Performance Appraisal

Case Study
PERFORMANCE APPRAISAL AT KALYANI ELECTRONICS CORPORATION
Kalyani Electronics Corporation Ltd., recently diversified its activities and started producing computers. It
employed personnel at the lower level and middle level. It has received several applications for the post of
Commercial Manager-Computer Division. It could not decide upon the suitability of the candidates to the
position, but did find that Mr. Prakash is more qualified for the position than other candidates. The
Corporation has created a new post below the cadre of General Manager i.e. Joint General Manager and
asked Mr. Prakash to join the Corporation as Joint General Manager. Mr. Prakash agreed to it viewing that he
will be considered for General Manager's position based on his performance. Mr. Anand, the Deputy General
Manager of the Corporation and one of the candidates of General Manager's position was annoyed with the
management's practice. But, he wanted to show his performance record to the management at the next
appraisal meeting. The management of the Corporation asked Mr. Sastry, General Manager of Televisions
Division to be the General Manager in-charge of Computer Division for some time, until a new General
Manager is appointed. Mr. Sastry wanted to switch over to Computer Division in view of the prospects,
prestige and recognition of the position among the top management of the Corporation. He viewed this
assignment - As a chance to prove his performance.
The Corporation has the system of appraisal of the superior's performance by the subordinates. The
performance of the Deputy General Manager, Joint General Manager and General Manager has to be
appraised by the same group of the subordinates. Mr. Anand and Mr. Sastry know very well about the system
and its operation, whereas Mr. Prakash is a stranger to the system as well as its modus operandi. Mr. Sastry
and Mr. Anand were competing with each other in convincing their subordinates about their performance
and used all sorts of techniques for pleasing them like promising them a wage hike, transfers to the job of
their interest, promotion, etc. However, these two officers functioned in collaboration with a view to pull
down Mr. Prakash. They openly told their subordinates that a stranger should not occupy the 'chair'. They
created several groups among employees like pro-Anand's group, pro-Sastry group, Anti-Prakash and Sastry
group, Anti-Anand and Prakash group.
Mr. Prakash has been watching the proceedings calmly and keeping the top management in touch with all
these developments. However, Mr. Prakash has been quite work-conscious and top management found his
performance under such a political atmosphere to be satisfactory. Prakash's pleasing manners and way of
maintaining human relations with different levels of employees did, however, prevent the emergence of an
anti-Prakash wave in the company. But in view of the political atmosphere within the company, there is no
strong pro-Prakash's group either.
Management administered the performance appraisal technique and the subordinates appraised the
performance of all these managers. In the end, surprisingly, the workers assigned the following overall
scores. Prakash: 560 points; Sastry: 420 points; and Anand: 260 points.
QUESTIONS:
1. How do you evaluate the worker's appraisal in this case?
2. Do you suggest any techniques to avert politics creeping into the process of performance appraisal by
subordinates? Or do you suggest the measure of dispensing with such appraisal systems?

Employee evaluations need to be fair and unbiased. They also need to be based on clear
expectations that employees know ahead of time. Employees need to be given specific job
requirements and have the opportunity to practice before being evaluated.
If an employees work is not up to par, it is very important that a step-by-step process is in place
to improve this performance. It is generally cheaper to keep current employees and improve
their performance than it is to recruit, hire, and train a new employee from scratch.
The workers evaluated Mr.Prakash on these lines :
a) He is a gentle person and able administrator displaying his high leadership qualities
b) He can handle the things efficiently
c) He recognises the people's work
d) He is a good human as he did not fight with other internal employees
e) He never wooved any employee nor put any negative feeling on anyone and remained as a good person
with the co. and its employees.
f) The employees thought that they will be secure and nicely look after by him .
These factors led to good appraise to Mr. Prakash by the employees

performance appraisal is one of the functions of Human Resource Management for measuring and evaluating the performance
of the employees in an organisation over a period of time as against the set standards. Different methods are used for evaluating
performance in different types of organisations and 360 degrees performance appraisal is one of them.
Helps improving performance of organisation as a whole
The companies can use the data collected through feedback programs to monitor consistent patterns and areas of weaknesses for
employees within the organisation (ref.3). Thus as discussed in the above points, the top management can more effective and
appropriate training programs to overcome the weak areas. This will lead to improvement in performance of various departments in
the organisation and as a result, the overall performance of the firm goes up.
E. Increased consistency in the performance
An all-round feedback helps in improving the consistency in the working patterns of an organisation. The employees are more
concerned regarding how others perceive them. This motivates them to perform consistently towards achieving the organisational
goal as this will help them achieve their personal goal as well, which will further lead to individual growth. Thus the employees will
feel more content with their performance. 360-degree feedback allows employees to gain a more thorough understanding of their
impact on people they interact with every day (ref.7). This method helps in motivating the employees who undervalue themselves.
F. Improved superior-subordinate relationships
In traditional appraisal system, the feedback is totally in the hands of the supervisor thus he can be biased in his judgement. He can
give good ranking to those in his good books or he can rank employees on the basis of their recent performance while they expect to
be ranked on whole years performance. This can lead to differences between superior and the subordinates. The 360 degrees
feedback helps in creating an environment of trust. The employees feel more motive and work in teams towards achieving the
common objective if the feedback is positive. Employees tend to be more honest with each other and help each other.
G. Complete analysis of the subject
Since feedback is from many sources and every source has a separate relation with subject. So everybody gives feedback from their
own perspective and as per their experience and expectations. Supervisors, for example, may judge employees based on their
output, while co-workers judge others based on their pleasantness, and subordinates judge supervisors based on their fairness
(ref.7). Thus, this feedback provides a complete analysis of the person being reviewed and it has a positive impact on him and can
induce him to change as per the observations.
H. Suitable for appraisal of top-management executives
This kind of feedback is suitable for the review of the top management as they dont have many people as their supervisor or boss
who can rate them. Plus they are the people on whose decisions the organisations operate so their decisions affect almost everybody
from employees to customers to suppliers. Subordinates can provide their opinion without any fear of being confronted because this
review is done on the principle of anonymity.
I. Helps creating happy employees

Employees are more satisfied with their performance after they are reviewed by many sources and get a chance to improve their
performance and hone their skills through effective training. Plus they feel happy by giving their views about their superior and this
creates a sense of belongingness as their views are considered important. After seeing that they can bring positive change in the
working of the organisati

Recruitment Selection & Retention Management

Case Study
Growing Minds, Inc. is a national chain of retail outlets specializing in creative toys and innovative learning
materials for children. The company caters to the upper end of the market and focuses on customer service
for a competitive advantage. It provides workshops for parents and children on topic such as learning with
the computer and indoor gardening and offers crafts classes ranging from papier-mch to pottery.
Growing Minds plans to expand and to open five new retail outlets in the coming quarter. This may mean up
to 200 new hires, and the executive team wants to make sure that the best propel are hired and retained. It
has issued a challenge to its retail management personnel to design a staffing process that will accomplish
these goals.
The children's market in which Growing Minds operates demands service personnel who are endlessly
patient; knowledgeable about children, toys, and learning; and, perhaps most important, sociable,
enthusiastic, and engaging. Excellent customer service is the top priority at Growing Minds, and obtaining the
desired performance from personnel has meant a major investment in training. Unfortunately, new workers
often leave within a year of being hired. This means that the company barely gets an adequate return of the
training it has invested in its new hires. Apparently, turnover is due (at least in part) to the demanding nature
of the job. Recently, Growing Minds has been emphasizing the establishment of work teams to improve the
quality of its services, identify and fix any problems in service delivery, and brainstorm new opportunities.
This approach has yielded better-than-anticipated results, so the team concept will be central to the new
outlets.
Questions:
1. How can Growing Minds attract the best applicants for job at its new retail outlets? On what groups, if
any, should the company's recruiting efforts focus? How should the recruiting be done?

1. Have clear, easy-to-understand job descriptions.. If job seekers have to struggle to figure out
what the role is or who would be qualified for it, the best will simply move on.

.
2. 5. Keep interviews focused on questions related to the work. Great candidates want to spend
the interview talking about their background, the job and what they might bring to it.
3. 6. Be transparent through the hiring process. Hiring process are so often inscrutable from the
outside that it stands out when an employer is transparent and open with candidates. That can
mean things like making it easy for top candidates to speak with would-be co-workers, being
upfront about the downsides of the position (like long hours or difficult clients) and talking candidly
about the reasons behind delays in the hiring timeline.
4. 7. Remember that interviewing is a two-way street. Since the best candidates have options,
theyll interview and evaluate employers right back. Employers who assume that the assessment
process only goes one way and forget to care about how theyre coming across to candidates or
even give them opportunities to ask rigorous questions and do their own evaluations will
generally turn off strong applicants.
5. 8. Be worth working for. That means not only offering competitive salaries and benefits, but also
providing a high-functioning work environment, with effective management, professional
development and recognition for a job well done. The best-run hiring process in the world wont be
able to overcome bad word of mouth about what its like to work for a particular company.

2. How should Growing Minds select the best candidates? What type of characteristics and measures
should be used? Why?
To find the best employees Growing Minds should follow and take following
measures as follows:
1. Competent: This is still the first factor to consider. Does the potential
employee have the necessary skills, experiences and education to successfully
complete the tasks need to be performed?
2. Capable: Will this person complete not only the easy tasks but will he or she
also find ways to deliver on the functions that require more effort and
creativity? being capable means the employee has potential for growth and the
ability and willingness to take on more responsibility.
3. Compatible: Can this person get along with colleagues, and more
importantly, can he or she get along with existing and potential clients and
partners? A critical component to also remember is the persons willingness

and ability to be harmonious with org, his or her boss. If the new employee
cant, there will be problems.
4. Commitment: Is the candidate serious about working for the long term? Or
is he or she just passing through, always looking for something better? A history
of past jobs and time spent at each provides clear insight on the matter.

Determine the required outputs and performance success factors for the job.

The best way how to identify whether a candidate characteristics and motivations match the
behaviors needed for the job is through a behavioral interview. As it is the best tool organization
can have to identify candidates who have the behavioral traits and characteristics essential for
success in the job.

In behavioral interviews, candidate may be asked to pinpoint specific instances in which a

particular behavior was exhibited in the past.

Use reference check to find out most suitable fit

Conducting reference checks is more than just a formality in the interview process. It can be a
very powerful way of learning about a person from the perspective of five or six people who
have worked with the candidate in a variety of roles and positions
Seek out informal interaction opportunities with the candidate
If possible, try to find ways to spend time with the candidate outside of the formal interview
process. It is perfectly appropriate to invite a candidate for a senior position to attend a brownbag lunch, participate in a staff meeting, or come to an upcoming fundraising event. In each of
these situations, growing minds can learn a lot about the individual. Watch to see how the
individual participates in these various setting.
Finding the candidate who is the best cultural fit for organization can be a very challenging task. It
requires insight into your own organizations culture and keen observation of the candidates
personality and work style. By proactively developing a list of ideal fit characteristics that go beyond
the job description, and maximizing opportunities to learn more about candidates through formal and
informal interactions, one can have greater confidence in finding the right candidate for the
organization

3. How might Growing Minds address its retention problem?

The quality of the supervision an employee receives is critical to employee

retention. People leave managers and supervisors more often than they leave companies or jobs.
It is not enough that the supervisor is well-liked or a nice person, starting with clear expectations of
the employee, the supervisor has a critical role to play in retention.
Anything the supervisor does to make an employee feel unvalued will contribute to turnover.
Frequent employee complaints center on these areas are as follows.
--lack of clarity about expectations,
--lack of clarity about earning potential,
--lack of feedback about performance,
--failure to hold scheduled meetings, and
--failure to provide a framework within which the employee perceives he can succeed.

The ability of the employee to speak his or her mind freely within the organization is
another key factor in employee retention. Does your organization solicit ideas and provide an
environment in which people are comfortable providing feedback? If so, employees offer ideas,
feel free to criticize and commit to continuous improvement. If not, they bite their tongues or find
themselves constantly in trouble - until they leave.

Talent and skill utilization is another environmental factor that key employees seek in
growing mind workplace. A motivated employee wants to contribute to work areas outside of his
specific job description. How many people could contribute far more than they currently do?
Growing mind just need to know their skills, talent and experience, and take the time to tap into it.

4. How might Growing Minds socialize its employees so that they are attuned to the firm's culture and
plans for the future?
Having devoted the time and resources to compete for talent, the next step that HR practitioners face is
to get new hires quickly up to speed. Retaining newcomers, however, poses a challenge, as most
turnover occurs during the first few months on the job.1 Because organizations have little opportunity to
recoup the return on investment in new employees who quit, newcomer turnover is problematic and is
therefore a concern of researchers and practitioners alike. While there is an expanded interest in
predicting newcomer turnover at the selection process, research on this topic has generally focused on
organizational socialization and how it is used to familiarize new hires with new roles and to retain these
new organizational members.
Socialization
Socialization is broadly defined as a process in which an individual acquires the attitudes, behaviors and
knowledge needed to successfully participate as an organizational member.2 Socialization is an ongoing
process that sometimes lasts for a year. It represents a sense-making process that helps new hires
adapt, form work relationships and find their place in the organization. A typical socialization process
includes three phases:3
1. Anticipatory socialization: This stage occurs before new hires join the organization. Through
interacting with representatives of the company (e.g., recruiters, managers), new hires develop
expectations about the company and the job prior to organizational entry.
2. Encounter: When new employees begin a new job, they start to learn about job tasks and receive
training. Managers can exert their influence by helping new employees understand their roles and
duties. Also, by understanding the stresses and issues that newcomers experience, managers can
help cultivate a high-quality work relationship with newcomers.
3. Settling in: New employees begin to feel comfortable with their job demands and social relationships.
They will be interested in the companys evaluation of their performance and in learning about
potential career opportunities within the company.
Regardless of the years of work experience that new employees have, knowing the technical and social
aspects specific to the job and the company is essential to function in a new environment. Figure 1
summarizes what employees should learn and develop through socialization.

Figure 1: Socialization Content

Performance proficiency

Learning and mastering the knowledge, skills and abilities to perfo

People

Establishing successful and satisfying work relationships with orga

Politics

Gaining information regarding formal and informal work relationsh

Language

Understanding the professions technical language as well as acron

Organizational goals and values

Understanding the rules or principles that maintain the integrity of

History

Learning the organizations traditions, customs, myths, personal ba

Source: Chao, G. T., OLeary-Kelly, A. M., Wolf, S., Klein, H. J., & Gardner, P. D. (1994). Organizational socializati
Orientation and Onboarding: An Effective Program
Within the broad socialization process, newcomer orientation refers to a training program that occurs
when an employee first begins employment with an organization. The purpose of orientation is to prepare
employees to perform their jobs effectively, learn about the organization and establish work
relationships.4 A successful new-employee orientation program can help lessen the impact of reality
shock on newcomers and facilitate the socialization process.5
According to a new survey by the Society for Human Resource Management, 83% of companies report
the use of a formal orientation program for new employees. The most frequently used formats are groupbased and individual sessions, whereas only 11% of companies conduct the orientation program using a
computer-based format.6 Often used interchangeably with the term orientation, onboarding refers to
the orientation process for newly hired managers. Similar to orientation, an onboarding program
involves introducing new managers to the work they will be supervising and helping them understand the
culture and the operation of the company.7 Compared with 2004, 34% of HR professionals indicated that
the investment in onboarding programs has increased in 2005.8
Often, an onboarding or orientation program involves communicating factual information about pay and
benefits, reviewing company rules and policies, and completing paperwork. It may also include
presenting an employee handbook to newcomers and giving a quick tour of the office. While these
procedures are important in terms of providing basic information about the organization, an effective
onboarding program should actively involve new employees and encourage them to ask questions. Other
individuals also play a role in the onboarding process. Helpful managers and peers can enhance
employees learning the new job.9 In addition, the nature and the quality of new employees relationship
with their managers have a significant effect on socialization.10
When planning the details of an orientation program, HR practitioners should set the objectives of the
program. For example, Corning, Inc., the manufacturing giant, had several objectives aimed at improving

productivity. It sought to reduce voluntary turnover in the first three years of employment and to shorten
the learning curve of new employees by 17%. Also, the program was designed to foster a uniform
understanding of employees about the company and to build a positive attitude toward the company. As
it turned out, newcomer turnover was reduced by 69% after two years. 11 The example of Corning
illustrates that setting objectives in advance to focus on realizing goals can help develop a successful
program.
HR has overall responsibility for program planning and follow-up and must coordinate with the immediate
supervisor to avoid duplication or omission of important information. Usually, much attention is placed on
the content of the orientation program, leaving the follow-up process neglected. After completing the
orientation program, HR representatives may review a checklist of items with employees to ensure all
items have been covered. As new employees are not the only individuals involved in the program, getting
feedback from everyone involved in the process is essential. This can be done through roundtable
discussions with new employees after their first year on the job or by giving questionnaires to all relevant
individuals (e.g., managers, peers). Having a formal and systematic follow-up process will not only help
evaluate the programs effectiveness, it can also identify areas for further improvement. 12
Tactics and Values of Socialization
Organizations employ a variety of tactics or techniques to socialize newcomers during the encounter
stage. Specifically, socialization tactics help facilitate the socialization process by reducing uncertainty
and anxiety associated with entry experience and helping newcomers adapt and acquire the necessary
attitudes and behaviors.13 Presented in Figure 2 are the basics on which the socialization literature is
built.

Figure 2: Socialization Tactics

Collective-individual

Subject newcomers to common entry experiences with a group versus unique experiences in i

Formal-informal

Use specifically designed activities and materials while segregating newcomers from incumb
the job).

Sequential-random

Communicate the sequence of discrete and progressive learning activities versus ambiguous o

Fixed-variable

Communicate specific time frame of completing each socialization step versus no given time

Serial-disjunctive

Provide newcomers with access to experienced organizational members as role models or me

Investiture-

Provide newcomers with positive social support and affirm their personal characteristics vers

divestiture

Source: Van Maanen, J., & Schein, E. H. (1979). Toward a theory of organizational socialization. Research in Organi
It is beneficial for both employees and organizations to be able to identify appropriate tactics for
socializing new employees. For example, research suggests tactics that are more collective, formal,
sequential, fixed, serial and supportive enhance newcomer loyalty and reduce turnover. 14 As a potential
result of successful socialization, employee adjustment is indicated by outcomes such as organizational
attachment and commitment, job satisfaction, social integration, role clarity, task mastery and values
congruence.15 In addition, people who are well socialized in their organizational roles tend to have higher
incomes, be more satisfied, more involved with their careers and more adaptable, and have a better
sense of personal identity than those who are less well socialized. 16
Literature and Research
Do Organizational Socialization Tactics Influence Newcomer Embeddedness and Turnover?17
Because newcomer turnover is an issue that many organizations face, this study seeks to understand
how socialization tactics influence newcomer turnover by embedding new employees more extensively
into the organization. Embeddedness represents a web of restraining forces that influence employee
retention when employees become tied to their organization through different types of links, investments
and affective and cognitive appraisals. To test how socialization tactics relate to newcomers adjustment
and turnover, a sample of new hires from a large financial service organization completed a survey that
measured individual perceptions of socialization tactics and employee embeddedness. Organizations
records of turnover were matched with survey responses approximately a year after the survey
administration.
The results demonstrated that tactics that were collective, fixed and supportive (investiture) were
positively related to on-the-job embeddedness, and on-the-job embeddedness was negatively related to
turnover. Based on this information, the author suggests that the nature of socialization activities allows
organizations to actively embed new employees in the organization. Companies can achieve this through
1) involving experienced organization members in the socialization process as role models or mentors; 2)
providing newcomers with positive feedback as they adjust to the new environment; 3) structuring
orientation activities to allow newcomers to experience the activities together; and 4) providing clear
information about the stages of socialization process.
Shaking Hands With a Computer: An Examination of Two Methods of Organizational Newcomer
Orientation18
Computer-based training is commonly used to provide learning and training exercises to employees. As
a result of technological advancement and cost reasons, a number of organizations are shifting from

traditional group-based orientation sessions to computer-based sessions. This study explores the
differences between the impact of the two methods on organizational socialization outcomes. A group of
new employees (261 individuals) participated in either a group social-based orientation session or an
individual computer-based session. They were then asked to complete a survey measuring the six
content areas of organizational socialization (organizational goals and values, history, politics, language,
people and performance proficiency). Compared with employees who attended the social-based
orientation session, those who were in the computer-based session reported lower levels of socialization
in the content areas of people, politics and organizational goals and values, and no significant
differences on the more information-based dimensions of history, language and performance proficiency.
Therefore, contrary to the argument that initial orientation sessions are likely to be ineffective in helping
newcomers adjust to their new organizations, this study demonstrates that formal orientations and the
choice of training method can have an effect on socialization outcomes for employees.
Organizational Socialization: A Field Study Into Socialization Success and Rate19
To understand whether there is an underlying pattern to organizational socialization, this study examines
the adjustment rates of new hires in two organizations that use comparable organizational socialization
tactics. Newcomer learning is evaluated in terms of four domains: 1) role (knowledge and mastery of
skills and understanding of performance requirements); 2) social interaction (integration with colleagues);
3) interpersonal resources (establishment of a network of contacts); and 4) organization (knowledge of
the structural and cultural aspects of the organization). Additionally, job satisfaction and intent to quit are
measured as attitudinal outcomes of socialization during the post-entry period. Specifically, newcomers
in two organizations went through group-based socialization, were mostly segregated from insiders, went
through a specific process with various stages that had to be passed according to a timetable and had
access to experienced role models. Results indicated that new hires reported learning in all domains.
Learning was related to attitudes not at entry, but rather at the early post-entry period, suggesting
newcomers may reduce their uncertainty and begin to make sense of the new situation, which, in turn,
has a positive impact on job satisfaction and intent to quit. This research also demonstrates that both
information acquisition and attitude measures are relevant for measuring the process of socialization.
In Closing
An important aspect of newcomer adjustment at different position levels is to gain confidence and
personal control over the situation. To achieve this, effective onboarding or orientation programs enable
new employees to learn the organizational culture and behavior. These programs also help facilitate the
broader socialization process, which not only involves newcomers and HR practitioners, but also hinges
on the support from immediate supervisors and co-workers, as social networks have been proved to
provide information as well as to welcome the newcomer as an integral part of the organization

Environment Management
Case Study
Economy & Ecology

The hills of Ranikhet situated in the state of Utranchal a part of Kumaun hills, have a scenic beauty
and support many of the species of flora and fauna, the small rivulets and springs create a splendid
environment. The forests also have some of the exotic species of flowers and a range of medicinal plants. The
local community lives a simple life dependent on the tourism and the forests for the medicinal plants and
other minor forest products. The biodiversity of Ranikhet is well protected from the external influences and
the anthropocentric activities.
The new government plans to encourage tourism sector and related infrastructure growth aimed at
economic and industrial development of the area through promoting Ranikhet as tourist destination and
licensing industrial establishments in Ranikhet. Government is proposing to set up star hotels and travel
agencies and granting licenses to manufacturing companies to establish their plants in Ranikhet with the
special tax subsidies for period of 5 years. According to the preliminary estimates it is hoped to achieve
approximately 27% increase in the earning through creating employment opportunities and improving the
local economic standards. Government has invited various large organizations to participate in the projects,
and everyone is looking with great expectations.
Q.1 What are the implications of such projects on the ecosystem of the Ranikhet?
Traditional cultures have always lived in harmony with their natural environments. Nature and humankind
(prakriti and purusha) form inseparable parts of the life support system. This system has five elements: air, water, land,
flora and fauna, which are interconnected, interrelated and interdependent. Deterioration in one element affects the
others..
The developmental activities of man such as the construction of high dams, roads, exploration for minerals and mining
activity and the quest for arable land have to face the challenge of intensified dynamic process, commonly referred to as
geographical hazards. Natural resources are being exploited in the name of economic development. Indira Gandhis
interpretation is that the real conflict is not between environment and development but between the environment and
reckless exploitation by man in the name of efficiency. We have to live a life according to the rhythm of nature. Human
inference in natural environmental conditions often gives these dynamic processes catastrophic proportions, leading to
disasters and irreparable damage to the natural balance of the ecosystem.
It is not just concern about the extinction of the big cats, but concern for all inhabitants and non-living resources. We
have to stop this undeclared war against nature. Human beings are at the crossroads. Careless application of technology
is leading to eco-degradation and pollutionSustainable development is, therefore, a concept of good and sound
economic growth that can be maintained indefinitely with damage to the environment. Good environment generally
begets good economics.
The words economics and ecology have the same root, oikos, which refers to a house. While economics deals with
financial housekeeping, ecology deals with environmental housekeeping.

Studies have shown that the perspectives of ecology are different from those of economics in that the former stresses
limits rather than continuous growth, stability rather than continuous development. The ecosystem is the basic unit
which has biotic and abiotic components that form an interrelated, interconnected and interdependent system. The most
important characteristic of an ecosystem is that it is dynamic, evolving and auto-sustainable as long as it remains
reasonably undisturbed and there is incoming sunlight. The equilibrium of an ecosystem is disturbed by external stimuli
such as natural cataclysmic changes and ever-increasing human activities dictated by socio-economic growth. The basic
difference is that the socio-economic system, in contrast, is hitched only to one species, human beings. In an ecosystem,
different species of plants and animals including human beings and micro-organisms form an interacting system. Thus,
the economic process is unidirectional and human beings can only progress forwards. Conflict between the ecosystem
and the socio-economic system arises from unidirectional and unlimited human wants to meet genuine needs as also
greed. This has caused ecological crisis, which in other words means human exploitation of resources at a greater rate
than can be normally regenerated under natural conditions.
.

Forest: a Womb.
Massive deforestation in the Himalayan region is the important factor in ecological degradation. Non-availability of certain
species, decline of fodder and wood resources, loss of the habitat of wildlife, soil erosion, recurrent floods and drying-up
springs and seasonal streams and climatic changes are the consequences of mans activity. It is obvious that there is
something wrong with the management of these vital resources.
The deforestation which has taken place due to commercial exploitation of trees for timber, resin, medicinal herbs, etc.,
the developing of new agricultural fields, over-grazing by animals, the coming up of new habitation all have had an
adverse affect on the environment and have brought about ecological imbalance.
The forest has gone away from the villages. It is reported that there is a scarcity of fuel, fodder and fruit. Medicinal herbs
are going to be extinct. The adverse affects noticed by us were that due to deforestation in the villages there is
watershed failure, which has resulted in both drought and flood conditions, soil erosion, landslides, changes in the
microclimate, increase in the silting rate which has caused a rise of the river beds, loss of wildlife, drying up of natural
springs on which the villagers depend for drinking water.
Forest Fires
Forest fires are another cause of the destruction of trees, vegetation, thick layer of humus and animals. The two major
causes of forest fire are:

a.

b.

Intentional fire: The forest is often set on fire by the villagers during the summer season to get a good growth of
grass following the rains. The fire burns the debris that is lying on the forest floor and hence the grass is able to
grow well in the rainy season. Sometimes it spreads and destroys vast tracts of valuable trees. The forest is also
set a fire by the forest department to clear it of dry vegetation in order to avoid the risk of a huge fire. Firing is
done from top to bottom by cutting fire-lines at regular intervals to control the fire. Villagers also set fire to pine
leaves falling on the surface as they inhibit the undergrowth.
Accidental fire: Fire is also caused by mans carelessness. Unextinguished campfires of trekkers and picnickers,
forest labourers throwing away burning cigarettes, bidis and matchsticks, villagers burning the unwanted material
on their fields during summer, throwing away of torches used by travellers to see their way in the forest at night,
and acid applied to increase the yield of resin. This acid may be spilled on the dry needles of a pine forest,
thereby leading to forest fires.

The flow of air in the hills is upwards, which is responsible for huge fires, and a fire may go beyond control if it spreads
from the bottom of a hill. It is easily controlled if it is from top to bottom. Too much dryness also helps in spreading fires.
Soil: an Anchorage for All!

Soil is our most valuable material heritage, the basis of all terrestrial life. As an ecological factor, soil is of great
significance, for it affords a medium for the anchorage of plants and a depot for minerals and water.
Normally, soil is constantly generated and enriched when an ecosystem is left undisturbed or minimally disturbed.
However, due to loss of vegetal cover, there is a progressive loss of soil due to erosion, together with attendant
consequences like landslides and siltation.
Water: Flow of Life
Water is yet another important element of the life support system. Water is also the home of aquatic life. The presence of
aquatic life is an indication of the well-being of water. The region receives plenty of rain, but due to deforestation there is
a failure of watershed which results in the unchecked flow of water during the monsoon to cause a sudden swelling of
streams in rivers so that there are floods in the foothills and even in the plains, and droughts in the villages located on
the slope of the mountain. A watershed is a natural drainage area draining off water to a common point which ultimately
meets with a river. Integrated development of watersheds thus takes care of water, crops, fuel, fodder and livestock with
a view to develop the overall economy.
.
Impact of Development
Development in the region is the other major feature of the ecological crisis, which takes different forms such as the
coming up of dams, building of roads, tourism development, etc. Quarrying, mining and blasting operations also give rise
to landslides, which not only block traffic on the roads but sometimes form lakes by the temporary blockade of rivers.
When the water exerts pressure these burst, causing devastating floods, sweeping away roads, bridges, agricultural
land.
The traffic of vehicles alters the composition of vegetation. Building of roadways in the mountain system creates
disturbances. This does not mean that roads in the hills are not important, but they need to be constructed in
consonance with the nature of geological formation. The construction of a hill road involves felling of existing protective
vegetation, cutting and blasting otherwise stable hill slopes, and the rolling down of the resultant debris which in turn
destroys vegetation and causes severe erosion resulting in extensive slope failures. These are often termed as
landslides. The phenomenon of landslides is not linked with road making alone but also with land use in general.
Tourism
The region is considered to be abundantly suited for tourism since it offers all kinds of attractions to tourists. A paradise
for anglers and a challenge to hikers. The lush green valleys, emerald meadows, vast icefields have now started
showing abrasion due to increasing human activity. Tourism brings a large number of people together, which leads to
marked changes that are detrimental to the ecosystem as a whole. Tourism is found in the form of pilgrim tourism and for
pleasure and adventure. To accommodate the large tourist influx, hundreds of new buildings are being constructed every
year. The tourist activity has to be in consonance with the principles of conservation of nature and with the protection of
associated resources. Unplanned development is causing irreparable damage. The problems of litter, noise, erosion,
destruction of fauna and flora have become acute.
Observations
Suggestions which may help in maintaining the ecological balance are: afforestation should be encouraged by planting
mixed trees, both conifers and broad-leaved. Monoculture of trees should be avoided; on the higher slopes cultivation of
agricultural crops should be stopped. Instead of agriculture, crop trees should be planted. To stop the over-exploitation of
the forest by government contractors for resin, medicinal herbs, timber, etc., there should be a total ban on cutting of
trees on mountain slopes and in catchment areas. Instead of big dams, small dams and hydro-electric power stations
can be constructed. For a very small village a hydro-electric generator can be installed in the water mill. There should be
a check on quarrying, mining and blasting operations. Efforts should be made to develop more hill stations as tourist
centres in the region to avoid the overcrowding of tourists in the well-known hill stations. Kilns with filter devices and
higher chimneys should be constructed to minimise the effect on the environment. Any sort of development should be in
harmony with the environment, and renewable resources like ground water and forests should be used at a rate at which
they are being replenished by nature

Q.2 Do you think EIA is necessary? If yes how will you conduct the EIA for the above projects c) How can you use
tourism to uplift the local community without disturbing the ecology of the place.
EIA is necessary because Environmental impact assessment (EIA) is an analytical process that systematically
examines the Possible environmental consequences of the implementation of projects, programmes and
policies.
Environmental Impact Assessment (EIA) is the process of assessing the likely environmental
Impacts of a proposal and identifying options to minimize environmental damage. The main
Purpose of EIA is to inform decision makers of the likely impacts of aproposal before a Decision
is made.EIA provides an opportunity to identify key issues and stakeholders early In the life of
a proposal so that potentially adverse impacts can be addressed before approval decisions are
made."EIA is not a way of allowing an environmental 'veto' on development proposals
.Environmental considerations may be set aside in favors of other considerations including
economic and other benefits of going ahead.
Conduct EIA For Above Projects

1. To establish that before decisions are taken by the competent authority or

authorities to undertake or to authorize activities that are likely to significantly affect the
environment, the environmental effects of those activities should be taken into account.
2. To promote the implementation of appropriate procedures in all countries
consistent with national laws and decision-making processes, through which the
foregoing goal may be realized.
3. To encourage the development of reciprocal procedures for information
exchange, notification and consultation between States when proposed activities are
likely to have significant trans-boundary effects on the environment of those States.

States (including their competent authorities) should not undertake or

authorize activities without prior consideration, at an early stage, or their
environmental effects. Where the extent, nature or location of a proposed
activity is such that it is likely to significantly affect the environment, a
comprehensive environmental impact assessment should be undertaken
in accordance with the following principles.
The criteria and procedures for determining whether an activity is likely to
significantly affect the environment and is therefore subject to an EIA,
should be defined clearly by legislation, regulation, or other means, so
that subject activities can be quickly and surely identified, and EIA can be
applied as the activity is being planned.

In the EIA process the relevant significant environmental issues should be

identified and studied. Where appropriate, all efforts should be made to
identify these issues at an early stage in the process.
An EIA should include, at a minimum:
(a) A description of the proposed activity;
(b) A description of the potentially affected environment, including
specific information necessary for identifying and assessing the
environmental effects of the proposed activity;
(c) A description of practical alternatives, as appropriate;
(d) An assessment of the likely or potential environmental impacts of

the proposed activity and alternatives; including the direct, indirect,

cumulative, short-term and long-term effects;
(e) An identification and description of measures available to mitigate
adverse environmental impacts of the proposed activity and alternatives,
and an assessment of those measures;
(f) An indication of gaps in knowledge and uncertainties which may
be encountered in compiling the required information;
(g) An indication of whether the environment of any other State or
areas beyond national jurisdiction is likely to be affected by the proposed
activity or alternatives.

Eco-Tourism
Ranikhet has a rare diversity of flora and fauna. This makes it an ideal area for
developing eco-tourism, projects and activities like jungle safaris, trekking on mountain
and forest trails, nature walks, catch and release angling for Mahaseer and other fish
species. All these activities have to be conducted in a manner that promotes awareness
of environment and helps maintain the fragile ecological balance.
Environmental Impacts of Tourism
Tourism in Ranikhet, while vital for both state finances and peoples livelihood, is
fraught with many implications for both the environment as well as for community
development.
For instance, the urban pockets particularly along the major pilgrim routes are in utter
decay. Mass tourism contributes to increased pollution load, most of which reaches the
venerated rivers.
.
Impact on natural resources
The increasing in the number of tourists visiting to a particular location increases the
pressure on land and water. Land degradation is the most common effect of tourism,
particularly in hill resorts
Construction activities are mushrooming in pilmgrim centres at higher altitudes. Often such construction does not
take into consideration the minimum precautions needed when building in such environments,and thus becomes
vulnerable to disasters.
Tourism intensifies the water crisis. Most Tourist centres draw huge crowds and the
limited or poor infrastructural facilities collapse under such an onslaught.
In addition, as most of the tourist centres evolved in places with good natural
vegetation, the expansion of areas has meant the degradation of adjoining green belts.
The demand for fuel wood the primary fuel for restaurants and dhabas - is much
higher during the tourist season, especially in the higher parts of the Ranikhet, leading to
further pressures on the forests.
Solid waste management and wastewater handling
Increased flow of tourists has direct impacts in terms of increase of waste and
wastewater generation. Wastes in tourist centres come from various sources such as
hotels, restaurants, temples, etc. Since most of the tourist centres are small in size, there
is a limited capacity to collect and dispose off wastes in these areas. Especially in
valleys, wastes is usually dumped into the rivers for convenience.
. The waste is either strewn all over the place or thrown in rivers, which are now getting polluted at
source.
Dry waste poses more threats to environment. For instance, the polythene bags thrown
down the hill cover the roots of trees lining the mountain slope and thereby

preventing water from reaching the roots. The roots gradually die and the trees get
uprooted. Part of the waste that is thrown down the slopes gets carried away with water
and pollutes the streams.
Impact on local community development
The tourism activities in Ranikhet have affected the lives of the local communities.
Some features of tourism in the state are:
Lack of linkage of tourism with local or regional production systems: Tourism has
failed to develop adequate linkages with local production systems, and continues to
remain a peripheral seasonal appendage to the local economic systems. There are a
number of products and services that can be exchanged by the local communities with
the tourists, such as fruits and nuts, handicrafts, herbal medicines, arts and crafts, music
and theatre, which need to be linked to tourism so that local communities can also
benefit from it.
Lack of retention of benefits from tourism: When linkages with local communities are
not built, there is an increased flow of goods and services away from the state.
High level of seasonality: This is an intrinsic character of tourism in the region and
though there is a scope of expansion of the traveling season, the mechanisms for coping
and the limits to dependence on tourism as a contributor to the local economy must
reflect these constraints. Seasonality is also seen as a favourable factor as systems
recoup, particularly in areas where the carrying capacities are exceeded during the
tourist season.
The Way Forward: Strategy for Sustainable Tourism
Tourism is one of the most vital sectors of industry in Uttaranchal, for both the state as
well as the people, and hence it needs to be developed. However, it is essential that
such development be based on sustainability of the environment and of communities.
Any strategy for developing tourism needs to change the current situation of highvolume
low-value tourism and to identify the high-value low-volume opportunities.
This means
broad-basing of the tourist profile, both economic and geographic;
proportional decline in environmental threats with increase in number of
discerning tourists;
enlargement of the tourism `cake' bringing in its wake the potential for greater
quality based services that the local people can be trained to offer.
The tourism activities associated with the tourists on the basis of which the specific
policies and programmes could be drawn are identified as:

Class Tourism: The Class Tourist is better oriented to the range of destinations and is
more often traveling on a purpose. The Class Tourists range from the culturally
educated Mass Tourists who have not ventured beyond the identified destination for
lack of sufficient information, to tourists exploring the art and culture of the region.
Value Tourism: At the apex of our classification is the Value Tourist, who is a veteran
climber or trekker, researcher, high-altitude flora and fauna enthusiast who has
traversed his way through the world and is almost romantic about the Himalayas. The
Value Tourist needs no persuasion from image-makers and advertisers and is willing to
replace anything that is needed in his travel with local material provided they meet the
high quality standards of the tourist. Value Tourists are travelers who completely

merge with the Himalayan identity and are extremely conscious of the risks to the local
ecology and culture.
Tourism, with careful forethought and planning, can thus fulfill its potential of being a
high value revenue earner for both the state and the people of Uttaranchal, without
causing environmental destruction.

Q.3 Setting up of manufacturing plants to bring development is right strategy? Comment.

Setting up manufacturing plant to bring development provide all the essential as well as luxurious modern amenities. Their role
inimproving life styles and standards of human societies cannot be denied. Manufacturing facilities have become indispensable
component of the modern age. However, it have adversely affected and changed the environment e.g.
1.Land for setting up manufacturing plants is acquired either by deforestation or by converting agricultural
land.
2.manufacturing plants consume huge quantities of raw materials and energy. This results in over exploitation of
natural resources and disturbs natural cycles and balance of nature.
3.The various poisonous gases, smoke, etc. released from plants pollute soil and water. Thus growth of industries is
the main cause of unplanned urbanization leading to unequal distribution of human population. In addition, greater the population,
greater is the pollution of the given environment.Thus, while setting up manufacturing plant have become an essential component of
modern life, they are also the main factor of degradation of environment and ecosystems. Hence, setting up manufacturing units
may be describedas thenecessary evilsof the modern age.
The region has plenty of water, which can promote the growth of fisheries. Promote horticulture and small-scale industry
in the region, which will provide job opportunities to the local people. Promote sulabh sauchalaya and bio-gas plants for
recycling biodegradable material. To reduce the pressure of the growing population on natural resources, they should be
provided LPG gas, kerosene oil, solar cookers

Case Study
ABC Industries Lease Vs. Buy
ABC Company can purchase a $50,000 piece of equipment by putting 25 percent down payment and paying
off the balance at 10 percent interest with four annual installments of $11,830. The equipment will be used in

your business for eight years, after which it can be sold for scrap for $2,500. The alternative is that it can
lease the same equipment for eight years at an annual rent of $8,500, the first payment of which is due on
delivery. ABC will be responsible for the equipments maintenance costs during the lease.
ABC expects that its combined federal and state income tax rate will be 40 percent for the entire period at
issue. Its cost of capital is 6 percent (the 10 percent financing rate adjusted by your tax rate).
Question:
Please calculate the net cash flows for both lease vs. buying options and suggest which one should ABC go
for and why. Assume that depreciation is computed on the basis of the 20 percent declining balance
method.