976) to boost the the performance of RRBs of Odisha and
rural economy of India. their service quality, as perceived by the
Since the establishment of Regional customers, post amalgamation.
Rural Banks, various groups/ committees First, we briefly summarize the
have been set up by the Reserve Bank of development in banking industry, reforms
India and Government of India to review measures adopted after liberalization and
38 Parikalpana - KIIT Journal of Management
then discuss about the parameters for financial resources mobilization and
measuring operational efficiency as well as allowance.
consumer perception. Operational According to the recent policy
efficiency is proposed to be analysed guidelines, the second phase of
through secondary data, while the amalgamation of the RRBs working in a
‘customer perception’ is to be analysed state sponsored by different commercial
by a sample survey of some existing banks are being amalgamated so that each
customers of RRBs in Odisha. proposed RRB will have minimum 350-
Indian Banking & Financial System 400 branches working in a contiguous area
The Indian financial system can be and each State would have one or two
categorized into two distinct sectors: formal RRBs. This process has already been
financial system and informal financial initiated from the 1st October, 2012. So
system. The formal financial system is this is the most opportune moment to study
regulated by Government of India, Reserve the effect of first phase of restructuring
Bank of India, Securities Exchange Board (2005) on the efficiency of the RRBs
of India, and other regulatory bodies, working in India to assess whether
whereas the informal financial system amalgamation has really improved the
consists of indigenous money lenders, performance of the Regional Rural Banks
landlords, traders, chit-funds, etc. working in the State of Odisha.
In the last two decades, there has Need for the research
been a considerable expansion of the The performance measurement is a
Indian financial system, both in terms of process which helps in evaluating how well
growth in infrastructure and business or how efficiently an organization is
volume. The role played by the financial performing. It helps the management, to
institutions, particularly the banking sector, assess whether the organisation is moving
in the development and growth of a in the right or desired direction. It also
nation’s economy has been widely motivates the people in the organization
acknowledged by the various researchers. and out of the organization who are directly
To make the banks more efficient, or indirectly involved in managing it by
delivering better results, committees have making them conscious of the
prescribed various measures like the end achievements made by the organization.
of control on loans, deregulation of interest Last but not the least reviewing
rates, reduction in reserve ratios like CRR performance provides necessary feedback
and SLR, implementation of prudential to make either any midway correction, if
norms (Narasimham,1991). Those warranted, to improve the overall
reforms were set up with the main performance of the organization or to plan
objective of improving efficiency in for the future.
Customer Perception on Performance of RRBs in Odisha 39
During the same period, the number level of Rs. 3554 crores in a short span of
of RRB branches increased from 17 to 15 years. The average annual growth rate
14,443 (in the year 1990). The branches of credit in the same period was 33 %.
of the Regional Rural Banks which were Credit-Deposit Ratios
opened mostly in the remote rural and
unbanked areas gave an opportunity to the Credit-deposit (CD) ratio of a bank
hitherto neglected rural mass to experience reflects the utilization of deposits mobilized
benefits of banking services. by a bank in the economic development of
the locality or region by deployment of credit
Deposit Mobilization in the region. Ideally the CD Ratio of a bank
The two important functions of any should be more than 60 percent. CD Ratio
bank are deposit mobilization and credit is found to be much above the stipulated rate
disbursal. The idle savings in the hands of of 60 per cent. It shows that RRBs had all
the people are mobilized as deposits by along used the mobilized resources in the
the banks and the same is deployed in development of the local region.
productive use through the borrowers of Productivity per Bank
the bank. The deposit grew from meager
amount of Rs. 0.2 crores in 1975 to Productivity per bank and
Rs.4151 crore in 1990. The annual growth productivity per branch are standard
rate of deposits during period 1979 to measures used to assess the performance
1990 was as high as 68 per cent in 1981 of any bank. It is measured by dividing
and as low as 5.16 per cent in the year the total business mix of deposits and
1989. The average annual growth rate of advances by the number of banks. It
deposits during the period 1979-1990 was increased from Rs. 0.6 crore in the year
40 percent. The compounded annual 1975 to 39.31 crores in the 1990.
growth rate (CAGR) of deposit for this RRBs of Odisha
period was 39.88 %.
The study of the development and
Credit Amount working of commercial banks in Odisha
The Regional Rural Banks were during the post nationalization period
specifically set up to cater to the needs of (1970-1979) deserves a special mention.
the rural people. Their prime task was to Firstly, the period succeeds implementation
meet the credit needs of the small and of Lead Bank Scheme on the
marginal farmers, rural artisans, small recommendations of the National Credit
businessmen and other borrowers under Council set up by the Government of India
the target group. The credit outstanding in the year 1968. Under the scheme the
grew steadily during the period 1975 to Lead Banks were required to concentrate
1990. The banks which started functioning on the banking business and resource
in 1975 could reach credit outstanding development in the districts assigned to
Customer Perception on Performance of RRBs in Odisha 41
Almost 66 per cent of the customers amenities that they expect to be made
surveyed have income of below Rs. 5000/- available at the branches according their
per month .It reflects the economic condition importance in their perception. At the
of the rural poor. People having monthly same time they were also asked rank
income of Rs. 5,001 to 10,000 constitute those facilities as available in the branches
17 per cent of the respondents. Only 7 per according their perception. The findings
cent of the people among the respondents have been tabulated below in descending
have monthly income above Rs. 20,000/-. order according to the rank given by the
Facilities and amenities respondents. The rank is based on the
weighted average of the ranks accorded
During the survey, the respondents by the individual respondents.
were asked to rank sixteen facilities and
Customer Perception on Performance of RRBs in Odisha 45
Table - 5
Sl. Amenities Expected Weighted
- (Importance measured in 4-point rating scale) Average Score
1 ATM facility at the branch (Importance) 1.39
2 Air-condition comfort (Importance) 1.44
3 Name board and other information about working hours etc. 1.79
4 Parking facilities (Importance) 1.88
5 Drinking water facility (Importance) 1.91
6 Convenient location of the bank (Importance) 1.95
7 Sitting arrangement (Importance) 2.05
8 May I Help You counter (Importance) 2.17
9 Dust bins (Importance) 2.29
10 Lighting (Importance) 2.30
11 Electronic token number display and audio announcement system 2.46
12 Complaints and suggestion boxes (Importance) 2.54
13 Flooring (Importance) 2.65
14 Availability of personal assistance/guidance (Importance) 2.71
15 Display of products and services information (Importance) 2.85
16 Display of identification boards at counters (Importance) 3.18
Table - 6
Sl. Amenities Available Weighted
(Importance, as felt by customers) Average Score
1 Convenient location of the bank (Importance) 2.14
2 Lighting (Importance) 2.53
3 Flooring (Importance) 2.75
4 Dust bins (Importance) 3.10
5 Name board and other information about working hours etc. 3.19
6 Drinking water facility (Importance) 3.24
7 Complaints and suggestion boxes (Importance) 3.41
46 Parikalpana - KIIT Journal of Management
Figure - 5
In the present era of globalization and sector. It is the behavior of the employees
privatization where great emphasis is put who deal with the customers that matter in
on marketing for success of any product retaining in customers and in bringing in new
or service, it is the general perception that customers. Advertising is the factor which
people’s choice of bank is greatly is found to be the least influential among the
influenced by advertising. But the findings eight factors listed for ranking by the
of the survey, contrary to the general respondents influencing choice of a bank
perception, have shown that most influential by them. So to improve the customer base,
factor influencing the choice of a person for attract new customers and retain the existing
choosing a bank is the employee behavior customers the top management of the banks
and it is followed by quality of service. It should give emphasis on enhancing the
has again brought in to focus the contribution quality of the employees and Customer
of the human touch in the success of a Relationship Management rather than on
service industry in particular the banking advertising.
Parikalpana - KIIT Journal of Management, Vol - 10 (I), 2014 51
Dr R K Panda
Senior Research Officer,
Bankers Institute of Rural Development, Lucknow-226012
Abstract
The state of Uttar Pradesh is having vast water resources of flowing water and
confined water. Uttar Pradesh accounts for about 15% of the country’s river length,
around 5 percent of reservoir area of the country. The present study evaluates the
inland fishery resources and long term trend of fish production in Uttar Pradesh. It
provides the business potential of fish galaxies by analyzing the mean changes in
consumption pattern of the buyers in fish galaxies over traditional fish markets.
are fixed parlors, in strategic locations. One different published sources and primary
such parlour very recently in January 2013 data obtained from buyers are analyzed.
has come up at Barabirua location in Primary data are obtained under two
Lucknow. Previously, there was a market clusters which are Barabirua Fish
congested unhygienic market yard for Galaxy (Experimental Group) and
selling inland fish. Around 50-60 sellers Alambagh, Power House Choura
were engaged in selling very limited traditional fish markets, Bangla Bazar
varieties of inland fish only. Now, one Sunday Fish Market (Control Group).
observes that the number of varieties of Business potential of the fish galaxies are
fish being sold in that market has gone up examined by analyzing the changes in fish
and the customers are getting quality fish consumption behavior of the buyers of the
in a clean environment. In this backdrop, galaxy fish market with that of the traditional
present study with the aid of primary data nearby fish markets. Buyers are interacted
obtained from buyers attempts at assessing at market points after the completion of
the business potentials of such parlours in their fish purchase. For obtaining relevant
strengthening the supply chain of fishing. information, 100 buyers from each market
After setting the backdrop of the study, are interacted with the aid of a fully
the subsequent section of the study evaluates structured format.
the inland fishery resources and long term TREND OF FISH PRODUCTION
trend of fish production in Uttar Pradesh. IN UTTAR PRADESH
Section-3 provides the business potential of Inland Fishery Potentials of the state
fish galaxies by analyzing the mean changes
in consumption pattern of the buyers in fish The state of Uttar Pradesh is having
galaxies over traditional fish markets. vast water resources of flowing water and
confined water. Presence of a great length
Objectives of the Study of rivers, canals, natural lakes, and ponds
To evaluate the inland fishery provides adequate potentiality for best
resources in Uttar Pradesh. possible inland fishing in the state. Uttar
To study the impact of fish galaxies Pradesh accounts for about 15% of the
on the buyers’ consumption country’s river length, around 5 percent of
Pattern and to examine the reservoir area of the country. Added to it,
business potential of the fish the state is having 7% of the country’s tanks
galaxies over the traditional fish and ponds; around 17% of flood plain lakes
marketing places. and derelict water. Besides the land area
under water bodies of the state standing at
MATERIALS AND METHODS 4.32 lakh hectares accounts around 6
In order to examine the study percent of the land area under water bodies
objectives, secondary data obtained from available in the country (See Table-1).
Business Potential of Fish Parlours in Uttar Pradesh 53
Table-4 : Monthly per capita consumption of fish (KG) and number of fish consuming Households
(per 1000 Households) in Uttar Pradesh in comparison to All India
Year UTTAR PRADESH ALL INDIA
MPC- MPC- NFCH- NFCH- MPC- MPC- NFCH- NFCH-
Rural Urban Rural Urban Rural Urban Rural Urban
1996 0.04 0.02 109 52 0.15 0.17 282 262
2008 0.05 0.03 163 69 0.2 0.21 342 278
% Variation 25.00 50.00 49.54 32.69 33.33 23.53 21.28 6.11
Note.: MPC stands for Monthly per capita consumption of fish (in KG) and NFCH stands for
number of fish consuming Households (per 1000 Households)
Source: Hand book on fisheries statistics 1996 and 2008, Govt. of India
Table-6 : Occupation Category wise Mean quantity of fish purchased in grams per
visit and averages number of times visit per month in both the market conditions
Sl Occupation GALAXY MARKET NON GALAXY MARKET
No. Category Mean Mean no. Mean Mean no.
consumption of times consumption of times
/ visit visit / month / visit visit / month
1 Govt. Employee 981 4.71 895 6.56
2 Private Sector Employee 919 6.08 756 2.39
3 Business 968 10.09 864 5.56
4 Professionals 1175 4.81 653 3.86
5 Skilled Labour 925 8.06 562 6.86
6 Casual Labour 880 5.86 798 6.83
Mean across all occupations 940.48 6.53 752.7 5.27
‘P’ value with ‘t’ Test for *0.001
mean consumption per visit
‘P’ value with ‘t’ Test mean *0.108
No. of times visit per month
* Statistically significant at 5 percent level
As per table-7, it is also found that galaxy market consumer are found with
the average expenditure per visit in galaxy less than Rs.300/- spending per visit as
market calculated at Rs.142/- is higher against around 6 percent of the consumers
than the non galaxy market. It is also spend more than Rs.300/- per visit to the
revealed that people spending more galaxy market. This might be due to the
amounts on fish prefer to galaxy market availability of costly varieties of fish in the
than non galaxy market because all the non galaxy market.
Table-7: Mean expenditure on fish in Galaxy Market and Non galaxy Market
Sl. Expenditure (Rs.) No. of Consumers No. of Consumers in
No. in the galaxy Market the Non-galaxy Market
1 0-100 35 53
2 100-200 47 36
3 200-300 12 11
4 300-400 3 0
5 400-500 3 0
Total 100 100
Average Expenditure 142 108
‘P’ value with ‘t’ Test mean expenditure 0.5
per month
* Statistically significant at 5 percent level
Business Potential of Fish Parlours in Uttar Pradesh 59
Analyzing consumers’ preferences they have more preference for fish and less
for fish over other non vegetable food items preference for non fish. It is found that 56
in terms of the ratio of non fish to fish , it is percent of the galaxy consumers and 41
found that 11 percent in the galaxy market percent of the non galaxy consumers’ fall
and 20 percent in the non galaxy market under this category. Combined ‘0’ and ‘0-
are exclusively consume fish only as the 1’ (preference to fish than non fish)
corresponding ratio for this group stand indicates that 67 percent of the fish lovers
at ‘0’. If the value of this ration happens go to the galaxy market as against 61
to be between ‘0’ and ‘1’, it implies that percent of the non galaxy market.
9 Baiki
10 Tuna
11 Padhen
12 Baden
13 Gaichi
14 Suhiya
15 Pamphlet
16 Grass corp
Abstract
Financial services generally undifferentiated products, it becomes imperative for
service organization to strive for improved service quality if they want to distinguish
themselves from the competition (Stafford, 1994). Several researches show that service
quality is a significant issue which is used in positioning and marketing of
organization. In banking also, Service Quality has been one of the concerns. This
has been necessitated by the unbending rivalry in the banking industry. Banks are
go-getting hard to offer quality services and products in a proffer to maintain existing
customers and woo new ones as well.
Keywords: Service Quality, Service Environment, Interaction Quality, Empathy,
Reliability
for banks to develop a customer-centric Profile of the Banks under Study: The
approach for future survival and growth. study has selected two largest banks from
Banking Industry the public and private banking space of
the country viz. State Bank of India and
The phenomenon of globalization, ICICI Bank.
liberalization and privatization coupled with
other significant changes as technology and SBI also has the following non-banking
policy pertaining to the banking sector has subsidiaries:
fundamentally changed the banking 1. SBI Capital Markets Ltd
scenario of the country. Technological 2. SBI Funds Management Pvt Ltd
advances redefined distance, time and 3. SBI Factors & Commercial Services
location and liberalization and globalization Pvt Ltd
have led to reduced entry barriers, shorter 4. SBI Cards & Payments Services Pvt.
strategy and product cycles, Ltd. (SBICPSL)
commoditization of products and
increased competition. These factors have 5. SBI DFHI Ltd
impacted banking sector considerably. 6. SBI Life Insurance Company Ltd.
The banking sector reforms over the 7. SBI General Insurance
past decade coupled with the impact of ICICI Bank: ICICI Bank Ltd. is an
the above mentioned forces have resulted Indian diversified financial services
in a greater integration of the banking company having its headquarter in
sector with the global markets. As a result, Mumbai, Maharashtra. It is the second
the culture specific banking sector largest bank in India with respect to its
participants have also sought a new assets and third largest by market
framework that has emerged across the capitalization. ICICI Bank is India’s
globe that successfully addressed the needs second-largest bank with total assets of
of the highly competitive and rapidly Rs. 4,062.34 billion (US$ 91 billion) at
changed environment. March 31, 2011 and profit after tax Rs.
The nature of the banks also changed 51.51 billion (US$ 1,155 million) for the
from a depositing and lending institutions year ended March 31, 2011. The Bank
to a one stop superstore of all financial has a network of 2,630 branches and
needs. This new banking model provided 8,003 ATMs in India, and has a presence
a clutch of services from retail and in 19 countries, including India. (ICICI
corporate banking to industrial lending, Bank Annual Report 2011-12)
invest banking to insurance. Modern banks ICICI Bank is the largest private
have grown tentacles that went beyond sector bank in India. ICICI Bank has been
mere brick and mortar structures. one of the pioneers in the starting superior
customer experience in the Indian banking
Service Quality Gaps Banking Industry : A Comparative Study 63
space and is also credited with many of the ICICI Securities Limited
customer service innovations. Tremendous ICICI Prudential Asset
amount of Service Quality innovations has Management Company Limited
been initiated by ICICI Bank. This is one ICICI Venture
such bank in the private banking space that
has done private banking as public sector ICICI Home Finance
banks and reached out to customers with ICICI direct.com
the aggressive reach of public sector banks ICICI Foundation
and superior service experience of private International
sector banks. ICICI Bank offers a wide
ICICI Bank UK PLC
range of banking products and financial
services to corporate and retail customers ICICI Bank Canada
through a variety of delivery channels and ICICI Bank Eurasia LLC
through its specialized subsidiaries and Review of Literature
affiliates in the areas of investment banking,
life and non-life insurance, venture capital, Modern customers are aware
asset management and information customers and they willingly participate in
technology. ICICI Bank’s equity shares are the market processes, numerous services
listed in India on stock exchanges at processes and affect the result significantly
Chennai, Delhi, Kolkata and Vadodara, in terms of quality and value addition.
Mumbai and the National Stock Exchange Service Quality enables businesses to
of India Limited and its American realize, recognize and respond to total
Depositary Receipts (ADRs) are listed on satisfaction internal as well as external
the New York Stock Exchange (NYSE). customers. Edvardsson (1998) in his study
stated that “a company does not sell
Subsidiaries of ICICI Bank services, but opportunities for services”.
The ICICI Bank includes a network There are two important component
of eight domestic subsidiaries and three of Service Quality which needed
international subsidiaries. Through the explanation in comprehension of Service
establishments, it offers various services Quality.
including merchant banking services, fund
management, factoring services, primary Researchers generally agree that
dealership in government securities, credit Service Quality is not a bi-dimensional
cards and insurance. construct that reflects whether a firm’s
customer service is excellent or poor.
Domestic Instead Service Quality represents a
ICICI Lombard composite of factors that determine
ICICI Prudential Life Insurance customers’ perceptions about the offering.
Company Limited Service Quality is not objectively
64 Parikalpana - KIIT Journal of Management
measured according to some technical Berry et al.’s (1985) believed that the
standards but is subjectively felt by instrument could be used to assess quality
customers and measured relative to in a wide range of service firms. They found
customer-determined standards that the model’s five dimensions were
(Kwortnik, 2005). The most popular insufficient to cover quality in a retailing
definition of Service Quality has been the setting. Siu and Cheung (2001) found that
customer ’s perception of service the dimension physical appearance and
excellence (Parasuraman et al., 1990; policy have the greatest impact on the
1998) and relative superiority of overall Service Quality & the future
performance (Bitner and Hubbert, 1994; shopping behavior. In their study they also
Gronroos, 1982). found that Personal interaction was rated
Parasuraman et al. (1985) stated that the weakest dimension and customers
Service Quality is a degree and direction of were mainly dissatisfied with the physical
discrepancy between customers’ service appearance & promises. Khan et al.,
perceptions and expectations. Reeves and (2009) found that the two dimensions, viz
Bednar (1994) in his study explained privacy /security and fulfillment are not
Service Quality as excellence, value, contributing significantly towards the
conformance to specifications and meeting overall Service Quality. Munhurrun et al.,
or exceeding customers’ expectations. (2010) found that Customer rated the
Bitner and Hubbert (1994) defined Service importance of attributes as reliability,
Quality as the customers’ overall impression assurance, responsiveness, Tangibles and
of the relative inferiority or superiority of empathy respectively and also found that
the organization and its services. The the largest gap was observed for reliability
definition of Service Quality also included and responsiveness. Truclien (2010) found
attitude (Parasuraman et al., 1988, Cronin that not all the factors of Service Quality
and Taylor, 1992). DeMoranville and have positive effect on perceived Service
Bienstock (2003) identified Service Quality Quality. There are two factors reliability and
as a measure to assess service responsiveness doesn’t have positive effect
performance, diagnose service problems, on perceived Service Quality. Convenience
manage service delivery, and as a basis for has been identified as the most effective
employee and corporate rewards. factor to perceived Service Quality.
process. With the advent of innovations at for both public and private sector banks
the marketplace, the customers have and this gap is on all the dimensions. Rai,
greater options to select from and this is Pareek, Yadav (2012) Identified that offers
posing great difficulty among the marketers and delivery are the two most significant
of banks. To gain and sustain competitive service quality dimensions where
advantages in the fast changing retail maximum gap exists for rural customers.
banking industry in India, it has become Measuring Service Quality in Banks
crucial for banks to have a deeper
understanding of customer’s perception of Quality is sought across sectors and
key dimensions of service quality and its industries. But measuring Service Quality
impact on the identified dimensions. In this with the same scale might not suffice as
view Mehta (2005) found that public different industries have different specific
sector banks enjoy a better quality issues to address. Even the scale
perception among their customers as for developed in one environment might not
public sector banks, three out of five be equally significant when is used in
dimensions have scored higher than another environment as different countries
average, however, in case of private banks, have different peculiarities and even in the
only two dimensions have had higher than same country, may issues and relevance
average values. Awasthi and Dogra (2005) may be differ from tier 1 city to tier 2 or
found that customers regard reliability as tier 3 cities and may also vary from urban
the most important dimension of services to rural markets.
in banks. Singh and Tripathi (2007) This questioned the universal
suggested in his comparative study that applicability of most widely used scale i.e.
private banks should improve SERVQUAL developed by Parasuraman
responsiveness, competence, product et.al. (1988). Addressing this issue,
range and security features in their services. Karatepe et al., (2000) developed
Seema (2008) found that the perceived Banking Service Quality Scale (BSQ), a
performance of Prime Bank (one of the scale developed exclusively for banking
bank) is relatively close to expectations in industry and duly tested for its validity and
comparison to other two banks and studied reliability for the measurement of perceived
the variations in service quality across Service Quality in banking services.
demographic variables and income of
In the banking Industry, perceived
customers. Mohanty (2008) Observed
Service Quality results from the difference
that there are wide gaps exist between the
between customers’ perception of the
expectations and views of customers and
complete offering experience by the bank
also the products and service delivery by
and their expectations from the bank. The
banks. Rai Alok K (2010) Identified that
four dimensions presented in the BSQ
the perceptual gap in service quality exists
scale included:
66 Parikalpana - KIIT Journal of Management
From the above graph Customer’s Interaction Quality, 38% in Empathy and
response that there is 24.4% gap exists in 31.60% in Reliability of public Banks which
Service Environment dimension, 29% in is the function of overall Service Quality.
Service Quality of Private Bank:
Service Quality Dimension’s Mean Score Gap scores % Gap
Service Environment 3.59 -1.41 28.2
Interaction Quality 3.47 -1.53 30.6
Empathy 3.24 -1.76 35.2
Reliability 3.64 -1.36 27.2
on Guest satisfaction and guest behavioral Parasuraman, A., Zeithaml, V.A., and
intension in Vietnam hotel Industry. Berry, L.L. (1985).A conceptual model of
Juran, M.J., (1980). Books on Upper Service Quality and its implication. Journal
Management and Quality. New York. of Marketing, Vol. 49, pp. 41-50.
Khan , Mahapatra and Sreekumar (2009). Rai ,Alok, K. (2009).Service Quality gap
Service Quality evaluation in internet analysis in Indian banks: An empirical study.
banking: An empirical study in India. Paradigm.
International journal of Indian culture Rai, Pareek, and Yadav (2012). Service
and business Management, Volume 2. quality assessment of rural banks - a study
No.1. of select banks of Varanasi, LBS
Mohanty, R.K. (2008).Hunting Customer Management Review.
Satisfaction in Banks. Gurukul Business Reeves, Carol A; Bednar, David A (1996).
Review, Vol.4, pp.47-52. Keys to Market Success — A Response
Munhurrun, Bhiwajee and Perunjodi and Another View. Journal of Retail
(2010).International Journal of Banking, 18 (4): 33.
Management and Marketing Research, Sharma Alka, Versha Mehta (2005).
Volume 3 No.1. Service Quality perceptions in financial
Noel,Y.M., Jeff, Tak-Hing, Cheung. (2001). services-A case study of banking
A measure of retail service quality. services. Journal of services
Marketing Intelligence & Planning, Vol. research.
19 Iss: 2, pp.88 - 96. Singh, AK., & Tripathi, Shiv K.
Parasuraman, A., Zeithaml, V. A., and (2007).Perceptual Difference of Quality in
Berry, L L. (1994). Reassessment of Banking Services: A Study on Indian Private
Expectations as a Comparison Standard in Sector Banks. Indian Management
Measuring Service Quality: Implications for Studies Journal 11 (2007)1-14.
Further Research. Journal of Marketing, Spathis, C., Petridou, E., and Glaveli, N.
58(January), pp.111-24. (2004). Managing Service Quality in banks:
Parasuraman, A., Zeithaml, V. A., and Customers´ gender effects. Managing
Berry, L. L. (1988). SERVQUAL: A Service Quality, 14(1), pp.90-102.
Multiple Item Scale for Measuring Stafford, M.R. (1994). How Customers
Consumer Perceptions of Service Quality. perceived Service Quality. Journal of
Journal of Retailing, 64(1), pp. 12-40. Retail Banking, 17(2), Summer.
Parasuraman, A., Zeithaml, V.A. and Berry, Zeithaml, V. A., Parasuraman, A., and
L.L. (1986). SERVQUAL: a multiple-item Berry, L. L. (1990). Delivering Service
scale for measuring customer perceptions Quality: Balancing Customer Perceptions
of Service Quality. Report No. 86-108, and Expectations, New York: The Free
Marketing Science Institute, Cambridge, Press.
MA.
72 Parikalpana - KIIT Journal of Management
Annexure:
Variables Entered/Removed
Model Variables Variables Method
Entered Removed
1 QE . Stepwise (Criteria: Probability-of-F-to-enter <
= .050, Probability-of-F-to-remove >= .100).
2 R . Stepwise (Criteria: Probability-of-F-to-enter <
= .050, Probability-of-F-to-remove >= .100).
a. Dependent Variable: SD
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .523 a
.274 .266 .55792
2 .614b
.377 .365 .51921
a. Predictors: (Constant), QE
b. Predictors: (Constant), QE, R
c. Dependent Variable: SD
Excluded Variables
Model Beta In t Sig. Partial Co linearity Statistics
Correlation Tolerance VIF Minimum
Tolerance
1 SE .198a 2.102 .038 .209 .806 1.241 .806
QI .205a 1.833 .070 .183 .577 1.734 .577
R .334 a
4.019 .000 .378 .928 1.077 .928
2 SE .118b
1.291 .200 .131 .759 1.318 .759
QI .197b 1.893 .061 .190 .576 1.735 .555
a. Predictors in the Model: (Constant), QE
b. Predictors in the Model: (Constant), QE, R
c. Dependent Variable: SD
Ruhi Chawla
Amity Business School, Noida
Abstract
This case briefly describes a study conducted for State Bank of India, which is India’s
largest bank with the most number of branches and also in terms of the total value of
the business.
The emphasis is initially on initiatives by SBI and offerings for the people which
make it stand out. The idea is to understand customer perception and their choices
and then make customizable products to suit their need and demands. The financial
institution has mostly happy customers and a large database too. The customers
have been in the forefront always for SBI.
Keywords: Financial institution, Services by SBI, mutual funds, security trading,
pension fund management, custodial services, general insurance
Introduction
SBI is the largest bank in India owned
Before the establishment of banks, by Indian Government. As of March 31,
the financial activities were handled by 2012, the Bank had a network of 20,193
money lenders and individuals. At that time branches, including 5,096 branches of its
the interest rates were very high. Again five associate banks. In addition to
there were no security of public savings banking, the Company, through its various
and no uniformity regarding loans. So as subsidiaries, provides a range of financial
to overcome such problems the organized services, which include life insurance,
banking sector was established, which was merchant banking, mutual funds, credit
fully regulated by the government. card, factoring, security trading, pension
This case focuses on The State Bank fund management, custodial services,
of India and how it has believed in general insurance (non-life insurance) and
customer satisfaction. primary dealership in the money market.
74 Parikalpana - KIIT Journal of Management
been done on the basis of age, occupation 3. Perspective 3: Feedback from MNC
to create profiles and analyze the data. employees and surveying why SBI
The data was collected and analyzed is not opted by them.
on basis of age first to see the different After completing the study of three
type of customers the bank has. Then the perspectives an analysis tool named
factors which influenced the reason for “Pareto analysis” was put to use which
choosing SBI over others for these suggested that 80% of the defects are due
customers were analyzed and data to only 20% causes.
grouped appropriately. Hypothesis
The respondents were also asked to Hypothesis 1: On which bank you depend
mention a second preference over SBI for your regular transaction?
for taking a loan. This helped to identify
certain factors which competitors had and
SBI did not.
Responses were also recorded for
the type and condition of branch facilities.
Based on all these factors satisfaction level
was defined.
Identification of Factors/ Goodness of From above figure above we can see
Data that State Bank of India has preferred by
Apart from other factors on which the most of the clients for regular transactions.
research was based, the research also tried 60% of our respondents do regular
to measure satisfaction levels among transaction from SBI, 33 % from ICICI,
customers. It related this satisfaction to 5 % HDFC and a meager 2 % chose other
level of awareness about the bank’s banks apart from stated three. We can
products and offerings. It also analyzed hence draw the inference that majority of
future growth areas by asking people customers chose SBI over others for
preferred bank for loans and gained insight regular transactions.
into such demographics. The study in this Hypothesis 2: Are you aware of
project is carried out using following three products & services provided by SBI?
perspectives:
1. Perspective1: Online customer
survey from customers.
2. Perspective2: Personal Visit to
branches and questioning from the
staff and the customers at banks.
76 Parikalpana - KIIT Journal of Management
So, we can draw the inference that 14 issues, these five are the most significant
the above chart is a Pareto chart which few i.e. (5/14)*100= 35 %
depicts the theoretical 80-20 rule i.e. 20 approximately. These 5 problems should
percent problems are the causes of 80% be on priority for resolution by SBI and
of the defects or loopholes in the service. remaining 9 problems that represent 65%
Practically in our analysis, we observe that of the lower priority problems should be
35% of the problems are cause of 65% put in line after resolution of the first 5.
loss of business of SBI or 65% defects in The resolution of these will
the customer service of SBI or 65% significantly increase the confidence of
dissatisfaction of the customers, whichever customers in the services of SBI and thus
way quote it. would promote more business from the
Practically the purple line cuts the red youth and prime customers.
line after 5th problem bars. Out of the total
Consumer Perception of Services for Retail Products : A Case Analysis of SBI 77
Conclusion
State bank of India still need to focus
The conclusions from the research
on improving the surroundings it provides
were pretty conclusive. People obviously
to its customers. This can be
prefer SBI over other private banks which
accomplished by having good interiors,
accounts for its massive database and its
and young and charming staff. Due to the
turnover.
large number of customers they also need
Customers would prefer to to ensure waiting times are within certain
experience a better ambience at SBI which limits and hire extra staff during festive
is not comparable to their private season. The bank needs to figure out a
counterparts. Customers also felt if way how to be personally attached to its
bureaucracy could be reduced at SBI customers. This might seem to be a
since it makes difficult to get things done daunting task with the number of
because of that. A good and positive customers it has, but it needs to find a
conclusion was that there is high awareness way out to retain those customers and
amongst SBI customers and they are well add more in the future to become bigger
aware of all its products and promotions. and better.
78 Parikalpana - KIIT Journal of Management
Ha, H. Y., & Fanda, S. (2012). Predicting Sheeraz, M., Iqbal, N., & Ahmed, N.
consumer intentions to purchase retail (2012).Impact of Brand Credibility and
products. Journal of Consumer Consumer Values on Consumer Purchase
Marketing, 29 (7), 461-469. Intentions in Pakistan. International
Journal of Academic Research in
Shabbir, S., Kaufmann, H. R., Ahmad, I., Business and Social Sciences, 2 (8), 1-
& Qureshi, I. M. (2010). Cause related 10.
Parikalpana - KIIT Journal of Management, Vol - 10 (I), 2014 79
Abstract
The past decade has witnessed the beginning of a major directional change of
consumer behaviour, from physical stores purchasing to online purchasing
behaviour, in the retailing industry. In India, internet is still considered as a new
medium to link customers with retailers. Still Indian people have been attached to
the traditional brick and mortar stores, they take online shopping as a risk. In this
study author have attempted to find out the factors leading to perceived risk with
online shopping. Reliability coefficient for the scale containing 18 variables was
satisfactory and factor analysis generated 6 major factors: product risk, financial
performance risk, psychological risk, time risk, delivery capability risk and website
performance risk.
Key Words: Online Shopping, Internet, Perceived Risk
Introduction
The adoption of the Internet as a way million Indians shop online. The ultimate
to purchase goods and services has seen reason behind this growth is the convenient
an increasing trend over the past two of online shopping which not only saves
decades globally. Compared to traditional time of the customer but also provides
shopping, the Internet not only facilitates wide variety of items before him. It also
transactions between buyers and sellers provides scope for comparing the offering
from anywhere at any time, but also of variety of vendors at one click of mouse.
provides a wide range of product choices Apart from this the most significant benefit
and a platform for exchanging ideas for of online shopping is the attractive discounts
customers with low costs. To achieve the that most of the e-tailer provide to attract
success of electronic commerce, and retain their customers. Again online
companies place great emphasis on stores are available 24×7 in the service of
attracting customers continuously and their customers and provides better access
building long-term relationship with to product review and rating system.
customers on the web. According to latest However, people still remain reluctant
forecast from internet and mobile to make purchases on the Internet due to
association , there are more than 35.5 the lack of trust toward businesses in the
80 Parikalpana - KIIT Journal of Management
new electronic environment. many people associated with brick and mortar shops.
still locate information on the internet and As per the study conducted by Vijaysarthy
purchase products offline at traditional and jones in 2000 , it was found that this
stores, conversion rate being very low. Past perceived risk influences both attitude and
researches have indicated that consumers’ intention of a customer to shop on line.
perceived risk of online transaction Miyazki and Fernandez in their study in
constituted a key barrier to the use of 2001 found that perceived risk decreases
Internet shopping. with internet experience of him.
Conceptually perceived risk stands In separate studies conducted by
for the uncertainty that a consumer feels Cunningham, et al. in 2005; Liberman and
when they became unable to foresee the Stashevsky in 2002; Park and Kim in
outcome of their purchase decision. It also 2003; Miyazaki and Fernandez in 2001 it
represents the customers subjective belief was found that the major concerns of online
about the possibility of a reverse outcome shopping are security of online payment
from any purchase decision. The nature and privacy of personal information.
of these risks vary from consumer to According to the study conducted by
consumer depending on the product Doolin et al in 2005 it was found that lack
category, shopping situation and also with of ability to inspect merchandise before
their personal, cultural and psychological purchase; puts them at higher risk of fraud
consideration. on the part of the merchant than in a
Existing literature: physical store.
From the above table, it is found For the study, six factors having eigen-
that the value of KMO statistics is values greater than one were extracted.
greater than 0.5, indicating that factor The eigen-value of the six factors along
analysis can be employed for the given with the cumulative percentage of the
set of data. variance is shown in Table -3.
The result of the factor analysis using F3 explains about 9.6% of the
principal component method shows that variation. Likewise the fourth factor F4
65.2% of the total variance is explained explains about 9.2% of the variation
by classifying these 18 variables into 6 and the fifth factor F5 explains about
components or factors. The percentage 6.78% of the variations. Finally the
of the total variance which is used as an sixth factor F5 explains about 6.78%
index to determine how well the factor of the variations.
solution accounts for what the variables Table -4 gives the factor loading of
together represent. the variables under each of the five
The first factor F1 is the most extracted factors. In order to interpret the
important factor which explains 18.5% results, a cut-off point of 0.5 is decided
of variance before rotation. The second for each variable to group them into
factor F2 is the second major factor factors by forming a rotated component
which explains about 14.846% of the matrix.
variance of the variables. The third factor
Perceived Risk and Consumer Behavior Towards Online Shopping : ... 83
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86 Parikalpana - KIIT Journal of Management
Measuring Effectiveness of
Attendance Management Systems in Time Office
CM Maran
Assistant Professor (SG), VIT Business School
VIT University Vellore – 632014
E-mail: cmmaran@vit.ac.in cmaran78@gmail.com
Abstract
There are various problems that have been faced in the field of Workforce Management
such as, some of the data that has to be converted into vital information which needs
to be collected within the stipulated time period could not be acquired. This study is
helpful to overcome the problem stated. Therefore by means of this study; the
organizational goals can be achieved at a higher level. The present study helps to
overcome the challenges in the work force so that the organizational goals can be
achieved efficiently and effectively.
To identify the problems faced by time management is based. He carried out using
office personnel in their day to day standard evidence-based review
operations. methodology comprising systematic and
To analyse those problems faced in transparent literature searching, paper
order to arrive at a better solution for selection according to pre-determined
it. criteria and critical evaluation of each
To make the work done by the time
paper in terms of the standard of scientific
office employees simple and easier. methodology to be employed.
To overcome further problems in the In any fast growing organization,
near future and to face any uncertainties according to Prassanna & Senthilkumar2,
that may affect the advancement in tracking and monitoring employee time
technology to be used and the and attendance and preparing payroll are
fulfillment of the organization goals. tedious, time consuming and risky as it is
more prone to errors. Biometric time and
Review of Literature attendance management system is one of
Dr Anne1 recommended the core the most successful applications of
elements of effective attendance biometric technology, serves an alternative
management policies. These elements are for the traditional manual signing process.
to provide the necessary guidance to the The most challenges in transforming
public sector on managing attendance at towards biometric based attendance
work, consist of the following modules like, management system from traditional
management training, accurate recording system are, first, providing platform to
and monitoring of absence in the store and maintain employee data,
organization ; early management contact secondly the timely collection of huge
with absent individuals; return to work amount of data from biometric machines,
interviews; trigger points for action and deployed as cluster of nodes, into a central
review; review of individual cases. There database and finally to setting up a
is an assumption that recommended ‘best distributed computing environment to
practice’ in any field is based on evidence support the payroll process. They designed
of proven effectiveness. However, recent and implemented a reliable, scalable and
application of rigorous evidence reviewing cost effective Biometric Attendance payroll
processes in a variety of fields, including System over Cluster based Cloud
those related to health, has revealed that technology, by which we successfully
in many cases such assumptions are overwhelmed all these challenges. Our
unfounded. The objective of the current cloud based Biometric Attendance
report therefore was to provide such a Manager (BAM) works with text files to
review of the evidence on which current collect data from different Biometric
“best practice” in the field of attendance Terminals (BT) and process them to store
88 Parikalpana - KIIT Journal of Management
workers. Both systems have their own From the above table it is clear that 13%
drawbacks. of employees have 0-1 yrs of experience,
Tabulation (Percentage Analysis) 20% have 1-2 yrs of experience, 57%
have 2-5 yrs of experience and 10% have
1. TABLE showing age wise above yrs of experience. So it clear that
classification of employees majority of employees have 2-5 yrs of
Age No of Percentage experience.
respondents
Below 25yrs 10 33%
4. TABLE showing experience in
25-40yrs 15 50% producing reports
40yrs above 5 17%
Experience in # of Percentage
Total 30 100%
producing reports respondents
From the above table it is found that the Very easy 5 17%
Easy 15 50%
numbers of respondents with age groups Manageable 8 27%
below 25yrs, 25-40yrs, 40 above are Difficult 2 6%
30,50, and 20 respectively. It is inferred Very difficult 0 0%
that majority of the respondents are from
From the above it is inferred that 17% of
age group 25-40yrs.
employees feel very easy to produce
2. TABLE showing gender wise reports using the current software system,
classification of employees 50% say that it is easy to produce to
reports, 27% say that it is manageable for
Gender No of Percentage them to produce reports and only 6% feel
respondents it is difficult for them to produce reports
Male 27 90% and none feel that it is very difficult to
Female 3 10%
produce reports. Hence majority of the
Total 30 100%
employees feel it is easy to produce reports
From the above table it is found that 90% using the software.
are male and 10% are female of the total
5. TABLE showing ease of use
number of employees. And the majority
attendance software :
of the employees are male with 90%.
Ease of use of No of Percentage
3. TABLE showing years of work attendance Respondents
experience of employees software
Poor 0 0%
Years of work No of Percentage Ok 0 0%
experience respondents Good 18 60%
0-1 yrs 4 13% Very good 8 27%
1-2 yrs 6 20% Excellent 4 13%
2-5 yrs 17 57%
Above 5 yrs 3 10%
90 Parikalpana - KIIT Journal of Management
From the table it is clear that none of the 8. TABLE showing response of
employee has opted for “poor” or “ok”. employees regarding the problem
60% say that it is good in using the with swipe card
software, 27% feel it is Very good and 13% RESPONSES YES NO
it is excellent regarding the ease of use in Is there any 3problem with 27 3
using the attendance software. the swipe card?
6. TABLE showing respondents of Percentage 90% 10%
employees to need of customization of From the above table it is clear that about
software: 90% of employees say that there is some
Is customiztion # of Percentage problem in the swipe card. And the
of software respondents remaining 10% of employees deny that
required? there is no problem with the swipe card.
Yes 27 90%
9. TABLE showing response of
No 3 10%
employees to hardware related
From the table it is clear that 90% of problem
employees say that there is a need of
Responses Card Swipe System All the
software customization and 10% of Reader Card Memory three
employees feel that there is no need of In hardware 6 4 2 18
software customization. related pro-
blem, where
Majority of them feel that there is need of do you think
software customization for efficient the problems
working. occur?
Percentage 20% 11% 9% 60%
7. TABLE showing response of
employees regarding the problem From the table it is clear that about 20%
with pace timer of employees say that hardware related
RESPONSES YES NO problems is due to Card Reader and about
Is there any problem with 20 10 11% of employees say that swipe card
the pace timer? totally contributes to the hardware related
Percentage 70% 30% problems. 9% of employees say that
system memory is responsible for
From the above table it is clear that hardware related problems and remaining
about 70% of employees say that there 60% of employees say that all three i.e.
is some problem in the pace timer. And the reader, swipe card and the system
the remaining 30% of employees deny memory is responsible for hardware
that there is no problem with the pace problems of the attendance system.
timer.
Measuring Effectiveness of Attendance Management Systems in Time Office 91
From the table it is clear that about 31% 11% of employees say network problems
of employees say that software related accounts to software problems and
problems occurs during data transfer .And remaining 9 % of employees say that
about 49% of employees say that poor software problems are due to the viruses
software coding the attendance system that are present in the system.
accounts to the software related problems.
11. TABLE showing response of employees to performance of attendance system
RESPONSES Very Low Low Average High Very High
Rating of the current 5 20 4 1 0
attendance system
Percentage 17% 67% 11% 5% 0%
It is clear from the table, about 17% of system is low. 11% of employees say that
employees feel that the performance of the the performance is Average and remaining
current attendance system is very low. And 5% of employees feel that the performance
about 67% of employees feel that the is high. None of the employees have opted
performance of the current attendance for very high performance.
12. TABLE showing opinion of employees to change the attendance system
RESPONSES Strongly Agree Neutral Disagree Strongly
Agree Disagree
Opinion in changing 7 17 4 2 0
Attendance System
Percentage 22% 56% 11% 5% 0%
It is clear from the table that about 22% 11% of employees are neutral in their
of employees Strongly agree to change opinion about changing the system and
the current attendance system. And remaining 5% of employees disagree to
about 56% of employees agree to the opinion of changing the current at-
change the current attendance system. tendance system.
92 Parikalpana - KIIT Journal of Management
The calculated value is .000 which is 2. Most of them have opted that there is
less than (< .05) the table value, hence a need in software customization of the
reject the null hypothesis and accept the current attendance software.
alternate hypothesis. So there is significant 3. Majority of the respondents are
relationship between age and software unsatisfied in the performance of
customization. current attendance software.
The calculated value is .000 which is 4. Most of them have opted that there is
less than (< .05) the table value, hence problem in swipe card and pace timer.
reject the null hypothesis and accept the
alternate hypothesis. So there is significant 5. Most of the respondents feel that it is
relationship between age and pace timer. easy to produce reports using the
software.
The calculated value is .000 which is
less than (< .05) the table value, hence 6. Most of the respondents are well
reject the null hypothesis and accept the experienced in using the software.
alternate hypothesis. So there is significant 7. Most of the respondents are also
relationship between age and swipe card. ready to work in new kind of
Findings & Recommendations: attendance system that suits their
industry.
1. Majority of the respondents feel that
there is problem in both the software Most of the system related problems that
and hardware components of the prevail is because of the mismatching of
attendance system. the company’s requirement and the
Measuring Effectiveness of Attendance Management Systems in Time Office 93
monitored, maintained and to be checked Shehu V. and Dika A. (2011): Using Real
for any contingencies and rectified if there Time Computer Vision Algorithms in
is any as it is vital source of information. Automatic Attendance Management
Hence it is sometimes even better to Systems. Proceedings of the ITI 2010
replace the system for the smooth working 32nd Int. Conf. on Information Technology
of the organization. Interfaces, June 21-24, 2010, Cavtat,
Notes: Croatia.
1. Dr Anne Spurgeon Institute of Shoewu O., Olaniyi O.M. and Lawson A.
Occupational Health The University of (2011): Embedded Computer-Based
Birmingham September 2002; Lecture Attendance Management System.
2. Implementation of Biometric African Journal of Computing and ICT.
Attendance Management System on Vol 4, No. 3. P 27- 36, September, 2011.
Cloud Environment by Prassanna J, Web Sources:
Senthilkumar, 2003. 1. http://www.mba.com/the-gmat/test-
3. Development of Attendance day/palm-vein-reader-biometric-
Management System using Biometrics. identification/palm-vein-recognition-
O. Shoewu and O.A. Idowu. frequently-asked-questions.aspx
References: 2. http://www.biometricsystem.in/
Bevan S and Hayday S. (1998): Biometrics-Attendance-System.html
Attendance Management: a Review of 3. http://www.ti.com/solution/
Good Practice” Report 353, Institute for fingerprint_biometrics
Employment Studies.
4. http://www.sersc.org/journals/IJCA/
Kadry S. and Smaili M. (2010): Wireless vol3_no1/3.pdf
Attendance Management System based
on Iris Recognition. Scientific Research 5. http://seminarprojects.com/Thread-
and Essays Vol. 5(12), pp. 1428-1435, palm-vein-technology
18 June, 2010. 6. http://www.scribd.com/doc/88305233/
McKeehan D.A. (2002): Attendance 429-Palm-Vein-Technology
Management Program, The City of
Pleasanton, Human Resources.
Parikalpana - KIIT Journal of Management, Vol - 10 (I), 2014 95
Suman Ghalawat
Asst. Professor, Dept of Business Management,
CCS Haryana Agricultural University, Hisar, Haryana.
E-mail: sahrawat_s@yahoo.com
Abstract
Behavioral finance considers the impact of individual’s attitude on their financial
decisions. The present paper empirically assesses the factors that influences the
individual behavior regarding everyday financial decisions and further examine the
impact of demographic variables on these factors. The study is mainly primary data
based with a sample of 250 respondents from Hisar district of Haryana state and
applied statistical tools of factor analysis and one way ANOVA to achieve the objective
of the study. The factor analysis discloses nine factors which are named as compulsive
shopper, financial awareness, financial botheration, financial advice, concern for
future, saving schemes, composed decision believes in savings and income. Further,
gender, age, marital status and occupation are found to have significant impact on
the derived factors.
Key Words: Financial behavior, Factor analysis, ANOVA.
adopted for collecting the sample. The (59.2%) followed by graduates (26.8%)
questionnaire is designed with two sections: implying that sample consist of of high
section 1 confine to demographic literate respondents. With regard to the
information of the respondents and section employment status, service and
2 has questions describing the financial professionals have (78%) share implying
decision making behaviour of individuals. that respondents are well placed in their
The questionnaire used a Likert scale career. The table also depicts that 28% of
ranging from 1 = Strongly Disagree to 5 = respondents save up to Rs15000-25000.
Strongly Agree. The data is analyzed using The sample had a majority of respondents
SPSS version 13.0. The study employs (28.4%) earning between Rs 55,000-
factor analysis to find out the underlying 75000 followed by 15000-25000 (28%).
factors from the collection of apparent Result and Discussions:
important variables. Factor analysis trims
down the total number of variables into In the present study, the researcher
fewer factors and also shows the applies Kaiser-Meyer-Olkin (KMO) test
correlation between the factors and Bartlett’s Test of Sphericity as pre-
(Nargundkar, 2005). Further, the paper analysis verification for judging the
makes use of one way analysis of variance suitability of the entire sample which is a
(ANOVA) to study the association pre-requisite of factor analysis.
between demographic variables and the Table 1.1 shows the value of Kaiser-
factors. Mean score was calculated for Meyer-Olkin (KMO) and the Bartlett’s
factors where significant relationship Test of Sphericity as 0.532 and 1225.729
between independent variable respectively, which are statistically
(demographic) and dependent variables significant at 1% level of significance.
(factors) was observed. Secondary data Thus, it indicates that the sample is
is collected through research papers, suitable for factor analytic procedures
journals, websites and books. (Hair et al., 2006). In addition, the
Demographic Profile of The Sample significant value of chi-square test statistic
(1225.729), depicts that there is
The demographic description of the exceptionally low probability of obtaining
respondents unveils a fairly equal this result (a value greater than or equal
proportion of males (56 %) and females to the obtained value) if the null
(44 %). The sample respondents are hypothesis (H0) was true. Hence, the null
mainly in the age group of 45-55 years hypothesis that the population correlation
(30%) followed by age group of more than matrix of the measures is an identity matrix
50 years (21%). Further, a majority of the has been rejected as the variables were
respondents (72%) were married. The found to be correlated with each other.
respondents were largely post-graduates Table 1.2 presents the overall reliability
Behaviour of Individuals in Everyday Financial Decisions : a study ... 99
respondents on financial matters and they to those factors, which have their
do not hesitate in taking views from relevance with respect to demographic
financial experts and from member of characteristics of sample respondents.
their family. The respondents also reveal References:
their worry for future and for that they
believe in savings and have a tendency to Barber, Brad M., Odean, Terrance and
invest in a range of saving schemes. Zhu, Ning. (2009). Systematic Noise.
However, the respondents regard the Journal of Financial Markets, 12,
financial decision making as botheration 547-569.
and for that reason, they believe in taking Barberis, N. and Thaler, R. H. (2003).
these decisions with a poised mind. A Survey of Behavioral Finance. in
Further, the results revealed by one way George Constantinides, Milton Harris,
ANOVA discloses that gender, age, Rene Stulz, (Eds.) Handbook of the
marriage and occupation of the Economics of Finance, (Amsterdam:
respondents have significant impact on the North-Holland). pp. 1053-1123
factors regarding everyday decision on
Barnea, Amir, Henrik Cronqvist, and
financial matters. Moreover, the saving
Stephan Siegel (2010). Nature or
schemes are the most important factor as
Nurture: What determines investor
it is found to be significantly related to all
behavior?. Journal of Financial
the demographic variables. This is
Economics, 98 (3), 583-604.
followed by the factors composed
decisions which is significantly different Brown J. R., Ivkovic Z., Smith P. A.,
across gender, age and marital status. and Weisbenner S. (2008). Neighbors
Moreover, financial botheration is also Matter: Causal Community Effects and
significantly different across three Stock Market Participation. Journal of
demographic variables i.e. age, marital Finance, 63 (3),1509-1531.
status and occupation. On the other hand, Campbell, J.Y. (2006). Household
compulsive shopper, financial advice, Finance. Journal of Finance, 61,1553-
concern for future, believes in savings and 1604.
incomes are significant only for two
demographic variables. Financial Fellner, Gerlinde and Maciejovsky,
awareness is the factor that is found to Boris, (2007). Risk Attitude and Market
be significant only for gender. Behavior: Evidence from Experimental
Asset Markets. Journal of Economic
Thus, the study highlights the factors Psychology, 28 (3), 338-350.
which need to be emphasized concerning
the behavioral decision pattern as regards Funfgeld Brigitte and Wang Mei
to financial matters. Moreover, it (2009). Attitudes and Behavior in
becomes pertinent to give due weightage Everyday Finance: Evidence from
Behaviour of Individuals in Everyday Financial Decisions : a study ... 105
17. Saving A19: I have invested in variety 0.841 0.355 1.380 6.275
schemes(F6) of saving schemes for future
uncertainties
18. A22: I will postpone the 0.331*
purchase decision if I do not
have sufficient money to buy it.
19. Composed A7: At the end of the day, 0.775 1.215 5.521
Decision (F7) I decide peacefully on financial
affairs
20. Believe in A16: I believe in saving a part 0.725 0.306 1.093 4.966
Savings(F8) of my income
21. A17: Special offers like sales 0.662
can entice me into buying
22. Income(F9) A20: My family advises me to 0.251* 1.083 4.923
save a part of my income
* represents the statements dropped due to factor loading less than 0.40
Five statements i.e. A4, A10, A5, A22, A20 have been deleted due to factor loading less than 0.4.
108 Parikalpana - KIIT Journal of Management
Corporate Restructuring:
Causes, Measurement Methods and Effects
Raju L Hyderabad
Post-Graduate Department of Studies in Commerce
Karnatak University, Dharwad – 580003.
drrajulh@yahoo.com
Abstract
Corporate restructuring has been a very popular strategy for reinvigorating firms
the world over. Highly diversified, poorly performing firms are using the strategy to
restructure activities and unlock the hidden value. Against this background, it
becomes pertinent to analyse the motives or reasons for the use of corporate
restructuring by firms and empirical evidence relating thereto. The present paper
aims to review the existing literature on causes, effects and measurement methods
followed in evaluating the performance of restructured firms. Restructuring is viewed
as process of unlocking the hidden value. Consequently, firms aim to improve the
market valuation and financial performance.
Though there are both short-run and long-run methods of analyzing the performance
of restructured firms the long-run methods are considered to be desirable in view of
the fact that the benefits of restructuring are realized in the long-run rather than the
short-run. The extent of benefits realized depends on the method of restructuring
employed and the intensity with which the method is employed or used. In India,
though several firms have employed restructuring methods, there exists no exhaustive
study analyzing the performance of restructured firms for want of suitable data bases.
Keywords: Restructuring, Wealth Effects, Regulatory Shocks, Measurement.
has enabled thousands of organizations business firm does to regain its competitive
around the world to respond more quickly advantage. Crum & Goldberg (1998)
and effectively to new opportunities and define restructuring of a company as “a
unexpected pressures, thereby re- set of discrete decisive measures taken in
establishing their competitive advantage. order to increase the competitiveness of
In view of this increased reliance on the enterprise and thereby to enhance its
this strategy, it becomes pertinent to value”. It is a set of measures rather than a
identify the concept and its value creating single measure. One action does not make
properties. From where do restructuring corporate restructuring just like a fatty
creates benefits and how to measure these person starving for a day to reduce his
benefits? Do all forms equally valuable? weight. The measures are discrete in the
What are the measurement approaches sense that each measure is separate and
and how reliable those measurement distinct from the other. Each measure aims
approaches? An attempt has been made at a particular advantage. Further, the
in this paper to find explicable answers to measures are decisive in the sense that they
some of these issues. are used for a definite purpose and
management is conscious of why it is using.
Concept of Restructuring The restructuring has a specific goal or
Jensen and Meckling (1976) argue purpose – the goal of increasing the
that a company can be viewed as a competitiveness of the enterprise through
collection of contracting relationship among unlocking the hidden value.
individuals - a nexus of contracts. These Venkiteswaran (1997) defines
contracts are what make it possible for the restructuring as a significant reorientation
company to conduct business. The parties or realignment of the investment (assets)
to these contracts include shareholders, and/or financing (liabilities) structure of a
creditors, managers, employees, suppliers company through conscious management
and customers - in other words, anyone action with a view to drastically alter the
who has a claim on the firm’s profits and quality and quantum of its future cash flow
cash flows. Restructuring is a process by streams. Small changes do not constitute
which firms change these contracts (Gilson, restructuring activities. Actions undertaken
2010). Firms restructure to overcome are significant. Besides, they significantly
some of these market imperfections, reorient firms existing operations. The
rigidities, or in-built inefficiencies crept in actions undertaken affect either or both
various contracts. The objective is to side of the balance sheet, i.e., asset-side
emerge out of suffocating environment and and liabilities-side. Measures like
have more focused and stronger firms. expansion or divestitures or sale of assets
Corporate restructuring is an all- affect only the assets side of the balance
inclusive term which indicates all that a sheet as sale of assets is offset by the receipt
110 Parikalpana - KIIT Journal of Management
of the cash. Conversion of debt into equity as deregulation of markets and increasing
or short-term debt into long-term debt global competition are associated with
affects only the left-hand side of the strategic change and corporate
balance sheet. On the other hand, debt restructuring.
redemption or buyback of shares affect Restructuring activity is generally
both sides of the balance sheet. associated with three motivations in the
Reasons for Corporate Restructuring academic literature, namely (i) to address
There are many reasons as to why poor performance; (ii) to exploit strategic
firms restructure their operations. Besides opportunities and (iii) to correct valuation
poor operating performance prompting errors (Reneboog and Szilagyi, 2006).
firms to restructure activities, even a Similarly Smart and Waldfogel (1994)
financially sound firm can restructure to opine that firms that are experiencing
preempt surprises overtaking it. Many unusually low current performance may be
successful companies undergo frequent more likely than other firms to restructure.
restructurings to improve their overall As a precautionary measure, such firms
efficiency (Herz and Abahoonie 1992). realign or rejig their activities on an on-
According to Brickley and Drunen (1990) going basis so that the value does not desert
poorly organized firms are motivated by them. John et al. (1992) and Kang and
market pressures to change their Shivdasani (1997) find that firms respond
organizations. Change also occurs in to financial distress using predominantly
healthy firms as part of the growth process. contraction policies, which refers primarily
Restructuring often occurs where there is to asset sales, divestitures, spin-offs,
no evidence of takeover threats. Economic employment reduction and emphasis on
shocks to the corporate environment might core business. Kang and Shivdasani
give rise to several organizational (1997) document restructuring of 92
inefficiencies. This has recently been Japanese corporations that experienced a
occurred during the credit crisis when many substantial decline in operating
firms in Europe tend to restructure their performance between 1986 and 1990.
businesses to a more ‘back to basics’ Lang et al. (1995) argue that firms’
approach to become more transparent for restructure when raising funds on the
its stakeholders (Cockshott and Zachariah, capital markets is too expensive because
2010). Peel (1995) opines that although the of high leverage and/or poor performance.
strategic motives underpinning any They find 26% of sample firms divesting
particular restructuring transaction may be their subsidiaries for poor operating
complex and varied and concludes that results. Many studies also examine firms
companies may be at least partly responding restructuring in response to financial
to a common set of environmental/macro distress (Berger and Ofek 1999, Atiase
factors. The economy-wide variables, such et al. 2004, Faccio and Sengupta 2006).
Corporate restructuring: Causes, measurement methods and effects 111
Brown et al., (1994) found that firms that Restructuring may be resorted to
had either defaulted or anticipated default, reorient or refocus a firm’s activities
divest business units to improve overall on core activities. This is generally
performance and generate funds. termed as ‘refocusing’ strategy. Firms
Pattnaik (2005) provides two with wide diversification resorted to
explanations for US firms’ restructuring this practice in 1980s and 1990s. It
decisions in the form of asset sales. The is generally said that a diversified firm
environmental explanation posits that the trades at a discount, known as
rise in corporate restructuring in the U.S. ‘diversification discount.’ Berger and
was due to changes in the regulatory and Ofek (1995) and Lang and Stulz
competitive environment, e.g., (1994) shows that diversified US
government antitrust and tax policies, firms trade at a significant discount
monitoring and discipline from external relative to specialized firms. A wide
capital markets through acquisition threats, range of diversified firms restructured
and increases in competition leading to rise themselves in the late 1990s by
in corporate restructuring. In contrast, the divesting business units (Fukui and
financing hypothesis of asset sales, which Ushijima, 2007). According to
is based on agency theory, argues that Merkides (1995) a significant
managers value firm size and control. proportion of major diversified firm
Contrary to efficiency gains, managerial in the U.S. have reduced their
motivation in this case is to sell assets in diversification in the 1980s by
order to survive the credit crunch. Under refocusing on their core businesses.
this theory, managers sell assets to obtain Competitive pressures may unleash
funds when alternative sources of financing restructuring measures across diverse
are too expensive due to agency cost of firms as mergers, divestitures, spin-
debt or information asymmetry, which offs, etc. Ekholm et al (2011) examine
makes equity sales unattractive the impact of a sharp real appreciation
Thus, in general, the following can be of the Norwegian Krone in the early
identified as reasons for restructuring 2000s on Norwegian manufacturing
across business enterprises: firms. A change in the real exchange
rate affects a firm’s export sales,
Change in legal environment affecting purchases of imported inputs and
business enterprises, as in the case of import competition faced in the
natural gas sector in India. The domestic market. Both net exporters
Petroleum and Natural Gas Regulatory and import-competing firms were
Board wants gas utilities like GAIL to exposed to increased competition
separate gas transportation and due to the real appreciation. Both
marketing businesses. groups reacted by shedding labor.
112 Parikalpana - KIIT Journal of Management
Several studies have been carried out Jin et al (2004) examined the impact
over the wealth effects of restructuring of restructuring on the operational aspects
announcements. As far as the wealth of the publicly traded firms in China. They
effects of restructuring are concerned, the used changes in revenue, profit margin,
empirical evidence is not clear. If one return on assets and the total turnover ratio
wanted to make a broad generalization using before and after methodology. Their
about state of the literature, however, it study showed that there were significant
would be to suggest that restructuring improvements in total revenue, profit margin
announcements generally produce small and return on assets following restructurings
but significant increases in returns, at least but there was no evidence of any significant
in the US market (Beason, et al., 2008). impact on asset turnover ratio. Yawson
Black and Grundfest (1988) find American (2009) studied the effect of restructuring
corporations creating roughly $162 billion decisions on profits of sample Australian
of shareholder value within only five years firms experiencing significant declines in
of restructuring. Analysing the effect of operating performance. These firms
restructuring actions of Japanese firms for experience significant gains in operating
the period 2000-2001, Beason et al performance in each of the first 3 years
(2008) find that firms announcing following the restructuring. These changes
restructuring programs experience were significant even after controlling for
significant improvement in operating firms matched by size and industry.
earnings in the following year as well as in However, contrasting evidence is also
the second year following the available. A recent American Management
announcement. Kinai W M (2012) in his Association survey concludes that profits
study on impact of corporate restructuring rose for only 51% of the companies that
on the shareholder value of Nairobi Stock downsized between 1989 and 1994 and
Exchange listed companies observed that that only 34% reported an increase in
in a majority of the restructured companies, productivity (Webb et al, 2005). Webb
net cash flow, earnings per share, dividends et al (2005) after incorporating a set of
per share, and market price per share had methodological enhancements designed to
improved. This implied that restructuring provide reliable evidence related to the
contributed to the improvement in financial long-term impact of operational
performance and enhancement of restructurings finds that median profit
shareholder value. Further it was found that margin, return on equity, return on assets,
there existed a relatively strong positive asset turnover and operating margin relative
Corporate restructuring: Causes, measurement methods and effects 119
The third column of the table shows turnovers also increase the likelihood of
the proportions of the studies that report performance improvement. When firms
positive means. It indicates that financial expanding assets cut dividend payments
and portfolio restructuring studies display at the same time, they experience
higher proportions of positive returns than improvement in operating performance.
organizational restructuring. In five out of Further evidence revealed that new
six cases (86%) of financial and portfolio CEOs who are able to pursue debt
restructuring, the impact on performance restructuring policies are more likely to
is positive. In only half of the cases of achieve a turnaround.
organizational restructuring, however, the Defining refocusing firm as one
impact is positive. which divests at least 10% of its asset
More specifically, retrenchment base or a firm which reduces the number
actions are followed by improvements in of industries in which it is competing by
operating performance, while expansion more than two, Merkides (1995)
actions are not. Financial restructurings analyses the performance of refocusing
also result in performance improvements. firms in US. He finds that over-
These results are robust to outliers and diversified firm by using refocusing
industry adjustments. When we control strategy improves the overall
for other firm characteristics, as well as profitability. Eckbo and Thorburn (2008)
for the performance change for non- survey the empirical literature on
announcing firms, the results for corporate breakup transactions,
employment changes and internal leveraged recapitalizations, and
reorganizations remain significant, leveraged buyouts (LBOs). The
although the performance improvement empirical evidence shows that the typical
for contraction-type reorganizations are restructuring creates substantial value for
no longer significant (Bowman et shareholders. The value-drivers include
al,1999). elimination of costly cross-subsidizations
Yawson (2009) studied the characterizing internal capital markets,
interaction effects of financial and other reductions in financing costs for
corporate restructuring decisions subsidiaries through asset securitization
undertaken by a sample of performance and increased divisional transparency,
declining Australian firms. The study improved investment programs,
provides evidence that revenue growth, reduction in agency costs of free cash
debt restructuring and cost cutting are flow, implementation of executive
essential strategies for poorly performing compensation schemes with greater pay-
firms to achieve turnaround. Asset performance sensitivity, and increased
contraction policies and forced CEO monitoring by lenders and LBO
sponsors.
Corporate restructuring: Causes, measurement methods and effects 121
modify their strategies and reorganize and empirical evidence shows that poor
streamline their business to satisfy their performance compels a firm to restructure.
shareholders and to enable their However, successful firms also restructure.
companies to weather through the Economic and industrial shocks could
mentioned challenges of the recent past. generate restructuring actions.
An increasingly favoured way of enhancing In recent years a controversy over
the company’s value is to reorganize and the desirability of corporate restructuring
restructure the firm’s business. In doing so, has arisen because of the effectiveness and
American corporations were able to create efficiency of the “newly invented” firms.
roughly $162 billion of shareholder value Proponents argue that leaner and more
within only five years (Black & Grundfest, efficient organizations arise after being
1998). restructured, while critics assert that
There are no accepted methods of organizational disruption exceeds the
evaluating the performance of restructuring anticipated benefits from such transactions
as each method has its own pros and cons. and therefore is a method of destroying
The period of measurement is another shareholder value. The question arises as
complex issue in the measurement to which actions can be taken to reorganize
process. Since the benefits are expected a company, and much more importantly,
to flow only in the long run, what long run which actions can spur the company’s
period is to be considered to capture the performance and thus satisfy the
benefits is a difficult question for a finance shareholder and enhance the company’s
researcher. Separating the benefits of value effectively.
restructuring from other policy actions of India presents a peculiar picture for
the firm is yet another problem researchers in finance. There are no
encountered. All the improvements in post- organisations documenting corporate
restructuring period cannot be ascribed to restructuring actions. Data is hardly
the restructuring only. Restructuring available. Most of the studies so far have
generally involves use of more than one concentrated only the M&As activities
form of restructuring and the effects could while other restructuring processes like
vary. A portfolio restructuring on its own asset sale, spin offs, split offs, divestitures,
can produce different gains compared to equity carve-outs,, downsizing, ownership
a situation when it is used along with changes, debt recast, etc., are hardly
organisational and or financial restructuring. looked at. A well organized research
Identifying benefits to a particular form is inputs on these aspects would make the
well-nigh possible. Reasons for Indian researchers to study the Corporate
restructuring can also vary across firms India’s perspective on these forms of
and might be difficult to judge the exact restructuring.
cause for which firms restructure though
124 Parikalpana - KIIT Journal of Management
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Theory of the Firm: Managerial Behavior,
126 Parikalpana - KIIT Journal of Management
Ratnakar Mishra
Associate Professor,
National Institute of Science and Technology, Berhampur
Abstract
This paper deals with the influence of climatic condition on student productivity. It
highlights the impact of temperature on student’s performance. Several factors plays
important role on student productivity one of it is ‘variation in internal temperature
of a class room’. Climatic conditions of India are different to that of its western
counterparts. Studies conducted in Indian conditions often points to a host of teaching
quality related factors rather than external environmental impact. This study adopts
a descriptive approach and uses primary source of data comprising the classes in
professional courses, carrying equal weight age. All total 60 samples are taken
comprising of students from both climate controlled and non-controlled class rooms,
for the test.
Key words: Climate controlled class rooms, Students, Productivity
probability that the increases in reading General Accounting Office has found that
performance with ventilation rate were due fifteen thousand schools suffer from poor
to chance. In a Danish study performed IAQ, affecting more than eight million
within four classrooms, Wargocki and children or one in five children in America’s
Wyon used performance tasks schools (General Accounting Office
representing various aspects of 1995). The IAQ symptoms identified—
schoolwork, from reading to mathematics irritated eyes, nose and throat, upper
that were embedded into the normal school respiratory infections, nausea, dizziness,
work. “The speed and accuracy of task headaches and fatigue, or sleepiness—
performance was assessed. This study have collectively been referred to as “sick
reported an 8% increase in speed of school building syndrome” (EPA 2000).
work tasks with a doubling of ventilation Temperature and Humidity:
rate. There was no statistically significant Temperature and humidity affect IAQ in
influence of ventilation rate on the number many ways, perhaps most significantly
of errors made by students”. because their levels can promote or inhibit
(Wargocki,Wyon,2006) the presence of bacteria and mold. “For
Ventilation Rates and Absences example, a study of Florida classrooms
in Schools: In an elementary grade with relative humidity levels greater than
classroom study, on average, for each 100 seventy-two percent found visible mold
ppm decrease in the difference between growth on the ceilings and complaints of
indoor and outdoor CO2 concentrations allergy symptoms associated with sick
there was a 1% to 2% relative decrease building syndrome” (Bates 1996). At the
in the absence rate. Given the relationship other end of the humidity scale, Leach
of CO2 concentrations with ventilation (1997) reported “findings of a 1970 study
rates, for each 1 cfm per person increase done in Saskatoon, Saskatchewan,
in ventilation rate, it is estimated that the Canada, which found absenteeism was
relative decrease in absence rates is reduced in schools by twenty percent as
approximately 0.5% to 2%. relative humidity in the facilities was
This relationship applies over an increased from twenty-two to thirty-five
estimated ventilation rate range of 5 to 30 percent”. Wyon (1991) showed that
cfm per person, and should not be applied “student performance at mental tasks is
outside those limits. Data relating building affected by changes in temperature”, and
ventilation rates and absence rates are very Fang et al. (1998) found that “office
limited. workers are most comfortable in the low
end of temperature and humidity comfort
Indoor Air Quality: Poor indoor air zones”. “These findings support the idea
quality (IAQ) is widespread, and its effects that students will perform mental tasks best
are too important to ignore. The U.S. in rooms kept at moderate humidity levels
Climate Controlled Environment and Student Productivity 131
Data Analysis
Statistics
Age
N Valid 60
Missing 0
Mean 21.15 The age of the samples were divided
Std. Deviation 1.071 into two parts to ease the complication of
Minimum 19 studies and the respective mean, standard
Maximum 25 deviation and maximum, minimum of its
subsequent parts were found out.
Age
Frequency Percent Valid Percent Cumulative Percent
Valid 19 3 5.0 5.0 5.0
20 12 20.0 20.0 25.0
21 24 40.0 40.0 65.0
22 17 28.3 28.3 93.3
23 3 5.0 5.0 98.3
25 1 1.7 1.7 100.0
Total 60 100.0 100.0
Histogram of Age
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
institute * age 60 100.0% 0 .0% 60 100.0%
course * age 60 100.0% 0 .0% 60 100.0%
Climate Controlled Environment and Student Productivity 133
One-Sample Test
Test Value = 0
95% Confidence Interval of the Difference
T df Sig. Mean Lower Upper
(2-tailed) Difference
concentration power is enhanced 32.560 59 .000 3.983 3.74 4.23
in air conditioned classrooms
high scoring of marks is seen in 22.948 59 .000 3.267 2.98 3.55
students when provided with an
air conditioned environment
comfortable air conditioned 34.083 59 .000 4.217 3.97 4.46
classrooms leads to less bunking
of classes
Climate Controlled Environment and Student Productivity 135
The above table shows the result of T-test done and the value of T is very high as
compared to normal value required for the test which means that there is a lot of differences
in the variables which are taken. It also shows the other factors in the table such as
difference, mean difference with upper and lower limits defined.
Model Summary
Model R R Square Adjusted R Square Std. Error of the estimate
1 .475 .225 .212 .841
Predictors: (Constant), high scoring of marks is seen in students when provided with an
air conditioned environment. The R value shows that the variables are highly correlated
and R square value shows a good impact on predictor.
Model Summary
Model R R Square Adjusted R Square Std. Error of the estimate
1 .058a .003 -.014 5.411
136 Parikalpana - KIIT Journal of Management
a. Dependent Variable: high scoring of marks is seen in students when provided with an air
conditioned environment and the value of standardized and un-standardized coefficients is
found out.
One-Sample Statistics
N Mean Std. Deviation Std. Error Mean
concentration power is enhanced in 60 4.82 6.655 .859
air conditioned classrooms
high scoring of marks is seen in 60 3.93 5.374 .694
students when provided with an air
conditioned environment
The one-sample statistics shows the two variables which were studied in above tables
individually as independent and dependent are jointly considered and mean, standard
deviation, standard mean error are shown.
One-Sample Test
Test Value = 0
95% Confidence Interval of the Difference
T df Sig. Mean Lower Upper
(2-tailed) Difference
concentration power is enhanced 5.606 59 .000 4.817 3.10 6.54
in air conditioned classrooms
high scoring of marks is seen in 5.670 59 .000 3.933 2.55 5.32
students when provided with an
air conditioned environment
The T values of the two variables concentration power is enhanced in air conditioned
classrooms versus high scoring of marks is seen in students when provided with an air
conditioned environment and mean difference, lower and upper limits are defined too.
Climate Controlled Environment and Student Productivity 137
One-Sample Statistics
N Mean Std. Deviation Std. Error Mean
high scoring of marks is seen in 60 3.93 5.374 .694
students when provided with an air
conditioned environment
method of teaching plays an important 60 4.23 1.079 .139
role than air conditioned classrooms
for productivity
This is the one-sample statistics for the other two variables taken i.e. high scoring of
marks is seen in students when provided with an air conditioned environment versus
method of teaching plays an important role than air conditioned classrooms for
productivity and mean, standard deviation, standard mean error are found out.
One-Sample Test
Test Value = 0
95% Confidence Interval of the Difference
T df Sig. Mean Lower Upper
(2-tailed) Difference
high scoring of marks is seen in 5.670 59 .000 3.933 2.55 5.32
students when provided with an
air conditioned environment
method of teaching plays an 30.381 59 .000 4.233 3.95 4.51
important role than air conditioned
classrooms for productivity
Now in this table the same two variables is compared related to its T values and the
mean difference along with the lower and upper limits are shown.
Model Summary
Model R R Square Adjusted R Square Std. Error of the estimate
1 .058 a
.003 -.014 5.411
a. Predictors: (Constant), concentration power is enhanced in air conditioned classrooms, when
this variable is considered as independent the R and R square values are very much low,
consequently they are not at all correlated and impact factor is very low.
Coefficients
Model Un-standardized Standardized T Sig.
Coefficients Coefficients
B Std. Error Beta
1 (Constant) 3.706 .865 4.286 .000
concentration power is enhanced in .047 .106 .058 .446 .657
air conditioned classrooms
138 Parikalpana - KIIT Journal of Management
a. Dependent Variable: high scoring of marks is seen in students when provided with an air
conditioned environment, considering the independent as concentration power is enhanced
in air conditioned environment and the standardized and unstandardized coefficients are
calculated.
Model Summary
Model R R Square Adjusted R Square Std. Error of the estimate
1 .102a .011 -.007 5.391
a. Predictors: (Constant), method of teaching plays an important role than air conditioned
classrooms for productivity, the two variables are also not correlated anywhere and there is
no impact too.
Correlations
Teaching aids such as High scoring of marks is
projector used inside the seen in students when
classroom is helpful for provided with an air
high scoring of marks conditioned environment
Teaching aids such as Pearson 1 .013
projector used inside the Correlation
classroom is helpful for Sig. (2-tailed) .924
high scoring of marks N 60 60
High scoring of marks is Pearson .013 1
seen in students when Correlation
provided with an air Sig. (2-tailed) .924
conditioned environment N 60 60
The correlations as shown between the above two variables selected are showing no
correlations between them and hence we can conclude that impact factor is also null.
The correlations depicted here between teaching aids such as projector used inside the
classroom is helpful for high scoring of marks versus high scoring of marks is seen in
students when provided with an air conditioned environment and vice versa are not
correlated anywhere and their impact is also close to null.
Model Summary
Model R R Square Adjusted R Square Std. Error of the estimate
1 .013a
.000 -.017 5.419
a. Predictors: (Constant), teaching aids such as projector used inside the classroom is helpful for
high scoring of marks, R and R square values shows absolutely no correlations and impact on
variables respectively.
Climate Controlled Environment and Student Productivity 139
Coefficients
Model Un-standardized Standardized T Sig.
Coefficients Coefficients
B Std. Error Beta
1 (Constant) 3.716 2.365 1.571 .122
teaching aids such as projector used .060 .622 .013 .096 .924
inside the classroom is helpful for
high scoring of marks
Dependent Variable: high scoring of marks is seen in students when provided with an air
conditioned environment is seen in context with independent variable teaching aids such as
projector used inside the classroom is helpful for high scoring of marks and standardized and un-
standardized coefficients is found out.
much more important if related with 56% of the samples. Air condition
productivity. It was always seen classrooms may provide a comfortable
throughout the survey that the emphasis environment but for more productive state
was on quality of teaching for attaining any the samples considered quality of teaching/
components of the student productivity materials provided.
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142 Parikalpana - KIIT Journal of Management
In the corporate office of NSP (Noamundi Steel Plant) at sector V, Salt Lake, Kolkata,
the board was having its 98th meeting on 25th November 2003, to take a final decision
on renovation of the steel plant. Mr. Srinivasan, GM (Projects), the head of the
committee for the upgradation, had submitted the report with all technical and
financial data. The committee was formed in the last Board meeting with the
unanimous decision of the Board to go for modernization of plant. The committee
was to study the proposals, aimed at increasing capacity, incorporating state-of-art
technology in the blast furnace including new skip system and modern technologies
in peripherals. It was required to see the technical and financial feasibility of the
upgradation of Blast furnace 1. The committee was comprised of Mr.Srinivasan, Mr.
Dinesh Agrawal, GM(Finance) and three more technical persons. The Chairman of
the company, Mr. Rajen Malhotra addressing the Board emphasized the need of
modernization of the plant. He said:
“We are doing well partly because of the growing demand of steel for the last few
years. But to keep the company competitive, as per the Board’s decision in the last
meeting we have to upgrade the plant. I would like to thank the committee for
submitting the report. Now, I request Mr. Srinivasan to present the report to the
Board”.
some amount of training required to be second year it is assumed that the plant
given to the workers and supervisors, will works at 60% capacity( for a period
which would cost around Rs. 50 lakhs. It of 6 months after commissioning), third
was informed to the board that the year at 90% capacity, forth year onwards
upgradation would meet all the stipulated at 95% capacity, till the 22nd year(full year
norms of the State Pollution Control Board. was to be considered). The depreciation
Mr. Agrawal appraised the board would be charged @10% p.a on straight
about the plan for generating financial line method.
resources for the investments to be made. Going through the details presented,
He said that the project would be financed most of the board members agreed to the
through internal resources and commercial proposal but they had some
borrowings. It was said that the company apprehensions. One of the independent
was having sufficient reserves for funding director, Mr. Kothari was not convinced
the internal resources. The reserves and with the figures projected. Therefore the
surplus of the company was Rs.890.35 board asked the committee for more
crore and the company was having a debt detailed analysis of various aspects and
of Rs.35.08 crore from a commercial to incorporate the apprehensions raised by
bank as per the last years balance sheet. the Board. Mr. Malhotra said Mr.Srinivasan
The debt to internal resources was and the team to study the viability of the
reported to be in the ratio of 1:1 for project keeping a cut off rate of 15%, which
financing the project. The cost of is the regular practice of the company for
borrowing projected was at 9% p.a. (little the approval of the project and also to
less than the cost of equity because of study the impact of the following
higher equity financing and the average cost uncertainties on the outcome of the report.
of capital would come to be 10% p.a.). a) Financial implication of any delay in the
The loan was planned to be raised from a completion of the project, say it takes
nationalized bank, which would be paid in another six months for completion.
10 equal annual installments. It was
suggested that 50% of the debt will be b) If the investment cost over runs by
taken at the beginning of the project and 10%.
rest after six months. c) If the productivity decreases which
The project was to be implemented reduces the contribution margin by 6%
through seven packages within a period on additional pig iron.
of 18 months and the life of the project The committee is expected to submit
was 20 years from the year of installation. the report in another one week time, so
So in the first year of construction there that the board would be able to take a
will be no production from BF1, in the decision soon. The above points are
Noamundi Steel Plant Ltd (NSP) 145
independent from each other. Mr. calculations and find out the NPV, IRR and
Srinivasan handed over all the documents the sensitivity analysis to justify profitability
to Mr. Agrawal to do the necessary of the project.
Exhibit 4: The above benefits and expenses are given below at 100%
capacity utilization:
(Rs. Crore)
Benefits:
Contribution on additional Pig iron 266.07
Saving due to less coke consumption 210.08
Savings in steam consumption 12.98
Additional power generation 13.55
Additional revenue from Gran. Slag 2.12
Total Benefits 504.80
Additional Expenditure:
CDI coal 102.44
Electricity 3.78
Nitrogen 3.01
Oxygen 53.59
CO gas 12.04
Make-up water 0.56
Training and development 0.50
Repair and maintenance 15.05
Total additional Expenditure 190.97
Gross Margin 313.83
Source: Company Data
147
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