Gumbad Business Review Vol. Vii (I)

GUMBAD BUSINESS REVIEW
(An International Journal of Business and Management Research) Vol. VII, Issue 1, July - December 2011 ISSN No. : 0973-6158
Consumer Behaviour Towords Women's Cooperative Dairy (Swakrushi Milk) : A Field Based Study Ravinder Rena, Suresh Vadde Understanding and Analyzing Stakeholders Perspectives in Developing a Marketing strategy for Bay Leaves in Uttarakhand Dyutiman Choudhary, S.P. Kala, N. P. Todaria Is the Stock Market Overvalued: A Study in the Context of Bangladesh Mohammad Nayeem Abdullah Reciprocity with the natural environment Jesus Vicens Understanding Competitive Advantage in Retail Banking Sector : A Case Study of Public Sector and Private Sector Banks in India Dr. Jaskaran Singh Dhillon HRM: A Vital Asset in the Value Chain for Attaining Competitive Advantage Priyanka Srivastava, PallaveeShrivastava, Prof. Rekha Prasad "Assessing The Effectiveness Of Grievance Redressal Systems In Labour Intensive Units in Bareilly, Uttar Pradesh" Ms. Payal Johari Emerging Free and Open Source Software (FOSS) as a total Solutions for Knowledge Management in Academic and Special Libraries (ASL) of India Sunil Goria Landslide Response Management in Himalayas Jog Singh Bhatia Study of Barriers and bottlenecks with reference to export of Indian Textile Goods: Strategies for competitive Advantage Prof. J.S. Bisht , Avanish Chandra Pandey
DEPARTMENT OF BUSINESS MANAGEMENT

H.N.B. Garhwal University (A Central University) Srinagar (Garhwal), Uttarakhand, India

(An International Journal on Business and Management Research) ISSN: 0973-6158
EDITORIAL BOARD
Chief Editor Dr. Akhilesh Chandra Pandey Managing Editor Dr. M.E. Burke
Salford Business School, University of Salford Salford Greater Manchester, United Kingdom)
ADVISORY BOARD
Dr. P.R. Datta
Chairman, Academy of Business and Retail Management Research, London, UK
Mark T. Jones
Director of External Affairs, London College of Management Studies
Prof. Jesus Vicens Vich

University of Barcelona, Barcelona, Italy
Dr. Lukasz Wall

Faculty of Life Sciences and Technology, Wroclaw University of Environmental and Life Sciences, Wroclaw, Poland
Prof. J.N. Mishra

MONIRBA, University of Allahabad, Allahabad, India
Mohd. Nayeem Abdullah

School of Business, Independent University, Chiitagong, Bangladesh (IUB)
Prof. Raj Kumar

Faculty of Management Studies, Banaras Hindu University, India
Dyutiman Choudhary
Marketing and Enterprise Development Specialist, ICIMOD, Kathmandu, Nepal
Prof. J.S. Bisht

Department of Secretarial Practices, HNB Garhwal University, Srinagar Garhwal, Uttarakhand, India
The Gumbad Business Review is published bi-annually by the Department of Business Management, HNB Garhwal University Srinagar Garhwal (A Central University), Uttarakhand, India. The views expressed in this journal are those of the authors. All work published is blind reviewed according to standard procedures of referred journals. The purpose of the Gumbad Business Review is to publish manuscripts reporting original, creative research in the field of management and issues related to trade, business and commerce. Theoretical and applied work including case studies of companies or comparative studies are given equal weightage in publication consideration in this journal. The Gumbad Business Review publishes manuscripts only in the English language. Submission of manuscripts for publication review may be send by post or e-mail addressed to the Chief Editor, Gumbad Business Review, Department of Business Management, HNB Garhwal University, Srinagar Garhwal (Uttarakhand), Pin-246174. Telefax No. : 00-91-01370-267653 E-mail- acpmanagement70@gmail.com

(An International Journal of Business and Management Research)
ISSN: 0973-6158
Vol. VII, No. 1
Consumer Behaviour Towords Women's Cooperative Dairy (Swakrushi Milk) : A Field Based Study
July 2011 - December 2011

Ravinder Rena Suresh Vadde 1-12
Understanding and Analyzing Stakeholders Perspectives in Developing a Marketing strategy for Bay Leaves in Uttarakhand
Dyutiman Choudhary S.P. Kala N. P. Todaria
13-20
Is the Stock Market Overvalued: A Study in the Context of Bangladesh
Mohammad Nayeem Abdullah
21-29
Reciprocity with the natural environment
Jesus Vicens
30-37
Understanding Competitive Advantage in Retail Banking Sector : A Case Study of Public Sector and Private Sector Banks in India
Dr. Jaskaran Singh Dhillon
38-51
HRM: A Vital Asset in the Value Chain for Attaining Competitive Advantage
PriyankaSrivastava PallaveeShrivastava Prof. Rekha Prasad Ms. Payal Johari
52-63
Assessing The Effectiveness Of Grievance Redressal Systems In Labour Intensive Units in Bareilly,Uttar Pradesh
64-71
Emerging Free and Open Source Software (FOSS) as a total Solutions for Knowledge Management in Academic and Special Libraries (ASL) of India Landslide Response Management in Himalayas Study of Barriers and bottlenecks with reference to export of Indian Textile Goods: Strategies for competitive Advantage
Sunil Goria
72-79
Jog Singh Bhatia Prof. J.S. Bisht Avanish Chandra Pandey
80-86 87-115
ABOUT THE UNIVERSITY AND THE DEPARTMENT

THE UNIVERSITY
Hemwati Nandan Bahuguna Garhwal University, was established in December 1973 by the then Uttar Pradesh Government with it's headquarter at Srinagar, District Garhwal, Northern Himalayas in the then State of Uttar Pradesh, India. With effect from 15th January, 2009 the University has been elevated as a Central University by an Act of Parliament. In its present state the University is residential and affiliating in nature with its four Campuses located at Srinagar, Pauri, Tehri and Chauras besides with more than 170 affiliated colleges and Institutions spread over the Garhwal region of Uttarakhand State of India. There are Fourteen Schools with one hundred one Academic Departments providing teaching, research and extension in different areas of learning. The University provides the most ideal conditions for serious study with the surrounding area abounding in natural grandeur with river Alaknanda flowing with its sylvan beauty supported by green forests accompanied by snow covered peaks offering clean and fresh air, water, thus creating a salubrious peaceful environment, all requisites for learning with excellence and tapasya.
ABOUT DEPARTMENT OF BUSINESS MANAGEMENT

The Department of Business Management, which is now part of school of management, has been set up by the University with the permission of the then State Government of Uttar Pradesh in the year 1996 for running two years full time MBA Degree course. The two year full time M.B.A. Degree course of the Department has also been approved by the All India Council for Technical Education, New Delhi from time to time.The Department has established its image as a centre of excellence in management education. The vision of the Department is to be and remain a centre of excellence in management education and the mission statement of the Department is to produce quality managers and good human beings. The Department also admits Research Scholars for Ph.D. in Management. The Department is located at Chauras Campus of the University in well structured Building with in house Library, State-of-the art computer lab, Seminar hall and well equipped class rooms and tutorial rooms. Case studies, simulation exercises, classroom presentation, class lectures including group activities like seminars, workshops, guest lectures by outside experts, brain games, quizzes and field works are some of the techniques used in the course. Besides, exercises relating personality development, enriching communication skills, and building team spirit are regular features. Meditation and participation in cultural and social activities are unique features. Summer training, field assignment, project work and industrial tours are essential features of the course.
Ravinder Rena
Editor-in-Chief, International Journal of Education Economics and Development and Coordinator, Joint African Masters Programme, Harold Pupkewitz Graduate School of Business, Polytechnic of Namibia 13 Storch Street, Private Bag 13388, Windhoek , NAMIBIA Suresh Vadde Assistant Professor and Head, Department of Commerce & Business Management, Lal Bahadur College, P.G. Centre, Warangal, (A.P) India.
Abstract: All the marketing process starts with the consumer and hence the consumer is a very important person to a market. Consumer decides what to purchase, for whom to purchase, why to purchase, from where to purchase, and how much to purchase. In order to become a successful marketer, he must know the liking or disliking of the customers. He must also know the time and the quantity of goods and services, a consumer may purchase, so that he may store the goods or provide the services according to the likings of the consumers. The manufacturers produce and the sellers sell whatever the consumer likes. In this sense, "consumer is the supreme in the market". As consumers, we play a very vital role in the health of the local, national or international economy. The decision we make on our consumption would affect the demand for the basic raw materials, for the transportation, for the banking, for the production; they effect the employment of workers and deployment of resources and success of some industries and failures of others. Thus marketer must understand this. India is the largest producer of milk in the world, but in terms of per capita availability (gm/day), its production is low, compared to other developed countries. Milk is an essential commodity required on a daily basis, and serves the consumers as directly as multiple product and for multiple industrial products, for instance in the preparation of food and sweet items. This paper analyzes the behaviour of milk consumers, and their satisfaction level of Swakrushi consumers towards price and quality of the product. An attempt is made to find out the payment system and per house of consumption of milk, and finally it also explores the preferable promotion channel of consumer in the milk industry. Keywords: Milk Industry, International economy, consumers, women empowerment, Swakrushi milk, Customer satisfaction.
1. INTRODUCTION
Every body in this world is a customer. Human beings need a variety of goods and services right from cradle to grave. All customers are buyers and all buyers are not customers. Then who are the customers and how they behave while purchasing a particular product is very important for marketers. Consumer behaviour refers to the buying behaviour of the final consumersindividuals and households who buy goods and services for personal consumption. All the marketing process starts with the consumer and hence the consumer is a very important person to a market. Consumer decides what to purchase, for whom to purchase, why to purchase, from where to purchase, and how much to purchase. In order to become a successful marketer, he must know the liking or disliking of the customers. He must also know the time and the quantity of goods and services, a consumer may purchase, so that he may store the goods or provide the services according to the likings of the consumers. The manufacturers produce and the sellers sell whatever the consumer likes. In this sense, "consumer is the supreme in the market". As consumers, we play a very vital role in the health of the local, national or international economy. The decision we make on our consumption would affect the demand for the basic raw materials, for the transportation, for the banking, for the production; they effect the employment of
Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158
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workers and deployment of resources and success of some industries and failures of others. Thus marketer must understand this. India is the largest producer of milk in the world, but in terms of per capita availability (gm/day), its production is low, compared to other developed countries. Milk is an essential commodity required on a daily basis, and serves the consumers as directly as multiple product and for multiple industrial products, for instance in the preparation of food and sweet items. Walter says that buyer behaviour is the process where by individuals decide what, when, where, how and from whom to purchase goods and services. Consumer behaviour is influenced strongly by cultural, social, personal and psychological factors. Cultural factors include the set of basic values, perceptions, wants and behaviour learned by a member of society from family and other important institutions. The social factors include customer's family, small group, social roles and status. The personal characteristics such as buyer's age, life cycle stage, occupation, economic situation and life style influence a buyer's decision. Importance of the Study: Presently FMCG market is very competitive in the world. In this competition consumer is playing major role, every company investigates the consumer behaviour and thus learn the marketing strategies. The term consumer behaviour is defined as the behaviour that consumer exhibits in searching for purchasing, using, evaluating and disposing of products and services. There are numerous questions that include what they buy it, when they buy it, where they buy it, how often they use it, how they evaluate it after the purchase and the impact of such evaluate on future purchase and how they dispose of it. One of the most important constraints among the consumers is that we use a variety of products on regular basis food, clothing, sheltering, transporting education, equipment. As consumers, we play a vital role in the health of the economy local, national and international. The decisions of consumers may affect the employment of workers and the deployment of resources, the success of some industries and the future of other. Need for the Study: Consumers are highly complex individuals, subject to a variety of psychological and sociological needs apart from their survival needs. Needs and priorities of different consumers segments differ drastically. Present day consumers have wide range of transportation needs, and they take decision on how to spend their available resources such as time, money and effort on the modes and means of transport. Objectives of the Study: 1. To know the consumer behaviour towards milk consumption. 2. To study the regular source of milk of the consumer. 3. To examine the satisfaction of consumers towards Swakrushi's price and quality of the milk product. 4. To find out the payment system and per capita house of consumption of milk. 5. To provide implications for the Swakrushi. The scope of the present study pertains to consumer behaviour that is being carried out in one of milk dairies Swakrushi under the umbrella of Mulukanoor Cooperative Rural Bank And Marketing Society Ltd (MCRBMS) of Mulkanoor town of Bheemadeverapally Mandal (cluster of villages) in Karimnagar district of Andhra Pradesh, India. The present study is under taken to elicit the opinion of consumer behaviour, on the milk consumption.
Profile of MCRBMS1 The Mulukanoor Cooperative Rural Bank And Marketing Society Ltd(MCRBMS) was registered in 1956 as a co-operative with 375 farmers from 14 villages with a total share capital of Rs. 2300. The society was basically the brainchild of late Sri A.K. Vishwanatha Reddy Gaaru, who hailed from this area and inculcated the co-operative spirit through it. Today, MCRB&MSL is a highly respected and feted success story with more than 6166 active members and a share capital of Rs. 2.2 crores. MCRBMS believes that its members' investments in the co-operative are the major reason behind the co-operative ability to stay sensitive to their needs and highly accountable to them. Adequate care has been taken to ensure that every member builds his savings in the society and therefore its financial base is wide and strong. In fact, apart from individual and institutional savings, in the early days every member used to contribute towards share capital, thrift and a building fund - in proportion to his need from the cooperative. "The society serves a population of 48137 members from 7901 agricultural families and 11031 non-agricultural families. It's operations extend over an acreage of 45674 across over 7978 survey numbers. Though the number of families depending directly on agriculture is high and agriculture is main stay and livelihood of the population in the society's hinterland, the number of families depending on agriculture related allied activities is also high. In sum total, majority of population in the society's coverage area depends on agriculture and allied activities. Of the 14 villages, Mulkanoor, which has the head office of the society, has the highest population of 7939." The society's services can be broadly categorized as Financial, Marketing, Input, Consumer, welfare services and Community Initiatives. In addition, the society also provides a large number of services that are aimed at being true to its charter of being a co-operative for farmers and extend over activities like help in soil testing, pest attack, introduction of new agricultural practices, initiatives in animal husbandry, crop seminars etc. through trained staff and a veterinary agriculture division. Overall, all the services and activities of the society are aimed at making each and every member of the society happy, prosperous and progressive. New Initiatives The cooperative, in keeping with the tradition, has embarked on a number of new initiatives for the benefit of the members of the society. These initiatives, on the top of the existing ones, not only help in providing better service to the member but also help the society to track its performance. The new initiatives are 1. Information Technology 2. Farmers Information and Training center 3. Upgraded technology in Rice mills Information Technology The activities of the members of the society are closely linked to the banking activities and majority of transactions are routed through kind, which is a unique characteristic of the society. The society processes more than one million financial transactions in a financial year which includes all the banking and trading activities of the society. Large number of transactions and the fact that this deals with the hard earned money of the members necessities that the bank develops a fail proof system which keeps track and accounts for these transactions. To take care of the above, the society has embarked on a massive computerization project with the following objectives: 100% automation of all banking activities and meet the critical operational and information requirements of other business entities; Provide member service and timely MIS to the
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management; Develop operational standards that would bring pride to both the staff and members of the society; Build an integrated coherent system with adequate audit trials; Simplify business procedures, reduce operating costs, increase the speed of operation and provide live information to the management. Upgraded technology in rice mills The penchant to use new technology for the benefit of members is never dying in Mulakanoor society. The society has invested, not only in information technology, but also in the rice mills. The society has recently upgraded its old par boiled mills to new technology called Satake technology from Japan. This upgradation has cost the society more than INR 2 crores. The members would benefit from the better output from the mills in terms of finer rice and better quality to suit exports to other states in India and international markets too. Information and training center In keeping with the spirit of cooperative and taking further the initiatives taken by the society to help the members and improve the standard of living of the members, a Farmers Information and Training Centre has been established within the cooperative for the benefit of the farmer members. The society leaves no stone unturned in exploring the areas that are beneficial to the members and this initiative is one such example. The farmer members benefit immensely with this initiative wherein agriculture and market related inputs are provided to them at No cost. Training on latest farming techniques is also provided which the farmers can use to improve the productivity. The information center is manned by agriculturists from within the society and external experts on a regular basis. MRB&MSL has been using technology for the benefit of the members. e-sagu and IFFCO kiosks are the standing examples of internet technology being used at grassroots. E-sagu initiative helps farmer members to post any problem/query to the concerned authority or scientist directly. The problem is analyzed and a reply is sent to the farmer answering his queries. This saves lot of time and cost in terms of travel and lost wages to farmer. The society bridges the gap between the experts and the needy farmer. IFFCO kiosks are setup by MCRB&ML in association with IFFCO to help farmers access technical and market related trends. These kiosks are equipped with touch screen systems, which can be accessed in vernacular language. The kiosks are also supplied with testing facilities to test soil samples that help farmers to identify the deficiencies in the soil and accordingly required inputs can be used to maximize the yield. 2. LITERATURE REVIEW Milk Production: 1998 is the lucky year for India since India emerged as the highest milk producing country in the world and that too in the 50th year of our Independence. Increasing the annual milk production from 20 million tone's in 1970 to around 74 tone's million in 1999. In fact it is a unique success story of Indian dairy development in spite of constraints and climatic vagaries. The result of white revolution is quite visible with our per capita milk consumption rising to 215g per day in spite of the ever increasing human population. Indian dairy has over the year created on identity of its own. It has also succeeded in having a competitive edge to its low investment energy efficient cost effective production system. FAO of the United Nations as declared India as the top milk producer in the world surpassing USA by a recent survey. The institutional support provided by the dairying sector in India provides round the year employment which no other agribusiness can do. Besides, it also provided a sufficiently this sectors contribution to the Indian economy and its growth potentials
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have not yet been properly recognized. The industrial sector has been regularly receiving several forms of subsidies and incentives since independence. The agriculture sector too has its own share of privileges and subsides. But if one goes through the budgetary allocation of the entire made so far, dairying share is too insignificant as compared to any other sectors. The dairying sectors is also depressed of the special banking support as is provided to the industrial as well as agriculture sectors. The dairy industry has played a prominent role towards house hold nutrition security and also strengthening the rural economy of India. It has been recognized as instrument to bring about socioeconomic transformation also the dairy sector has helped national economy by emerging as the largest milk producer in the world. The import dependent Indian dairy has soon became not only self sufficient but also passed for an export oriented dairy nation. This has been primarily attributable to the implementation of the operation flood program (popularly known as white revolution) launched in 1970 under the agencies of the Nation Dairy Development Board (NDDB). The white revaluation occurred through the co-operatives networking of the small and marginal farmers and land less labourers. Emerging Trends in Milk Processing: With the changing declining trend in the domestic export market as well as profit for conventional dairy products, such as milk powder, butter etc.need for product diversification that permits value addition longer life cycle and grater income has become quite obvious. There has been a growing awareness towards the beneficial role of milk and milk products. In maintaining normally of human health has led to the development of a new range of nutriaceticals or even mood elevating /refreshing foods. It has been widely recognized that components derived from milk such as immunoglobulin. Lactoperosidose, lactoferrimlysozyme vitamin binding proteins etcplay an extra nutritional role. Fermented milk products such as yogurt in particular provide beneficial micro bed. Which favorably influence the microbial ecology of the gut system? These in turn affect various biotechnical functions to protect human health. Biotechnology has been successfully employed to develop genetically modified strains of dairy culture that tend to reduce the risk of entire infections hypercholestemia rate of proliferation of cancer cells. As well as augment immune system besides offering many health promoting attributes. The dairy industry in advanced countries is rapidly diversified its product mix to reduces a range airy foods that targeted to reduces the role medicine in maintaining normally of human health. Japan is the world leader in this sector, where the current market of US $5.5billion is still fast growing in the country. In the USA more than 100 food companies have entered these areas with a turnover of US $ 11billion. Hence biotechnology and bioengineering food science offers new opportunities to India's dairy industries which we must capitalizes trough required Research and Development (R&D) efforts, both in public and private sectors, dairy industry also fast diversifying to develop special food ingredients food ingredients derive from milk which can be deployed advantageously to improve the sensor quality attributes. These include fractionated castigates. They proclaim concentrate enzymatic Hydrolystates prepared by employ innovative energy efficient unit process. Packaging is another area which receiving intensive R&D inputs for developing low cost biodegradable material to prevent further damage to the environment and ensure grater food safety. However greater challenge ties before the Indian dairy industry in modernizing sector engaged in the preparation of wide range of indigenous milk products intensive scientific R&D and financial inputs are necessary to develop industrial manufacturing and packaging system. About the Dairy Industry: Livestock sector is the backbone of India's economic in terms of income, employment, equity
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suitability and forging exchange earnings, By virtue of traditional practice of utilizing the crop residues as feed of the milk animals, India has been able to achieve milk production of 70 million competitive edge over new Zealand, Australia and the USA of being able to produce milk at a lower cost. Livestock production has registered a compound growth relate of 5.4 percent per annum during their preceding decade, Milk and products account for 66 percent of the total value of lice stock production. Another noteworthy feature of Indian diary scenario is that the entire milk animal having low productivity. Thus only marginal improvements in the technologically advanced countries since animals have already attained the maximum genetic potential and the production system have also been optimized. India has a well organized dairy infrastructure of 78,000 rural milk co-operatives and a processing capability of about 12 million liter per day and about 280 diary plants. India has strong HRD capability to meet the multi sacral requirements of the dairy industry. India has generated to meet the multi sectoral requirements of the dairy industry. India has developed a precious R&D reservoir for milk processing. This provides opportunities for export of technologies trod partner countries through an integrated for accessing remunerative markets. With the liberation of world of economies India dairy industry has also ventures to explore the export market. A rather modest beginning has been made through exports of milk powders, being Rs.318.5 millions butter/ghee, being Rs.65.9 million; and cheese being Rs.0.08 million during 1994-1995 tom countries mainly Bangladesh, Nepal, UAE, the Philippines and the Netherlands. 3. RESEARCH METHODOLOGY: The study has been based on both the primary and secondary data. The primary data was collected was through a questionnaire designed and administered. A structured questionnaire was designed and administered among the respondents to give a fair representation to various attributes of the consumer viz. age group, occupation and income of the consumers. All in all a sample of 100 consumers were selected for the present study in the Swakrushi dairy under the umbrella of Mulukanoor Cooperative Rural Bank And Marketing Society Ltd (MCRBMS) of Mulkanoor town of Bheemadeverapally Mandal (cluster of villages) in Karimnagar district of Andhra Pradesh, India. The selection of customers was done on convenient random sampling technique. No data base collected of particular as such it was a general market survey done on Swakrushi milk. The data was also been collected through personal interviews and observations. The secondary data has been collected from various published articles, journals, company reports, books on dairy and also from the websites like: www.indiandairy.com Limitations of the Study: 1. The present study was based on 100 samples only. 2. The study was conducted in Mulkanoor town only. So this study was limited to this town only and its a representative town in Karimnager district. 3. The study was conducted on the Swakrushi milk consumers. 4. The views of the people are biased therefore it doesn't reflect true picture. 4. SWAKRUSHI MILK ORGANIZATIONAL PROFILE: The Mulukanoor women's cooperative dairy started procurement of milk on 17 august 2002. However the story began much before in 1997. The women's thrift cooperative and their association were having huge ideal cash balance in spite of leading their numbers to barrow, they have to pay interest to members on their thrift and also cost the founds. The member who now had access to capital was looking for ways of investment.
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They started exploring ways of investment which would benefit a large section of members after a lot of brain-storming, they realized that many women numbers had milk cattle and were already selling milk. Thus the idea emerged dairying on cooperative basis. Sahavikasa agreed to support them in this new venture in financial, promotional and training aspects. When approached by Sahavikasa. The national dairy development board (NDDB) also agreed to extend their technical support. The Mulkanoor cooperative society (PACS) healed the union by talking the responsibility of supervising the construction of the building and installation of the machinery of the plant. The Mulukanoor women's Dairy became reality. The aims of Mulkanoor Women's Cooperative Dairy (MWCD) are: 1. To provide market facilities, for the milk producer through co- operatives organized for the purpose. 2. Reasonable remunerative price to the milk produced on quality basis. 3. To provide hygienic milk and its products to the urban consumers. 4. The MWCD has assured a new dimension as a powerful strategy for rural development, creating a New Hope for growth with social justice, generating employment and income opportunities to thousand of rural producers. Objectives of the Mulukanoor women's cooperative dairy The objectives of MWCD are: 1. Procurement of milk from the milk producers situated within the control of units. 2. To provide good market for the rural unit producers and develop economic strength in the rural area. 3. Supply of fresh and quality milk to Warangal, Hanamkonda, Kazipet and Godavarikhani towns in Andhra Pradesh at a reasonable price. 4. To avoid the distance and inconvenience of consumers. 5. To development entrepreneurship. About the Swakrushi Milk: The profile of MWCD is shown in the below table 1 Sl. No. Particulars MWCD 1. Date of establishment 17th Aug 2002 2. Plant capacity liters per day 50,000 3. Milk routes 5 4. No. of Mandals covered 6 5. Share capital in lakhs Rs. 201,000 6. Maximum milk procurement liters per day during 2002 10, 682 7. No. of milk procurement centers 67 8. No. of consumer booth centers 40 9. No. of milk producers 8426
Source: Swakrushi Dairy office records
TABLE -2: Types of Swakrushi Milk Types of Milk Toned milk Whole milk
Source: Swakrushi Dairy office records
% of fat 3.0 6.0
% of SNF 8.5 9.0
Note: The data of the table reveals the percentage of fat and solid not fat (snf) in each type of swakrushi milk.
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Milk Procurement and Sales of Milk: The process of procurement is as follows: 1. Collecting the milk from varies producers at 100 milk collection centers. 2. Test the sample milk to find the standard of the milk a collection centers. 3. Sending the milk to the dairy. Then, again test the "sample milk" to find the standard of the milk. 4. After testing the milk will be stored at milk chilling unit. 5. From dairy milk will be brought to market for distribution. 6. At, the market, the agents (who are appointed by Mulkanoor cooperative dairy) will be distributing the mile to the consumers for cash. Table 3 : Number of Family Members Sl. no. No. of family members Respondents Percentage 1 0-2 8 8% 2 3-4 44 44% 3 5-6 36 36% 4 Above 6 12 12%
Source: Primary data
It is to note that 44% of the customers have 3-4 members in the family, 36% of the customers are having 5-6 members in family, 12% of the customers are having above 6 members in family and the rest of the customers are having 2 members in family. Table 4 : Age group of family members below 12 Years Sl. No. Age below 12 years Respondents Percentage 1 1 30 30% 2 2 50 50% 3 3 16 16% 4 4&more 4 4%
When we look at the number of children's in the family below 12 years, we found found that 50% of the customers have 2 children; 30% have1 child; 16% have 3 children; and the rest have 4 and even more members. Table 5 : Quantity of Milk Sl. no. Quantity of milk Respondents Percentage 1 lit 22 22% 2 1lit 32 32% 3 1.1/2lit 28 28% 4 2lit 18 18% Source: Primary data It can be noticed from table-5 that the quantity of the milk used by the people, 32% of the customers were using 1 liter per day; 28% of the customers are using 1.1/2 liter per day. 22% of the customers are using liter per day. And the rest of the customers use 2 liters per day. Table 6 : Monthly Lot Purchases Sl. No. Monthly purchase Respondents Percentage 1 Yes 86 86% 2 No 14 14%
Table-6 reveals the monthly lot purchases of the family. It has been observed that 86% of the customers are purchasing their milk monthly for the family and 14% of the customers are purchased daily for the regular usage in the family.
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Table-6 reveals the monthly lot purchases of the family. It has been observed that 86% of the customers are purchasing their milk monthly for the family and 14% of the customers are purchased daily for the regular usage in the family. Table 7 : Mode of Milk Usage Sl.No Mode of milk Respondents Percentage 1 Packed branded milk 68 68% 2 Loose raw milk 32 32% 3 If any 0 0%
Table -7 demonstrates that the mode of the milk does the customer regularly use in the family. It has been found that 68% of the customers are using packed branded milk for their family usage and 32% of the customers are using loose raw milk for their family usage. Table 8 : Brand of Milk the Customer Purchase Sl. no. Brand of milk Respondents Percentage 1 Swakrushi milk 60 60% 2 Vijaya 16 16% 3 Jersey 12 12% 4 Thirumala 10 10% 5 Any other 2 2%
It is interesting note from the table -8 that the brand of the milk does the customer regularly use in the family. It has been found that 60% of the customers are using swakrushi milk; 16% of the customers are use Vijaya milk; 12% of the customers use jersey milk; 10% of the customers use Thirumala milk and the rest of the customers are purchase other brands of the milk. Table 9 : Factors that Influence the Purchase Sl. No. Factors Respondents Percentage 1 Quality of milk 60 60% 2 Effective pricing 16 16% 3 Easy availability 20 20% 4 On agencies 4 4%
From table-9 we can observe that various factors that influence the customer to buy the particular brand of the milk. It has been identified that 60% of the customers said that quality of the milk is important, 20% of the customers said that easy availability of the milk is important, 16% of the customers are said that effective pricing is important and the rest of customers are said that depend on the agencies are important. Table 10 : Customers' Satisfied with the Price Sl. No. Satisfaction level Respondents Percentage 1 Highly satisfied 20 20% 2 Satisfied 60 60% 3 Not satisfied 18 18% 4 Disappointed 2 2%
Table -10 depicts that the satisfaction of the customers towards price of the milk. It is to be noted that 60% of the customers were satisfied with the price, 20% of the customers were highly satisfied with the price, 18% of the customers were not satisfied with the price and the rest of customers expressed that were highly disappointed with the price.
Sl. No. 1 2 3 4
Table 11 : Source that How Customers known regarding brand Source Respondents Percentage News papers 36 36% Television 4 4% Hoarding/wall paintings 30 30% Commission agent 30 30%
In replying to the question whether the customers knew the brand or not, it found that 36% of the customers are said that they are aware of the brand through the newspapers, 30% of the customers said that they knew through the commission agent, and 30% said they knew through the wall posters, and the rest of them said through the television. Table 13 : Whether Satisfied With Quality of the Swakrushi Milk Sl. No. Satisfied with quality Respondents Percentage 1 Yes 88 88% 2 No 12 12%
As a response, whether the customers are satisfied with the quality or not the respondents reveal that 88% of the customers are satisfied with the quality of the milk and the rest of customers are said that they are not satisfied with the quality. Table 14 : Problems with the Leakage of the Swakrushi Milk Sl. No. leakage Respondents Percentage 1 very rare 66 66% 2 Often 12 12% 3 Regular 20 20% 4 If any 2 2%
When we look at the problem of leakages of the milk it has been found that 66% of the customers are said that they face a very rare problems in the leakage, 20% of the customers are said that they face a regular problems in the leakage, 12% of the customers revealed that the milk leakage is a chronic problem, and the rest of the customers are said they indeed face other types of problems due to the milk leakage. Table 15: The Customer Preferences over the products Sl. No. Other products Respondents Percentage 1 Curd 57 57% 2 Buttermilk 28 28% 3 Ghee 15 15% 4 other 0 0%
It is interesting to note that 57% of the customers said that they prefer curd, 28% of the butter milk, 15% ghee and the rest of customers prefer others. Table 16 : Satisfied Level with Commission Agent Service Sl. No. Commission agent Respondents Percentage 1 Highly satisfied 30 30% 2 Satisfied 60 60% 3 Not satisfied 8 8% 4 Highly not satisfied 2 2%
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When we look at the customer satisfaction, it is observed that 60% of them are satisfied with the service, 30% are highly satisfied with the service, however, 8% are not satisfied with the price and the rest of customers are highly not satisfied with the service. Table 17 : Consumer Expectations over the price Sl. No. lit price in Rs Respondents Percentage (%) 1 5 to 6.50 10 10 2 7 to 8.50 30 30 3 9 to 10.50 60 60
In response to the price fixation customers expressed their concern from which, 60% of reveal that litre milk packet should be sold in the price range of Rs. 9 to Rs.10.50, 30% said Rs. 7 to Rs.8.50 and the rest of them said it should be Rs. 5 to Rs.6.50. Table 18 : Customers' Satisfaction towards Swakrushi Milk Sl. No. Criteria Yes No 1 Quality 88 12 2 Price 20 80 3 Availability 70 30 4 Service 65 35 5 Brand name 86 14 6 Door delivery 83 17
The customers also shared some of their views to improve product quality 88% of are satisfied with quality of the milk and 12% are not satisfied. It is also noted that 83% of the customers satisfied with door delivery and 12% are not satisfied. 5. SUMMARY AND CONCLUSIONS: Findings: It has been found that the majority of the customers are having the 3-4 members in consumers' milk. When the study was conducted it is to found that more than 50% of the customers are having children below 12 years of age. Majority of the customers are consuming a liter of milk per day for their family usage. Its been found that more customers are using the packed branded milk. The customers who are using the packed milk said that they are satisfied with the quality of the milk. Most of the customers expressed that the packed milk, price and the quality are more important for them to consume. Conclusions: Majority of consumers are purchasing milk from shops. Commission agencies and customers are satisfied by the price of Swakrushi milk. 85% of consumers have felt good about Swakurshi milk. Majority of consumers have been satisfied by quality, availability, services and brand name. 86% of consumers are being satisfied with the brand name of swakurshi milk. The card system has been preferred by 74% customers of the Swakurshi milk. Electronic media is playing significant role to advertising dairy milk. Suggestions: Customers are also expecting more quality from the brand so that the brand can also develop its sales. Majority of the Swakrushi customers are expecting some more dairy products from the
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company. Therefore, the company can focus and expand its business. The majority of the customers are satisfied with the price so it has been suggested the standard and affordable price has to be maintained. About 70% of the customers suggested starting the point of purchase (POP) for easy availability of the product. REFERENCES: n David L-Loudon & Albert J. Della Bitta (1991) Consumer Behaviour (Fourth edition), New Delhi: McGraw Hill, International Editions. n John A. Howard, (1989) Consumer Behaviour, New York: Prentice Hall, International Edition. n Edward W. Cardiff, Richard R. Still and Norman A.P Govani, (1985) Fundamentals of Modern Marketing, New Delhi: Prentice Hall of India Pvt. Ltd. n Engel, James F., Kollat, David T., and black well, Roger D. (1968) Consumer Behaviour Holt, New York: Rinehart and Winston. Inc. n Raghbir Singh, (1989) Marketing and Consumers Behaviour, New Delhi: Deep & Deep Publications. n Philip Kotler, (1991) Marketing Management - Analysis, Planning, Implementation, and Control, (VII Edition), New Delhi: Prentice Hall of India Pvt. Ltd. n Phillip Kotler and Gray Armstrong, (2002) Principles of Marketing, New Delhi: Pearson Education, Asia. n Singh, J.D. and Raghbir Singh (1981) A Study of Brand Loyalty in India, Indian Journal of Marketing, 11(7):15-21 (July). n Engel, J., D. Kollatt and R. Blackwell. (1978) Consumer Behaviour, (3rd Ed). Insdale, Illion: Dryden Press. n Schiff man Leon and Kanuk, (1994) Consumer Behaviour (Fifth Edition), New Delhi: Prentice Hall of India.
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Dyutiman Choudhary
Marketing and Enterprise Development Specialist, ICIMOD, Kathmandu, Nepal
S.P. Kala
Professor and Head, Department of Business Management, HNB Garhwal University, Srinagar, Uttarakhand
N. P. Todaria
Professor and Head, Department of Forestry and Dean, Faculty of Natural Resources and Agriculture, HNB Garhwal University, Srinagar, Uttarakhand
Abstract : Non timber forest products (NTFPs), especially medicinal and aromatic plants (MAPs) are an integral component of the rich biodiversity and crucial sources of income for the poor people of the Hindu Kush-Himalayan region. The MAPs sector in Uttarakhand is a priority for the state which has declared itself as a herbal state. A study was conducted to understand the perspectives of stakeholders on marketing of MAPs. The results show that while the farmers and facilitators are somewhat similar in their perspectives the traders have divergent views. It is argued that due to a lack of a common vision and strategy the marketing of MAPs from Uttarakhand is a weak area. A set of recommendations is provided to develop a marketing strategy through sustainable management of MAPs; developing competitiveness in the value chains and affecting policy change and readjustments for the benefit of the sector as a whole and farmers in particular. 1.Background : Medicinal plant is not a taxonomic but a use-group of plants. Any plant when used in any system of medicine or healing procedure can be categorized as medicinal plant. Aromatic plants, on the other hand, are plants containing volatile oil, mostly having aromatic flavor, which may be but also not only limited to, medicinal plants. Both the groups are these days collectively termed as 'Medicinal and Aromatic Plants (MAPs) or simply medicinal plants (MPs) (Bhattarai and Karki, 2004). The various other uses of plants are in food, spice and condiment, fibre, dye, tan, gum, resin, etc. Every plant contain a large number of different groups of chemical compounds, some of which have been observed to have healing effects. In the course of evolution, human discovered methods to process medicinal plants and used their active compounds. According to the WHO Traditional Medicine Strategy 2002-2005, "Traditional medicine" (TM) is a comprehensive term used to refer both to TM systems such as traditional Chinese medicine, Indian Ayurveda and Arabic Unani medicine, and to various forms of indigenous medicine. TM therapies include medication therapies - if they involve use of herbal medicines, animal parts and/or minerals and non-medication therapies - if they are carried out primarily without the use of medication, as in the case of acupuncture, manual therapies and spiritual therapies. In countries where the dominant health care system is based on allopathic medicine, or where TM has not been incorporated into the national health care system, TM is often termed "complementary", "alternative" or "non-conventional" medicine, popularly written as CAM. 2.Key problems and Objectives of Study: In the Himalayan region several thousand tones of MAPs are extracted from forests providing earnings that run into millions of dollars each year (Karki, et. al, 2003,). In India, which is the hub of the South Asian regional trade, at the national level up to 40% of the state forest-based revenues and 70% of forest export revenues, come from MAPs & non-timber forest products
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(NTFPs) mostly in unprocessed and raw forms (UNESCO-UNDP, 2002). Trade in herbal commodities in the region as already mentioned is highly unorganized and unfair. The available information on internal and external trade is discontinuous and disjointed in terms of geographical distribution, time series, quantity of harvests, national level value addition and exports, price information and margins to producers and other market intermediaries (Choudhary, et. al, 2008). Apart from the above producers are not organized in collection, marketing and trade of highland MAPs. The trade circuits and marketing channels are complex, well networked and secretive in nature and flow of information along the channel/trade chain is very poor (Banskota and Sharma, 1999). Also, as most high-value upland MAPs are exported in unprocessed form and with inconsistent qualities, producers do not gain through value addition and receive only a meagre share of the value of the final products. Despite the large growth of the MAP sub-sector, MAP policies focused on enhancing livelihoods of poor producers are either not adequately developed or poorly implemented in the region. The present study was carried out to understand the perspectives of three categories of stakeholders viz., farmers; traders and facilitators in MAP marketing so as to understand the dynamics among the actors and suggest a marketing strategy for MAPs in the state. For the purpose of the study Bay Leaves (Cinnamomum tamala) was selected. 3. Research Methodology A total of 202 respondents comprising 142 farmers; 30 traders and and 30 facilitators were selected for the study. The upstream actors constituted about 20% of the population and were collectors of bay leaves in 6 villages viz., Gadi, Sainji, Byara, Najmola, Gauna, and Durmi in Najmola Valley of Chamoli district in Uttarakhand. Traders were selected randomly from the three major market centres viz., Ramnagar, Tanakpur and Rishikesh. The facilitators were professionals from the Forest Department, Besajh Sangh, and NGOs. An interview questionnaire was designed and pre tested with the identified organizations and stakeholders involved in the bay leaf chain seeking their opinion, view point, observations and suggestions in marketing. Face to face interview and discussion was then conducted with them and their observations and suggestions recorded. Data were coded and analyzed through SPSS. Several descriptive and inferential statistics were used in the data analysis. The views of stakeholders were measured on a ranking scale of 1-5 ranging from most important to least important for a set of five variables related to marketing preference. Data was analyzed using percentage method, tabulation method, and bar diagrams. Chi square test was used to compare their responses on the different marketing preference. Qualitative analysis of the functioning of markets and their underlying factors from personal observation and cross verification of information was used to overcome the secretive nature of MAPs traders. 4. Results 4.1 Marketing Channel : In terms of MAPs marketing in Uttarakhand, the Government of has made it mandatory for all forest products harvested from the wild to be sold through auctions. Three designated mandis' (market yards) have been established at Rishikesh, Ramnagar and Tanakpur. The component of auction holds an important position due to their implication on the harvest from the wild. As per the law, all produce harvested from the forests has to be sold through the three designated auction centres. In the year 2008, a total of 7.23 tons bay leaf from Kumaon region was sold through auction by three facilitating organizations in Ramnagar mandi. In the case of Garhwal region, in 2004-2005, a total of 5250 Kg bay leaves were sold from Rishikesh. For bay leaves sold through auction, traders have to pay a royalty at the rate of 0.8% of total purchase to the Forest Department, 10% of the cost of produce to the Forest Development
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Corporation as charges; 1% of the cost as mandi tax, and transportation of produce from the auction yards to their godwons. This added cost reflects the lower prices in mandis. Data from Rishikesh mandi was available only for 2004. This suggests the absence of bay leaf harvests from Government Forests after 2004 from Garhwal. However, it is not clear if bay leaves harvested from forests are illegally traded as cultivated products. For cultivated bay leaves from within the state and supplies from outside, the survey identified six levels of function and actors for bay leaves, namely, collection/harvesting (collectors/harvesters), village trade (village traders), state level wholesaling (wholesalers 1), powder making, secondary wholesaling (wholesalers 2), and export (exporters). The main suppliers of bay leaves in the surveyed markets were farmers from Kumaon (Didihaat, Pithoragarh, Almora & Nainital region). In Garhwal region, the major supplies are from Rudrapryag, Chamoli, Tehri, Dehradun and Uttarkashi. Leaves are purchased by the village traders for INR 14-18/kg from the farmers and sold to the state level wholesalers for INR 22-24/ kg. The village level traders act as a mediator between cultivators and wholesalers. Before harvesting season, the wholesalers place their demands to the village traders. No contracts are signed between the wholesalers and village traders. Transportation costs from village to target markets are borne by village level traders, and royalty to the forest department is not paid for cultivated produce. The state level wholesalers are based in Rishikesh, Ramnagar and Tanakpur. The wholesalers further dry, clean, and grade the leaves, repack them and sell to secondary wholesalers outside the state in Kanpur, Lucknow, Indore, Amritsar, and Delhi for INR 30-33/kg. One additional function in the bay leaves supply chain was visible at the state wholesaling level. The wholesalers powder leaves and sell the same to spice makers at INR 50/kg. Wholesalers also participate in the auctions to purchase bay leaves. The prices at the auctions range from INR 17-20 at the time of the survey. The secondary wholesalers then sell leaves to the exporters for INR 40-45/kg. Information on the channels from the secondary wholesalers to other parts of India was difficult to obtain and there were no clear demarcation of trade routes and buyers. But it was evident that the secondary traders supplied bay leaves to all major dealers in different states of India, spice manufacturers within the country, who then sold to the retailers. The average retail price is estimated to be INR 7080/kg. Bay leaves are exported at INR 50-58 to buyers in Pakistan, Gulf countries even Europe. Secondary wholesalers from Kanpur and Lucknow export leaves mainly to Pakistan and Middle East. Spice makers are a major consumer of bay leaf powder, consuming 90% of the total bay leaf products. Households that purchase bay leaves pay on an average INR 120/kg. 4.2 M a r k e t i n g Preference of Stakeholders 4.2.1 Farmers : An overwhelming majority of the farmers agreed that the mandi system was their most preferred mode of marketing bay leaves (p<0.05). They were not sure and confident regarding the traditional trade channels and provided a mixed response (p>0.05). They were also not supportive of the options for direct contract with buyers (p<0.05). Production of value added products by small and medium enterprises and marketing of value added products by producer groups. Table 1 shows the chi square values for the different options. Table 1: Chi square values, p value and result on best marketing in bay leaf trade by farmers Form X2 value P value Result (At 5%) NTFP Mandi 22.296 0.000 Significant Direct contract of buyers with producers for leaves 61.606 0.000 Significant Traditional trade channels 3.563 0.468 Not Significant Production of value added products by SMEs 83.352 0.000 Significant Marketing of value added products by producers groups 88.211 0.000 Significant
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4.2.2 Traders All the traders were opposed to the idea of marketing mandi and contractual arrangements with producers (p<0.05). They were highly supportive of the traditional trade channels (p<0.05). They were not sure about the potential for production of value added products by small and medium enterprises (p>0.05). They however were against the idea of marketing of value added products by producer groups (p<0.05). Table 2 shows the chi square values for the different options. Table 2: Chi square values, p value and result on best marketing in bay leaf trade by traders Form Chi square value p value Result (At 5%) NTFP Mandi 19.400 0.000 Significant Direct contract of buyers with producers 16.000 0.003 Significant for leaves Traditional trade channels 13.333 0.000 Significant Production of value added products by SMEs 7.600 0.055 Not Significant Marketing of value added products by 19.333 0.001 Significant producers groups 4.2.3 Facilitators The facilitators responded in line with the farmers and were highly supportive of the mandi system for marketing MAPs (p<0.05). They were not sure about the contract marketing by linking farmers and traders (p>0.05). They were against the traditional trade practice and were supportive for value added products marketing by both small and medium enterprises (p<0.05). They were highly supportive of local level processing and value addition of bay leaves by producers groups. Table 3 shows the chi square values for the different options. Table 3: Chi square values, p value and result on best marketing in bay leaf trade by facilitators Form Chi square value p value Result (At 5%) NTFP Mandi 18.667 .001 Significant Direct contract of buyers with producers for 3.000 .558 Not Significant leaves Traditional trade channels 10.000 .040 Significant Production of value added products by SMEs 17.000 .002 Significant Marketing of value added products by 16.000 .003 Significant producers groups 1. Discussion Marketing is an integral component of value chain development for MAPs. Studies on the promotion of community-based enterprises (CBEs) in the region show that market is the leading constraint in MAP resource promotion. Enterprises have been successful where marketing information, channels, infrastructures or institutions exist. The second important factor that triggers marketing initiatives is a vibrant strategy involving all the involved stakeholders. Community-based small-scale enterprises, have demonstrated potential to create economic opportunities by mobilizing human and natural resources (Choudhary, 2005).The results of this study indicate that the three major stakeholders involved in trade have different opinions. This is a serious constraint in order to develop a competitive and fair marketing system from the state. While farmers favour the mandi system the traders are completely against the same. This is attributed to the fact that farmers want fair prices for their produce following a competitive bidding process. But traders do not want to develop transparency in the chain. They are not
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willing to give up their monopoly over trade and ensure that the MAP value chains are competitive with quality products. The facilitators seem to share the same opinions as farmers as they are concerned about the conservation of MAPs which are threatened by illegal trade. The results are also relevant in terms of promoting value addition within the state of Uttarakhand. Farmers and facilitators are interested in greater value addition at the production sites as value added products would bring higher income and benefits. But traders as the major link to the buyers are not supportive of farmer level processing and value addition. Traders normally supply to distant buyers often outside the state and hence they are not interested in value addition. Due to a coherent strategy a lack of effective coordination and systematic planning among different agencies, technical backstopping and policy support there is a high level of opacity in the MAP value chains. There is also a lack of standards and protocols to produce quality herbal products that are able to access high-end markets. The results also indicate why an integrated supply chain model in the herbal sector is yet to be developed and tested in the state. After harvesting the collectors are faced with the issue of product disposal. As the markets are several hundred kilometers downstream, there was no means by which the farmers could participate in markets. There is no means to empower the farmers who were operating with minimal capital, infrastructure, information and knowledge. 2. Recommendations for Developing Marketing Strategy of MAPs Uttarakhand i. Strengthening Sustainable Management of MAPs The expansion of unregulated and inequitable trade and commercial use of MAPs poses a major threat to both the biodiversity and local people's health care system in the region. As 95% of MAPs are harvested and collected in wild, the alarming levels of deforestation and ecosystem degradation in the region are also contributing to a decline in MAPs. Sustainable harvesting and management of NTFP resources is unlikely to happen without promoting participation of local institutions that oversee, monitor and enforce regulations and sustainably manage and benefit from these resources. There is a need to concentrate on learning from other commodities in developing and strengthening value chain models in MAPs/NTFPs sector. ii. Involve Farmers and Local Institutions From the study it is recommended that producers of bay leaves and all other MAPs need to be organized into groups to improve their bargaining powers. Group formation must ensure that all the well being groups are well represented. These groups should be facilitated to plan the upstream operations so that they may produce bay leaves as per the market demand. This is also important to improve the position of the target group in the value chain. Researchers, development workers and local communities have an immense repository of knowledge, networks of which can be used in the identification of priority species both for conservation and development. There is a need to strengthen multi stakeholder collaboration to facilitate community-based development process to engage rural producers in the MAP supply chains. In South Asia especially, they may be the basis of empowering women and indigenous communities to build safety nets and resiliency in food security. iii. Improve Competitiveness of Value Chains of MAPs There is a need to develop, strengthen production chain for MAP products from collection and cultivation through value addition, certification and marketing through appropriate institutional structures. Such activities coupled with developing information and communication networks are closely linked to quality management. Quality management needs to be part of every step in the production chain in order to permit proper long-term marketing. They are broken down into the major technical activities of the chain: production, collection, value-addition (processing), certification, marketing and the development of
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appropriate small enterprises with people's involvement. The research and experimental character of each activity requires detailed multi-disciplinary documentation along commonly required standards. Such record keeping, extensive databases, frequent consultation between stakeholders and partners, and an active network for exchange are to assure that results and experiences are shared efficiently and extensively among participants of the traditional medicines value chain. iv. Policy Support to Mainstream Trade of MAPs Existing trade of MAPs has poor quality understanding and assurance due mainly to unorganized trade, lack of information to producers and traders and other chain actors about the marketing challenges faced by MAPs beyond their levels. Therefore, policies that promote quality assured markets and institutional mechanisms with appropriate benefits to the producers and stakeholders who are part of the MAPs value chains and involved in their wise management are paramount. There is need to understand and improve the traditional channel of trade and promote sustainable harvesting and cultivation of MAPs in private and degraded lands. This needs to be achieved by providing spatial information on products and building a responsible value chain of MAPs to meet the present and future challenges in quality production of health products national and global markets. v. Need to develop local Mandis It is highly recommended that the present marketing policy of the state may be amended to include local Mandis in the catchments of major bay leaf/MAP production areas. Innovations are required to empower the people to participate in markets, as for better returns the traditional practice of selling to village traders or for that matter to only traders of the district are not gainful. The menace of monopoly of local traders and the cartels formed by facilitating agencies together with traders must be addressed to improve the terms of engagement of collectors of bay leaves and bring in transparency in the marketing system. The research results provide scope for Government of Nepal to also consider the establishment of medicinal plants and non-timber forest products Mandis in different development regions of the state. References and Bibliography n Bhattarai, N. and Karki, M. 2004. Medicinal and aromatic plants - Ethnobotany and Conservation Status. In: J. Burley, J. Evans and J. Youngquist (Eds.). Encyclopedia of Forest Sciences. Academic Press, London, UK. pp.523-532. n Banskota, K. and Sharma, B. (1999) Traded Resource Flows from Highland to Lowland. Understanding Economic Linkages. ICIMOD. n Choudhary, D. (2005). Community Based Enterprises: Successes and Issues in the Himalayan Region, Diversifying and Enhancing Livelihood Options in the Himalayan Region. ICIMOD Newsletter 48: 21-22. n Choudhary, D. and Bhattarai, N.K. (2008). Organic Production and Certification of MAPs: Experience of MAPPA. Paper presented at the International Workshop on Organic Agriculture - Opportunities and Challenges. 10 August, Kathmandu, Nepal n Choudhary, D., Rawat, R.B.S., and Bhattarai, N.K. (2008). Community-based Enterprises and Market Development for Medicinal and Aromatic Plants (MAPs) in the Greater Himalayan Region. In International Union for Conservation of Nature and Natural Resources, 2008. International Conference Proceedings: The Role of NTFPs in Poverty Alleviation and Biodiversity Conservation. IUCN, Ha Noi, Viet Nam, 260 pp. n Dobremez, J. F. 1996. Foreword. In: P.K.Jha, G.P.S. Ghimire, S.B. Karmacharya, S.R. Baral and P. Lacoul (eds.). Environment and biodiversity in the context of South Asia. Ecological Society (ECOS), Kathmandu, Nepal.
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GOI, 2000. Report of the Task Force on Conservation & Sustainable Use of Medicinal Plants. Planning Commission, Government of India, New Delhi, India. n ICIMOD, 2003. Partnership In Sustainable Mountain Development; Securing the Future of Hindu Kush Himalayas - Overall Strategy 2003 -2007, International Centre for Integrated Mountain Development, Kathmandu, Nepal. n Kaplinsky, R. & M. Morris (2001): A Handbook for Value Chain Research. IDRC. n Karki, M., Tiwari, B.K., Badony, A.K. and Bhattarai, N. (2003). Creating Livelihoods Enhancing Medicinal and Aromatic Plants Based Biodiversity-Rich Production Systems: Preliminary Lessons from South Asia. Paper presented at the 3rd World Congress on Medicinal and Aromatic Plants for Human Welfare (WOCMAP III), 3-7 February 2003, Chiang Mai, Thailand. n Riisgaard, L., Bolwig, S., Toit, du. A., Halberg, N., and Matose, F. (2007). 'A Toolbox for Action Research with Small Producers in Value Chains'. Paper presented at the IDRC Inception Workshop Integrating Poverty And Environmental Concerns Into Value Chain Analysis Analysis, Action And Collaboration, Cairo, 3 6 December. n Hamilton, A. (2005). Himalayan Medicinal and Aromatic Plants: Perspectives for Balancing Use and Conservation. In: Y. Thomas, M. Karki, K. Gurung and D. Parajuli (eds.). Himalayan Medicinal and Aromatic Plants, Balancing Use and Conservation. Government of Nepal, Ministry of Forests and Soil Conservation, Kathmandu, Nepal, pp. 109-148. n Maikhuri. R.K., Rao.K.S., Chauan.K., Kandari. L., Prasad. P., Negi. G.S., Nautiyal. S., Purohit. A., Rajasekaran. C., and Saxena. K.G. (2005). Cultivation and Conservation of higher Himalayan Medicinal plants through participatory and action research: A case study from the Central Himalaya (Uttaranchal), India. In: Y. Thomas, M. Karki, K. Gurung and D. Parajuli (eds.). Himalayan Medicinal and Aromatic Plants, Balancing Use and Conservation. Government of Nepal, Ministry of Forests and Soil Conservation, Kathmandu, Nepal, pp. 281-301. n National Medicinal Plants Board, 2004. Cultivation of Selected Medicinal Plants, Department of Ayush, Ministry of Health and Family Welfare, Government of India, New Delhi. n Rawat, R.B.S. 2004. Study of Marketing Pattern and Potential of Medicinal Plants in Uttaranchal; PhD Thesis, Forest Research Institute, Indian Council of Forestry Research and Education, Dehradun, India. n Rawat, R.B.S. and Choudhary, D. 2006. Networking for Development MAPPA Launched in China. MedPlant Network News, Newsletter of MAPPA/ICIMOD, NMPB & MPCN; March June 2006, Volume 6, Issue 2, pp13-15. n Rawat, R.B.S., Bhattarai, N.K., and Choudhary, D. (2008). Poverty Reduction through Medicinal and Aromatic Plants Based Enterprise Development and Private Sector Collaboration. In: G. Rasul and M. Karki, (Eds). Policy Priorities for Sustainable Mountain Development. Proceedings and Selected Papers from the ICIMOD Regional Policy Workshop. September 18-20, 2006, Kathmandu Nepal. CD-RoM. n Roe, D. The Millennium Development Goals and Natural Resource Management: Reconciling Sustainable Livelihoods and Resource Conservation or Fuelling a Divide. www.iied.org/pubs/pdfs/G00448.pdf n Shengji, P. (1998). Tradition and transition in medicinal plants management in the Himalayas: Overview of plants utilization in traditional mountain communities. Paper presented at the International Conference on Medicinal Plants for Survival, 16-19 February, Bangalore, India.
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Shengji, P. (2005). Ethnobotany and Modernization of Traditional Chinese Medicine. In: Y. Thomas, M. Karki, K. Gurung and D. Parajuli (eds.). Himalayan Medicinal and Aromatic Plants, Balancing Use and Conservation. Government of Nepal, Ministry of Forests and Soil Conservation, Kathmandu, Nepal, pp. 70-78. n WHO 2002 . WHO Traditional Medicine Strategy 2002-2005. World Health Organization, Geneva, Switzerland. 61p. n WHO 2003. WHO Guidelines on good agricultural and collection practices (GACP) for medicinal plants. World Health Organization, Geneva, Switzerland. 72p. n Womens Role and Contribution to Forest Based Livelihoods. UN Inter-agency working group on Gender and Development, New Delhi, UNESCO-UNDP. 2002. New Delhi. India.
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Mohammad Nayeem Abdullah
Lecturer School of Business Independent University, Bangladesh (IUB), 12 Jamal khan road, P.O Box: 568, Chiitagong-4000, Bangladesh
ABSTRACT: The primary objective of this paper is to analyze if the Stock Market is overvalued. We studied prices of 17 actively traded companies in the Stock Markets from 2006 to 2010 and used three Valuation Ratios with an explicit corporate sector along with overall market index data and found that the Stock Market is overvalued. The analysis was completed in two stages. At first we analyzed each of the 17 companies to determine the condition of each company .This part shows that among 17 companies most of the companies' share prices are overvalued and they are also inefficient in managing costs. The second stage of the analysis is comprised of 17 companies share prices along with examination of capital accumulation in the corresponding period. This result also shows that the stock market is overvalued. From my analysis a relationship has been found between mass capital accumulation and Stock Market Overvalued. Keywords: Stock, market, Bangladesh, overvalued INTRODUCTION Bangladesh Stock Market has been the subject of significant changes in recent years. DSE has also taken significant steps towards the development of its capital market. The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments. History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Measures have been taken for privatization, economic liberalization, relaxation of foreign exchange controls, and easing of regulations on repatriation of profits, investment, and operation of financial institutions (Ghazi and Khoda, 2009). There are two Stock Markets in Bangladesh-Dhaka Stock Exchange and Chittagong Stock Exchange. The Dhaka Stock Exchange (DSE) was first incorporated as the East Pakistan Stock Exchange Association Limited on April 28, 1954. It was renamed as Dhaka Stock Exchange (DSE) Limited on June 23, 1962.After liberation when Dhaka Stock Exchange resumed trading activities in 1976, only 9 companies were listed having a paid up capital of Taka 137.52 million on the stock exchange. By the end of 2005 number of Securities listed on DSE became 260 with market capital of Taka 228,574.85 million.. At present, there are 297 companies are enlisted in DSE (http://www.dsebd.org/company%20listing.php) that covers 18 industries (Bank, Cement, Ceramics Sector, Corporate Bond, Debenture, Engineering, Food & Allied, Fuel & Power, Insurance, Investment, IT Sector, Jute, Miscellaneous, Paper & Printing, Pharmaceuticals & Chemicals, Services& Real Estate, Tannery Industries and Textile. Asset price bubble is an economic phenomenon in which values in a particular sector become inflated for a short period of time. If the bubble burst, prices in that sector fall (Chapman, 2007; Knight 2002). Yet, this is hard to predict when this will happen (Black 2002).A description of Stock Market bubble is seem to be more useful in Kindleberg (1987) which notes positive feedback and price increases greater than justified by Market fundamentals. A stock Market is
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an economic bubble which occurs when Market participants drive stock prices above their value in relation to some system of stock valuation(see Figure-3).A bubble occurs when speculators note first rise in the stock value and decide buy in expectation of further rises rather than because shares are undervalued. Numerous factors have been responsible for the formation and collapse of stock Market bubbles from early times. One is the availability of easy credit approval and fungible investments funds that are invested in the stock Market for buying company shares (Craven and Islam, 2008). Intermediary effects imply two things- one the one hand, there are interlinks between consecutive or successive bubbles (Allen and Gale 2002) and also some mediatory dynamics cause to shape the bubbles on the other (Craven and Islam 2008).Intuitively. these interlinks can be interpreted as an existence of a long memory or long range dependence of intermediate factors and stock Market bubbles (Ashraf and Rodriguez, 2006). There were also flows of information between London and Paris and other Financial centers in Europe such as Amsterdam and asset price movement were independent(Craven and Islam ,2008).Similar Observation has been shared by Rahman (2010) in the case of Dhaka Stock Exchange (DSE) in which painful memories of 1996 bubble is linked with the recent-scenario of the highly inflated asset prices in early 2010 that is being termed as bubble because DSE has been risen by nearly 125 percent over the period from March 2009 to February 2010.Many times the asset price bubbles might result in economic downfall (Lewis et al 2010). While empirical tests of return-volatility behavior and Stock Market overvaluation are plentiful for developed stock markets, the focus on developing and emerging stock markets has only begun in recent years. The interest in these emerging markets has arisen from the increased globalization and integration of the world economy in general and that of financial markets in particular. The globalization and integration of these markets has created enormous opportunities for domestic and international investors to diversify their portfolios across the globe. As a result, rigorous empirical studies examining the efficiency and other characteristics of these markets would be of great benefit to investors and policy makers at home and abroad. This study is important for a number of reasons. First, to the best of our knowledge, this is the first study of this kind for the Bangladesh stock market. Second, it utilizes the share prices of 17 actively traded companies being operated in Bangladesh. Third, the results of this study will be of interest to academics, policy makers and investors both at home and abroad. Finally, it may also be useful for international organizations (such as the World Bank) and foreign governments who are interested in the development of capital markets in emerging countries. LITERATURE REVIEW The United States experienced the Nasdaq bubble in the late 1990s. The fluctuations in heterogeneous beliefs generated by overconfidence among Bangladesh investors led to larger speculative component in stock prices, and the technical bubble of the U.S. stock market was identified as the result of "irrational exuberance" (Shiller, 2000; Chen, Hong, and Stein, 2002). Given that markets in the advanced economies seemed to be more susceptible to speculative bubbles and crashes, and many emerging stock markets also display similar evidence, it seems reasonable that no one should look forward to these phenomena disappearing from the Bangladesh markets (Ahmed et al., 2006). There are many literatures investigating stock market valuations. Traditionally, stock valuation literature in accounting focuses on the fundamental value measures that address simultaneous prices and returns. Prior researches in the accounting literature such as Abarbanell and Bernard (1995) investigated the empirical properties of the residual-income formula to explain crosssectional prices. Empirical studies by Frankel and Lee (1998) show that better pricing fit than the traditional dividend discount model as well as better predictive power than financial ratios analysis can be realized by the multi-stage residual income model. For example, Dong,
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Hirshleifer, and Teoh (2007) measured misevaluation as the deviation of market price from the fundamental value. They believe intrinsic value reveals a discounted value of analyst forecasts of future earnings that reflects growth prospects and opportunities. Thus, normalizing market price by intrinsic value which sorts out the extraneous effects of the firm's growth provides a purified measure of misevaluation. Their measure of stock market misevaluation minimizes the confounding of misevaluation effects and growth opportunities existing in many stock market and investment studies. Their findings indicate that firms respond to overvaluation by investing more. Overall, the authors applied a forward-looking fundamental measure and obtained a general measure of market misevaluation which sorts out growth effects. The stock valuation literature in finance focuses on the ability of the fundamental measures to forecast future returns. For example, Fama and French (1988, 1989), and Campbell and Shiller (1988) examined the relationship between market multiples, such as book-to-market ratio or dividend yield (dividend/price) and subsequent market returns. The authors emphasized on forecasting returns by simple valuation measures predictability of market returns. While empirical tests of return-volatility behavior and Stock Market overvaluation are plentiful for developed stock markets, the focus on developing and emerging stock markets has only begun in recent years. The interest in these emerging markets has arisen from the increased globalization and integration of the world economy in general and that of financial markets in particular. The globalization and integration of these markets has created enormous opportunities for domestic and international investors to diversify their portfolios across the globe. As a result, rigorous empirical studies examining the efficiency and other characteristics of these markets would be of great benefit to investors and policy makers at home and abroad. Glassman and Hassett (1999) questioned the reason why the stock prices kept keep increasing when the stock market was thought to be fully valued or on the verge of a crash. The authors believed the incredible returns that stocks produced came from recognizing that stocks had been far riskier than bonds and as a result generates more returns. Glassman and Hassett (1999) think that stocks are terrific investments and investors are gradually shrinking the risk premium toward where it should be. They believed that investors are bidding up the prices of stocks because they are catching on to the true riskiness of stocks and hoping to have a higher return to compensate for that risk. Their anticipation of the Dow Jones Industrial Average to end up at 36,000 was considered extremely dangerous because people would get irrationally exuberant when they see the news and jump into the stock market without proper preparation. Shiller (2000) claimed that there was a bubble in the U.S. stock market, mostly because of psychological factors or "irrational exuberances" which are frequently used to illustrate a heightened state of speculative fervour. Shiller summarized the evidence against rationality of the stock market. Most of the evidence engages in the predictability of returns. For instance, subsequent ten-year returns are likely to be lower when stock prices are high relative to earnings. Shiller also argued that there are obvious pricing errors due to noise in stock prices since actual stock prices are more volatile than the present discounted value of actual dividends. In line with Shiller (2000), other researchers also discussed how price movements are led by social processes in a non-stationary environment or irrational market and that individuals value other person's opinion in assessing probabilities. For example Chen, Hong, and Stein (2002) analysed the overvaluation generated by heterogeneous beliefs. The authors concluded that the stock market overvaluation was caused by the investors' overconfidence. Campbell and Shiller (2001) showed that stock prices are probably overvalued based on the dividend-price and price-smoothed-earnings ratios. According to the authors, the extreme valuation ratios outside their historical range over the late 1990s poses a challenge to the
23
traditional opinion that equity prices resemble a sign of rational expectations and that they are substantially motivated by mean reversion. However, Campbell and Shiller disagreed that the traditional valuation levels and argued that their findings showed a poor long-term stock market outlook. METHODOLOGY The main objective of this paper is to analyze whether Stock Market of Bangladesh is overvalued. There are a variety of ways to calculate whether the stock market is overvalued. The data for this study has been collected from different companies listed in the DSC 20 list. To compare the Real price with the projected price of the companies we have considered the Earning per share model, Cash Flow per share model and Sale per share model. The calculations have been done on the basis on the secondary data. There are several stock valuation models. The most popular and simplest technique for stock valuation is comparing the market's P/E (price earnings ratio), P/CF ratio and P/S ratio to historical averages.( EPS, CFPS, SPS). For the analysis purpose we have resorted to secondary data. The sample includes stock prices of actively traded 17 companies of Bangladesh in both DSE and CSE. Stock prices of each company are taken for 2006, 2007, 2008, 2009, and 2010. Among the Banks include (Dhaka Bank,Islami Bank, National Bank Limited, Prime Bank, Southeast Bank), Leasing Company (Uttara Finance),Pharmaceuticals include(Square Pharma) and other companies include(Aci,Amcl Pran,Apex tannery Ltd,Bata Shoe,BatBc ,Bd Lamps,Boc,GQ Ball Pen, Megnament and Monnocera,SingerBd).lastly forecasted share price is compared with market price of the November 27th ,2011 share price (www.dsebd.org). Long horizon historical researches on equity prices examined how firm and investor performances have changed over time and across economic conditions in an attempt to better understand what factors drive value. In order to understand how investors value financial assets, Foerster and Sapp (2006) examined stock valuation using fundamental valuation methods and compared it to the actual price for equity over a long period of time. In the process of evaluating the level of pricing errors which is defined as the differences between the actual price levels for the index and the expected prices, they find that the mispricing level is normally connected with changes in economic and price-related factors. The relationship between these factors and the short-term fluctuations in actual prices around the expected price indicates that investors' expectations indeed play a significant role in asset pricing. FINDINGS At first we analyzed each of the 17 companies individually based on the P-E ratio, P-CFPS ratio and P-SPS ratio. This analysis shows stock price overvaluation for majority of the companies while undervaluation for some other companies. Then to have a better understanding of the overall Market direction, we combined the three types of valuation ratios on the year basis (Table 1). TABLE: 1 Average yearly ratio YEAR P\EPS P\CFPS P\SPS 2006 12.09 14.61 3.59 2007 13.15 29.80 6.01 2008 29.93 56.91 70.95 2009 47.19 55.95 7.61 2010 34.84 49.09 10.21 We began by examining behavior of the data over time. As indicated by Table 1, in which average yearly ratios are presented for the last five years. Over the 5-year periods, the three types of ratios show increasing trend. One reason for this increasing trend, maybe, that with their
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increasing emphasis on growth, these firms have increased earnings retention ratio, reducing dividend yield. At the same time their initial success and market's expectations that they would continue to succeed in generating high growth rates pushed price earnings ratio to historically high levels. This is reasonable because investors have been willing to accept these tendencies because of the increased availability of means of risk reduction. Another reason may be that a sudden influx of funds and a surge in retail investors are pushing the DSE index forward without regard to economic fundamentals. The Index which was at 2941 in August in 2009 has crossed 5800 points in February 2010 (see figure 1), or a growth of 98 percent. Figure: 1 Trend in Market capitalization in DSE from January 1 2004 to June24, 2010
3000000000
2000000000 1000000000
1 74 147 220 293 366 439 512 585 658 731 804 877 950 .023 .095 .169 .242 .315 1.388
This surge is certainly not normal and cannot be explained by economic fundamentals (Rahman 2010; Mansur and Hoque 2010). Market capitalization (total number of shares times the average market price of shares) in August 2009 was Tk 1307 billion and February 2010, it has risen to tk2366 billion, recording an increase of 81 percent within the 5-month periods. Just to put it in proper perspective, the market capitalization was only TK97 billion in Dec 2003 before the beginning of the current Bull-Run. The daily average turnover showed a similar trend, increasing from Tk.14 billion in Dec 2003 to Tk 12 billion in Jan 2010 and further to Tk 14 billion in the first half of February. In 2009 Daily turnover did not fell below Tk 10 billion Which was a miniscule Tk.26 billion in 2004 (Mansur and Haque,2010). While the supply of stocks is almost unaffected, except for the launching of Grameen Phone IPO in November 2009, pressures in stock prices are exerted from the demand side. Among many factors, huge numbers of new investors with fresh funds are primarily responsible for this price pressure. During 2009 period on an average of 12000 new investors are joining the market everyday(Mansur and Hoque ,2010).Huge amount of fresh money are being channeled into stock market through these new accounts, undoubtedly pumping the stock market balloon to grow bigger almost every day. If the average account size is Tk .1 million, everyday Tk 1.2 million are being poured into the market, mostly by the retail investors (Rahman, 2010). Table: 1 shows an increasing trend in the three types of ratios being analyzed. From that particular data drawing any conclusion whether the stock market is overvalued or not is difficult and in many cases may result in many contradictions. For the purpose of more accuracy and authentication, I have particularly analyzed numerous factors such as Market Capitalization, Number of BO account holders in the DSE, which is the largest stock Market in Bangladesh, in the corresponding periods. The particular data showed erratic increase in Market Capitalization and BO account holders in the corresponding periods (2006-2010). We could observe that the stocks are mostly overvalued and when undervalued the prices are too low. (Look at tables 2, 3 & 4)
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TABLE: 2 EXPECTED STOCK PRICE OF THE COMPANIES UNDER DIFFERENT RATIOS Company Names ACI AMSL PRAN APEX BATA SHOE BATBC BD LAMPS DHAKA BANK GQ BALL PEN SLAMI BANK MEGNA CEMENT MONNO CERAMIC NBL PRIMEBANK SINGERBD SOUTHEAST BANK SQUARE PHARMA UTTARA FINANCE BOC 169.095 798.3657 562.7131 646.295265 46.8459 198.9489316 4550.19 4116.67 4164.57 472.7394 311.1055098 543.6509669 526.8330954 1437.146677 52.5989484 8446.972 672.74963 4283.739602 552.4263354 6006.666655 361.7748811 145.4728884 396.3058955 6070.443419 441.9598 970.38 159.3997631 721.05 171.2615506 1695.32 49.2546288 103.49105 291.5066436 1852.276 2027.913946 1902.777041 953.28991 711.212236 766.849378 1294.90893 500.120491 1294.90893 470.5059584 353.62 459.615625 p/eps 372.8998 1276.0954 p/cfps 66.96704 2354.5173 p\sps 485.3594 3267.6125
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TABLE -3 CALCULATIONS OF P-ERATIO,P-CFPSRATIO AND P-SPS RATIO ON YEAR BASIS

2007 g p\e 9.5 10.92 17.03 9.42 11.15 15.32 15.52 2.9995 2.8616 18.31 2.8719 1.79312 13.4 0.8634 6.10 1.54 14.30 7.17 1.47 22.77 555.35 2.17 0.30374 9.7 11.2 7.25 7.2 7.3 11.87 11.1 11.5 10.11 0.77 9.76 11.86 0.95 16.08 17.20 1.45 16.46 14.93 30.50 16.3 22.2348 0.1797 38.25 398.704 0.36614 12.34 6.62669 1.13598 15.84 5.0166 11.0587 25.33 12.4680 31.0171 27.32 35.8243 30.3982 31.46 12.4763 51.6231 17.74 15.3 197.99 1.8553 2.9890 .5077 7.8 38.4900 0.7019 8.8 -14.4031 0.7387 12.2 50.009 p\c p\s g p\e p\c p\s g p\e p\c p\s g p\e p\c p\s 0.5293 12.476 1.3128 1.49 19.6 3.03 0.4818 2008 2009 2010 g
2006
COMPANY
p\e
p\cf
p\s
NAMES
ACI
7.4
1.0431
.2685
AMSL
PRAN
10.67
5.7790
7.5842
APEX
8.91
12.3812
0.1722
BATA
SHOE
6.00
5.12
0.43
BATBC
13.95
8.3
15.6
BD
LAMPS
10.26
1.53
1.10
DHAKA
BANK
10.31
3.2477
1.76205
GQ 10.03 22.08 22.08 8.77 14.03 14.03 5.08 12.87 9.37 2.97 165.42 19.97 2.57 23.33 25.82 12.87 4.61 5.28 42.81 17.86 19.87 55.22 5.61 7.78
BALL
PEN
23.96
1.28
1.24
ISLAMI
BANK
7.59
7.45
0.31
MEGNA
CEMENT 0 22.6 15.02 29.06 9.42 28.33 8.48 19.00 223.62 123.25 506.6704 5.72351 8.48 25.04 102.1439 263.9907 11.4223 7.16 3.02 9.76 44.88 8.14 11.00 3.5462 11.0436 12.29 1.04 4.33 12.4 3.28 19.03 8.64 9.8159 0 0 84.16 45.6489 4.05949 1102 7.7923 1.04 2.57 223.7549 13.5049 70.5829 90.81 8.14 15.82 508.74 967.3871 1206.17 543.09 8.88 10.69 24.42 16.08 23.43 16.97 12.00 802.34 47.4653 7.32 0.3682 1.37 12.81 4.92879 7.59 1.24182 1.47 5.14 150.8927 10.6751 14.13564 14.0206 65.53 26.69 951.1431 129.343 188.82 12.32 18.49 82.14 16.46 25.88 33.79 16.00 24.8932 21.3 0.7612 5.96 21.54 5.73896 15 1.74053 6.00 5.36 208.7905 11.0244 30.0914 99.07 592.265 834.49 42.9275 33.42 173.5219
MONNO
CERAMIC
35.65
15.3402
2.7994
NBL
12.07
4.997
3.65
PRIMEBANK
2.7104
6.3118
SINGERBD
SOUTHEAST
BANK
6.00
6.42
3.13
SQUARE
PHARMA
29.46
90.3717
11.16078
UTTARA
FINANCE
5.35
5.35403
5.35
BOC
9.00
77.13
0.26
27
total
205.58
248.454
61.12922
Table: 4
Sl.No. Name of the companies 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ACI AMCL (PRAN) APEXTANRY BATASHOE BATBC BDLAMPS BOC BXPHARMA DHAKABANK GQBALLPEN ISLAMIBANK MEGHNACEM MONNOCERA NBL PRIMEBANK SINGERBD SOUTHEASTB SQUARETEXT SQUAREPHARMA UTTARAFIN PROJECTED PRICE EPS MODEL CFPS MODEL TK.373 TK. 372.89 TK. 66.97 TK.1553 TK. 1276.09 TK. 2354.52 TK.1117.75 TK. 1294.91 TK. 502.61 TK.599.95 TK. 1294.91 TK. 502.61 TK.475 TK. 953.28 TK. 711.21 TK.1553.875 TK. 1852.276 TK. 2027.91 TK.621.9 TK. 798.36 TK. 646.30 TK.88.55 TK. 552.09 TK. 97.18 TK.44.3 TK. 49.254 TK. 103.491 TK.202 . 441.96 TK. 159.40 TK.643 TK. 970.38 TK. 721.05 TK.121.25 TK. 86.06 TK. 371.34 TK.479.5 TK. 526.83 TK. 672.75 TK.124 TK. 1437.15 TK. 145.47 TK.512 TK. 52.60 TK. 552.43 TK.2373.5 TK. 8446.72 TK. 6006.06 TK.305.05 TK. 472.74 TK. 311.11 Not Available TK.3016 TK. 4550.19 TK. 4116.67 TK.265 TK. 169.10 TK. 562.71 Real price SPS MODEL TK. 485.35 TK. 3267.61 TK. 353.62 TK. 353.62 TK. 766.85 TK. 1902.78 TK. 198.95 TK. 122.53 TK. 291.51. TK. 171.26 TK. 1695.32 TK. 494.94 TK. 361.74 TK. 4283.74 TK. 396.30 TK. 6070.44 TK. 543.65 TK. 4164.57. TK. 46.85
The reasons might be: 1. Stocks have recovered from the recession situation but the Bangladeshi economy hasn't. 2. Price of the stocks may have increased unexpectedly. 3. The experts' predictions and the current Stock market situation are not similar. 4. People are more interested investing in the purchasing stocks, so more money is finally flowing into stocks. 5. The companies might be using misleading information to value their stocks. Conclusion The Dhaka Stock Exchange limited has been generally bearish, except speculative run-up for six months during the later part of 1996, and the companies do not hold annual general meetings (AGM) as stipulated in company guidelines, nor do they declare dividends or invest the retained earnings in value maximizing investments. The primary objective of the paper was to analyze the weak form efficiency of DSE all share index and DSE Top 20 index and Day Wise index (Sunday, Monday, Tuesday, Wednesday and Thursday) and individual stock prices of the proxy companies (23 companies operating in the rapidly growing Pharmaceuticals industry). The result presented in the study shows that the hypothesis of the randomness of the stock returns are rejected for stock price index changes at all frequencies using Augmented Dickey-Fuller test. Basic assumptions of Efficient Market Hypothesis are violated for Dhaka Stock Exchange that means the DSE market is not efficient even in the weak form. The rejection of null hypothesis of random walk can be interpreted by the mean reverting tendency of stock market prices. The reason for the market inefficiency is also the poor institutional infrastructure, weak regulatory framework, Lack of supervision, and a lack of accountability, poor corporate governance, slow development of the market infrastructure, and low level of capacity of major market players, and lack of transparency of market transactions. The processing of new information in Bangladesh is rather weak, and may result from the persistent large number of non-actively traded shares, and the limited role of mutual funds and professionally managed
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investment and broker houses. As an institutional policy to improve the capital market, the timely disclosure and dissemination of information to the shareholders and investors on the performance of listed companies should be emphasized. The implication of the rejection of weak form efficiency for investors is that they cannot adopt a 'fair return for risk' strategy, by holding a well-diversified portfolio while analysts and institutional investors is a well known fact in the emerging markets like Bangladesh. BIBLIOGRAPHY
n (Abarbanell J., and Bernard V., 1995), Is the U.S. Stock Market Myopic? University of Michigan
Working Paper. n (Ahmed E., Li H., Rosser J. B., and Eastern Jr., 2006) Nonlinear Bubbles in Chinese Stock Markets in the 1990 Economic Journal, Vol. 32, No. 1. n (Allen and Gale 2002) Asset price bubbles and stock Market interlink ages-Working paper, Wharton school, university of Pennsylvania.usa. n (Ashraf and Rodriguez, 2006) Estimated Long Memory Fractional Parameter and impacts on the volatility of the financial Markets: some specualtions'North south Business review, 1(1) 1-16 n Campbell, John Y., and Robert J. Shiller (1998, 2001), "Valuation Ratios and the Long-Run Stock Market Outlook: An Update." NBER Working Paper 8221, April 2001. n (Chapman 2007) Evedence for a speculative Bubble in the clean energy Sector: an event study, Master thesis, Department of Economics, University of Shaffield, UK. n (Chen J., Hong H., and Stein, J. C., 2002), Breadth of Ownership and Stock Returns, Journal of Financial Economics, Vol. 66, pp. 171205. n (Craven and Islam, 2008) A Model for Stock Market Returns: Non-GaussianFluctuations and Financial Factors' Review of quantitative Finance and accounting, 30,355-370. n (Dong M, Hirshleifer, D., and Teoh, S. H. 2007), Stock Market Misvaluation and Corporate Investment, Unpublished MPRA Paper, at http://mpra.ub.uni-muenchen.de/3109/ n (Fama E. and French K., 1988), Dividend Yields and Expected Stock Returns, Journal of Financial Economics, Vol. 22, pp. 3-25. n (Fama E., and French K., 1989), Business conditions and expected returns on stocks and. Bonds, Journal of Financial Economics 25, pp. 2349. n (Frankel R. and Lee C. M. C., 1998), Accounting Valuation, Market Expectation and CrossSectional Stock Returns, The Journal of Accounting and Economics, Volume 25, pp. 283-319. n (Foerster S. R. and Sapp S., 2006), Dividends and Stock Valuation: A Study From the Nineteenth to the Twenty-First Century", retrievable at SSRN: http://ssrn.com/abstract=890445. n (Ghazi and Khoda, 2010) An Empirical Examination of Random Walk Hypothesis for Dhaka Stock Exchange: Evidence from Pharmaceutical Sector of Bangladesh International Research Journal of Finance and EconomicsISSN 1450-2887 Issue 33 (2009) Euro Journals Publishing, Inc. 2009http://www.eurojournals.com/finance.htm n Glassman, James, and Kevin Hassett (1999) Dow 36000: The New Strategy for Profiting from the Coming Rise in the Stock Market. New York: Times Business, l999. n Rahman (2010) Bubble is DSE, Worg Press, and Dhaka. n (Kindleberg 1987) Bubbles in J.Eatwell, M.Milgate and p.Newman (Eds), The new Palgrave: A Dictionary of Economics, Vol.1.Stockholm press, Newyork. n (Knight 2002) A Bubble in the Mighty Mississippi: An application of a general Model of speculative bubbles of 1716-1720.Major themes in Economics spring. n (Lewis et al 2010) Was the 2008 financial crisis caused a lack of corporate ethics? Global Journal of business research, 4(20), 77-84 n (Mansur and Hoque, 2010) Stock Market: A ticking Bomb, The Financial Express, February, 19. n Shiller, Robert J. (2000), Irrational Exuberance (Princeton, N.J.: Princeton University Press).
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Jesus Vicens Introduction Reciprocity In ancient cultures, reciprocity was the balance in the flow of nutrition between the human community and the extended community. David Abram, a US ecological philosopher defines reciprocity as follows: The traditional or tribal shaman, I came to discern, acts as an intermediary between the human community and the larger ecological field, ensuring that there is an appropriate flow of nourishment, not just from the landscape to the human inhabitants, but from the human community back to the local earth.1 The extraordinary importance that the animistic cultures attributed to the natural environment as the provider of support for all living organisms, including humans, is pertinent to the contemporary world. Today, ecological systems are in danger of disappearing and collapsing, in spite of their enormous economic value. The close relationship between the community and the territory, which oral cultures created to structure their social life, has a special relevance in the present environmental crisis. This relationship involved rivers, stones, birds, mammals, plants, trees, forests, mountains, coasts, even the winds, clouds and local rainfalls. In fact, it embraced everything that constitutes a landscape. This proximity between humans and the natural environment has led to perceptions of the value of these cultures to humanity, as they have something in common with all societies and organisms, in terms of their inspiring services to the community and their spirituality. Their example encourages humanity to establish roots in nature and in the connections that make us part of the local place and of the Earth. Without losing the wider perspective of the globalised planet or the cosmopolitan experience of the universal, this approach to a specific landscape strengthens our bonds with the Earth, which have been weakened by globalization. Such close relationships with the landscape can inspire an approach to ecological challenges that is different to those focused on consumption, or on a consideration of nature as a warehouse of resources. A reciprocal deal with the environment, similar to the one that members of the ancient communities had, ensures balanced sustenance for all organisms in a place, without taking more than is necessary. At this stage, we will not analysis the development and the value of the material transformation of natural resources into consumer goods. Instead, we will consider how the cosmological terms of a reciprocal relation with the territory surrounding a human community affect the current ecological crisis. For example, the community rituals that are guided by shamans to ensure that the relationship between humans and the global community of beings is balanced and reciprocal also guarantee: that the village never takes more from the living land than it returns to it not just materially but with prayers, propitiations, and praise. The scale of a harvest or the size of a hunt is always negotiated between the tribal community and the natural world that it inhabits. To some extent, every adult in the community is engaged in this process of listening and attuning to the other presences that surround and influence daily life.2 Reciprocity versus sustainability Sustainability is the contemporary concept used to deal with imbalances in ecosystems and natural resources. It is ambivalent and it is most commonly used in reference to the scope of the economy. In contrast, the ancient culture's concept of reciprocity can aid understanding of the
1 2
David Abram, 1997. The Spell of the Sensuous, New York, Vintage Books Edition, p. 7 David Abram, 1997, p. 7.
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risks of the present ecological problems. This approach indicates that the worldwide problems of food, basic water, resources, contamination and climate change are rooted in the way we relate to nature and living organisms. The domination of northern communities, as well as the relations between cultures, reveal that there are deep breaks with natural rhythms and the logic of nature and with the cultural rhythms and the logic of the diversity of human communities that populate the planet. The balance in the flow of nutrition between the environment and the human community has broken, both in terms of food production and people's mentality. The wealthy accumulate money and resources, which increasingly creates a closed system. The social, environmental and economic balance has been destroyed. The economic development of the last century has been unsustainable and has generated much poverty. Economic indicators must be analysed, in order to confront the crisis and to attain the objectives of satisfying global needs and reducing poverty. However, such indicators must reflect reality and not hide it. The markets, governments and civil society must receive real indications of what is happening to social welfare and the environment, instead of information to numb the misery that can be found in all societies today and the constant threat of violence and wars. We want to emphasise the importance of a worldview. Our approach and perspective will affect the level of understanding that we can attain. In other words, sustainability needs cosmological principles to confront the ecological crisis. We can learn a lot from ancient cultures. The values of a society are important, as they can help us to decide on courses of action that lead to a more sustainable lifestyle. Consumption, for example, which is the keystone of the modern lifestyle, has turned out to be dangerous, due to the high level of diseases that it produces, the violence and environmental destruction that it generates, and the lack of perception of interrelations that it involves: more consumption in one place causes more poverty in another. The suitability of consumption is questioned when the biological base of the Earth becomes impoverished. The aim of sustainability is to balance environmental conditions with data on the economy and social well-being. The objective is to meet present needs without reducing the opportunities for future generations to satisfy theirs. However, other values need to be added, such as that contained in ancient cultures' notion of reciprocity. We also need to understand the ecological problem in more depth. The mutual dependency between the Earth and the human community is as binding today as it was a million years ago. Modern industries and macro human organizations, such as metropolises, have affected the basic components of the planet's ecology. They have upset the chemical balance of the atmosphere by generating many pollutants, altered temperature regulation, decreased the biodiversity of the oceans and the Earth, and caused problems like acid rain, climate change, water diversion, toxic contamination, clearance of forests and a reduction in species diversity. These effects do not indicate that the economy and society is independent from the natural world. Rather, they highlight our vulnerability in our relations with nature. Dependency on the natural world is the same today as it was at the dawn of humanity. However, the degree of risk is incomparably higher, both for human groups and other species. Significant causes of this are rooted in the dark history of capitalism. In its first decades, capitalism moved and exploited entire communities. In the second half of the twentieth century, it has continued these displacements and operations, and has also led to the decline in vital ecosystems, which has put humanity and the biological wealth of the planet at risk. Thus, the reciprocity principle that guided the ancient cultures has been lost. The cohesive forms that these cultures used for their social life included shared oral narratives
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Jesus Vicens. 1995. El valor de la salud, Siglo XXI, Madrid. Jess Vicens, 2006. La vulnerabilidad social y ecolgica de la tecnologa in J. Vicens and ngels Canadell, La tecnologa desde la perspectiva intercultural. Girona, Documenta Universitaria, pp. 11-25
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and a sacred sense of the territory. Both of these factors created the main space for social relations, in which the voice of nature was very important. The sounds of stones, the trees and the animals, the evocative tones that could be heard in the distance in a valley, above a rocky crag or near the sea, reflected the moment in which events occurred, or indicated when it was the right time to transmit an experience. These forms of social articulation of the oral traditions were participative, and represented a social field for the members of the community. This discourse was always open to all members of the group. The forms, the gestures and the sounds were those of the surrounding ecology. You could only feel that you were a member of the community by participating actively in it. The cohesion established by participation in the surroundings and in the community led to perceptions of the variations in the natural world and the narration of these variations, which created a social world. The sensible, natural environment remains the primary visual counterpart of spoken utterance, the visible accompaniment of all spoken meaning. If we listen first to the sounds of an oral languageto the rhythms, tones, and the inflections that play through the speech of an oral culturewe will likely find that these elements are attuned, in multiple and subtle ways, to the contour and scale of the local landscape, to the depth of its valleys.5 Today, only a smal part of the animistic cultures and their depth remains. The leaders of some dispersed communities have resisted pressure from large multinational companies for the resources in their territory. The social resistance of some indigenous groups and the strength of their spirituality, which has some principles in common with all other religions, has meant that, although their way of living is being lost, interest in their conception of the world has spread to more people. Such communities' intellectual knowledge has been extended to the academic world. Knowledge transfer from reciprocity to the present concept of sustainability, is a hypothesis that enables us to understand the state of ecosystems beyond an analysis of economic indicators and reveals the urgent necessity of a cosmological vision of ecology. This hypothesis needs to be corroborated with empirical studies carried out by research groups worldwide, in order to verify whether the interdisciplinary concept of sustainability includes some aspects of reciprocity. Some papers have discussed ecology and spirituality. For example, the Centre for the Study of World Religions at Harvard University has published a series on Religions of the world and Ecology.6 An approach to animism can help to deal with the question of natural balance with the human community. The ecological movement that began in order to preserve and protect the environment has reached a level of political and economic thought. However, it has still not entered the cosmological field. This paper aims to contribute at the level that addresses how we perceive and understand the world. To the reciprocity between the Earth and the human community and to the social cohesion of the shared oral narrative, we should add a third economic principle: a sense of measure. Taking care of the environment involves looking after all living communities, including the human one. The convergence between human food resources and the provision of food for all of the organisms in the surroundings is a basic component of reciprocity and a central factor in the concept of sustainability. The Millennium Project proposes reducing the poverty of 150 million people by 2015, particularly in city suburbs. In addition, the aim is to provide universal access to clean water, as well as healthy and safe foods; to reduce waste; to reach the objective of zero
David Abram, p. 140. Mary Evelyn Tucker and Ducan Ryken Williams. 1997. Buddhism and Ecology. The interconnection of Dharma and Deeds. Harvard University Press, Cambridge, Massachusetts. Dieter T. Hessel and Rosemary Radford, Ruether, 2000. Christianity and Ecology. Seeking the Well-Being of Earth and Humans, Harvard University Press, Cambridge, Massachusetts. 7 Worldwatch Institute, 2007. State of the World. Our urban future, New York, Norton and Company, pp.154-155.
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emissions in production processes and consumption; and to recycle reusable materials. In addition, the Millennium Project promotes equality between men and women and reaffirms the basic rights of health, education, housing and security.7 Global economic relations: risks and inequalities The world today is at greater risk than it was at the end of 19th century. The economy grew more than ever before in the 20th century, particularly in its last three decades. However, environmental hazards also increased in parallel, including toxic substances, contamination, adulterated foods, acid rain and ozone layer depletion. Even greater risks that were not considered by the economy include climate change and loss of biodiversity. These problems have accelerated the symptoms of tension between the results of economic growth and the unexpected forms of ecological decline. The increase in temperature is going to affect animal species and flora in a way that will alter biological cycles and the food chain. It is also destroying the coral reefs that house impressive biological diversity. The melting of the ice caps in the Arctic and the Antarctica is going to cause an increase in sea levels, which will threaten coastal cities worldwide, including those that symbolize capitalism, such as London, New York and Tokyo. Climate change will also increase the occurrence of the most destructive storms.8 The ecological crisis, the changing ecosystems and the decline in the diversity of species are part of the second phase of the dark history of capitalism. The first phase involved inequality, exploitation and poverty. The second phase includes ecological degradation and its impact on poverty and inequality, which both increase when natural resources are the focus of interest. Ecological deterioration has increased inequality between rich and poor regions, between the north and the south. It is evident that the crises (the ecological, labour market and economic crises) overlap and reinforce each other. This raises global ecological issues in continuation of social issues such as poverty and class in the industrial period of capitalism, within the context of the nation state.9 One of the main causes of violence in the 20th century was access to natural resources. There was no regulation and little civil society opposition in the rich countries that were responsible for exploiting resources. The sacking of territories led to exiled communities and marginalized societies, as a result of access to minerals or power plants. Michael Renner, who researches this subject, indicates that conflicts in Angola, the Republic of Congo, Indonesia, Papua New Guinea or Colombia, among others, are related to places that have environmental resources of great value. There is now more awareness about the relation between the illegal extraction of resources and arms trafficking, conflicts, humanitarian disasters, violations of human rights and environmental destruction. Angola, Congo and Sierra Leone are cases that have been investigated by the United Nations and have lead to awareness campaigns against the so-called diamonds of death. The practices of many companies are analyzed thoroughly by international civil society organizations, due to their involvement in the uncontrolled proliferation of small arms. In many places, looting for petroleum, minerals, metals, precious stones or special wood has occurred that has provoked continuing wars for these resources, leading to many injustices. Such problems are ultimately caused by the rich countries.10 Global economic relations have broken the principles of reciprocity between the natural world and the human community. They have destroyed the cohesion between members of a
Lester Brown, 2000. Ecoeconomia, Barcelona, Centro UNESCO de Catalunya, p. 27-39. The last report of the Intergovernmental Panel of Climate Change (IPCC), 2007. Available on the Internet. 9 Ulrich Beck, 2008. La sociedad del riesgo mundial, Barcelona, Paids, p. 128. 10 Michael Renner, 2002. Trenquem el nexe d'uni entre els recursos i la repressi, en L'estat del mn, Instituto Worldwatch, Barcelona, Centro UNESCO de Catalunya, pp. 153-178.
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community, which is based on the relationship with the natural surroundings. They have prevented a sustainable economy from being attained, which would promote equality between regions of the world and focus on future generations. They have globalized risks, increased violence and created greater inequalities. Reciprocity in the global context The importance of reciprocity is linked to the notion of sustainability. The question is what must be sustained. If the idea is to maintain the status quo, then all we need is a modern ecology. We need to adapt consumption needs and the production system in order to increase the productivity of resources and to avoid damage to ecosystems. In this scenario, ecology and economy must be interrelated. In contrast, if what needs to be sustained are ecosystem services, we need to recover the knowledge that is contained within the notion of reciprocity and the knowledge of communities. We need a deep cultural change that can influence production systems and social structure. This involves a change of mentality that affects the roots of our knowledge. We cannot hesitate to apply sustainable economic policies, in response to data on the state of the world in natural areas, forests and wetlands and information on the effects of climate change. However, adapting the capitalist system to meet these environmental needs is not the same as examining the the crisis of the ecosystems in depth and translating this knowledge into policies that unmask the errors of capitalism. In ancient cultures, reciprocity referred to the mutual relationship between Earth and humanity or between nature and society. Today, we need to create a mutual relationship between the reality of the Earth and the capacities of cultures. The second question that we must ask is abour power relations. Who should manage sustainability? If we wish to maintain the status quo, then sustainability should be managed by governmental institutions and the experts who work for their agencies and departments, or by private companies that are specialized in the management of natural resources and sustainability and are contracted by the institutions. Nevertheless, if ecosystems are to be sustained for the services they provide, then perhaps they should be managed by the people in the places, in other words, by the communities and social movements. Experts would still be needed, as many work for the communities and social movements, and institutions would still exist, as many have introduced participative action at local level into their budgets and into decision-making that directly affects citizens. However, instead of a centre made up of governors and their expert advisers, we would need a centre in which governors include civil organizations and social leaders in their management, and in which experts move with more facility from one place to another. For example, natural areas whose high biological or environmental value is determined by the research of scientists and experts would not be preserved and protected from human intervention. Instead, we would understand that the communities who live in such areas have very valuable knowledge that can aid preservation and improvements. These communities know haw to manage the protection of the area if the suitable financial resources are provided and if they are included in the decision-making process, along with the experts and governors. Ancient cultures are an extraordinary source of knowledge and experience. However, we must also consider the knowledge that comes from research into complexity, biomes, the organization of living systems and other disciplines, as this contributes to information on economic and social management. Some contemporary scientists are not happy just to maintain the status quo, or to work for institutions that keep power in the upper classes. Some want to maintain ecosystem services and to work for the communities. The International Union for the Conservation of Nature (IUCN) was founded 60 years ago within
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the framework of the United Nations. It brings together government institutions, nongovernmental organizations and indigenous communities. It has generated much scientific and social knowledge, and represents a forum for debate. This organisation has also discussed the issue of what must be sustained and who must be responsible for sustainability. A modern ecology would involve maintaining the capitalist system, although with an awareness of the need to preserve intact natural areas, in order to meet the requirements of the system. In this case, engineering efforts to make more efficient energy and to reduce contamination would continue to be important, in the same way that global production has generated an impressive labour force with the prices stipulated by the multinationals. This approach would maintain the levels of production, consumption and earnings in an economic system that is controlled by major managers of capital, who must now face up to environmental issues. However, the ecological crisis can also be seen as an opportunity to change the economy and lifestyles. This involves confronting the dogmas of consumption and globalization, as these concepts have led to environmental deterioration and injustice, and to fighting over natural resources. The current economic system is causing the collapse of basic natural systems. We need to clarify this issue. We must accept the importance of developing the Living Planet Index (LPI) for the well-being of all and the Index of Human Development (IHD), with its levels of satisfaction and happiness. This requires a dramatic change in thought, as well as in civic and political action. It is essential to consider the principles of natural systems, such as interdependence, no duality, cohesion, dynamic balance, cycles and nonlinearity, which we will discuss in more depth later in this paper. The limits of natural resources give human society a new opportunity to value nonmaterial satisfactions. They give us the chance to develop human well-being in a more qualitative sense, in which we consume less and live better, and to develop an economic approach that respects these limits. Happiness is not only related to income and material consumption, but also to the quality of life that comes from natural systems, human sociability and spiritual values. This notion of happiness involves a significant change in our conception of the economy, as it can only be achieved by maintaining natural limits, rhythms and a lifestyle that returns to more moderate consumption levels, a better distribution of resources and a balance with the ecosystems. Why not earn less, spend less and have more time for family and friends? People would live betterand more equitablyand at the same time the impact of humanity on theenvironment would be reduced.11 Sustainability should recover important ecosystem services. The idea is not to adjust to the system, but to change the system. We should investigate cosmologies from within, to discover their potential and to extend their field of reference. Thus, we can create a dynamic balance between human community and the natural world. These ideas can be found in the Voluntary Simplicity philosophy of life of the 1970s. In addition, they can be seen in the philosophy of Mahatma Gandhi, who encouraged people to live a simple life in order to make other people's lives possible. A simple external life involves less consumption, but is internally rich, in terms of people's deep nature. Those who lead this kind of lifestyle feel rewarded when they participate voluntary in activities that increase common well-being or in actions that favour others by simply helping them to live. Most of these activities are non-material. Pople who live simply respect the environment and others, aim for subjective well-being and consume less. The strength of reciprocity is always local; it concerns the human community that lives and develops in a specific territory. However, the references and world views constitute a cosmology
11
Tim Jackson, 2008. El repte dels estils de vida sostenibles, in L'estat del mn. Instituto Worldwatch, Barcelona, UNESCOCAT. p. 63
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in itself, a specific way to see the world, to develop in it and to become a community. The strength of sustainability is global, it make us aware that the current world order is under the pressure of climate change, species loss, water and air pollution, soil toxicity, poisoning of the sea floor and the death of reefs. The reality of the global environmental crisis is that 50% of the world populationmainly in the southern hemisphereare on the brink of an abyss. Local food policies, renewable energy, access to clean water, zero carbon homes and collective transport, are sustainable policies that can help to alleviate problems in the south and the economic recession in the north. They represent a change in the international order that can tackle the environmental deterioration of the Earth. If we combine the strengths of reciprocity and sustainability, that is, the specific experience of the territory in the first case and a general understanding of the state of the world in the latter, we have a good basis for a change in the roots of a failing economic and social system. Reciprocity makes us aware of the interdependence of human society and the Earth, which must be restored. Sustainability involves commitment to a complex relationship between the environment and the economy, based on biological wealth, and the ecosystem services that are used by all organisms. The use and management of resources and of natural services require shared commitment. This change of mentality should be supported by economic policies that shift the balance from the production of goods to an economy of services, which reinforces the self. The environment as the basis of economic and social well-being The discourse about sustainability began with the Brundtland Report in 1987 to prepare for the Earth Summit. This report defined sustainable development in terms of the scope of human well-being, environmental conditions and economic data. It linked these three factors in a mutual system. The economic data on growth or employment, for example, make sense if they are interpreted in terms of environmental conditions. Environmental deterioration indicates that the positive data sent to people and institutions are erroneous. Simultaneously, economic data and environmental conditions must be analysed with respect to human well-being. If there is dissatisfaction and disease at the end of the productive and commercial process, then there has been no real development. Sustainable development occurs when economic data are associated with environmental improvements, such as renewable power plants, and these improvements are reflected in human well-being, for example, in the community management of energy without the need for a corporation. If one of these three factors fails, development has not occured. Today, two out of these three factors (environmental conditions and human well-being) are failing. Nevertheless, after more than 20 years of research and debate on this topic and with the results of global forums on the state of the world and environmental quality, we can update some aspects of sustainability to provide a better understanding of reality. The environment, ecosystems and the Earth (a landscape, a fluvial system or a climate balance, for example) are the correct level for development that must also be adapted to the economy and social development. In addition, they are the most basic level on which the social and economic structure should be built. They are the basis on which economies, societies and cultures are grounded. If ecosystems fail, due to their deterioration, contamination, disappearance, etc.as is currently occuring in almost all of the major ecosystemsthen economies and societies will also fail. In other words, the capacity to meet needs will fail, as will the different forms of human cohesion in communities, the cultures, cosmologies, values and meaning of what people do. The global environmental crisis makes us understand that the planet's biology is of central importance to the concept of sustainability, whilst the economy and culture are less significant. This is a more suitable perspective.
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Biodiversity Economy Culture
Although these three levels have a feedback relation, the biological core of the Earth, the diversity of species and their interactions with the river basins, the tropical forests, the coral reefs and all living organisms on the planet determines the quality or the deterioration of the economy and culture. Consequently, it is essential to reintroduce the cosmological principles of reciprocity within sustainability debates. Reciprocity is the physical interdependence of all living organisms with all the zones and systems that constitute the ecology of a place, living communities' links with other living communities, networks within networks, and shared boundaries instead of separate spaces, in which all living beings communicate and share resources. This is the reciprocity that occurs between all the components that constitute an ecosystem. At a social level, this is analogous to cooperative relations between people in order to integrate groups and communities.
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Understanding Competitive Advantage in Retail Banking Sector: A Case Study of Public Sector and Private Sector Banks in India
Dr. Jaskaran Singh Dhillon Director - Principal, Swift Institute of Management and Computer Sciences NH-1, Ghaggar Sarai, Rajpura, Patiala Abstract: The process of establishing a competitive advantage is at the heart of competitive marketing strategy. However, a competitive advantage cannot be established without a clear idea of what constitutes the relevant competitive arena. Theoretically, there are strong arguments for seeing both these processes as market driven, but in practice their implementation may present particular problems for financial services providers. The degree of complexity and intangibility which characterizes most financial services is generally thought to complicate the identification of a clear source of competitive advantage; it is also argued that these characteristics might affect the extent to which an organization may identify the appropriate competitive arena. Provides preliminary interview-based evidence on the extent to which the market-driven concepts of competitive advantage and competitive arena have been adopted in financial services and evaluates the extent to which they can be adopted, given the distinctive characteristics of many of the services concerned. Contends that the findings confirm the difficulties associated with the development of a clear competitive advantage and the relative unimportance of price; they also highlight the practical difficulties associated with defining the competitive arena as market driven. While these difficulties are common across the financial service providers interviewed, concludes that there is some evidence to suggest that market driven competitive arenas and sources of competitive advantage are more easily identifiable for specialist or niche players. Introduction Although still the subject of some debate, there is general recognition that many of the distinctive characteristics of financial services have important implications for the marketing process. The impact of service characteristics on marketing activities has been investigated in relation to marketing tactics (advertising, pricing, etc.) and in relation to broader strategic issues such as service quality, but the subject of developing competitive strategy has received rather less detailed attention. Central to the development of a competitive marketing strategy is the definition of the competitive arena and the identification and communication of a competitive advantage. There are strong arguments to suggest that both constructs should be defined in a customer-centered way: competitive advantage must be built around attributes that customers value; and the competitive arena should be based on products which consumers perceive as substitutes for each other. Thus, where organizations operate in different markets and consumer needs differ across those markets, it is important to recognize that competitors may be different. Furthermore, with different competitors and different customer needs it may be appropriate to develop different forms of competitive advantage in each market. For example, in financial services, organizations which have separate entities with which to deal with private clients, such as ICICI Bank, HDFC Bank, IDBI Bank (Private Sector Banks) etc, are seeking to establish a competitive advantage in the market for wealthy clients which is different from that of State Bank of India (SBI), Punjab National Bank (PNB) (Public Sector Banks) etc which they would use in their mass markets; and they will establish it in relation to different sets of competitors. This paper suggests that organizations in the financial services sector face particular problems with respect to the definition of their competitive arena and the identification of the source of competitive advantage, and that these problems
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may be related to certain service characteristics, most notably the degree of intangibility and of complexity. In particular, it is generally recognized that the inability to patent services and the ease of copying largely preclude the use of service features as a basis for competitive advantage. Furthermore, the recognition among managers that many financial services are highly complex (or are perceived as such) may make it difficult for those managers to adopt a customercentered view of the competitive arena. To examine these issues in further detail, the paper begins with a review of the issues associated with operationalizing the concept of a market and defining competitive advantage. The empirical analysis seeks to identify the extent to which financial services organizations have been able to adopt a customer-centered view of markets and competitive advantage, and the barriers to so doing. The final section identifies some preliminary conclusions and managerial implications. The Competitive Arena and Competitive Advantage An informed discussion of competitive strategy can take place only once the appropriate unit of analysis has been established. Once it is recognized that competition takes place between companies' offerings and not the companies themselves, it becomes apparent that a "market" focus is appropriate. As most marketers would recognize, the offering, which is presented to potential customers through the market, is the primary focus of competitive strategy. While accepting that the resources and reputation of a company may add value to an offering, this does not alter the fact that customers choose between offerings. For a particular bank/company which has offerings in a number of markets, it is unlikely that the competitors offering alternatives in each market will be the same. That is why the notion of two banks/companies in competition may be unhelpful and even confusing. Indeed, marketing and strategy writers often use the terms "market" and "industry" interchangeably (Curran and Goodfellow, 1990). The two terms have different applications: the former is a supply-side concept, while the latter is demand-oriented. To address this ambiguity, Mathur (1988, 1992) introduced the concept of the "single competitive market" (SCM) to represent a collection of offerings which are seen as competing with each other. In essence the SCM is similar to the idea of a strategic product market introduced by Day, Shocker and Srivastava (1979) and which they defined as: "the set of products judged to be substitutes within those usage situations in which similar patterns of benefits are sought and the customers for whom such uses are relevant." (p. 10). Wensley (1995) was alluding to a similar concept when he talked of customer-use situations in discussing the role of the market in marketing research. A market focus and, in particular, the concept of the SCM, together provide the most complete and appropriate unit for the analysis of competitive strategy. It captures the notions that competition takes place among companies' offerings rather than the companies themselves and that, via the marketplace, customers are the final arbiters of success. Undoubtedly, the lack of attention paid to market definition is due in part to the difficulties associated with arriving at a useful practical definition (NERA 1992; Wensley, 1995). As a result of these difficulties, a common approach has been to rely on supplyside concepts, such as industry SIC codes and strategic groups, to provide an approximation. Day et al. (1979) suggest that industry type classifications have gained wide acceptance, despite their questionable applicability, due to their stability and ease of operationalization. In certain situations, for example where an industry and the market that it serves are stable and predictable, supply-side concepts may provide a reasonable approximation; in the majority of cases, however, they will prove to be unsuitable. In more complex situations, confusing an industry with a market and relying on supply-side definitions can cause major problems. The marketing literature is replete with such examples, and these concerns are similar to those first expressed by Levitt (1960) when discussing marketing myopia. Thus industry type classifications do not, in general, provide a useful alternative to the definition of the market.
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When attempting to define market boundaries in practice, there are three main approaches, though each has theoretical and practical limitations (NERA, 1992). The techniques which have been recognized fall into three basic areas: 1. Elasticity measures; 2. Relative price movements; 3. Industry and consumer surveys. The literature recognizes also that the concept of the market has a geographical element and a product usage element. The following discussion will focus on the latter concern, as it has been established (Kay, 1990) that the retail financial services market is primarily a national one. Survey material is, potentially, an option in attempting to define market boundaries. One suggestion is to question "industry" participants as to their likely reaction to a change in price of another related offering. However, many product offerings are in competitive situations which are not particularly price sensitive; as a result, such investigations do not really lead to clearly defensible definitions of markets, and this may be particularly so in the service sector. One major weakness of industry surveys is that those answering the questions may not know the particular usage situation customers have in mind for offerings and therefore cannot really judge which products are seen as substitutes. Consumer surveys on the other hand do provide an attractive alternative, partly for the very reason that they can take account of usage situations. With certain physical goods, or where there are industrial buyers with a good knowledge of alternatives, then surveys can be operationalized. However, it is highly questionable whether such an approach would yield useful definitions in an area such as financial services. Studies (e.g. Devlin and Ennew, 1993) have established that financial services are characterized by a high degree of information asymmetry between buyers and sellers, with consumers often lacking detailed specialist knowledge. In terms of buying behaviour, financial services are known to be high in experience and credence qualities. Unless consumers have purchased or are about to purchase an offering, they may not be in a position to make informed judgments as to relative merits of offerings or the extent to which they are substitutable. Intangibility is the basic reason underlying the problem of asymmetric information and customers' reliance on experience and credence qualities in the financial services buying process. Financial services are an experience or act rather than a physical product, and often part of the offering is the advice or guidance given, as well as the product features themselves. Therefore, only after becoming involved in the production process are customers in a position to make informed judgments; and even at that stage, with some of the more complicated and long-term products, information asymmetries may persist. This renders the task of obtaining a reasonably coherent sample of sufficient size and quality extremely difficult. The problem also exists of whether to ask all potential consumers of financial services, those intending to make almost immediate purchases or those who have made a purchase. Thus, although the option of a consumer survey is theoretically appealing, it is debatable whether, for an intangible offering high in experience and credence qualities, consumer surveys provide a suitable method for defining the competitive arena. Clearly, then, while the customer-centered concept of a single competitive market is theoretically appealing, there are potential difficulties in its operationalization. Nevertheless the definition of a market is a necessary condition for the identification of competitive advantage. A competitive advantage can exist only in relation to the market and other offerings in that market. The role of competitive strategy is then one of delivering superior performance relative to competitors by affording superior value to the consumer in the relevant SCM. Early research on the concept of competitive advantage tended to be rather less market focused. The work of Porter (1980, 1985) introduced the concepts of cost leadership and
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differentiation as the two main options available to firms to achieve competitive advantage. With cost leadership, the firm in question must aim to be the lowest-cost producer in the industry while maintaining parity of differentiation. With differentiation, the firm in question aims to create an actual or perceived uniqueness in the mind of the consumer while retaining parity of cost. Although most would accept that Porter's work concerning generic strategies remains an extremely important contribution to the field of strategic thinking, there are significant weaknesses, including the "stuck in the middle" hypothesis (Cronshaw, Davis and Kay, 1994) and the notion of cost leadership as a means of securing a sustainable competitive advantage (Johnson and Scholes, 1993; Speed, 1989) given that cost is an input attribute. More generally, one interpretation of the requirements that "differentiators retain parity of cost" and "cost-based firms maintain parity of differentiation" is that what is of real relevance to consumers is attractive price-quality combinations or value for money. Thus, while a competitive advantage must stem from the existence of certain core competences in an organization, these only provide a source of competitive advantage if they are relevant to the needs of the market (Verdin and Williamson, 1993). Therefore, in attempting to achieve competitive advantage, firms aim to present an offering which competes effectively in the marketplace by providing consumers with a combination of added value and price which is deemed to be superior to other offerings in the market. Value is added to the offering by effective differentiation. Mathur (1988, 1992) suggests that there are two main non-price dimensions along which an organization can differentiate its offering: merchandise and support. Mathur defines the former as that which is made available to the customer, while the latter is support, advice and assistance given to the customer. Although the two-way split works well for product offerings and some service offerings, for many financial services the advice and assistance are core parts of the service and are in manycases indistinguishable from the "product" being offered. However, the distinction remains useful in that it highlights the fact that both product features and advice and assistance provide options for differentiation. These options are developed by introducing the concepts of content or image differentiation for merchandise and expert or personalized differentiation for support. In this way Mathur builds up an elaborate array of options for adding value to an offering. The particular characteristics of services make some options more feasible and more practical than others, a theme which will be developed in a later section. Once it is accepted that competitive strategy is concerned with a particular offering competing in an SCM, then the distinction between competitive strategy and marketing strategy becomes blurred (Biggadike, 1981; Brownlie, 1989; Cook, 1983). Marketing strategy is central to delivering an offering to the market which has a competitive advantage over the competition in the relevant SCM. Accordingly, from a theoretical perspective, we can identify three key processes associated with the development of a marketing strategy: 1. The organization must identify an SCM and determine the main market needs that the offering is trying to meet. This will provide clues as to how to add value in areas that are valued by the consumer. 2. The features of the product or service being offered must be analysed, as they may provide opportunities to achieve competitive advantage. 3. The characteristics of the organization may be important, particularly so with service offerings: the image or reputation of an organization can add value to an offering, and in some cases this may be the primary source of competitive advantage. While the market-driven concepts of competitive arena and competitive advantage are intuitively appealing, there is relatively little evidence to highlight the extent to which they have
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been adopted and the problems which hinder adoption. As has already been suggested, the characteristics of financial services have the potential to constrain the implementation of market-based or customer-centered approaches to competitive strategy. The difficulties of determining competitive advantage for service organizations in general have been well documented in theory (see Bharadwaj, Varadarajan and Fahy, 1993), and the same arguments apply in the context of financial services. With respect to market definition, the problems created by intangibility and complexity (at least from a theoretical perspective) have been alluded to earlier. Essentially, if managers in organizations recognize that many customers lack an understanding of (and in many cases an interest in) financial services, then there may be a strong justification for de-emphasizing the type of customer-centred approach to market definition suggested by Mathur simply because it is difficult for individual managers or customers to determine which sets of products are actively in competition. While these arguments are theoretically sound there is a relatively small body of empirical work which addresses these issues. Accordingly, the following sections provide preliminary evidence regarding the extent to which market- based approaches to competitive strategy (market definition and competitive advantage) have been adopted and the factors which might inhibit implementation. Competitive advantage in Retail Financial/Banking Services The Indian retail financial services industry is a set of highly competitive markets in which there has been much environmental change in the last two decades. The resultant complex competitive situation provides an opportunity to assess how financial services firms perceive the markets in which they now compete. The interview data contained in this section were collected in late 2008 from a series of semi-structured interviews with senior marketing and strategy managers in financial services companies. The sample, details of which are shown in Table I, included three of the three private sector banks (ICICI Bank, HDFC Bank and IDBI Bank) and two public sector banks (State Bank of India-SBI and Punjab National Bank-PNB). Although the sample is relatively small, it did cover many of the major players in Indian retail financial services, with considerable depth to the data collected. The aim of the interviews was to explore empirically the issues relating to competitive arena and competitive advantage which were discussed theoretically in the previous section. The main areas of investigation mirrored those discussed above, although a number of peripheral issues, such as distribution, were mentioned. As a result this section will proceed by focusing on financial services markets, competitive advantage in financial services and related issues. Table 1 : Details of Interviewees Company code Brief description of company Main responsibility of interviewee
A B C D E F G H I Strategic planning directorate Marketing Corporate planning Marketing Customer service Corporate planning Marketing Marketing Planning directorate Unit trust company/investment house Specialist pensions provider Large mutual composite insurer Medium-sized mutual life insurer Personal financial services division of major clearing bank Large banker Life and pensions division of major clearing bank Large plc composite insurer Major clearing bank
Defining the Market Prior to identifying and developing a competitive advantage, an organization first must
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establish the boundaries of the market or the set of markets in which it is to compete. The theoretical discussion argued that this process should be customer-centred, although there is little empirical evidence to determine the extent to which such an approach is evident in practice. The interview data pointed to a degree of uncertainty and confusion as to exactly which offerings are competing where and with what. Although respondents were very clear about the importance of a customer focus and being market-led, there was a strong tendency to rely on supply-side definitions of the market. When asked to provide details of the markets in which their companies were perceived to operate, most respondents relied mainly on productfocused or technology focused concepts to delineate the competitive arena. For instance in company A, the main markets were described as: "three business units, life [insurance], personal pensions and group pensions". The focus here was very much on particular products, and accordingly the set of competitors identified by this respondent consisted almost exclusively of other traditional insurers. The representative of company B responded to a similar line of questioning as follows: "We've effectively got general insurance businesses in one grouping and life insurance business in another grouping within the India " Again the tendency was to restrict the definition of competitors to other organizations in the same industry. The companies mentioned thus far were major banking firms which, understandably, focused on their traditional lines of business defined in product terms. That is to say, although many bank- savings products may well be competing with, say, SB, RD,FDR, unit trusts, etc., the companies concerned continued to define their market as banking business. This is not to suggest that these companies did not recognize the competitive threat but rather that managers may have experienced difficulty in articulating this threat in the context of a market definition. Representatives from companies were involved in the financial services divisions of Indian clearing banks. Despite the greater diversity of customers and services, there was still a reliance on a product-based split. For example company C indicated "mortgage, savings, life insurance, general insurance". There was, more generally, evidence of a binary split between traditional banking and personal financial services: "We see it as a single market in the sense of personal financial services" (company D). This approach was justified on the grounds that consumers find it difficult to perceive differences in the range of products offered. There was a strong initial tendency for respondents to identify similar organizational types (other banks) as their closest competitors, with other financial service providers (e.g. insurers) being mentioned but not as the main focus of thought: "I guess it would be the main clearing banks. A view would appear to be emerging of retail banking as one distinct market and of personal financial services as another, with the latter possibly subject to a further split between investment products, insurance products and pensions, although boundaries between these sub-categories are by no means clear and they are not treated as separate by all organizations. This binary split does not rest neatly with the theoretical concept of the single competitive market consisting of close substitutes, and there are several possible explanations for this observation. As argued earlier, the use of the simple binary definition may be due to limitations in customer understanding of financial services (see Devlin and Ennew, 1993). Financial services markets are characterized by a high degree of information asymmetry, and customer understanding of financial services offerings and the benefits they can provide is, as a result, extremely limited. Furthermore, customer evaluation of these services is heavily reliant on credence qualities. Given this lack of understanding, it seems entirely plausible that consumers and potential consumers of financial services group together banking and related products, such as consumer credit and savings products, as one market and other, perhaps more complicated products of which they are more suspicious, as another market. Thus a potential "demand-side" justification for the relatively straightforward division of the financial services
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market is apparent. Certainly, the interviews suggested that such a perspective might be justified. For example, one respondent discussed in detail the processes of segmentation in relation to relatively simple retail banking products, but commented when considering other financial services: "Now it would be lovely to imagine that that was appropriate in life insuranceIt just isn't from a customer perspective" (company G). Of course, this demand-side view may not be the sole explanation for the relatively simplistic approaches adopted for market definition. It is possible that the two "markets" detailed above were seen as separate because the technologies (broadly defined) employed in the production of the two broad product types are distinct - as also, in some cases, is the delivery mechanism used. Thus industry participants may be using this supply-side separation as a proxy for distinct markets or what they believe to be distinct markets. That is to say, the binary divide may implicitly reflect some form of segmentation; although studies of segmentation in the financial services sector (see Harrison, 1994) would suggest that customer groups are far more complex than this simple two-way split. Again, it is possible that this product-based focus may reflect even a certain reluctance or resistance to the adoption of the marketing concept, as has been commented on elsewhere (e.g. Baker, 1993; Knights, Sturdy and Morgan, 1994); at the very least, these results would be consistent with such earlier findings. Clearly, further research is required to establish whether there is a link between the degree of marketing orientation exhibited by a firm and the propensity of representatives of that firm to recognize the notion of the SCM. Finally, the supply-side approach may be a consequence of the limit which managers' cognitive capabilities place on the understanding and accurate mental mapping of an organization's competitive environment (de Chernatony, Daniels and Johnson, 1994). Given cognitive limitations and time pressures, managers tend to simplify their understanding of the competitive environment. This simplifying process may be a further reason for this tendency to employ a binary division in defining "markets". From the interviews carried out it is evident that representatives of some firms are taking a more sophisticated view, meaning that they are more inclined to adopt an informed and market-driven approach to mapping their competitive environment. For instance, one organization in the survey concentrated on meeting customer needs of financial planning for and during retirement; while another focused more specifically on the varying financial needs of high net worth (HNW) individuals. In the case of the former organization; it was apparent that there was a very broad view of customer needs in the specific target market, and implicit in this perhaps is a recognition of the fact that in a distinct SCM an organization might be competing with firms from quite different industries: "If our customers tell us that a retirement specialistsets up retirement homes, we'll have to start thinking about it" (company B). The interviewee for the latter company, with its interest in HNW individuals, described customers as: "anyone with money who wants to invest" (company A); and consequently identified competitors from a wide range of industry sectors, including banking, insurance, and unit and investment trusts. It is perhaps to be expected that a firm which has taken a strategic decision to concentrate on a particular set of needs, such as those of individuals about to retire, will exhibit a superior knowledge of the competitive landscape. Such companies are likely to have considered carefully the boundaries of the particular market which they are targeting and the consumer needs they aim to satisfy; furthermore, by virtue of their decision to focus on a particular niche, it can also be argued that defining the boundaries of the market is a much less complex process. The issue of adopting and employing the SCM approach when considering market boundaries is an important but under researched area. From the qualitative investigation reported here, tentative conclusions can be drawn, specifically in relation to what factors may influence the
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degree to which the notion of the SCM is adopted and used by financial services organizations. From the information supplied by respondents, it would appear that the ability of an organization to identify and organize around the concept of an SCM may be related to the complexity of the potential product-market combinations, in terms of both managerial and consumer cognition. Tentatively, it is suggested that those managers who are faced with a large number of service offerings which consumers may find highly intangible, or complex, may have more difficulty in adopting the SCM approach. Also, the degree to which the organization is marketing-oriented may influence the extent of SCM adoption, with the more marketingorientated firms benefiting from an enhanced understanding of the needs of groups of customers and which groups of offerings constitute a market. Indeed, from the initial interviews it emerged that firms which are targeting a particular market - the so called niche players - can be expected to exhibit a greater understanding of the competitive arena and, as a result, take a more sophisticated view than do larger mass-market operators. The niche focus, which is often related to specialist, more sophisticated, markets may facilitate an approach which is close to the concept of the SCM. There are possible "push" and "pull" explanations for this argument. First, and in part, it may be easier for managers to comprehend the nature and boundaries of a narrowly defined market; second, there may be pressure to adopt a market- focused definition, because consumers in those niches are likely to be more knowledgeable and more aware of alternatives. Competitive Advantage It is now necessary to investigate issues relating to the nature of competitive advantage in financial services. The characteristics of services in general and of financial services in particular have implications for the options available to financial services firms attempting to gain competitive advantage. Building on the existing literature, we suggest an array of classifications appropriate to competitive advantage, as represented in Figure 1. Figure 1 Classification of Competitive Advantage Service Specific Organization Wide Core Service Service Features Service Support Other Elements Price Image Reputation The matrix illustrates the potential options for gaining competitive advantage available to services firms. The categorization is based on the work of Mathur (1988), with amendments and additions to ensure that the theory is applicable to financial services. Unlike Mathur, we suggest that "support" which, broadly speaking, is the advice and assistance given when choosing an offering, is viewed, together with the quality of service delivery, as part of the core service, as it is such an integral and important element of the service offer. The lightly shaded area thus represents the core service offering. The two lower quadrants represent further options available to firms in achieving competitive advantage. Firms can attempt to compete by using low price or can utilize a particular image or reputation to add value to their offerings. The lefthand quadrants, those of price and service features, tend to be service-specific, that is, associated with one particular service offering. The quadrants on the right - organizational image and reputation, as well as quality of service delivery and factors relating to advice and assistance - tend to be associated with the organization as a whole. The intangible nature of financial services makes it difficult to envisage the use of specific services features as the basis for establishing a competitive advantage. Services cannot be patented, so service features generally can be copied with ease (Davison, Watkins and Wright, 1989). This leads to difficulty in trying to establish a lasting competitive advantage using service features (Bharadwaj et al.,
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1993). It has been suggested also that many financial services markets are not especially pricesensitive, particularly in their more complicated offerings. Recent legislative changes requiring disclosure of all charges and commission earnings for certain investment services may result in some consumers becoming more price-sensitive; however, it is unlikely that price will become the major focus of competitive strategy for financial services. It is suggested, therefore, that competitive advantage is more likely to be based on support considerations, such as service quality or image and reputation factors, pertaining to the organization as a whole rather than any individual service offering (McGoldrick and Greenland, 1992). Service quality has been highlighted by, among others, Lewis (1993) as important in financial services markets. Basing competitive advantage on the organization as a whole rather than on specific offerings allows the organization to place considerable emphasis on trust and confidence to mitigate the doubts and uncertainties experienced by consumers in relation to the purchase of products which are complex and difficult to comprehend. Thus it is to be expected that features related to the righthand quadrants of the array of options in Figure 1 would be more in evidence in empirical discussions of competitive advantage in financial/banking services. The interviews provided many examples of the importance of more general organizational factors: We'd like it [competitive advantage] to be quality of service and value of advice we giveIt's not going to be price or fund performanceBasically it's going to boil down to customer trust and confidence in the service that's offered (company E). Our advantage is in our name and the recognition of [it], so we have a very strong brand franchisenot just with intermediaries but also customers, customers recognize the name (company C). What we're saying is that the advantage that we can derive is from a customer-focus strategy and the entire organization in the India has to work towards that (company D). I think our overall name awareness, built up over the last nine years of effective advertising through (name of personality) has been good (company F). [Competitive advantage] really revolves around safety, size and those sort of concepts and that [company H] is a household name. People can feel comfortable when they invest or take out life assurance with [company H] and I think that's the main thing (company H). It would appear, therefore, that responses in the interviews tend to endorse the findings of the theoretical discussion above. However, a considerable amount of confusion also was apparent in the discussions about competitive advantage, and this needs to be taken into consideration. For instance, when initially asked about competitive advantage company D replied: What one would like to be able to do is to say here's at least one if not a couple of things which are really distinctive about us which are built up from the core of the business. Now there isn't anything. Thus, although the individual from company D stated that he would like his company to derive an advantage from a customer-focus strategy, he was honest in admitting that at that time he doubted whether his organization had an advantage. Confusion as to the exact advantage possessed by organizations was quite common, and one theme which was highlighted in more than one interview was the notion of competitive equivalents. These are "hygiene" factors, and in order to compete effectively companies need to be judged as being of equal competence as competitors in these areas, although such features do not in themselves provide a competitive advantage. For instance, company D again: There are quite a few life offices which have got good investment performance so it's not distinctive, but in the broker market you have to have that otherwise you don't get anywhereIt's a hygiene factorIf you looked at things like servicing, admin, financial strengths, quality of staff, then you just put us on the pile with any other decent life company. There's nothing that particularly that stands out. And company C: I take the view that there are certain things that you have to be good at to stay in the gameThey're not necessarily competitive advantages, they're almost competitive
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strengths that have to be playedSo I think it's much more important now to recognize the fact of equivalents and then to say, OK, advantages are few and far between now and they are not necessarily particularly strong. The notion of hygiene elements being part of the process of adding value and achieving competitive advantage has support in the literature (Bowman and Faulkner, 1997), and the confusion apparent is indicative of the fact that, in some cases, interviewees are unsure whether, and if so how, their offerings are delivering superior value and gaining competitive advantage. In such a situation it could be argued that considerations of how the service offering is distributed to the consumer are important, because a particularly efficient or valued distribution mechanism may compensate for the lack of value being added to the offering in other respects. Distribution was mentioned as an important consideration in a number of interviews: Company C was pleased with its current relationships with independent intermediaries, particularly smaller ones, but was concerned that concentration on intermediaries would be detrimental to its position of strength in the intermediary market. Company B highlighted a 98 per cent dependence on the independent intermediary market, but were looking very closely at multi-channelling strategies to enable customers to choose their preferred method of delivery. Company A saw the current limited set of options for distribution as a potential problem. Company G cited accessibility through a mix of distribution channels as potentially important in achieving competitive advantage. These findings are consistent with those of other research which indicates that issues relating to distribution are seen as increasingly important elements of competitive strategy (Devlin, 1995; Howcroft and Lavis, 1986), because a convenient and valued distribution channel adds value to the service offering in the eyes of the consumer. Although evidence from the interviews tends to support the claim that competitive advantage in financial services markets is based primarily on organizational factors such as image, one particular exception seemed to emerge. Companies involved in presenting service offerings to more sophisticated "niche" markets of consumers were far more likely to mention such factors as price and specific service features as important to how effectively their offerings competed in those markets. Thus, consider company A which sells relatively complex financial services to an HNW market: "If you're selling direct unit trusts no person isn't price-sensitive." Equally, service features and performance may be sources of competitive advantage in a relatively specialized market: "You know you can't judge a company based on priceIf anything, it's going to be investment performance" (company B). Furthermore, even with relatively simple service, if the target market is relatively narrowly defined, as was the case with company A and HNW individuals, then a feature such as price may still be of significance. Thus: "Very few customers are actually price-sensitive, but quantitatively there were enough to make it worthwhile going into the marketplace" (company A). In these situations there appeared to be less of a need to rely on image and reputation factors, because the target markets were seen to be more knowledgeable and more likely to evaluate products based on features such as price and performance. Furthermore, although this pattern was mostly evident in relation to complex products, there was also the suggestion that price at least might be of significance in relation to some simple products if the target market was still seen as relatively sophisticated. Conclusions From the discussion incorporating the theory, and on the basis of the exploratory empirical findings regarding the nature of competitive advantage in financial/banking services, the
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following initial conclusions can be drawn: For services that are highly intangible as well as mentally complex, there is greater reliance on organization-wide factors, such as reputation, image and quality of service, in attempting to add value and so gain competitive advantage. Such an approach assists in accommodating customers' dependence on experience and, in particular, credence qualities in service evaluation. It is accepted that this conclusion, and the findings on which it is based, is a drawing together and confirmation of themes which have been emerging in the literature for some time. However, the investigation helped to clarify such themes and to highlight areas for further research, as well as introducing some more original findings. In this respect, it is important to note the perceived importance of distribution issues, particularly in view of the lack of certainty regarding factors important in adding value to financial services offerings. Also, it would appear that the more knowledgeable and sophisticated the target market, the greater the ability of the service provider to develop a source of competitive advantage based on more specific factors such as price and service features. It is apparent that this may also be the case for services which may be classified as simpler than the average, in that customers may exhibit a reasonable understanding of features and benefits, and are more able to perform pre purchase evaluation. However, the influence of this effect may be offset by the fact that service features are easily copied and because there may be a lack of options available for differentiating more simple services in terms of product features. Further research is required to investigate such matters in more detail, although initially, it would appear that service characteristics affect the nature of competitive advantage through their impact on consumer decision making. This paper has presented the results of some exploratory research into the nature of competitive marketing strategy in the services sector. Effective marketing requires a clear understanding of the arena in which a firm is competing and the nature of its competitive advantage. For strategy to be truly marketing-oriented, both the definition of the competitive arena and the source of competitive advantage must be demand-driven. In services in general and financial services in particular, certain characteristics, namely intangibility and complexity, affect consumer evaluation processes. As consumers become increasingly reliant on credence qualities in evaluation and as services become more complex, the process of defining a competitive arena and a distinct source of competitive advantage becomes more difficult. In particular, where consumers' understanding is limited, the importance of image and reputation, as well as service quality, as sources of competitive advantage are likely to be much greater. Conversely, with increased consumer understanding, either because consumers are more knowledgeable or because the products are relatively simple, or both, then elements such as price and specific service features may become more important in adding value and achieving competitive advantage. Furthermore, it should be noted that even within a given set of markets (such as retail financial services), differing degrees of knowledge and understanding across different market segments may enable some niche operators to define their markets and sources' competitive advantage more easily than is the case with the mass market players. In this respect, a market orientation may assist also the accurate mapping of the competitive arena. Managerial implications A number of managerial implications follow from these conclusions: Managers who are involved in the marketing of a large number of service offerings which
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customers may perceive as complex must be aware of the greater complexity associated with trying to understand the competitive arena. Equally, when faced with less challenging situations it continues to be important to monitor competition and to avoid a blinkered perception of competitors. Indeed the recent entry of supermarkets into banking activities illustrates the diversity of potential sources of competition. The potential for change in what will add value for customers and in which products are perceived as substitutes places a premium on the development of systems and cultures which encourage greater understanding of customer needs and requirements in the organization as a whole and not just the marketing department. Such developments enhance the possibility that managers will form an accurate and informed picture of the competitive environment. In addition to customer-based information, a comprehensive knowledge of the attributes of competing offerings is essential when considering factors on which to base competitive advantage in particular markets, This combination of customer and competitor understanding increases the chances of providing an offering which competes effectively, provided of course that the breadth of competition has been fully recognized. In addition, competitive strategy must take account of the characteristics of service offerings, not least in terms of complexity, as well as the nature of the target market in terms of sophistication and level of knowledge, etc. In this way appropriate elements of the service can be emphasized in order to add value and compete more effectively. References n Baker, M.J. (1993), "Bank marketing - myth or reality", International Journal of Bank Marketing, Vol. 11 No. 6, pp. 5-11. n Ballabh, J.(2001), "The Indian Banking Industry: Challenges Ahead", IBA Bulletin, April-May, pp 8-10. n Barnes, J.G. (2001), Secrets of Customer Relationship Management, McGraw Hill Co., New York. n Bajaj, M.K. (2000), "Customer Relationship Management", IBA Bulletin, September, pp 2325. n Beckett, Antony., Hewer, Paul. and Howcroft, Barry. (2000), "An Exposition of Consumer Behaviour in the Financial Services Industry", International Journal of Bank Marketing, Vol. 18, No. 1, pp 16-26. n Bharadwaj, S.G.,Varadarajan, P.R. and Fahy, J. (1993), "Sustainable competitive advantage in service industries: a conceptual model and research propositions", Journal of Marketing, Vol. 57, October, pp. 83-99. n Bhatt, Atul. (2002), "Bank Marketing: Market Research and Indian Banks", in Services Marketing: The Indian Perspective, (Eds.), Shanker, Ravi, Excel books, New Delhi, pp 288300. n Biggadike, E.R. (1981), "The contributions of marketing to strategic management", Academy of Management Review, Vol. 6 No. 4, pp. 621-32. n Bowman, C. and Faulkner, D. (1997), Competitive and Corporate Strategy, Irwin, London. n Brownlie, D.T. (1989), "The migration of ideas from strategic management to marketing on the subject of competition", European Journal of Marketing, Vol. 23 No. 12, pp. 7-20. n Cook, V.J. (1983), "Marketing strategy and differential advantage", Journal of Marketing, Vol. 47, Spring, pp. 68-75. n Cronshaw, M., Davis, E. and Kay, J. (1994), "On being stuck in the middle, or good food costs less at Sainsburys", British Journal of Management, Vol. 5, pp. 19-32. n Curran, J.G.M. and Goodfellow, J.H. (1990), "Theoretical and practical issues in the
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Reichheld, F.F. (1996), "Learning From Customer Defection", Harvard Business Review, March -April, pp 56-69. n Keltner, B. (1995), "Relationship Banking and Competitive Advantage: Evidence from USA and Germany", California Management Review, Vol.37, No. 4, pp 45-71 n Gadkari, R.G. (1997), "Customer Services: A Critical Success Factor", IBA Bulletin, Special Issue, March, 29-34. n Saraf, A.M. (1997), "Changing Role of Banks: Indian Perspective", in Indian Banking, (Eds.), Sharme, B. and Jossen, N.J., New Release Books, New Delhi, pp 56-70. n Bhargava, A.K. (2000), "Automation in Banks and Financial Institutions", Paper Presented, National Conference of Automation in Banks and Financial Institutions, June 22. n Aul, G.D. (2001), "Customer Relationship Management", PNB Monthly Review, March, pp 516. n Pathrose, P.P. (2002), "Moving Towards Risk Based Supervision of Banks: Issues and implications", IBA Bulletin, January, pp 21-26. n Rao, N.V. (2002), "Changing Indian Banking Scenario: A Paradigm Shift", IBA Bulletin, January, pp 12-20. n Chakrabarty, K. C. (1997), "Customer Service in Banks: The Challenges Ahead", IBA Bulletin, Special Issue, March, 23-28. n Parameshwara, N. (1997), "Customer Service: Costing and Pricing of Services in Banks", IBA Bulletin, Special Issue, March, 39-41. n Madhukar, R.K. (1997), " Customer Services in Banks: A New sense of Urgency", IBA Bulletin, Special Issue, March, 18-22. n Survey on Public Sector Banks Customer Service (1997), RBI Annual Report. n Yavas, U, Bilgin, Z and Shemwell, D.J. (1997), "Service Quality in Banking Sector in an Emerging Economy: A Consumer survey", International Journal of Bank Marketing, Vol. 15, No. 6, pp 217-223. n Mittal, B. and Lassar, W. (1998), "Why do Customer Switch? The Dynamics of Satisfaction versus Loyalty, Journal of Services Marketing, Vol, 12. No. 3, pp 177-94. n Lassar, W. M., Monolis, C. and Winsor, R.D. (2000), "Service Quality Perspectives and Satisfaction in Private Banking", International Journal of Bank Marketing, Vol. 18, No. 4, pp 181-199. n Kataria, N. (2001), "Marketing Financial Services: Evolving a Retail Banking Strategy", Paper Presented, Bank Economists Conference 2000, New Delhi, January 15-17, 2001 n Vijayakumar, T. and Annamalai, S. (2002), "Employee Satisfaction among Bank Employees: Cadre Wise- A Case Study", IBA Bulletin, February, pp 29-35. n Barnes (2001), Secrets of Customer Relationship Management, McGraw-Hill, New York. n Deivikaran, M. P. (2000), "Relationship Banking", The Journal of Indian Institute of Bankers, January - March, pp 24-31 n Mobeen, M.A. (2001), "Customer Relationship Management (CRM): Strategies for High Performance Business", PNB Monthly Review, November, pp 4-10. n Godes, V.T. (2001), "Technology: An Impact Analysis", IBA Bulletin, September 2001, pp 811. n Malyadri, P. and Kumar, V.D. (2002), "Customer Relationship Management", Banking Finance, June, pp 3-6. n Roy, P.K. (2002), "Can Knowledge Management Improve Customer Service in Bank?", IBA Bulletin, May, pp 8-10.
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PriyankaSrivastava Ph.D. Research Scholar Faculty of Management Studies, Banaras Hindu University, Varanasi PallaveeShrivastava Ph.D. Research Scholar Faculty of Management Studies, Banaras Hindu University, Varanasi Prof. Rekha Prasad Professor, Faculty of Management Studies, Banaras Hindu University, Varanasi Abstract This paper introduces the Value Chain Model for firms and industry for getting competitive advantage by creating value for its customers and changing business inputs into business outputs in such a way that they have a greater value than the original cost of creating those outputs. In this paper various primary and support activities like Inbound logistics, Operations, Outbound logistics, Marketing and sales, Service, Procurement, Human resources management, Technological development and infrastructure also has been discussed. Further this paper describes the importance of human resource management for getting competitive advantage as a part of support activities. Key Words: Value Chain, Human Resource Management, Competitive Advantage. Introduction: The value chain approach was developed by Michael Porter in the 1980s in his book "Competitive Advantage: Creating and Sustaining Superior Performance" (Porter, 1985). A value chain is a set of activities that an organization carries out to create value for its customers. The way in which value chain activities are performed determines costs and affects profits, help us in understanding the sources of value for the organization. Manufacturing companies create value by acquiring raw materials and using them to produce something useful. Retailers bring together a range of products and present them in a way that's convenient to customers, sometimes supported by services such as fitting rooms or personal shopper advice. And insurance companies offer policies to customers that are underwritten by larger re-insurance policies. Here, they're packaging these larger policies in a customer-friendly way, and distributing them to a mass audience. The value that's created and captured by a company is the profit margin: Value Created and Captured- Cost of Creating that Value=Margin The more value an organization creates, the more profitable it is likely to be. And when we provide more value to your customers, you build competitive advantage. Sustainable Competitive advantage by Value Chain Model: To analyze the specific activities through which firms can create a competitive advantage, it is useful to model the firm as a chain of value creating activities. Michael porter identified a set of interrelated generic activities common to a wide range of firms. The resulting model is known as
Inbound Logistics Operations Outbound Logistics Procurement Human resource management Technology Development Firm Infrastructure
Fig.1 : Porter's Value Chain Model
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Marketing & Sales
Services
MARGIN
the Value Chain.Value chain analysis is a powerful tool for managers to identify the key activities within the firm which form the value chain for that organization, and have the potential of a sustainable competitive advantage for a company. Therein, competitive advantage of an organization lies in its ability to perform crucial activities along the value chain better than its competitors. Firm Level: A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of the independent activities' values. A diamond cutter, as a profession, can be used to illustrate the difference of cost and the value chain. The cutting activity may have a low cost, but the activity adds much of the value to the end product, since a rough diamond is significantly less valuable than a cut diamond. Typically, the described value chain and the documentation of processes, assessment and auditing of adherence to the process routines are at the core of the quality certification of the business, e.g. ISO 9001. Industry Level: An industry value chain is a physical representation of the various processes that are involved in producing goods (and services), starting with raw materials and ending with the delivered product (also known as the supply chain). It is based on the notion of value-added at the link (read: stage of production) level. The sum total of link-level value-added yields total value. The French Physiocrat'sTableau economic is one of the earliest examples of a value chain. Wasilly Leontief's Input-Output tables, published in the 1950s, provide estimates of the relative importance of each individual link in industry-level value-chains for the U.S. economy. Elements in Porter's Value Chain: The 2 types of activities, present in the Porter's Value chain model are as following: Primary Activities: Primary activities relate directly to the physical creation, sale, maintenance and support of a product or service. They consist of the following: n Inbound logistics - These are all the processes related to receiving, storing, and distributing inputs internally. Your supplier relationships are a key factor in creating value here. n Operations - These are the transformation activities that change inputs into outputs that are sold to customers. Here, your operational systems create value. n Outbound logistics - These activities deliver your product or service to your customer. These are things like collection, storage, and distribution systems, and they may be internal or external to your organization.
Primary Activities Primary Activities Primary Activities
Primary Activities
Primary Activities
Fig.2: Primary Activities
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Primary Activities
n Marketing and Sales - These are the processes you use to persuade clients to purchase from
you instead of your competitors. The benefits you offer, and how well you communicate them, are sources of value here. n Service - These are the activities related to maintaining the value of your product or service to your customers, once it's been purchased. Support Activities: These activities support the primary functions above. In our diagram, the dotted lines show that each support, or secondary, activity can play a role in each primary activity. For example, procurement supports operations with certain activities, but it also supports marketing and sales with other activities. n Procurement (purchasing) - This is what the organization does to get the resources it needs to operate. This includes finding vendors and negotiating best prices. n Human resource management - This is how well a company recruits, hires, trains, motivates, rewards, and retains its workers. People are a significant source of value, so businesses can create a clear advantage with good HR practices.
Procurement
Human resources management
Primary Activities Technological development Infrastructure
Fig.3: Secondary Activities
n Technological development - These activities relate to managing and processing
information, as well as protecting a company's knowledge base. Minimizing information technology costs, staying current with technological advances, and maintaining technical excellence are sources of value creation. n Infrastructure - These are a company's support systems, and the functions that allow it to maintain daily operations. Accounting, legal, administrative, and general management are examples of necessary infrastructure that businesses can use to their advantage. Companies use these primary and support activities as "building blocks" to create a valuable product or service. Objectives of the study: 1. To study about the value chain and competitive advantage. 2. To identify the role of Human resource management in value chain for attaining competitive advantage. Methodology: In depth literature review and available secondary data from various sources has been used to develop this paper. Review of Literature: Various studies have been done to determine how a firm can achieve competitive advantage through most important assets i.e. Human Resources around the globe. Barney (1991) identified a resource can be source of Competitive advantage if it is rare, inimitable, and nonsubstitutable and add value to the firm. Bartlett and Ghoshal (2002) have thrown light on
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evolving role of human resources. Company has to create an environment that will attract the talented people and make them committed to the organisation. Among other classifications of organizational resources Grant's (1998) typology comprises three major kinds of resourcestangible (financial and physical), intangible (culture,reputation and technology), and human. Ulrich and Lake(1991), Pfeffer(1994)found human resources and their management role in the attainment of organizational success. Kane, Crawford and Grant( 1999) said that HRM effectiveness is associated with cost minimization rather than investment in human capital. Wright, Dunford and Snell (2001) propose that in order to acquire a sustainable competitive advantage anorganization has to be superior in all areas of strategicHRM: human capital pool (knowledge, skill, ability),employee relationships and behavior (psychological contractand organizational citizenship), and people managementpractices (staffing, training, rewards, appraisal, work design,participation, recognition, and communication).The idea that human resources can become a source of competitive advantage for the organization is not new according to Huselid (1995),Pfeffer(1998), Schuler and Jackson (1987). It is generally accepted that firms can create acompetitive advantage from human resources and their management practices. Effective human resource management will generate a higher capacity to attract and hold employees who are qualified and motivated for good performance, and also the benefits from having adequate and qualified employees are numerous. Wright and McMahan (1992) found that internal analysis of the firm offers to human resource strategic management a valuable conceptual framework, through which to analyzethe ways in which firms try to develop their human resources with the aim of transforming them in a sustained competitive advantage. In all the above studies researchers focused that Competitive advantage is now shifted to Human Resources. They also presented the importance of the human resources as the resource of organisation that can grow and contribute to the organisation and meet the criteria's of sustainable resource and also act as a vital asset for creating and adding value to the organization which ultimately helps in getting Competitive Advantage. HRM as a Vital Asset in Value Chain for Competitive Advantage : Management of human resources is how well a company recruits, hires, trains, motivates, rewards and retains its workers. Management of human resources is involved in each and every activity of the value chain for creating values for the customers. Due to the excessive importance of this the latest trend is to outsourcing of HR is existing. HR is responsible for the provision and management of one of the most critical factors of production labor. It is in this role that HR can help bring in differentiation and help create greater value with the limited resources in hand.Some of the areas of HR that are in the process of being outsourced is Recruitment, Payroll processing, Training, Benefits Management,etc. These areas are seen as transactional in nature and firms are able to derive cost benefits by outsourcing these activities to companies that are able to leverage economies of scale and domain expertise to provide superior value and cost benefit to the parent firm. Some of the core areas that are still seen as possible differentiators in HR are policy making, performance management, compensation management, etc. These are seen as functions that can add value to the entire firm and help it derive competitive advantage over other firms.Companies focus on excellent recruitment support, training opportunities, etc. to ensure that they continues to lead its own value chain and also manages to be a significant part of the customers' value chain.Only recently have companies looked at HRM as a means to contribute to profitability, quality, and other business goals through enhancing and supporting businessoperations.The HR department is most likely to collaborate with other company functions on employment interviewing, performance management and discipline,and efforts to improve quality and productivity. Large companies are more likely thansmall ones to employ
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HR specialists.Many different roles and responsibilities can be performed by the HR department.The HR department takes full responsibility for human resource activities in some companies; Fig.4 is showing the various responsibility of HR department. Intangible assets have been shown to be responsible for a company's competitive advantage. Human resource management practices such as training; selection, performance management, and compensation have a direct influence on human and social capital through influencing customer service, work-related know-how and competence, and work relationships. Fig. 5 is showing the list of intangible assets for value creation as well as for attaining competitive advantage. Fig.4: Responsibility of HR Department Employment and recruiting Interviewing, recruiting, testing, temporary labor Coordination Orientation, performance management skills training, productivity enhancement Wage and salary administration, job descriptions, executive compensation, incentive pay, job evaluation Insurance, vacation leave administration, retirement plans, profit sharing, stock plans Employee assistance programs, relocation services, outplacement services Attitude surveys, labor relations, publications, labor law compliance, discipline Information systems, records Safety inspection, drug testing, health, wellness International human resources, forecasting, planning, mergers and acquisitions
Training and development
Compensation
Benefits
Employee services
Employee and community relations
Personnel records Health and safety
Strategic planning
SOURCE: Based on SHRM-BNA Survey No. 66, "Policy and Practice Forum: Human Resource Activities, Budgets, and Staffs, 2000-2001," Bulletin to Management, Bureau of National Affairs Policy and Practice Series, June 28, 2001. Washington, DC: Bureau of National Affairs.
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Human capital Tacit Knowledge n Education n Work-related know-how n Work-related competence Customer capital n Customer relationships n Brands n Customer loyalty n Distributions channels Social capital n Corporate culture n Management philosophy n Management practices n Informal networking systems n Coaching/mentoring relationships Intellectual capital Patents n Copyrights n Trade secrets n Intellectual property
n
Fig.5: Intangible Assets SOURCE: Based on L. Weatherly , Human Capital: The Elusive Asset (Alexandria, VA: 2003 SHRM Research Quarterly); E. Holton and S. Naquin, "New Metrics for Employee Development," Performance Improvement Quarterly 17 ( 2004 ), pp. 56-80 ; M. Huselid , B. Becker, and R. Beatty, The Workforce Scorecard (Boston: Harvard University Press , 2005 ).
To show that HRM activities contribute to a company's competitive advantage, managersneed to consider the questions shown in Table 1 and be able to identify critical indicators or metrics related to human resources. As shown in the last column of Table 1 critical indicators of HR practices primarily relate to people, productivity, and processes
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Table 1:
PERSPECTIVE Customer QUESTIONS How do customers see us? CRITICAL BUSINESS INDICATORS Time, quality, performance, service, cost CRITICAL HR INDICATORS Employee satisfaction with HR department Services, Employee perceptions of the Company as an employer Training costs per employee, turnover rates, time to fill open positions. Employee/skills competency levels, engagement survey results, change management capability Compensation and benefits per employee, turnover costs, profits and revenue per employee
Internal
What must we excel at?
Processes that influence customer satisfaction, availability of information on service and/or manufacturing processes Improve operating efficiency, launch new products, continuous improvement, empowering of workforce, employee satisfaction Profitability, growth, shareholder Value
Innovation and learning
Can we continue toimprove and create Value?
Financial
How do we look to shareholders?
SOURCE: Based on B. Bhecker, M. Huselid , and D. Ulrich , The HR Scorecard: Linking People, Strategy, and Performance (Boston: Harvard Business School Press , 2001 ).
Fortunately, in the last few years, several researchstudies have reported some importantfindings regarding the relationships betweenHR and business performance (Arthur, 1994;Huselid, 1995; MacDuffie&Krafcik, 1992;Ostroff, 1995; Pfeffer, 1994; U.S. Departmentof Labor, 1993). Table 2 summarizes thekey findings of these studies in the area ofHR-business performance relationships. Table 2: Summary of Major Research Studies in HR-Organizational Performance Relationships: Research Studies Methodology Key Findings
Mac Duffie & Krafcik (1992) Studied 70 automotive assembly plants representing 24 companies and 17 countries worldwide Manufacturing facility with "lean production production system" are much higher in both productivity and quality than those with "mass production system" While the HR strategy of a mass production system is used to create a highly specialized and skilled workforce that supports a large scale production process, the HR strategy of a lean production system aims to create a skilled , motivated and flexible workforce that can continuously solve problem.
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U.S. Department of Labor (1993)
Pfeffer (1994)
Summarized all major research studies regarding the HR firm performance relationship. Identified the 5 top performing firms.
Arthur (1994)
Conducted a survey research from 30 U.S. steel minimills.
Huselid (1995)
Utilized both survey research and financial data of 968 firms.
Ostroff (1995)
Conducted a survey research jointly sponsored by Society of Human Resource management.
The success of a "lean production system" critically depends on such "highcommitment" human resource policies as the decentralization of production responsibilities, broad job classification, multiskilling practices, profit gain sharing, a reciprocal psychological commitment between firms and employee, and employment security Employee involvement in decision making. Compensation Training Programs Constellation of high performance work practices. Contradictory to traditional strategy literature, these five companies are neither in the right industry nor are they market leader in their industry. These companies share a set of high commitment work practices such as employment security Empirically identified two distinct HR configuration control and commitment systems. Control system aim to reduce direct labor costs or improve efficiency. Commitment system aim to shape desired employee behaviors and attitude. Based on his sample, Huselid found that if firms increase their highperformance work practices by one standard deviation, their turnover would be reduced by 7.05%, productivity increased by 16%. In terms of financial impact, a one SD in high performance work practices leads to a $27,044 increase in sales, a $ 3,814 increase in profit. Developed an overall HR Quality Index based on the aggregate ratings of all HR activities adopted by a firm. Based on HR Quality Index, firms are grouped into 4 categories based on their percentile. Firms that score higher in the HR Quality Index consistently outperform firms with a lower index in four financial measures: market / book value ratio, productivity, market value and sales.
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SOURCE: Based on Arthur K. Yeung and Bob Berman,Human Resource Management,Fall 1997, Vol. 36, No. 3, Pp. 321-335
In the words of Warns Muktesh, CEO Reebok India, "Inany business strategy, people are more crucial than plans. Effective implementation is possible only with motivated people." In fact, acquiring competitive advantage by providing best product and best services too at the best price is only possible by having best people and best human resource management system. Management of human resource in value chain helps in: 1. Offering Best Product: The strategy of offering best product requires best people. The HRM strategy in this case includes: Employing the people with original and creative skill. Retaining competent and innovating brains. Providing training and development facilities for skill-building. 2. Offering Best Service: Corporation complete with the best service package. The vital factor in the package is the human resource. The HRM strategies in this case include: Employing people with right mixture of initiative and skill. Link the appraisal and reward system to the level of customer satisfaction. 3. Offering Best Product at Best Price: Selling the product at best price is possible by producing the product at lower cost. Producing high quality product at low cost is the best strategy in the market economy. The HRM strategy relevant to such corporate strategy includes: Employing the workforce with creative skills in developing technologies and methods of minimizing cost. Molding the employee attitude towards low risk - taking and cost- cutting. The critical role ofhuman resources and their management is mainly supportedby the proponents of the internal source of competitiveadvantage, such as resource-based, competency-based, andknowledge-based views. (Table 3) Table 3: The role of human resources and their management in the creation of competitive advantage:
Competitive Approach Advantage Resource based view Author HR Value HR as a resource Competitive Advantage HR value Valuable, rare, inimitable optimization & non-substitutable bundles of resources and capabilities Competency development and deployment Managerial, input-based, transformational & output-based competencies HRM Role
Internal
Barney (1991, 1995) Grant (1991,1998) Kamoche (1999) Competency Lado& Wilson based view (1994)
Knowledge based view
Grant ( 1998)
Input-based competency contributing to valuable product/service development Core employee 'knowhow' as as a strategic resource HR as relationship builders & cultivators HR role
Interactional
Business network view Behavioral
Strandskov (2006)
HR value maximization through their deployment & development HR capability development
Integration of specialized Knowledge into organizational capabilities Resources & capabilities gained/developed outside the firm boundaries Role behaviors required
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Schuler &
Means of
Perspective
Jackson (1999)
Horizontal Delery & vertical (1998) fit approach Ferris (1999) (SHRM) Competitive Porter positioning (1990, 1998) view, Country/ Industry view
SOURCE: Based on RutaKazlauskaite and IlonaBucluniene, The role of human resources and their management in the establishment of sustainable competitive advantage, Engineering economics,2008.No 5(60)
Conclusion: At last we can say that the value chain model given by Michal Porter is very beneficial tool for the firms to create value and getting competitive advantage over their competitor. The primary and support activities help in solving the questions such like how does organization create value? How we can change business inputs into business outputs in greater value than the original cost of creating those outputs? The management of Human resource is also very necessary for getting best service and product, creating values and for attaining sustainable competitive advantage. References: 1. Arthur, J. (1994). Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal, 37, 670-687. 2. Barney, J. B. (19991) Firm resources and sustained competitive advantage //Journal of Management, Vol. 17, No. 1, p. 99-120. 3. Barney, (1995) J. B. Looking inside for competitive advantage // Academy of Management Executive, Vol. 9, No. 4, p. 49-61. 4. Barney, Jay B. (1991), "Firm resources and sustained competitive advantage", Journal of Management, Vol.17 No. 1, pp. 99-120. (Accessed on- March 9, 2012). 5. Bartlett and Ghoshal (2002), "Building Competitive Advantage through People". Sloan Management Review, Vol.43 No. 2. (Accessed on- March 9, 2012). 6. Becker, B. (1996) The impact of human resource management on organizational performance: progress and prospects / B. Becker, B. Gerhart // Academy of Management Journal, Vol. 39, No. 4, p. 779-801. 7. Delery, J. E.(1998) Issues of fit in strategic human resource management: implications for research // Human Resource Management Review, Vol. 8, No. 3, p. 189-309. 8. Ferris, G. R.(1999) Human resource management: some new directions /G. R. Ferris, W. A. Hochwarter, M. R. Buckley, G. Harell-Cook, D.D. Frink // Journal of Management, Vol. 25, No. 3, p. 385-415. 9. Gottfredson, M. &Puryear, R. & Phillips, S. (2005), Strategic Sourcing From Periphery to the Core, Harvard Business Review, Vol. 83, No. 2, p. 132-139.
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External
behaviors as a mediator between strategy and organizational outcomes Human capital as a mediator between HRM & performance Activity implementers
stimulating by competitive strategy role behaviors required by competitive strategy Performance Horizontally & vertically enhancement aligned HRM systems
Support activity
Firm's ability to perform activities at a lower price or in a distinct way Industry/nation specific key success factors.
10.Grant, R. M. (1998) Contemporary Strategy Analysis: Concepts, Techniques, Applications / Malden: Blackwell. 11.Grant, R. M.(1991) The resource-based theory of competitive advantage: implications for strategy formulation // California Management Review, Spring, p. 114-135. 12.Hill, W. L. C. & Jones, R. G. (2007), Strategic Management: An Integrated Approach, 7th ed., Houghton Mifflin Company, Boston: New York. 13.Huselid, M.A. (1995), ''The impact of human resource management practices on turnover, productivity, and corporate financial performance'', Academy of Management Journal, Vol. 38, pp. 635-72 14.Kamoche, K.(1999) Strategic human resource management within a resource-capability view of the firm. / In R. S. Schuler, S. E. Jackson (Eds.). Strategic Human Resource Management // Oxford: Blackwell Publishers Ltd., Oxford. 15.Kane, B.(1999) Barriers to effective HRM / B. Kane, J. Crawford, D. Grant // International Journal of Manpower, Vol. 20, No. 8, p. 494-515. 16.Lado, A. A.(19994) Human resource systems and sustained competitive advantage: competence-based perspective / A. A. Lado, M. C Wilson // Academy of Management Review, Vol. 19, No. 4, p. 699-727. 17.MacDuffie, J.P. &Krafcik, J.F. (1992). Integrating technology and human resources for highperformance manufacturing: Evidence from the international auto industry. In Kochan, T. &Useem, M. (eds.), Transforming organizations.New York: Oxford University Press. 18.Martin, James (1995). The Great Transition: Using the Seven Disciplines of Enterprise Engineering. New York: AMACOM. ISBN 978-0-8144-0315-0., particularly the Con Edison example. 19. Mitchell, J., Coles, C., and Keane, J. (2009) Upgrading along value chains: Strategies for poverty reduction in Latin America London, UK: COPLA Global - Overseas Development Institute 20.Ostroff, C. (1995). Human resource management:Ideas and trends in personnel, June 21, Issue number 356, CCH Incorporated. 21.Pathania-Jain, G. (2001), Global parents, local partners: A value-chain analysis of collaborative strategies of media firms in India, Journal of Media Economics, Vol. 14, No. 3, p. 169-187. 22.Pearson, G. (1999), Strategy in Action, Prentice Hall Financial Times. 23.Pfeffer, J. (1994). Competitive advantage through people: Unleashing the power of the work force. Boston, MA: Harvard Business School Press. 24.Pfeffer, J. (1998), The Human Equation, Harvard Business School Press, Boston, MA. 25.Porter, M. E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance, New York: Free Press. 26. Porter, M. E. (1996). What is strategy? Harvard Business Review, November-December, 61-78. The value chain 27.Porter, M. E. (1998) Competitive Advantage: Creating and Sustaining Superior Performance / New York: The Free Press. 28.Porter, M. E. (19990)The competitive advantage of nations // Harvard Business Review, March-April, p. 73-93. 29.Rainbird, M. (2004), A framework for operations management: the value chain, International Journal of Physical Distribution & Logistics Management, Vol. 34, No. 3/4. 30.Schuler, R.S. and Jackson, S.E. (1987), ''Linking competitive strategies with human resource
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management practices'', Academy of Management Executive, Vol. 1, pp. 207-19. 31.Schuller, R. S. A quarter-century review of human resource management in the US: the growth in importance of the international perspective / R. S. Schuller, S. E. Jackson // Management Review, 2005, Vol. 16, No.1, p. 11-35. 32.Strandskov, J. Sources of competitive advantages and business performance // Journal of Business Economics and Management 2006, Vol. 7, No. 3, p. 119-129. 33.Svensson, G. (2003), Consumer driven and bi-directional value chain diffusion models, European Business Review, Vol. 15, No. 6, p. 390-400. 34.Thompson, A. A. & Strickland, J. A. (2003), Strategic Management: Concepts and Cases, Thirteenth ed., McGraw-Hill. 35.U.S. Department of Labor (1993). High performance work practices and firm performance, August. 36.Ulrich, D. Organizational capability: creating competitive advantage / D. Ulrich, D. Lake // Academy of Management Executive, 1991, Vol. 5, No. 1, p. 77-92. 37.Wright, P .M. Human resources and the resource-based view of the firm / P. M. Wright, B. B. Dunford, S. A. Snell, S. A. // Journal of Management, 2001, Vol. 27, No. 6, p. 701-721. 38.Wright, P.M. and McMahan, G.C. (1992), ''Theoretical perspectives for strategic human resource management'', Journal of Management, Vol. 18 No. 2, pp. 295-320.
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"Assessing The Effectiveness Of Grievance Redressal Systems In Labour Intensive Units in Bareilly, Uttar Pradesh"
Ms. Payal Johari Assistant Professor Lal Bahadur Shastri Institute of Management & Technology, Bareilly ABSTRACT The souring relations between the management & workers in India in the recent past poses a threat to the sound industrial environment of the country and calls for an in-depth screening of factors leading to these conflicts. Also it is essential to examine the effectiveness of the grievance procedure followed in companies and to find out whether the prescribed norms under Standing Orders (Industrial Employment Act 1946) are being complied with or need correction. This topic is especially undertaken with an objective to learn the importance of Grievance Redressal in current Industrial Context featured by aggressive, unionized workforce. Keywords- Grievances, Conflicts, Grievance redressal system, standing orders. Assessing the Effectiveness of Grievance Redressal Systems in Labour Intensive Units in Bareilly, Uttar Pradesh The independence struggle was marked significantly by the dissatisfaction among the labor class in India who started raising voices of their complaint related to higher working hours, low wages and ruthless behavior. Since then the tussle between the worker and the employer has been growing. Then it was due to the British Raj and now it's due to globalization. The current industrial environment marked by growing labor unrest signifies that things have actually not changed much. Then it was the issue of independence from foreigners and now it is the issue of dissatisfaction over labor management relations mainly in the MNCs. Not many Indian companies will depict this unrest. The Indian Labour market has also witnessed a sea change, in terms of increase in unionized workers, psychographics, literacy levels etc. Obviously the unorganized labor constitutes the major part but the organized labour too has shown significant changes. The developments that took place last year in the Gurgaon-Manesar belt have raised serious concerns to the management and the government as there is a growth in militancy among labour unions. Such incidences keep on occurring in various parts of the country encompassing even the smaller industrial areas. In this article, we explore certain essential issues concerning worker grievances. Firstly, we intend to explain the importance of grievance systems in organizations especially in current conditions. Next we seek to evaluate the effectiveness of grievance Redressal system in industries and lastly we explore main reasons of grievances and how to handle them effectively. These research objectives were pursued through the empirical study of labor intensive units in and around Bareilly. The data was gathered through structured questionnaires having multiple choice questions. The main findings showed that apart from the usual reasons of grievances like overtime, leaves etc one of the important of grievances and industrial conflicts is avoiding the imaginative problems of workers. The study also discovered slight discrepancies in the implementation of the grievance procedure as mentioned in the Standing Orders.
Introduction
Like many other formal mechanisms existing in an organization, the grievance procedure also tends to become procedure oriented rather than outcome oriented. In other words, following laid down procedures rather than the speedy redressal of grievances tends to become the priority of the management. This causes delay in settlement of issues that leads to frustration which in turn not only lowers productivity but also the morale of the workers. This state of affairs leads to a situation where employees take recourse to extra organizational methods such as
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Assessing The Effectiveness Of Grievance Redressal Systems In Labour Intensive Units in Bareilly, Uttar Pradesh
union pressures, personal contacts and the likes for redressal of the grievances. For the past some time, it has been noticed that in disguise of Trade Union/Associations, workers of the company are writing letters to outside Agencies/Authorities including high dignitaries and Political Leaders. This practice is considered to be against the code of conduct enshrined in the Service Rules of the employees. Grievances stem from management policies and practices, particularly when they lack consistency, fair play and the desired level of flexibility. Grievances may also arise because of intra-personal problems of individual employees and union practices aimed at reinforcing and consolidating their bargaining, strength. The absence of proper twoway flow of communication can indeed be a fertile ground for breeding grievances and harming peace and harmony of the organization. Research Objective The objective of this research is to find out the effectiveness of grievance redressal systems. (Henceforth mentioned as GRS) set by Industrial Employment Act 1967 in manufacturing units. Also the study seeks to explore the major causes of dissatisfaction among workers and the most preferred ways to handle them. It is intended to evaluate the overall effectiveness of the grievance mechanism in redressing workers concerns. Literature Review Employees differ as individuals, in their needs, expectations and behavior. When their needs are not satisfied or their objectives are not achieved, the result is employee dissatisfaction. It is not an easy task for the management to keep all the employees satisfied and motivated, all the time. This results in the employee dissatisfaction and also results into the employee de-motivation which is not only negative for the organizational performance but also make the impact on the organizational culture. The grievance procedure of an organization enables employees to present and show their dissatisfaction and problems in front of the top and upper level management. A study of 51 organizations by Sharma (1995) observed that grievance redressal is one of the three critical determinants of labour management relations and supervisory management relations. Yet he noted that even in companies with a relatively better track record of labour management relations, the absence of a proper grievance Redressal mechanism has been identified as a major lacuna. The Standing orders are the rules set out in the schedule of the Industrials Employment Standing Orders Act, 1946 comprising of total 11 matters. Amongst these the 10th matter relates to means of redress for workmen against unfair treatment or wrongful exactions by the employer or his agents or servant also called as Grievance Redressal System The International Labour Organization (ILO) clarifies a grievance as a complaint of one or more workers with respect to wages and allowances, conditions of work and interpretation of service stipulation, covering such areas as overtime, leave, transfer, promotions, seniority, job assignment and termination of service. However, The Model Grievance procedure (Government of India, 1969) The National Commission on labour, Ministry of labour, employment and rehabilitation provides the following definition of grievance, "Complaints affecting one or more individual workers in respect of their wage payments, overtime, leave, transfers, promotion seniority, work assignments and discharge would constitute a grievance. Where the points of dispute are of considerable magnitude, they will fall outside the scope of this procedure". The feeling of dissatisfaction sometimes may be verbally shared or kept within or else it may be expressed in written or oral forms. Nevertheless as long as dissatisfaction with the system persists a workers performance may be adversely affected. At times, the discontent may be on account of inadequate or distorted information or even on imaginary grounds. The fact, however, remains that dissatisfaction exists and necessary action must be initiated by the
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management to remove the causes-real or imaginary-for such discontent as to ensure higher level of employee's commitment to work. There are several ways in which workers express their dissatisfaction ranging from a passive indifference or apathy to a more aggressive reaction of hostility or even violence. Acts of indiscipline, absenteeism, loitering, restriction in output and the like are some other forms of behaviors which can be attributed to feelings of frustration and dissatisfaction among employees. All these actions are often expression of some deep rooted problems encountered by the employees. They provide useful data on the basis of which the management can diagnose the problem and can initiate corrective action. Unexpressed dissatisfaction also needs to be watched so that corrective action could be taken before they get expressed in undesirable behavior. Although the precise nature of grievance differs from one organization to another in general they tend to fall under the following categories in most organizations: 1. Promotions 2. Compensation 3. Amenities 4. Service matters 5. Disciplinary action 6. Nature of job 7. Condition of work 8. Leaves In the past a detailed grievance procedures has been worked out by mutual agreement only in few units. Most of these units however did not have any machinery for the redressal of grievances. When day to day grievance piled up, the accumulated discontent of workers often culminated in industrial disputes. The matter regarding the formulation of a grievance procedure was therefore referred to the 15th session of the Indian Labour Conference, 1957 which formulated the Code of Discipline laying down that the management and unions would "establish" upon a mutually agreed basis a grievance procedure which will ensure speedy and full investigation leading to settlement. The guiding principle which was evolved under the code for this purpose and the Model Grievance procedure for adoption by the parties was settled in a tripartite committee in September 1958. The Industrial Disputes (amendment) 1982 provides for the reference of certain individual disputes to grievance settlement authorities. Section 9Cof the act stipulates that in every establishment in which one hundred or more workmen are employed or have been employed on any one day in the preceding twelve months the employer shall set up a time bound grievance Redressal procedure
MODEL GRIEVANCE PROCEDURE
Figure 1
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The GRS in an organization enable its employees to air their dissatisfaction. It is important that an organization has an effective GRS. This helps the organization to solve problems at the level of an individual rather than have them result in industrial unrest. Keeping track of employee grievances also helps an organization check its policies and procedures to avoid similar problems in the future. Having a good and effective GRS in an organization not only helps in maintaining good work culture but also have a great significance as it concerns the employee's career and his/her future within that organization. Therefore, a grievance should be analyzed and settled using a humane approach, along with procedural and legal approaches. However, care should be taken to avoid any violation of rules and regulations as this might result in future problems for the management. Research Methodology Relevant data was collected from labor intensive units in and around Bareilly with the help of structured close ended questionnaires. The study was both qualitative and quantitative one with data gathered through Purposive Judgment sampling. The IR/HR officers were identified for collecting data and were visited personally for getting clear views. The original sample size was 10 companies but due to unavailability and other managerial constraints data from 6 companies could be gathered .The study has used multiple choice multi-response scale that was measured by finding the mean score. Research Hypothesis The current study draws on the literature and explores grievance procedures from the perspective of all the 3 parties' viz., The Company, the Workers and the Government. Based on the nature of the current research problem, given the facts present in the literature, the following hypotheses are formulated: 1. Grievances originating out of imaginary grounds is an ignored but important reason of dissatisfaction 2. GRS is not implemented and handled effectively? Main reasons of grievances and ways to handle them effectively As stated above many reasons of grievances have been identified and major among them are: 1. Transfers, 2. Bad working conditions and 3. Tight service standards. Apart from these, the workers were equally discontented on issues related to 1. Coworker's behavior, 2. Their egoist nature, 3. Leaves and wages 4. Physical set up. An essential point here is that although companies have set up the GRS yet its implementation is not seriously taken. It was found that although the organizations are focusing on finding the reason of dissatisfaction, but only finding the reason is not enough until the companies should take the actions too. The companies surveyed accepted the fact that it is better to be proactive then to succumb to the industrial conflicts. Measures like conducting employee contact programs and taking regular feedback can help in minimizing workers grievances and can create a more cohesive work environment. Here feedback of workers regarding their supervisor's behavior, leadership skills etc can help in further planning of HR trainings. Also feedback of workers from their
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immediate supervisors can also improve communication between the management and workers. HYPOTHESIS 1 An important reason of dissatisfaction among workers causing industrial conflicts is ignoring of imaginative problems of workers. The study aimed at assuring this hypothesis because it has been found that majority of the conflicts crop up from trivial issues that are implicit in nature and are usually ignored by management. Here also the similar response was found that grievances other than related to work are not entertained by supervisors. They usually ignore cases of dissatisfaction arising due to reasons like favoritism, personal conflicts, and egos as they are not part of work.
Figure 2
Yes, the explicit reasons of dissatisfaction also emerged through this study. Fig 3 reflects the reasons of dissatisfactions in the companies surveyed. The workers were dissatisfied on mainly 3 issues the most important one being the irregular transfers. The workers had a basic problem that their personal data was not referred while assigning transfers. Instead of considering the nearby candidates other workers from far off places were sent that signifies lack of planning in assigning transfers. Similarly it is also clear that the officers are unaware of the employees personal details. Here the process of step-ladder approach to solve grievances was found to be ineffective in solving the issues
MAIN CAUSE OF DISSATISFACTION
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Working Tight condition Egoistic service s:Nature of Transfers Standard Canteen, Workers s restroom s etc 1 3 4 3
Wages
Leaves
MAIN CAUSE OF DISSATISFACTION
Figure 3: Main causes of worker's dissatisfaction Another major reasons of dissatisfaction were found to be inadequate working conditions specially rest times and other facilities. Workers were equally dissatisfied on service conditions including wages.
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GENUINE GRIEVANCE
HYPOTHETICAL GRIEVANCE
favourites m Transfers
working condit ions wages
Personal reasons of workers

working condit ions wages
Figure 4 Hypothetical reasons are major cause of dissatisfaction The hypothesis that imaginary problems do constitute to industrial unrest is hence proved correct. It is these small concerns that lay the path to much bigger problems leading to industrial conflicts. Hypothesis 2 GRS is not implemented and handled effectively? Another reason of this study was to find out whether this GRS is efficiently followed in organizations? The study revealed that companies have either set up grievance committees or some other measures to solve worker's issues as all units were having more than 100 workers. Some measures adopted to communicate workers about the GRS is by arranging meetings, communicating through notice boards etc. There was a contradiction found regarding communicating about redressal machinery to workers. On the one side companies are using notice boards to inform the employees and simultaneously it was also found that the officers did not give much importance in informing workers about the grievance systems in advance but usually inform as and when the need arises as shown in figure 5.Also in some cases union leaders were delegated the responsibility of communicating to the workers that was not strictly followed.
Figure-5
The committees for handling grievances consist of either only the management or both the parties. oreover majority of them followed the Step Ladder Technique where an aggrieved worker had to follow the channel from shift in charge to the top most authority. Here it is worth mentioning that all the companies surveyed were having maximum employee strength of 700 workers and a minimum of one union that was duly registered as well as recognized by the management. This is probably a reason for an indefinite answer received about the duration for
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redressing grievance. The disciplinary procedure included a Preliminary enquiry and a charge sheet followed by other steps. Punishments were therefore given after due enquiry and opportunity to clarify by the worker.
S.No. 1 2
Figure 6 Tabular view of hypothesis results Hypothesis Result Imaginative reasons constitutes majority of TRUE worker's grievances GRS is not properly implemented as per Somewhat prescribed norms TRUE
Result 80% of supervisors ignore such issues Slight loopholes found
Findings n More efforts are required at the management side to educate the workers about the existence and objective of the grievance redressal committee so that it can be better utilized. n The companies should try to reduce the dissatisfaction level of the employees by giving them posting near or in their home town so that their dissatisfaction can decrease and they can willingly focus on their work. n As per the organizational norms and conditions the way to handle and prevent grievance by step ladder approach is alright. n The frequency of initiatives for proactively dealing with worker's issues like feedback and contact programs etc should be increased and need to be better designed. Hence it was analyzed that management wishes to be proactive in managing grievances through methods like workers feedback, participation in grievance procedures etc. At SCCL Mines, a Grievance Redressal Mechanism has been formulated for its employees, advising the officers from time to time to put in their best efforts, to examine the grievances submitted by the workmen in a better manner at different stages and redress the grievances expeditiously.
CONCLUSION
This study revealed some major issues concerned with worker's grievances and its redressal. The management has to be equally concerned and responsive to the worker's grievances that arise out of not so important reasons. The imaginative problems like peer pressure, social status, favoritism etc need to be handled at the initial level itself so as to avoid any serious consequences in future. Implementing GRS is a mandatory requirement in industrial concerns employing 100 or more persons as per the Industrial Employment (standing orders) Act, 1946.It also stated that All complaints arising out of employment including those relating to unfair treatment or wrongful
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action on the part of employer or his agent, shall be submitted to the manager or other person specified in his behalf with the right of appeal to the employer. The state government under the Factories act, 1948 had framed rules requiring labor welfare officers to ensure settlement of grievances. References:
1. Industrial relations by C.S Venkataratnam.9th edition grievance and discipline handling. P.557 2. pg. 222,Labour And Industrial Law, S.N.Mishra 3. T.N.Chhabra And R.K.Suri; Industrial Relations-Concepts & Cases. Discipline & Grievance Handling. P.265, 266. 4. Times Of India Ascent 5. H.R.M.Review, March 2010 6. Study on Reforms and Restructuring Final Report of Meghalaya State Power Sector by Power Finance Corporation consultants. 7. www.timesofindia.indiatimes.com/india/Centre-told-to-form-Army-grievance-redressalpanel/articleshow/6931511.cms-Nov 16, 2010 8. www.meseb.nic.in/pfc/Vol Rev GRIEVANCE%20REDRESSAL.pdf
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Emerging Free and Open Source Software (FOSS) as a total Solutions for Knowledge Management in Academic and Special Libraries (ASL) of India
Sunil Goria Deputy Librarian, University Library, G.B. Pant University of Agriculture & Technology, Pantnagar-263145 India Abstract: Emerging FOSS as total solutions for knowledge management in Academic and Special Libraries (ASL) of India have been discussed. Present scenario of Indian ASL in knowledge management is also discussed. FOSS i.e. Koha, DSpace, Moodle, Linux operating system and Apache server are discussed in the paper. These FOSS have been emerging as a complete solutions for knowledge management activities in the digital environment from traditional library management system to advanced knowledge management activities like digital libraries management, e-learning management etc. FOSS special features, sharing of knowledge and economical aspects of FOSS are discussed so that these sources can be used in the Indian ASL for providing various information services. Keywords: Free and Open Source Software (FOSS), Open Source Software (OSS), Knowledge Management, Indian Libraries, Academic and Special Library, e-learning, Dspace, Koha, Moodle, Linux, Apache. 1. Introduction: In the present era of Information Technology (IT), the scientific research has been increased rapidly. There has also been increased inter disciplinary scientific research and technological innovation. As a result of this research, knowledge has been increased exponentially in the digital and printed form in various information sources and documents. The storage, processing and retrieval of information become necessary for all economic and social change. In this knowledge explosion era, it is difficult for researcher to get relevant information at the right time. So the management of recoded knowledge (i.e. knowledge management) through modern information technology has become essential to provide accurate, authentic and reliable information for research & development. Knowledge management (KM) includes capturing, organizing and storing information & knowledge and making this information & knowledge available to the right users at the right time. KM in digital environment brings together processes and technologies for sharing and using information & knowledge effectively. Our focus is on management of explicit knowledge in ASL of India using FOSS. Explicit knowledge is that has been or can be recorded in the form of document (i.e. print or digital). Tacit knowledge is that people carry in their minds and is not discussed here. The term open source was coined by Christine Peterson in 1998 (Bretthauer, 2002). The Open Source Initiative (OSI) is actively involved in open source community building. Proprietary software has restrictions placed by proprietors on use, and private modification, or with restrictions on copying or publishing of modified or unmodified versions while OSS have been developed by community or individual with the source code freely available to the public. Anyone may download and use the OSS, make changes to it as necessary, and redistribute it so that everyone can benefit from the modifications. Free softwares are available freely to download and use it but their source code may not be available publically. Some organizations have been producing quality, reliable and stable FOSS products form several years. As a result, FOSS is being increasingly used in developing and developed nations. Impact of FOSS on libraries and information centers all over the world is significant. FOSS have also been adapted in KM activities by leading organization in developed countries. Among developing countries, India has tremendous scope of FOSS for KM activities. In India, FOSS has also been started to use but it needs support from Government to increase its authentic utilization in ASL.
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2. Academic and Special Libraries (ASL) in India: India has one of the largest "Higher Education Systems" in the world. From 20 Universities and 500 Colleges at the time of Independence, it now has more than 500 Universities and 25,000 Colleges (Kakodkar et al., 2011). Apart from these educational institutions, many research institutions are working under CSIR (Council of Scientific and Industrial Research), ICAR (Indian Council of Agricultural Research), ICMR (Indian Council of Medical Research), DRDO (Defense Research and Development Organization), DST (Department of Science & Technology) etc. for research and development in India.Almost every college/university/institute has its own ASL or accesses its central library to fulfill the users' information need. These ASL are involved in management of knowledge available in printed as well as digital document through Information Communication Technology (ICT). 3. Need of FOSS in Indian ASL for KM: In the present era when the data is available in digital format and is required for various purposes in planning policy making, research, education, extension and solving the problem of society, management of knowledge in digital environment is become essential. Most of the Indian ASL are using proprietary software like LibSys, SOUL, SLIM, Alice for Windows, etc. as a Library Management System (LMS) or Integrated Library System (ILS). ICT is changing at very fast pace therefore no single tool provides all the features of KM. In the developing nations, it is very difficult for most of the ASL to adapt latest version or frequently update proprietary software for KM. Most of the Indian ASLs are facing following common problems with proprietary softwares: n Lack of state-of-art technology; n Costly (Cost of software and annual maintenance cost); n Lack of local modification/customization; n Costly training; n Support is provided only from software agencies as a result delay in timely support; n Lack of proper documentation; n Lack of open discussion forum; n Only Windows based platform of software creates virus problem, etc. 4. Knowledge Management in ASL: Libraries are playing vial role for managing knowledge available in printed and digital documents. Now the traditional library management activities are shifted to modern computerized system which required huge cost for the purchase and maintenance of ICT equipments and proprietary software. It can be overcome by providing state of art technology through FOSS. In present age of digital environment, e-learning management and digital library management are also become essential for ASL to fulfill the information need of online users. The main reasons in not adapting open source tools are nonavailability of proper training, guidance and support as and when required. It is high time for adapting FOSS in Indian ASL. 4.1 Emerging FOSS for KM in ASL: Number of FOSS are available for knowledge management but popular FOSS are Koha, Evergreen ABCD and NewGen Lib for library management; Dspace, Greenstone Digital Library Software, E-Print and Fedora for digital library management; Moodle and Brihaspati for e-Learning management. Five criteria (i.e. cost advantages, sources code, maturity, vendor lock-in and external supports) are identified to evaluate OSS by Kris Ven et al. (2008). Researchers have found that OSS support for open standard facilitate the development of compatible products and avoiding dependency on single vendor (J. West and J. Dedrick, 2006). The quality model considering the main four characteristics (functionality, usability, portability, Reusability) of OSS was suggested (Sung, Won Jun et al, 2007) for selection of OSS. Looking to current national and international scenario, the criteria for selection of FOSS are source code availability, cost advantages, usability, reliability, maturity, portability from one
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environment to another, online support, sustainability, adaptation of state-of-art technology, work in multi-user & multi-lingual environment, work on multi-operating systems, etc. Local modification is one of important factor in adaptation of software, so source code availability is most important features in FOSS. Free of cost with regular update is also important factor for selection of FOSS in developing countries including India. Following worldwide accepted FOSS have been selected for the present study, which follows state of art technology for KM. n Koha for LMS n DSpace for management of digital library/repository n Moodle for management of e-Learning system n Linux for operating system n Apache for web server These FOSS have been used with other supporting FOSS (i.e. for relational database management system, web server, operating system etc.) to make complete web based system. PostgreSQL is powerful open source relational database system which is used by Koha, Dspace, Moodle etc. 4.2 Overview and features of FOSS: The selected FOSS for knowledge management have been discussed below with key features. 4.2.1 Koha (http://www.koha.org): In the present era of fast changing Information Communication Technology (ICT), it is very essential for IAL to adapt latest technology for library management and web-based services. IAL are required authentic & standard open source to manage various in-house library management activities. Koha is internationally recognized open source for LMS. It is first open source LMS and developed in 1999 by Katipo Communications, New Zealand. It is being used in many libraries of all size around the world and non-profit organizations. The Koha system runs on Linux platform with PERL, Apache2 and Mysql database system. Fully implemented modules include Web-OPAC, cataloging, circulation, serials, acquisitions modules, patron management, report generation, branch relationships, and more (Koha Community, 2012). Koha has Z39.50 technology and MARC-21 standard, which are essential for sharing of knowledge in web environment. It has incorporated web 2.0 features. The users of Koha are supported through documentation, Koha Wiki, general mailing lists & developer mailing lists, real-time chat, community portal, etc. Multilingual and other support gives it international appeal to use Koha. Looking the features and popularity of Koha, vendors have been started supporting to Koha for smooth working of library activities. Over in all Koha is full-featured integrated library system. It uses a dual database design that utilizes the strengths of the two major industry-standard database types i.e. text-based and Relational Database Management System. It is built using library standards and protocols that ensure interoperability between Koha and other systems and technologies, while supporting existing workflows and tools. World Wide Web technologies like XHTML, CSS and Javascript making Koha a truly platform-independent solution. No vendor lock-in libraries are free to install and use Koha themselves if they have the in-house expertise. Koha latest version is released with new features. A study was conducted by Linda M. Riewe (2008) during October 30, 2007 to January 3, 2008 on most widely used FOSS (i.e Koha and Evergreen) and proprietary ILS. The Evergreen respondents are all public libraries in Georgia, the proprietary ILS respondents are mainly in North America, and the Koha respondents are the most geographically dispersed. Riewe found that 70% of OSS respondents said they chose their ILS because it was the most cost effective compared with 46% of proprietary ILS respondents. Libraries using Koha customize the source code (23%) more
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often than the libraries using proprietary ILS (7%). Koha most exceeded proprietary ILS in affordability, but proprietary ILS most surpassed Koha on installation smoothness. Users of both Koha and Evergreen were significantly more satisfied than users of proprietary ILS with the customizability of their system. Koha is used in academic, special and public libraries like proprietary ILS while Evergreen is used mostly in public libraries. Overall, the satisfaction of open source ILS respondents is slightly higher than that of proprietary ILS respondents (4.2 vs. 3.9 on a 5-point scale). In August 2008, the Government of Kerala, a well-developed state lying in the south-west part of India, has made a decision in principle to make Koha as its official software for computerization of libraries under Government control. Delhi Public Library (DPL) is one of largest public library of India. Its total collection is over 14 lakh books in Hindi, English, Urdu, Punjabi & other Indian Languages. DPL is first public library in India using the Koha 3.0 for library management and published its OPAC on web. A union catalogue of public libraries in the Konkan region of Maharashtra state of India have established (www.granthalaya.org) thorough Koha 3.0. The union catalogue started with five libraries and aim to cover as many of the hundreds of public libraries in the region as possible. Koha-India is an initiative from RDG Library Services to help Koha, find a prominent place in Indian Libraries. The objective is to provide a common platform for Indian Koha users to get Koha working at their libraries by providing assistance in installation, configuration, customization of Koha and data migration from their existing library software to Koha, etc. 4.2.2 Dspace (http://www.dspace.org/): Development and management of digital library has become essential component of modern library system to manage full text digital and multimedia document. DSpace is well known FOSS for management of digital repository/library. The MIT (Massachusetts Institute of Technology) Libraries and HewlettPackard (HP) jointly developed DSpace. DSpace accepts all forms of digital materials including text, images, video, and audio files. It indexes work, so users can search and retrieve the items. It preserves digital document over the long period. It is designed with a flexible storage and retrieval architecture adaptable to a multitude of data formats and distinct research disciplines, known as "communities." Each community has its own customized user portal that can use the community's own practices and terminology. Open Archives Initiative Protocol for Metadata Harvesting (OAI-PMH) has given tool for sharing of knowledge through digital libraries. Exporting digital content, along with its metadata, in a simple XML-encoded file format are supported by DSpace. DSpace allows contributors to limit access to items, at both the collection and the individual item level. It has a very active community of developers, researcher and users to contribute expertise and support through the DSpace listserv at SourceForge, DSpace-Tech, and the project wiki. DSpace uses the Handle System from CNRI to assign and resolve persistent identifiers for each digital item. Handles in DSpace are currently implemented as URLs. Lucene search engine and query language are also important features of DSpace. Main benefits of using DSpace are getting your research results out quickly to a worldwide audience and having a persistent network identifier for your work that never changes or breaks. The creation of a Digital Repositories for sharing of knowledge using DSpace is growing. The Directory of Open Access Repositories (OpenDOAR) lists highest use of DSpace 29% and second poison use of Eprints 13% in the world indicating a wide acceptance of it world over. The directory shows 27 (out of 39 i.e. 69%) Digital Institutional Repositories in India use DSpace software while E-print is used by 9 organizations (i.e. 23%). According to a web survey (Biswas and Paul, 2010), 72 Institute has installation the repository software various part of the world. In ths survey, Dspace with 42 installations seems to be the most popular choice among the digital
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library software packages and Greenstone has 7 installations. 4.2.3 Moodle for management of E-Learning system (http://moodle.org): Development of Internet technology, multi media and availability of documents in digital form have given great opportunity for electronic learning (i.e. e-learning). E-Learning is generally designed to guide users/students through information or to help user/students perform in specific tasks. Elearning has been increased in university system of all over the world. Most popular open source course management system for e-learning system is Moodle. Martin Dougiamas is the founder and manager for the whole Moodle project. Moodle uses pedagogical principals to help educator for creating effective online learning communities. It is an ongoing development project and provided freely as OSS (under the GNU Public License). Moodle can be installed on any computer that can run PHP, and can support a SQL type database. It can be run on Linux, Windows and Mac operation system. Moodle has good documentation available on website for teachers, administrators and developers. It provides support through e-mail, discussion, chat, Frequently Asked Questions, wiki etc. Moodle supports authenticating against LDAP (Lightweight Directory Access Protocol), which is the most widely-used standard protocol for this purpose. Moodle Tracker keeps track of all issues related to Moodle. Important Features of Moodle's are suitable for 100% online classes as well as supplementing face-to-face learning, course management, strong security, site management that allow local customization, user management that reduce admin involvement with high security, students can upload their assignments (any file format) to the server, different types of forums (e.g. teacher-only, course news, open-to-all, and one-threadper-user), different types of module, etc. In India, some of the national important institutes like Indian Institute of Technology (IIT) Chennai, National Academy of Agricultural Research Management (NAARM), Hyderabad etc have been used Moodle for e-learning. 4.2.4 Linux for operating system (http://www.linux.org/) : Linux is an operating system that was initially created by a young student, Linus Torvalds, at the University of Helsinki in Finland. The kernel, at the heart of all Linux systems, is developed and released under the GNU General Public License and its source code is freely available to everyone. There are now hundreds of companies, organizations and individuals that have released their own versions of operating systems based on the Linux kernel. Linux's functionality, adaptability and robustness, has made it the main alternative for proprietary UNIX and Microsoft operating systems. Linux has been adopted worldwide primarily as a server platform and, IBM (International Business Machine) and Hewlett-Packard stared support its ongoing development. Commercial application software companies also use Linux as operating system. Linux as an operating system has been successfully adapted world over. Linux and Apache are highly matured software (Kris Ven etc. 2008). With the efforts of developers of desktop management systems, office suite project OpenOffice.org and the Mozilla web browser project, etc are wide range of applications that run on Linux. There are Linux groups in almost every country and region in the world. Linux is highly matured operating system. Several enterprise Linux distributions are also available such as Red Hat Enterprise Linux and SUSE Linux Enterprise Server. These products are based on freely available Linux distributions, but include additional services for enterprise customers. Most of the organizations are satisfied with a freely available Linux distribution. Use of Linux will reduced virus threat which is major problem in computerization. There is evidence that Linux is more reliable than Windows applications and other proprietary software. Linux based systems are faster and secured than many proprietary operating systems. Linux has very good online documentation, tutorials, discussion forum etc. for its users and developers. There are number of features in Linux but important features are multitasking (i.e. several programs running at the
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same time), multi-user, multiplatform, client & server system, memory protection between processes so that one program can't bring the whole system down, dynamically linked shared libraries, all source code is available, multiple virtual consoles, supports several common & special file systems, etc. 4.2.6 Apache for web server (http://httpd.apache.org/) : The Apache Software Foundation provides support for the Apache community of open-source software projects. The Apache HTTP (Hyper Text Transfer Protocol) Server Project commonly referred to as Apache is a collaborative software development effort aimed at creating a robust, commercial-grade, secure, efficient, extensible server and freely-available source code implementation of an HTTP web server for modern operating systems including Linux, UNIX and Windows NT etc. The project is jointly managed by a group of volunteers located around the world, using the Internet and the Web to communicate, plan, and develop the server and its related documentation. Apache has been the most popular web server on the Internet from 1996. According to Netcraft, a networking consulting company in England is known worldwide for its Web Server Survey, Apache served 50.43% of all websites as of October 2008. Latest version of Apache is a major release and the start of a new stable branch, and represents the best available version of Apache HTTP Server. New features include smart filtering, improved caching, proxy load balancing, graceful shutdown support, large file support, re-factored authorization, etc. Online documentation for apache is available in several formats. Apache supports a variety of features, many implemented as compiled modules which extend the core functionality. These can range from server-side programming language support to authentication schemes. It support common language interfaces i.e. perl, python, TCL (Tool Command Language) and PHP. Other features include a proxy module, a useful URL rewriter, custom log files, and filtering support. Popular compression methods on Apache include the external extension module. Virtual hosting allows one Apache installation to serve many different actual websites. It is also supported by several GUIs (Graphical User Interfaces) which permit easier, more intuitive configuration of the server. 4.3 Training and support on FOSS: Comino and Manenti (2005) identify three ways of government policies may impact the adoption of FOSS: (1) mandated adoption, (2) information provision, and (3) subsidies. Many governments have already decided to support FOSS. Brazil mandated OSS will be adopted by municipal governments. France installed OSS on its desktops for computerizing much of the country's administration. Singapore is offering tax breaks to companies that use the open source Linux operating system instead of Microsoft Windows. Germany has done an agreement with IBM aimed at offering discounts on IBM machines with pre-installed Linux. In the United State of America, many public education consortiums are promoting OSS. It is fact that FOSS communities are very fast in adaptation of state-of-art technology. The main reason for fast adaptation of state-of-art technology in FOSS is development of FOSS by various experts with the open discussion of problems. Most of the Indian ASL and other libraries have been using commercial LMS. Many authors agree that lack of reliable technical support is one of the major inhibitors for OSS mass adoption (Brown, 2002; Goode, 2005; Miralles, Sieber and Valor, 2006). In lack of proper training and support, very few ASL of India use FOSS for library management. Use of Koha has been started by some of Indian ASL but use of commercial software for development of digital library is very rare in India. DSpace and Greenstone have been used for development of digital library in some of Indian ASL. It is found that use of Moodle is very initial stage in Indian ASL. Linux as an operating system and Apache as a web servers have been used in Indian ASL. The Linux and Apache are used by commercial software as well as OSS.Training & support of Linux platform is very essential to use FOSS like Koha, DSpace,
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Moodle. Looking to the importance of FOSS, now private firms like Nucsoft OSS Labs, Ecole Solutions Pvt Ltd etc have been started to support and training for the FOSS like Koha and DSpace. 5. Conclusion: Nowadays FOSS has become authentic source in the areas of ICT. Many useful FOSS are available for KM. Selection of right FOSS for KM and promoting the selected source will save the time, money and manpower of the country. In the paper author has suggested FOSS on the basis of utility, current trend, information from documentary sources and web sites. It can be changed on availability of better options. Use of common FOSS in ASL for KM will increase interaction and sharing of knowledge. Training and support on suggested FOSS will play a key role in KM activities among library professionals of India. It will increase sharing of knowledge among researchers, academicians, students, knowledge managers etc. Apart from the cost of propriety software and annual maintenance charges, most of Indian ASL spends money on training also. FOSS has bright future all over the world including developed and developing countries like India. Use of FOSS has been increased continuously in many developing and developed countries. Linux and Open Office need to be encouraged to use in ASL. In India, efforts are made to use some of OSS like Koha in Indian Agriculture libraries and Government libraries in Kerala, etc but more efforts are required in this direction so that use of FOSS can be increased in Indian ASL. References: 1. Antonelli, C. (2007), "Knowledge as an essential facility," Journal of Evolutionary Economics, vol.17, 451-471. 2. Bruce, G; Robson P and Spaven, R (2006) "OSS opportunities in open source software CRM and OSS standards,"BT Technology Journal. Vol 24, (1), 127-140. 3. Gold, A. H.; Malhotra, A. and Segars, A. H. (2001), "Knowledge Management: An Organizational Capabilities Perspective," Journal of Management Information System, vol. 18, (1), 185-214. 4. Demidova, Elena and others (2007), " Services for Knowledge Resource Sharing & Management in an Open Source Infrastructure for Lifelong Competence Development" Proceedings of 7th IEEE International Conference on Advanced Learning Technologies. 5. Kakodkar, A, Pai, TVM, Bhartia, H, et al. (2011) Taking IITs to Excellence and Greater Relevance: Report of Dr Anil Kakodkar Committee. New Delhi: Ministry of Human Resource Development, Government of India. Retrieved on December 30, 2011 http://www.education.nic.in/tech/KakodkarCommitteeReport-05132011.pdf 6. Ven, Kris; Verelst, Jan and Mannaert, Herwig. (2008), "Should You Adopt Open Source Software?," IEEE Software, vol. 25 ( 3), 54-59. 7. Lin, Lihui. (2006), "Impact of Users' Expertise on the Competition between Proprietary and Open Source Software," Proceedings of the 39th Hawaii International Conference on System Sciences. 8. Maybury, M. T. (2002), "Knowledge on demand: Knowledge and expert discovery," Journal of Universal Computer Science, vol. 8 ( 5), 491-505. 9. Chira, O.; Chira, C.; Roche, T.; Tormey, D. and Brennan, A. (2006), "An agent-based approach to knowledge management in distributed design," Journal of Intelligent Manufacturing, vol. 17, 737-750. 10.Parker, Kevin R.; Nitse, Philip S. and Flowers, Kay A. (2005), "Libraries as knowledge management centers," Library Management, Vol. 26( 4/5) 176-189. 11.Carchiolo, Vincenza and others (2007), "A model for a web-based learning system," Information System Frontiers, vol. 9, 267-282.
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12.Zhang, W. Y. and Yin, J. W.. (2008), "Exploring Semantic Web technologies for ontologybased modeling in collaborative engineering design," The International Journal of Advanced Manufacturing Technology, vol. 36, 833-843. 13.Zarogulko, Yu. A. and Borovikova, O. I. (2008), "An Approach to Constructing Knowledge Portals," Optoelectronics, Instrumentation and Data Processing, vol. 44(1). 75-82. 14.Brown, K (2002) "Opening the Open Source Debate: A White Paper", Alexis de Tocqueville Institution. Available: http://www.adti.net/ip/opensource.pdf . 15.Goode, S. (2005). "Something for nothing: management rejection of open source software in Australia's top firms", Information & Management, 42(5), 669-681. 16.Miralles, F.; Sieber, S. and Valor, J. (2006). "An Exploratory Framework for Assessing Open Source Software Adoption", Systmes d'Information et Management, 11(1), 85-103. 17.Comino, S., and Manenti, F. (2005). "Government Policies Supporting Open Source Software for the Mass Market", Review of Industrial Organization, 26(2), 217-240. 18.West, J. and Dedrick, J. (2006), "Scope and Training of Deployment: Moderators of Organizational Adoption of the Linux Server Platform", International Journal of IT Standards Research, Vol 4( 2), 1-23. 19.Bretthauer, D. (2002). "Open source software: A history", Information Technology and Libraries, 21(1), 3-10. Retrieved May 15, 2008, from http://www.lita.org/ala/lita/ litapublications/ital/2101bretthauer.cfm. 20.Riewe, Linda M. (2008). "Survey of Open Source Integrated Library Systems", San Jos State University, The Faculty of the School of Library and Information Science, Master of Library and Information Science Thesis, August, 102 P. 21. Biswas, Goutam and Paul, Dibyendu (2010)"An evaluative study on the open source digital library softwares for institutional repository: Special reference to Dspace and greenstone digital library", International Journal of Library and Information Science Vol. 2(1).1-010. 22. Thorat, Sukhadeo (2009). "Higher education - Approach, Strategy and Action Plan in the 11th Plan (Convocation Address)", University News, vol. 47 (37) September 14-20, p 30. 23 Sung, Won Jun; Kim, Ji Hyeok and Rhew, Sung Yul (2007). "A Quality Model for Open Source Software Selection", Sixth International Conference on Advanced Language Processing and Web Information Technology, IEEE Computer Society. Websites accessed during November 2009 - 2011. 1. http://www.dspace.org 2. http://www.koha.org 3. http://www.opendoar.org 4. http://www.linux.org 5. http://www.ugc.ac.in 6. http://www.wikipedia.org 7. http://www.inflibnet.ac.in/ 8. http://www.cdac.in/ 9. http://knowledgecommission.gov.in/ 10. http://www.ncsi.iisc.ernet.in/ 11. http://home.nic.in/ 12. http://delnet.nic.in/
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LANDSLIDE RESPONSE MANAGEMENT IN HIMALAYAS

Jog Singh Bhatia Master Instructor & International HAZMAT Specialist Posted at 8th Bn., RRC, Gauchar, ITBP, MHA, GOI. Abstract: In India, the main cause of heavy losses during landslides in mountains is the lack of awareness among the common residents about the first aid, safety routes, warning signs and first response to landslide emergency situation. Other main cause of great losses is poor disaster and response management system of administration. The change agents of society like, dedicated NGO's, teachers, senior citizens and govt. officials need be trained as a trainers and be given time-slab responsibility to spread awareness regarding response to landslides in the work area assigned to them in their locality. The execution of this awareness programme be managed by District Disaster Management Authority under the chairman ship of Deputy Collector. Local print and electronic media can play a very important role in spreading awareness about landslides in common residents. A well equipped and coordinated quick response teams under Deputy Commissioner, comprising of trained rescue workers be kept ready for mitigation measures and quick response round the clock near vulnerable areas especially during monsoon season. Keywords: Awareness, Preparedness, First Aid, Safety Routes, Warning signs, Mitigation Introduction: Building culture of prevention is not easy. While the cost of prevention had to be paid in the present, its benefit lies in the distant future. Moreover, the benefits are not tangible; they are disasters that did not happen ---- Kofi Annan, UN Secretary General, 1999 Whether it is a devastating landslide of Darjeeling in 1968 or on 18th August, 1993 at Malpa, disaster is unlike anything else in human experience. It strikes quickly and changes the lives of large number of people. Its effects are left long after the event. In India, the main cause of heavy losses during any disaster is the lack of awareness among the common masses regarding the first aid, basic search and rescue techniques, safety routes and zones, reacting to warning signs and signals. To study the level of awareness among common masses in India and preparedness level by the communities and government is also a key subject of study. It is said that, in India, we are sitting on the dynamite of disasters which can explode any time without any pre-warning. Hence, the need for and importance of studying systematically the subject of landslide management. Objectives: 1. To study the level of awareness and preparedness by local residents to the disaster caused by landslides in Himalayas (India). 2. To study the level of response management by government to cope up with the disaster caused by landslides in Himalayas (India). 3. To give suggestions and recommendations to spread awareness among common masses, improve response management by govt. and Community capacity building to cope up with emergency situation generated by sudden onset of landslides in Himalayas (India). Scope of Study: Main emphasis of the study is the prevention of landslides. Where prevention is not possible, emphasis is on reducing its consequences. The scope of the study covers the awareness in common residents, preparedness, plans and policies of government and the type of training
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Landslide Response Management in Himalayas
which should be imparted to rescue workers and common masses for both prevention and mitigation of disasters caused by landslides in Indian scenario, hazard mapping and resource mapping. The study is conducted at Pitthoragarh city. Pitthoragarh is a vulnerable city to landslides, earthquake and avalanche related disasters. It has got a history of earthquakes and landslides due to which it has suffered a big loss of life and property. 1. The study limits itself to the disaster management agencies operating in Pitthoragarh City because of its past disasters profile, convenience reasons and to make study manageable. 2. The study is more concerned with practice than policies 3. The study restricts itself only to well reputed and govt. registered agencies engaged in planning and disaster management This will make the study more useful for administration and society as a whole and develops the scope for development of disaster management plans for various cities in India. Respondents: A total of 300 respondents from various segments of society with different education and financial background and of both the sexes were selected by stratified sampling and administered a questionnaire to analyze the level of awareness to landslide disasters in common residents. To study the level of preparedness by govt. of India, 200 respondents from various govt departments who play the stakeholders during any landslide were personally interviewed by the researcher. Modern technology is capable of predicting landslides and many other natural disasters like hurricanes, tornadoes, tsunamis and now sometimes earthquakes. However, the warnings issued before such an event are often ignored to a notorious degree. On the midnight of 18th August,1998 the Malpa rock avalanche tragedy, hit headlines as it instantly killed 221 people and wiped out the entire village of Malpa on the right bank of river Kali in the Kumaun Himalaya. Famous dancer Protima Bedi was also killed during this disaster. The sudden rock fall from heights of 3000 to 2100 m, which occurred on 18 August 1998 at 3.00 a.m., brought down rock chunks varying from 1 to 5 m in size. The dust cloud generated spread 1 to 2 km on either side of the Kali valley. The rock fall started on 16 August morning, giving an early warning and killing three mules. The rock fall was followed immediately by flash flood in the Malpa stream due to bursting of the debris dam that was formed due to rockfall. The Malpa stream was blocked at a height of 2280 m. The flood brought huge amount of boulder debris to the other side of village Malpa where the camping site of KailasMansarovar tourists and pilgrims was located. The dam gave way on 17 August night. On 18th night there was yet another rock fall blocking the stream again and giving rise to a lake. On 19th evening the lake water burst out and flushed some of the dead bodies into the Kali river. The rock fall continued till 21 August. In all 221 people died including 60 members of KailasMansarovar team, 120 porters, 9 GREF personnel, 8 ITBP people (Parminder Singh, 1997). Thus, we have seen that many disasters like landslide cast their shadows before the actual onset. Due to lack of professional environment, our officials fail to recognize the alarm raised by the nature itself, and ultimately lead our innocent citizens to the grip of death by inviting disasters. Common people due to lack of awareness are unable to heed the signals of nature and fell easy prey to disasters caused by landslides. Moreover, most of the time, administration also fails to generate warning signals and execute evacuation, well in time. George Santayana said. Those who cannot remember the past are condemned to repeat it. To analyze the level of awareness and preparedness among common residents of a landslide prone area, Pitthoragarh city of Uttarkhand state, regarding quick response to emergency situation created by landslide, a study was carried out considering the following parameters:
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1. Awareness to Landslide proneness and vulnerability in their city. 2. Awareness of natural warning signs and issued warning signals of landslide 3. First response by residents during landslide 4. Financial implications during landslides Taking into considerations hazards present in landslide prone area which have already or can in future invite a great disaster, information about awareness and preparedness of common residents to different nature of disasters need to be considered. Table 1.1 indicates the level of awareness among the common residents of a landslide prone city of Pitthoragarh, Uttarkhand. Table 1.1 Respondents having general awareness to response landslides in Pitthoragarh city Variable Awareness Awareness Evacuate the Updation of Having done about landslide about area and disaster plan insurance of prone zones of warming provide first home, work important city they live in signs and aid to victims place, school expensive signa's of as first etc. since last household landslide response one year items No % No % No % No % No % Student 6 12 5 10 20 40 3 5 5 10 Housewife 2 4 2 4 13 26 1 2 1 2 Teacher 18 36 8 15 28 58 2 5 7 15 Employee 4 8 20 40 37 74 7 15 10 20 Shopkeeper 5 10 8 16 36 72 13 25 5 10 Senior 4 8 4 8 25 50 5 10 3 5 citizens Total 39 13 45 15 159 53 33 11 33 11 Source: Primary Field Work As revealed in table 1.1, teachers have the maximum awareness (36%) while housewives have the least (4%) followed by senior citizens(8%) awareness about the landslide prone zones of the city they live in. This makes housewives and senior citizens more vulnerable group to disasters caused by landslides. For warning signs of landslide, employees (46%) have the maximum while housewives (4%) again have minimum awareness. In case the landslide occurs, employees have the maximum awareness about evacuating the area and provide first aid as a first response to the affected victims while housewives have minimum awareness. Table 1.1 reveals the only 11% of the total population of the city have updation of disaster management plan and also have got insured their household items to any such calamity. It means majority of population is not aware of financial aspects for any crisis situation caused by landslide. Suggestions and Recommendations for developing awareness among common residents: To give training to common residents, a team of trained personnel need to be organized at the district headquarter who select some change agents in communities residing in landslide vulnerable areas. These change agents like, dedicated NGO's, teachers, senior citizens and govt. officials be trained as a trainers and be given responsibility to spread awareness in the work area assigned to them in their locality. Awareness workshops and seminars be organized at all public and private schools and colleges and educational institutions. They should be given honor and incentives time to time for their contribution and also given backup of resources fulfilling the community training needs. The administration of this awareness programme to be managed by District Disaster Management Authority under the chairman ship of Deputy Collector.
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Local print and electronic media can play a very important role in spreading awareness about landslides in common residents. Special features and articles on disaster's nature, causes and response skills be printed periodically in daily newspapers and talk shows, special programs on warning signs, response management be broadcast from local cable TV network time to time. Schools and colleges should include Disaster management as a subject of SUPW (Social Useful Productive Work) and at least one session of learning be provided every week for students in the form of lectures, workshops, group activities, quiz, mock exercise and visits to model places of safety. The program be strictly followed and report be sent to DEO every month about the activities held. At state level, Education Boards should include Disaster Management a compulsory subject for all classes and streams. The subject has been introduced by CBSE in 8th class. For practical exposure schools, college and universities should invite resource personnel from DDMA and should also appoint trained instructor/advisor on Disaster Management. Preparedness and Response Management by Government / City Administration A hazard becomes a disaster when it is not taken care and mitigated in the initial stage. Most of the time, the response system is activated by city administration only after the onset of landslide. This delay in response results in a great loss of life and property in India. With continues urbanization, the stakeholders of the development of society lay down their whole emphasis on economic development without taking into care the safety precautions and preparedness for unseen calamities and emergencies. Due to this, many a times, the economy build up in years is washed away in hours due to sudden onset of natural disasters like landslides. While preparedness is aimed at preventing a landslide from occurring, personal preparedness focuses on preparing equipment and procedures for use when it occurs, i.e., planning. Preparedness measures can take many forms including the construction of shelters, installation of warning devices, creation of back-up life-line services (e.g., power, water, sewage), and rehearsing evacuation plans. Preparedness is a continuous cycle of planning, organizing, training, equipping, exercising, evaluation and improvement activities to ensure effective coordination and the enhancement of capabilities to prevent and protect against disasters.(Source: FEMA) To study the level of preparation by the administration to deal with any crisis/disaster situation, researcher conducted a field survey in which he visited various government departments which are stakeholders of response management at the time of any emergency or disaster situation. The level of preparedness of government to face any disaster situation in Pitthoragarh city is analyzed by considering the following parameters: 1. Prevention and mitigation measures taken 2. Quick Response management 3. Resource Management 4. Rehabilitation management 5. Proper organization and coordination For the purpose of evaluating the preparedness and execution of planning's in practice researcher interviewed two hundred officials from various departments who are stakeholders of disaster management in Pitthoragarh city administration. Table 1.2 shows the response from various government department officials regarding their preparation to mitigate disaster
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caused by landslide if it occurs. Table 1.2 showing distribution of respondent's prevention aspects for flood disasters prevention of various departments in Pitthoragarh city DEPARTMEN TOTAL Establishment Adequate No coordinated Adequate RESP. of Landslie/ Cement bags Mock exercise eqpt. Not flood Control arranged at conducted in available Room vulnerable in city since last sites 3 years No. % No. % No. % No. % Deputy 50 0 0% - 50 100% 50 100% Commissioner's Office Drainage 30 0 0% - 50 100% 30 100% Department Uttarakhand 20 0 0% - 50 100% 50 100% fire service Health & Medical 50 0 0% - 50 100% 50 100% Total 200 Source: Primary field survey As indicated in table 1.2, district administration has not established any Landslide control room as a precautionary measure to have an eye on the developments of landslide, if it develops. As a precautionary measure to mitigate the developing landslide situation drainage department has only arranged availability of cement bags. Fifty percent of the officials of drainage department revealed that cement bags available are not sufficient enough ,practically to provide retrofitting at a vulnerable sites .Moreover, their stock is placed very much far away from vulnerable areas causing a very inefficient resource mapping. Further no mock exercise has been conducted since last three years to prepare and evaluate the response management of the administration. Table 1.2 further reveals that the officials from various government departments feel that they lack needful equipment to mitigate or to conduct proper search , rescue and evacuation operations. Suggestions and Recommendations to develop preparedness to Mitigate and respond to emergency created by landslides in India: The district administrations should not only take into consideration the lessons learnt from the past disasters but also follow the new lead provided by the fresh direction of prevention and mitigation taken up by Ministry of Home Affairs. Management Information System (MIS) need to be developed through state level institutions by providing training and organizing workshops for the government departments as well as NGO's and citizens from the public at large. Creation of a web enabled information system would also provide information and act as a link with other states and the central government in a calamity. A participatory approach to the planning and implementation process is recommended in order to maintain sustainability of the programs launched by the administration for Disaster Management. People's involvement is cardinal to the success of any initiative and it creates a selfregenerating process that requires less administrative interventions in the long run and eases pressure on the administration. This participation approach in cities, need to be modified to suit the urban context. The urban
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populace is not as attached to the community as they are ironically part of as their rural counterparts. Neither are they conscious of their environment and surroundings. The urban concrete jungle confuses the mind and makes people oblivious to smaller details. Even though urbanities have relatively less bonding within their community, they are more aware citizens and display greater knowledge of issues and their usefulness can be driven for exercises involved in participatory work. The urban community usually has less time to spend for social issues due to professional and personal commitments. It is also observed that women took a backseat in the community work in the middle and upper class areas as they are either too tied up with their professions or home or both commitments. Hence it is wise to tap potential of senior citizens for community work. It was observed during the initial sensitization during earthquake preparedness week organized by Jalandhar administration on 26 January, 2004, a mixed crowd of children, women and senior citizens participated. But the more activity oriented exercises like mapping saw 90% senior citizens as participants.(Ahmed Hussain). Along with children, women and senior citizens, young professionals who still have idealism of their profession instilled within react with more enthusiasm and can be involved with the process after some persuasion. Also professional students (doctors, engineers, architects, etc) are usually enthusiastic participants in the community planning. Planning and coordination within various departments of city is must to cope up and mitigate any disaster. This should not be limited to meetings by the officials and paper work only but the practice of joint operations along with community participation should be conducted periodically so that the shortcomings and need of improvements be practically assessed for further planning's and coordination. The participatory management of planning and coordination can be made effective by involving the method having following steps: Sensitization of the people through lectures, screening of movies and information brochures at schools, colleges, community halls, parks, religious places etc. Mobilization of the community by identifying key persons (change agents) like RWA presidents, local NGO's, retired persons, professionals like engineers and doctors who can act as a contact between the community and the administration. Risk and Opportunity Mapping (community level/ area wise). The risk factors like landslide proneness due to over grazing, hill angle more than 60degree, broken or narrow roads, high tension wires, bottlenecks, explosive factories and godowns can be mapped at the larger scale with factors like open spaces, parks, hospitals etc that represent opportunity in case of a disaster. Hazard Mapping : Landslide hazard prone areas be marked by the administration and complete 'hazard mapping' of that area be made and should not be encouraged for development of habitation and commercial projects. Vulnerability Mapping at the household level: The house hold vulnerability maps can be more detailed representation of the community with characteristics of each household graphically represented through symbols for a quick data check. This will enable the workers in a post landslide scenario to react in a specific and effective manner. Once the hazard mapping is complete, an intensive resource mapping should be done. Resources like, JCB, light bulldozers, airlift facilities, rescue tools and equipments, and trained rescue teams be made available at the proximity of hazard but at safe place from where quick response action can be initiated for search and rescue operation, in case landslide occurs. Vulnerability to landslides develops with development process, if not taken care well in time.
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Illegal settlements in landslide prone areas of hills need to be totally discouraged and the people already settled there should be moved and rehabitated at some safer place or newly developing well planned urban areas in the outskirts of the city. The most important thing to mitigate landslide disaster is Public education. Awareness programs on do's and don'ts, warning signs and signals, survival drills, first aid and community participation during any crisis should be organized in schools, colleges, offices, religious places, specific especially vulnerable areas to landslide through workshops, seminars, lectures & Demonstrations, movie and laser shows, billboards, local electronic and print media. Mock drills involving the administration, NGO's and community is the ultimate test of the disaster management planning and coordination success. A well trained quick response teams along with their equipments under Deputy Commissioner Office, comprising of trained rescue workers from various departments including Police, Health, Fire, Drainage, CPWD etc be established and kept ready for response round the clock especially during monsoon season. References: n FEMA Department of Homeland Security (Sept.2007), National Preparedness Guidelines. n Kofi Annan (1999), UN Secretary General ,World Disaster Report, 1999. n Parminder Singh (1997), 'The Malpa Disaster',research paper submitted in ITBP archieve, MHA,Govt. of India. Rajiv Theodore (2001) ,'Pilgrimage and Festival Related Disasters', India Disaster Report n
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Study of Barriers and bottlenecks with reference to export of Indian Textile Goods: Strategies for competitive Advantage
Prof. J.S. Bisht Head, Department of Secretarial Practices and Coordinator Management, H.N.B.Garhwal University( A Central University), Srinagar,Garhwal Avanish Chandra Pandey Research Scholar,Department of Business Management, HNB Garhwal University, Srinagar-Garhwal Abstract: The Textile Sector in India ranks next to Agriculture. Textile is one of India's oldest industries and has a formidable presence in the national economy in as much as it contributes to about 14% of manufacturing value-addition, accounts for around one-third of our gross export earnings and provides gainful employment to millions of people. The textile industry occupies a unique place in our country. One of the earliest to come into existence in India, it accounts for 14% of the total Industrial production, contributes to nearly 30% of the total exports and is the second largest employment generator after agriculture. Textile Industry is providing one of the most basic needs of people and the holds importance; maintaining sustained growth for improving quality of life. It has a unique position as a selfreliant industry, from the production of raw materials to the delivery of finished products, with substantial value-addition at each stage of processing; it is a major contribution to the country's economy. This paper deals with structure, growth and size of the Indian textile industry, role of textile industry in economy, key advantages of the industry, textile industry export and global scenario and strength, weakness, opportunities and threats of the Indian textile industry. Key words: Global competitiveness, Textile exports, Indian economy. Introduction - The Textile sector comprising cotton, man-made fibres, jute, sericulture & silk, wool, a number of speciality fibres and their products and handlooms and handicrafts, play a key role in the Indian Economy by way of significant contribution to GDP, manufacturing output, employment generation and export earnings. Textile sector's contribution to the Indian Economy is 2% of GDP (at factor cost) ,14% Industrial Production,8% Excise and Customs revenue collections , 12% of total manufacturing exports, Employs about 35 million people. The Governments, both Central and State, play a major role in the development of the Textile sector. The Government's role extends to a range of activities such as price support to cotton and jute, incentives for investments in technology up-gradation and modernization, setting up of world class Integrated Textile Parks, implementation of Technology Mission on Cotton, Jute and Technical Textiles, development of mega clusters for powerlooms, handlooms and handicrafts, development of handlooms, handicrafts, sericulture and wool sub-sectors by implementing a number of schemes, implementation of welfare schemes for handloom weavers and handicrafts artisans and promoting skill development of textile workers in collaboration with the industry. The Government is also providing a number of incentives for export of textile products. A large network of Government Offices, public sector enterprises, textile research associations, textile design and education institutions such as National Institute of Fashion Technology (NIFT), SV Patel International Institute of Textile Management, various textile industry associations, Export Promotion Councils etc. provide a robust institutional framework for the development of the textile sector. Indian Textile Industry occupies a very important place in the economic life of India. It contributes to the Indian Economy through generation of employment, output and export earnings. In the financial year 2010, it has been found out that the contribution of this industry amounts to 14% of the total output generation
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by the industrial sector. Indian Textile industry's contribution towards GDP has been estimated to be hovering around 4% which itself is a commendable one. Textile has been one of the main sources of income for the Indian economy through export. The total share of the Indian Textile Industry in the total earnings from export has been calculated to be 16.63%, as estimated by Ministry Of Textiles, India. This industry has shown the potential of being one of the largest employment generating industries of the Indian economy. On a direct basis, Indian Textile Industry employs a whooping thirty five million people and more. In terms of employment generation, textile industry has come up to the second position, just after agriculture. Textile industry of India is one of the largest in the world, with a huge raw material and textile manufacturing base. Due to its extensive input, it occupies an exceptional place in the Indian economy. Today this sector is highly globalised but, it is further organizing itself to crave a bigger share to become the market leader. This large and ancient industry has carved out a special niche for itself as a facilitator of the country's economic growth and participative development. However, since few years this industry was striving to recover from a stage of stagnation but today it is growing at a very fast pace. Objectives of the study: The broad areas in which the study has been conducted are: 1 Study of present status of Indian Textile industry 2. Study of Export of Textile goods with reference to present situation and keeping in view of the past performance 3. Study of Government policies and incentives to Textile Industry with specific thrust on Exports 4. Study of Problems, Barriers, Bottlenecks faced by Textile Industry with specific focus on Exports 5. Study of the competitive environment keeping in view of globalization of the Economy Role of Textile Industry in India's GDP: Textile industry plays a significant role in the economy. The Indian textile industry is one of the largest and most important sectors in the economy in terms of output, foreign exchange earnings and employment in India. It contributes 20%of industrial production, 9 % of excise collections, 18% of employment in industrial sector, nearly 20 % to the country's total export earnings and 4% on the GDP. The sector employs nearly 35 million people and is the second highest employer in the country.The textile sector also has a direct link with the rural economy and performance of major fibre crops and crafts such as cotton, wool, silk, handicrafts and handlooms, which employ millions of farmers and crafts persons in rural and semi-urban areas. It has been estimated that one out of every six households in the country depends directly or indirectly on this sector. India has several advantages in the textile sector, including abundant availability of raw material and labour. It is the second largest player in the world cotton trade. It has the largest cotton acreage, of about nine million hectares and is the third largest producer of cotton fibre in the world. It ranks fourth in terms of staple fibre production and fourth in polyester yarn production. The textile industry is also labour intensive, thus India has an advantage. Role of Textile Industry in India GDP has been quite beneficial in the economic life of the country. The worldwide trade of textiles and clothing has boosted up the GDP of India to a great extent as this sector has brought in a huge amount of revenue in the country. In the past one year, there has been a massive upsurge in the textile industry of India. The industry size has expanded from USD 37 billion in 2004-05 to USD 49 billion in 2006-07. During this era, the local market witnessed a growth of USD 7 billion, that is, from USD 23 billion to USD 30 billion. The export market increased from USD 14 billion to USD 19 billion in the same period. The textile industry is one of the leading sectors in the Indian economy as it contributes nearly 14 percent
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to the total industrial production. The textile industry in India is claimed to be the biggest revenue earners in terms of foreign exchange among all other industrial sectors in India. This industry provides direct employment to around 35 million people, which has made it one of the most advantageous industrial sectors in the country.Following are the statistics calculated as per the contribution of the sectors in Textile industry in India GDP: n India holds 22 % share in the textile market in Europe and 43 percent share in the apparel market of the country. USA holds 10 percent and 32.6 percent shares in Indian textiles and apparel. n Few other global countries apart from USA and Europe, where India has a marked presence include UAE, Saudi Arabia, Canada, Bangladesh, China, Turkey and Japan n Readymade garments accounts for 45% share holding in the total textile exports and 8.2 % in export production of India n The technical textiles market in India is assumed to touch $10.63 billion by 2007-08 from $ 5.09 billion during 2005-06,which is approximately double. It is also assumed to touch $ 43.5 billion by the year 2014-15. n The entire sector of technical textiles is estimated to reach $45 billion during 2005-2013. The Role of Textile Industry in India GDP also includes a hike in the investment flow both in the domestic market and the export production of textiles. The investment range in the Indian textile industry has increased from $2.94 billion to USD 7.85 billion within three years, from 2004 to 2007.It has been assumed that by the year 2012, the investment ratio in textile industry is most likely to touch $38.14 billion. EXPORTS AT A GLANCE: India's Textiles exports at a glance (Principal Commodities)
Item 2007-08 Rs. Crore US$ Mn Readymade 36497.79 9069.80 Garment RMG of 30335.79 7538.53 cotton including accessories RMG of Man - 3912.26 972.21 made fibre RMG of other 2249.74 559.07 textile material Cotton Textiles 27599.81 6858.63 2008 -09 2009-10 Apr-sept-2009 Apr-sept 2010(P) Variation Rupee -10.41% -12.79% -5.50% US$ Rs. Crore US$ Mn Rs. Crore US$ Mn Rs. Crore US$ Mn Rs. Crore US$ Mn 47112.77 10383.26 47608.39 10064.73 24341.69 5010.57 21807.76 4735.07 38522.72 8490.08 38070.33 8048.32 19144.48 3940.76 16696.06 3625.18
4721.94 1040.68 5745.29 1214.59 3151.92 3868.11 852.50 3792.77 801.82 2045.29
648.80 2990.66 649.36 421.01 2121.04 460.54
-5.12% -8.01% 3.70% 0.09%
21795.40 4803.52 27016.21 5711.41 9063.90 2865.86 631.61 9537.08 2016.20 1360.96
1865.74 13896.25 3017.26 280.14 1727.28 375.04
53.31% 9.39% 26.92% 61.72%
Cotton raw 8865.39 2203.07 including waste Cotton yarn, 18734.42 4655.56 fabrics & madeups Man-made 12785.02 3177.11 textiles Manmade 1121.72 278.75 staple fibres Manmade 11663.30 2898.36 yarn, fabrics & madeups Wool & Woolen textiles 1783.13 443.11
18929.54 4171.91 17479.13 3695.20 7702.94
1585.60 12168.97 2642.22
57.98% 33.87%
15090.76 3325.88 18783.13 3970.88 9405.93 1172.01 258.30 1690.68 357.42 742.51
1936.15 9409.19 2043.00 152.84 876.58 190.33
0.03%
66.64%
18.06% 5.52% -1.51% 24.53%
13918.75 3067.58 17092.45 3613.46 8663.42
1783.31 8532.61 1852.67
2199.49 484.75
2224.14 470.20
1316.35
270.96 1017.02 220.82
-22.74% 3.89%
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Study of Barriers and bottlenecks with reference to export of Indian Textile Goods: Strategies for competitive Advantage RMG of Wool 1409.55 350.28 Woollen 373.58 yarn, fabrics & madeups Silk
1742.97 384.14 456.52 100.61
1799.20 380.36 424.94 89.84
1100.50 215.85
226.53 802.63 44.43 214.39
174.27 46.55
-27.07% -18.50% -0.68% -23.07%
92.84
2646.75 657.72
3107.78 684.93 1437.73 316.86 1664.82 366.91
2819.46 596.05 1383.42 292.46 1411.12 298.32
1465.11 759.13 702.47
301.58 1251.36 271.71 156.26 567.30 144.60 663.40 123.18 144.04
-14.59% 4.77% -25.27% -9.91% -5.56% -21.17%
RMG of Silk 1093.67 271.78 Natural silk 1540.93 382.93 yarn, fabrics & madeups Silk waste Handloom Products*
12.15
3.02
5.23 567.01
1.15 116.72
24.92 720.19
5.27 156.37
3.51 27.02%
0.72 33.98%
20.66
4.49
488.60% -0.38% 520.87%
1252.81 264.85
Textiles 81312.50 20206.38 89306.20 19682.34 99704.14 21078.12 46159.99 9501.72 48101.77 10444.23 4.21% (excluding handicrafts, jute & coir) Handicrafts 5844.12 1452.28 Handicrafts 2046.21 508.49 (excluding handmade carpets) Carpets 3725.80 925.87 (excluding silk) handmade Silk carpets 72.11 Coir & Coir 644.87 Manufacturers Coir & Coir 644.87 Manufacturers Jute Floor covering 317.56 of jute Other jute 322.22 manufactures Jute yarn Total Textiles Exports (incl. handicrafts, coir & jute) 89120.85 22146.78 96311.91 21226.34 106045.80 22418.79 49129.99 10113.07 51879.93 11264.58 5.60% % Textile Exports
4949.23 1090.77 4548.91 961.67 1384.19 305.06 1066.58 225.48
2049.60 498.25
421.90 2362.50 512.96 102.56 389.70 84.61
15.27% 9.92% -21.79% 21.59%
3506.37 772.77
3441.74 727.61
1531.78
315.31 1968.48 427.41
28.51% -17.50%
17.92 160.25 160.25
58.67 680.70 680.70
12.93 150.02 150.02
40.59 759.66 759.66
8.58 160.60 160.60
19.57 381.48 381.48 538.92 134.53 175.61 62.46 166.32
4.03 78.53 78.53
4.32 332.81 332.81
0.94 72.26 72.26
-77.93% 35.55% -12.76% -76.72% -12.76% -7.98% 100.93% -7.98% 28.59% 111.94% 31.96% 35.64% 402.48% 39.20% 119.02% 430.03% 131.02%
1319.36 327.86 78.91 80.07 53.46 115.41
1375.78 303.21 251.63 491.64 216.92 415.59 55.46 108.35 47.81 91.59
1033.09 218.40 281.07 300.19 144.20 307.63 59.42 63.46 30.48 65.04
110.93 1082.85 235.12 27.69 36.15 12.86 34.24 172.99 231.74 313.85 364.27 37.56 50.32 68.15 79.09
215.14
Jute hessian 464.44
13.59%
13.59%
11.46%
11.46%
12.54%
12.54%
12.49%
12.49% 10.69%
10.69%
11.39%
India's 655863.52 162983.90 840755.06 185295.36 845533.64 178751.43 393262.20 80950.31 485206.78 105351.89 23.38% exports of all commodities
30.14%
Source: Foreign Trade Statistics of India (Principal Commodities & Countries), DGCI&S for export figures in Rupee and Department of Commerce (Intranet)-Exchange rate *Handloom Products have been included as commodities first time in 2009-10
Strategies for Indian Exports: Quota free market means competition amongst firms and not nations. Quotas have frozen the growth in market share. They encouraged the high cost domestic industry in many textile-importing countries by freezing the market share. Even the high cost exporting countries (Hong Kong, South Korea, Taiwan) continued to have high market share taking advantage of quotas. Quotas also assured fixed market opportunities in early years to Indian garment industry and textile industry despite low productivity, poor time delivery and quality. This is in sharp contrast to world-class manufacturing and supply chain tried by some units in
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Europe and USA in online transmission of high sale garment designs in departmental stores and replenishing the sold stocks quickly through a very low delivery cycle. Whereas Indian domestic market shall hot up by entry of both retailing chains in India (FDI has been now permitted up to 51% in single brand stores) and Outsourcing centers for International chains like Wal-Mart, the Indian exporters will get on one hand newer opportunities to enter restrained markets, while on other hand they will face stiff competition from countries like Turkey, Brazil, Mexico, Korea, China, Tunisia, Romania, Bangladesh and Pakistan. Quotas by restricting market supply have also kept the export prices artificially high. There is bound to be a price war in post quota regime. The Indian textile and clothing Industry except for cotton yarn sector should test waters within domestic markets to establish their global competitiveness and consumer acceptance. Devloped countries and many other countries are trying to extend export quotas. USA is developing a DNA marker system to trace the fabric origin. The technology can identify the US produced cotton yarn and check illegal textile imports. Instead of criticizing, countries like India should hold high vision as regards standards of health, safety and child labour to conform to international standards and to avoid non-tariff barriers. Technology Up gradation Fund (TUF) has to be better utilized and textile technology training infrastructure has to be improved in country. The textile sector should take lead in this. Global trade is expected to be in range of US $ 800 Billion in 2014 with share of textiles at 40% and clothing at 60%.According to some studies China and India will be major gainers. India could increase their share from present 8 % in US textile market to 13.5% and from 3% to 8% in US Garment market. For EU the projections are from 3.6 to 8% and 3% to 8 % in textiles and garment sectors. As on date China has distinct advantage in terms of supply chain management, low cost and better designs. Whereas Morgan Stanley has projected India to be one of top three exporters of textile and garments, another study by Indian Cotton Mills Federation has estimated Indian textile exports to reach US $ 40 Billion by 2012. China lacks capability in value addition and fashion design. India stands to gain in ladies blouses because of strength in hand-works, like embroidery, sequins, printing etc. On the other hand China has clear advantage in Nightwear due to large capacity and lower costs. Therefore, while China will focus on low value high volume capabilities, India should gain through fashion content. India will also be favorite destination as alternative source other than China for major retailers globally. India can emerge as good outsourcing center for EU and US giants. Another important factor is under valuation of Chinese currency by at east 20% vis--vis Dollar. China may retain their operations in Sri Lanka, Cambodia and Vietnam due to low costs prevailing there, when china set up facilities there for taking quota advantage. India's competitiveness: There has been no dearth of fervent declarations affirming India's determination to acquire the capabilities that will add to its competitiveness and enable it to be counted among other recognized global players the rankings on certain specific parameters are more worrisome than the overall figures. India's weakest areas include: uncertainty in government policies; infrastructural deficiencies; unsatisfactory corporate and financial management of both private and public sector enterprises; inept corporate boards; insufficient attention to human development; low productivity; undependable quality; inadequate customer orientation; and negligible investment on R&D, with special reference to information technology. India is the fifth largest country in terms of gross national product (GNP) and purchasing power parity (PPP). It constitutes one of the fastest growing markets in the world and is counted among the richest with regard to cheap skilled labour, scientific and technological resources, and
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entrepreneurial talents. Therefore, the above image of India is quite enviable. To improve the competitiveness of Indian organizations on product design, quality and on-time delivery it has become necessary for them to look for innovations that produce maximum efficiency both within and beyond their operations (Sahay, 2000). Supply chain management is an integrating philosophy to manage the total flow of a distribution channel from supplier to ultimate customer. It is the management of upstream and downstream relationships both within and beyond their operations with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole. Effective supply chain strategies for creating competitiveness revolve around the on-time delivery of competitive quality goods and services, at a reasonable cost, involving the right business partners (Easton, 2002). Business challenges in the twenty-first century: The information age competition has ushered in a new set of challenges for business competitiveness (Luftman, 1996). These include: 1. Understanding customers. There is no escaping the fact that the customer in today's marketplace is more demanding, not just of product quality, but also of service. As more and more markets become in effect "commodity" markets, where the customer perceives little technical difference between competing offers, the need is for the creation of differential advantage through added value. Hence, it is increasingly becoming important to understand customers' needs and wants and to translate these into a unique value-added business mission. 2. Managing time compression. Time is the primary competitive motive of business but cost, quality, and service factors can not be ignored. In fact, these are pre-requisites to sustain competitiveness. But the winning factor is provided by time-based competition, which becomes the highest priority to gain responsiveness and flexibility. Product life cycles are shorter than ever before, industrial customers and distributors require just-in-time deliveries, and end-users are ever more willing to accept a substitute product if their first choice is not instantly available. 3. Mastering mass customisation. The driving force behind the importance of responsiveness and flexibility is the need and the wish to respond to virtually any customer request just in time. Mass customisation offers a viable solution. It involves the delivery of a wide variety of customised goods or services quickly and efficiently at low cost. The key to making mass customisation work is highly-skilled and autonomous workers, processes, and modular units, so that managers can co-ordinate and reconfigure these modules to meet customer specific customer request and demands. Mastering mass customisation is the step towards gaining a competitive edge and is driving new business models. 4. Undertaking globalisation. There is an increasing trend towards globalisation. Almost every sector of business is influenced by global forces due to globalisation. In the global business, materials and components are sourced worldwide, manufactured offshore and sold in many different countries, often with local customisation. The challenge for the global company is to achieve the cost advantage of standardisation while still catering for the local demand for variety. This has given rise to intense competition blurring the boundaries between domestic and global markets. There is a need to create value delivery systems that are more responsive to fast changing global markets and much more consistent, focused and reliable. Review of Literature: L.Lakshmanan, S. Chinngaihlian and Raj Rajesh(2007) paper provides an analytical abstract of various parameters of manufacturing competitiveness of the Indian economy. India's manufacturing exports have risen impressively in the past decade or so and found to be directly linked to the world GDP and inversely related to real effective exchange rate (REER). Indian manufacturing industries have certain inherent strengths and advantages in having a relatively
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inexpensive, adequate and skilled labour force, cost-effective and competitive prices of goods produced, large manufacturing base and proximity to fast growing Asian markets. India is one of the leading producers and exporters in a number of commodities and enjoys significant advantages in terms of lower labour costs as compared to other economies. Nevertheless, India's competitiveness is lost on account of lower labour productivity and higher input and material costs. To improve the competitiveness of the Indian manufacturing goods, issues like further diversification of export basket, up gradation of export quality, improvement in productivity, increased technology intensity in production, enhanced R&D activity, encouraging business environment, less cumbersome regulatory environment, flexible labour laws, removal of infrastructural bottlenecks and SME related issues need attention of all concerned. Rakshit Arup ,Manisha Hira & U. K. Gangopadhyay (2007), A systematic survey had been undertaken by Ministry of Textiles (MOT) to assess the progress of technical textiles in India. With this study, it is established that India is yet to find a significant place in the global scenario in this area. Traditionally, Indian textile industry is composed of four sectors, viz., composite mill sector, decentralized powerloom, hosiery and handloom sectors. Indian textile industry was dominated by the composite mill sector in the post-independence period. Technical textiles did never find a place of priority in this sector, though a few mills produced a limited range of industrial textiles in their product mix. However, facing stiff competition from the power loom sector, gradually the composite mill sector suffered various set backs. Even in their revival effort, technical textiles did not find a strategic place as it deserved. They still focused their priority in modernization in conventional apparel and home textile products, yarn manufacturing etc. Seshadri Ramkumar and Appachi Arunachalam(2006) studied that India's technical textile industry will be worth 12-15 billion dollars by 2012, which will be 10% of the global value. It predict that the period between 2010 and 2035 will be crucial for the technical textile sector in India and will provide ample opportunities for both international and domestic players with a growth rate of 15% per annum. India is shining and is certainly a technical textile playing field to be in for the next three decades. Tewari, Meenu (2005) examined India's recent integration into the global apparel market to understand alternative forms on global insertion that are occurring, especially in light of the elimination of quotas. The paper made three points. First, it showed that India's (evolving) path to integration in the world market in clothing has been quite different from the experience of many of its competitors. India's trajectory does not fit very well either with neo-liberal arguments about the deregulation of the Indian economy in the early 1990s unleashing the growth potential of Indian apparel, nor with the trajectories of other successful exporters or by entry into regional trade agreements with major importing countries or by massively scaling up production capacities driven by sustained and deep incorporation into the outsourcing networks of some of the world's leading clothing buyers. Second, the paper argued that India's rather quick emergence as a successful textile and garment exporter after years of inward orientation had more to do with changes in domestic policy that took place throughout the 1980s and 1990s and how these changes interacted with global trade regulations on the one hand, and with ongoing transformations in the Indian domestic market on the other than with purely external factors. Finally, the paper argued that some of the same factors that account for India's slow integration into global textile and apparel markets have also, indirectly, provided subsets a segment of the industry with opportunities to move along a different, more high road path to upgrading and export growth. Anuradha Balaram, Surendra S. Yadav, Rajat K. Baisya(2003) The paper takes a view thatIndian apparel export firms will have the opportunity to increase their global market share provided they take the necessary steps to make themselves competitive in a quota- free world after 31
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December 2004.The analysis was based on a survey of leading Delhi-based apparel exporting firms. Since the Delhi region accounts for India's largest apparel export trade, these firms are among the top firms in the country in terms of apparel export sales turnover. The paper studies select structural and operationalparameters of Delhi firms that could impact their performance in future and brings out critical issues that require immediate attention. The paper also offers suggestions on how the government can facilitate better management practices in apparel exportingfirms so that they become globally competitive. Gordhan K. Saini ,(2002) This paper provides some important indicators of non-tariff measures in Indian textiles and clothing exports. The paper identifies major trading partners and HS codes to study the impact of Non Taiff Measures on Indian exports. First, using count measures i.e. frequency and coverage ratios, suggests that more than 60 of export value is affected by the NTMs in USA, EU-25 and Canada at various points in time. Second, it calculates Ad-Valorem Equivalents using price differential methods, which are imposed in the SMART model under the partial equilibrium framework to know the trade impact of NTMs. A total trade loss of about billion 2.34 US$ 16.8 of base trade value is estimated, while the zero tariff gains are roughly billion 1.36 US$ that's 9.8 of base trade. Also this paper develops the framework for the primary research in the field of Non-Tariff Measures. Masakazu Someya, Hazem Shunnar and T.G. Srinvasan,(2002) Growth in world textile and clothing exports have decelerated in US dollar values since the mid-1990s coinciding with the liberalization of the export quota regime under Apparel and Textile Agreements I & II. Evidence is suggestive of the decline in unit values as the competition intensifies. Largely quota- free and enjoying preferential agreements, MENA country exports of clothing thrived under the earlier MAF quota regime (1984-95) that constrained the dynamic exporters. However, in the period, 1995-2000, leading up to the abolition of MFA in 2005, MENA market shares have leveled off signaling a potential decline, if MFA is totally abolished as scheduled. The fear of a total rout of MENA countries from world clothing market is unjustified because of the expected continuation of preferences in tariffs and existence of niche markets. The potential loss of market shares are likely to be confined to GCC countries which have been used as export platforms by third country exporters to circumvent quota barriers for exports from their soil. An important caveat in this optimistic assessment is that being already high wage economies, MENA countries could easily risk the advantages of being close to a major clothing importing regionEU, if they fail to contain wage costs by letting their real exchange rate drift too much from equilibrium, or, catch up with competition in economizing on domestic service delivery costs for trade such as communication, transport, customs and general administration. Indian Textiles Industry: Indian textile industry is one of the leading textile industries in the world. Though was predominantly unorganized industry even a few years back, but the scenario started changing after the economic liberalization of the Indian economy in 1991. The opening of the economy gave much -needed thrust to the Indian textile industry which has now successfully become one of the largest textile industry of the world. Indian textile industry largely depends upon textile manufacturing and exports. It also plays an important role in the economy of the country. India earns about 27% of its total foreign exchange through the export of textiles. Further, the textile industry of India also contributes about 14% of the total industrial production of the country . It also contributes about 4% to the total GDP of the country. Indian textile industry is also the largest in the country in terms of employment generation. It not only generates employment opportunities in its own industry, but also opens up scopes in other ancillary sectors. Indian textile industry currently generates employment to more than 35 million people. It is also estimated that industry will generate 15 million jobs by the year 2015.
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SWOT Analysis of Indian Textile Industry: The Indian textile industry is one of the leading textile industries in the world. Though it used to come under unorganized sector few years back, the scenario changed dramatically after the economic liberalization of the Indian economy. Liberalization gave the much-needed push to the textile industry, which has now successfully become one of the largest in the world. As per the last statistics available from the Annual Report 2009-10 of the Ministry of Textiles, "The Indian textile industry contributes about 14 per cent to industrial production, 4 per cent to the country's gross domestic product (GDP) and 17% to the country's export earnings." Additionally, it provides direct employment to over 35 million people and is the second largest provider of employment after agriculture. Strengths of the Indian Textile Industry Huge Domestic Market consumption (due to its own population). Tremendous Export Potential (Indian products are in great demand among the western importers) The new age creative and risk taking entrepreneurs. Use of latest technology which produces high quality multi-fiber raw material. Supportive government policies. The Indian Textile Industry has its fair share of weakness like: The increased global competition due to WTO policies. Use of outdated manufacturing technology from the low end suppliers. Inefficient supply chain management. Additionally, this sector is still unorganized at many levels and needs a lot of government reforms for further improvisation. Opportunities: The western countries are now setting up their manufacturing units in India which single handedly opens up a wide array of possibilities for all the stakeholders within the textile industry. Experts believe that the golden era of Chinese textile and apparel exports is over and the production base of global textiles is gradually shifting from China to India, Pakistan and other low cost destinations. Threats: For making an effective marketing strategy it is important to keep in mind the capability of Chinese exporters to supply quality products at cheap prices. Indian textile exporters cannot afford complacency and need to be on their toes for any changes within the international trade community. Structure of Indian Textile Industry :
INDIAN TEXTILE INDUSTRY
Cotton Textile
Man - Made
Slik
Woolen
Jute
Organized Sector Cotton Mills (Private Public & Co-operative)
Decentralised Sector
Hand Looms (Cloth)

Spinning Mills (Yarn & Cloth)
Power Looms (Cloth)
Spinning Mills (Yarn)
The textile sector in India is one of the world's largest. The textile industry today is divided into three segments: Cotton, Synthetic and Other like Wool, Jute, Silk etc.
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All segments have their own place but even today cotton textiles continue to dominate with 73% share. The structure of cotton textile industry is very complex with co-existence of oldest technologies of hand spinning and hand weaving with the most sophisticated automatic spindles and loom. The structure of the textile industry is extremely complex with the modern, sophisticated and highly mechanized mill sector on the one hand and hand spinning and hand weaving (handloom sector) on the other in between falls the decentralized small scale power loom sector. Unlike other major textile-producing countries, India's textile industry is comprised mostly of small-scale, nonintegrated spinning, weaving, finishing, and apparel-making enterprises. This unique industry structure is primarily a legacy of government policies that have promoted labor-intensive, small-scale operations and discriminated against larger scale firm: Composite Mills: Relatively large-scale mills that integrate spinning, weaving and, sometimes, fabric finishing are common in other major textile-producing countries. In India, however, these types of mills now account for about only 3 percent of output in the textile sector. About 276 composite mills are now operating in India, most owned by the public sector and many deemed financially sick. In 2003-2004 composite mills that produced 1434 m.sq mts of cloth. Most of these mills are located in Gujarat and Maharashtra. Spinning: Spinning is the process of converting cotton or manmade fiber into yarn to be used for weaving and knitting. This mills chiefly located in North India. Spinning sector is technology intensive and productivity is affected by the quality of cotton and the cleaning process used during ginning. Largely due to deregulation beginning in the mid-1980s, spinning is the most consolidated and technically efficient sector in India's textile industry. Average plant size remains small, however, and technology outdated, relative to other major producers. In 2002/03, India's spinning sector consisted of about 1,146 small-scale independent firms and 1,599 larger scale independent units. Weaving and Knitting: The weaving and knits sector lies at the heart of the industry. In 2004-05, of the total production from the weaving sector, about 46 percent was cotton cloth, 41 percent was 100% non-cotton including khadi, wool and silk and 13 percent was blended cloth. Three distinctive technologies are used in the sector handlooms, power looms and knitting machines. Weaving and knitting converts cotton, manmade, or blended yarns into woven or knitted fabrics. India's weaving and knitting sector remains highly fragmented, small-scale, and laborintensive. This sector consists of about 3.9 million handlooms, 380,000 power loom enter-prices that operate about 1.7 million looms, and just 137,000 looms in the various composite mills. Power looms are small firms, with an average loom capacity of four to five owned by independent entrepreneurs or weavers. Modern shuttle less looms account for less than 1 percent of loom capacity. Fabric Finishing: Fabric finishing (also referred to as processing), which includes dyeing, printing, and other cloth preparation prior to the manufacture of clothing, is also dominated by a large number of independent, small-scale enterprises. Overall, about 2,300 processors are operating in India, including about 2,100 independent units and 200 units that are integrated with spinning, weaving, or knitting units. Clothing: Apparel is produced by about 77,000 small-scale units classified as domestic manufacturers, manufacturer exporters, and fabricators (subcontractors). Textile Trend in India : India is the world's second largest producer of textiles and garments after China. It is the world's third largest producer of cotton-after China and the USA - and the second largest cotton consumer after China. The textile and garment industry in India is one of the oldest manufacturing sectors in the country and is currently the largest . The textile and garment industry fulfils a pivotal role in the Indian economy. It is a major foreign exchange earner and,
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after agriculture, it is the largest employer with a total workforce of 35 mn. In 2005 textiles and garments accounted for about 14 per cent of industrial production and 16 per cent of export earnings. In cotton yarn production India has made a mark in the world textile scenario. It is the largest exporter of the cotton yarns in the world. Besides yarn exports, India's growing garment industry is working as a driving force to improve the yarn quality and to increase the production of cottonyarn. During 2004-05, production of fabrics touched a peak of 45,378 million square meters. In the year 2005-06 up to November, production of fabrics registered a further growth of 9 per cent over the corresponding period of the previous year. Textile exports during AprilNovember 2005 were at US$ 9,309.81 million, up 8.21 per cent from US$ 8,603.33 million during the corresponding period of the previous year. The first year of the non-quota regime for textiles has seen Indian exports to the US grow by 27 per cent year on year to US$ 4.6 billion, according to data released by the Office of Textiles and Apparels (OTEXA), USA. In keeping with the trend of textile companies increasing capacity and adding new manufacturing units, the last week of 2005 saw a substantial number of firms, both new and existing, queuing up to file an intent to manufacture document with the Department of Industrial Policy and Promotion (DIPP). Out of 161 companies that had filed Industrial Entrepreneur Memoranda (IEM) in the last week of December, textile firms accounted for more than a quarter of all new applications. In fact, in the last six years, an estimated US$ 6.7 billion has been invested in the textiles sector, aided by the Technology Up gradation Fund (TUF) scheme. The TUF scheme expires in March (2007) and the quotas on China had been lifted in 2008. Hence, companies l continued to add capacities over the years. Role of Textile Industry in India's GDP: Textile industry plays a significant role in the economy. The Indian textile industry is one of the largest and most important sectors in the economy in terms of output, foreign exchange earnings and employment in India. It contributes 20 per cent of industrial production, 9 per cent of excise collections, 18 per cent of employment in industrial sector, nearly 20 per cent to the country's total export earnings and 4 per cent to the GDP. The sector employs nearly 35 million people and is the second highest employer in the country. The textile sector also has a direct link with the rural economy and performance of major fibre crops and crafts such as cotton, wool, silk, handicrafts and handlooms, which employ millions of farmers and crafts persons in rural and semi-urban areas. It has been estimated that one out of every six households in the country depends directly or indirectly on this sector. India has several advantages in the textile sector, including abundant availability of raw material and labour. It is the second largest player in the world cotton trade. It has the largest cotton acreage, of about nine million hectares and is the third largest producer of cotton fibre in the world. It ranks fourth in terms of staple fibre production and fourth in polyester yarn production. The textile industry is also labour intensive, thus India has an advantage. Role of Textile Industry in India GDP has been quite beneficial in the economic life of the country. The worldwide trade of textiles and clothing has boosted up the GDP of India to a great extent as this sector has brought in a huge amount of revenue in the country. In the past one year, there has been a massive upsurge in the textile industry of India. The industry size has expanded from USD 37 billion in 2004-05 to USD 49 billion in 2006-07. During this era, the local market witnessed a growth of USD 7 billion, that is, from USD 23 billion to USD 30 billion. The export market increased from USD 14 billion to USD 19 billion in the same period. The textile industry is one of the leading sectors in the Indian economy as it contributes nearly 14 percent to the total industrial production. The textile industry in India is claimed to be the biggest revenue earners in terms of foreign exchange among all other industrial sectors in India. This industry provides direct employment to around 35 million people, which has made it one of the most advantageous industrial sectors in the country. Some of the important benefits
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offered by the Indian textile industry are as follows: India covers 61% of the international textile market India covers 22% of the global market India is known to be the third largest manufacturer of cotton across the globe India claims to be the second largest manufacturer as well as provider of cotton yarn and textiles in the world India holds around 25 percent share in the cotton yarn industry across the globe India contributes to around 12 % of the world's production of cotton yarn and textiles Current scenario of the Indian Textile Industry: The Indian textile industry is one of the leading in the world . Currently it is estimated to be around US$ 52 billion and is also projected to be around US$115 by the end of 2012.The current domestic market of textiles in india is expected to be increased to US$ 60 billion from current US$ 35 billion. The textile export of the country was around US$ 19.14 in 2006 -07 which saw a stiff rise to reach US$ 22.13 in 2007-08. Year Area in lakh hectares Production in lakh Yield kgs per hectare bales of 170 kgs 1950-51 56.48 30.62 92
1960-61 1970-71 1980-81 1990-91 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
76.78 76.05 78.24 74.39 85.76 87.30 76.67 76.30 87.86 86.77 91.44 94.39 93.73
56.41 47.63 78.60 117.00 140.00 158.00 136.00 179.00 243.00 244.00 280.00 315.00 290.00
124 106 170 267 278 308 302 399 470 478 521 567 526
Policies of Government towards Textile industry:The Indian textile industry is one of the largest in the world. The ministry of textiles has formulated a numerous policies and schemes for the development of textile industry in India. Some of them are listed in the following sections. With a view to raise India's share in the global textiles trade to 10% by 2015 (from the current 3%), the Ministry of Textiles proposes 50 new textile parks. Out of the 50, 30 have been already sanctioned by the government (with a cost of US$ 710 million). Set up under the Scheme for Integrated Textile Parks (SITP), this initiative will not only make the industry cost competitive, but will also enhance manufacturing capacity in the sector. Apart from the above, a series of progressive measures have been planned to strengthen the textile sector in India: Technology Mission on Cotton (TMC) Technology Up gradation fund Scheme (TUFS) Setting up of Apparel Training and Design Centre's (ATDCs) 100% Foreign Direct Investment (FDI) in the textile sector under automatic route. Setting up two design centres in Gujarat in collaboration with National Institute of Fashion
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Technology. Setting up a Handloom Plaza in Ahmedabad with an estimated investment of US$ 24.6 million. Revival plans of the mills run by National Textiles Corporation (NTC). Already, for the revival of 18 textile mills, US$ 2.21 million worth of machineries has been ordered for the up gradation and modernization of these mills. Setting up a handloom mall with an investment of US$ 24.6 million at Jehangir Mill in Ahmadabad. Scrapping of the Textile Committee cases being collected from the textile and textile machinery industry under the Textile Committee Act. The Government of India has also included new schemes in the Annual Plan for 2010-11 to provide a boost to the textile sector. These include schemes for Foreign Investment Promotion to attract foreign direct investment in textiles, clothing and machinery; Brand Promotion on Public-Private Partnership (PPP)) approach to develop global acceptability of Indian apparel brands; Trade Facilitation Centers for Indian image branding; Fashion Hubs for creation of permanent market place for the benefit of Indian fashion industry; Common Compliance Code to encourage acceptability among apparel buyers and Training Centers for Human Resource Development on Public Private Partnership (PPP) mode. Textile Industry Policies: Indian Textile Industry plays a vital role in Indian economy. For the proper functioning and operation of industry it is very essential to have some policies and regulation in place. In India, the Ministry of Textile is responsible for the formulation of policy, planning, execution, development, export promotion and regulation of the Textile Industry and related sectors. There are several other bodies and organizations which help to formulate and execute these policies. All policies should be implemented for the greater development of the whole industry so that it can help to strengthen the economy. Industry Policy: There are no restrictions regarding location for establishing manufacturing units. All producers of Clothing and Accessories are exempt from obtaining Industrial license to manufacture. The relicensed undertakings, however, are required to file an Industrial Entrepreneur Memoranda (IEM) in Part 'A' with the Secretariat of Industrial Assistance (SIA), and obtain an acknowledgement. No further approval is required.After commencement of commercial production, Part B of the IEM has to be filled In certain items of clothing are reserved for small-scale industries Import Licensing:India has liberalized its Import regime for Textiles and apparel, but some of the part is still limited for market access. Currently, there is no import restriction for yarns & fabrics items. Apparel & Made-up textiles goods require a Special Import License (SIL). Govt. revised Exim Policy on 31st March 1999 by eliminating Import Licensing Requirements for 894 consumer goods, agriculture products and textiles. On 28th December 1999 India and US signed an Agreement for the elimination of import restrictions of 1,429 agriculture, textiles, consumer goods and apparel. India removed restrictions on 715 tariff items as of 1st April 2000. Custom Procedures:Marking, Labeling, and Packaging Requirements: Marking, Labeling, and Packaging Requirements for Textile products are technically complex and difficult to implement. EXIM Policies:Duty Entitlement Passbook Scheme: DEPS is available for Indian Export Companies and Traders on a Pre-Export and Post-Export basis. Pre-Export credit requires the beneficiary firm has exported during the preceding 3-year period. The Post-Export credit is a transferable credit that exporters of finished goods can use to pay or offset custom duties on imports of any unrestricted goods. Export Promotion Capital Goods Scheme: This scheme is available to export companies and
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traders who provide the GOI with information about which type of goods and what value of Capital Goods they will import. And they also inform what will be the outcome of export they expect to produce from those imports. Depending upon the export commitment GOI provides them a license to import capital goods duty-free or preferential rates of duty. Pre and Post Shipment Financing: The Reserve Bank of India provides Indian Exporters PreShipment Financing through commercial banks for purchasing raw materials and packaging materials by presenting Letter of Credit. RBI also provides Post-Shipment Financing through commercial banks at preferential rates by presenting export documents. Export and Special Economic Zones: Govt. of India has established Export Processing Zones (EPZs) and Special Economic Zones (SEZs). In EPZs units can import goods free of custom duty. There is 5-year tax holiday to any industrial unit in EPZs. Govt. has allowed 100% Foreign ownership of units under EPZs and SEZs. The Govt. considers SEZs as foreign territory for trade and tariff purpose. Units under SEZs may engage in Manufacturing, Trading and Services. Units are exempt from routine checking of exports by customs, and they can sell in the domestic market on payment of duty as applicable to imported goods. Duty Drawback Scheme: The basic objective of this scheme is to reduce the indirect taxes on exports. Exporters can get refund of the excise and import duty. Through this scheme they can be more competitive and have more potential market. The textile industry in India is one of the flourishing sectors of Indian economy. It contributes more than 13% to industrial output, 16.63% to export revenues and 4% to the nation's GDP. In the year 2010, the industry is estimated to produce 12 million jobs with an investment of US$ 6 billion in the fields of textiles equipments and structure, and garment manufacturing by the end of 2015. Union Ministry of Textiles certified Apparel Export Promotion Council (AEPC) has taken the responsibility to motivate the foreign investors to invest in Indian Textile industry by exhibiting it massive unexplored domestic market. It has also formulated and endorsed the motto of come, invest, produce and sell in India. Under this the ministry has decided to send it representatives to Germany, Switzerland, France, Italy and US. The objective is to trigger the foreign investment towards instituting textile units in India by offering numerous allowances to global investor like low-priced workforce and intellectual right fortification. The government of India has also taken few initiatives to promote the textile industry by permitting 100% Foreign Direct Investment in the market. Owing to the upright and straight incorporated textiles price chain, the Indian textile industry symbolizes a strong existence in the complete value chain from raw commodities to finished products. The Synthetic and Rayon Textile Export Promotion Council (SRTEPC) has taken all the required steps to meet the target of doubling the synthetic textile exports in India to US$ 6.2 billion by seizing 4% of market share by FY 2011-12. Textile Non Trade Policies: Technology Up gradation Fund: As there is huge competition in international Textile Industry therefore the Indian Textile Industry has to be technologically well versed. Industry has been facing problem with high capital cost to improve the technology and modernization of Textile and Apparel Industry. Under the TUF scheme, Textile and Apparel Manufacturing Units can take Loan from IDBI Bank, SIDBI, and The Industrial Finance Corporation of India at interest rate of 5 % points lower than normal rates. This scheme also helps for IT Development, Product Development, Diversification and Research & Development through funding. Cotton Technology Mission : To improve the performance of Cotton sector, there is need for improvement in Research & Development, quality and productivity of products. The Marketing
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Infrastructure also needs improvement. The Govt. of India is aimed to increase production of cotton by 50% with improved quality and productivity. Quota Entitlement Policy:Textile and Apparel Industry in India was running under the terms of Multifiber Arrangements (MFA) over the many years. Under MFA, USA, European Union (EU), Canada, and Norway did negotiation for bilateral agreements with India and other textile exporting countries that had limits or quota on their specific textile exports. Construction of Apparel International Mart: Apparel Export Promotion Council has constructed an Apparel International Mart (AIM) at Gurgaon. This will provide showrooms on lease and license basis to the established exporters to showcase their products. Exports at glance : Textile exports plays a crucial role in the overall exports from India. Through export friendly government policies and positive efforts by the exporting community, textile exports increased substantially from US$ 5.07 billion in 1991-92 to US$ 12.10 billion during 2000-01.The textile export basket contributing over 46 percent of total textile export. In world textile trade has risen to 3.1 percent in 1999-2000 as against 1.80 percent in early nineties. Exports have grown at an average of 11 percent per annum over the last few years, while world textile trade has grown only about 5.4 per cent per annum in the same years. During the year 2000-01 India's textile export was US$ 12014.4 million. The exports of textiles (including handicrafts, jute, and coir) formed 24.6% of total exports in 2001-2002, however this percentage decreased to 16.24% during 2004-2005. The textile exports recorded a growth of 15.3% in 2002-2003 and 8.7% in 2003-2004. Textile exports during the period of April-February 2003-2004 amounted to US$ 11 billion. During 2004-05 textile exports were US$ 13.03 billion, recording a decline of 3.4% as compared to the corresponding period of previous year.However, during April-November, 2005, the textile exports have shown growth of 8.2% as compare to the corresponding period of previous year against a target of US$ 15.16 billion. During 2004-05, the textile exports were of US$13.03 billion, registering a shortfall of 14% against the target.The exports in the year 2005-06 were of US$ 15.56 billion. The exports in the year 2006-07 accounted for US$ 19.15 bn .Exports again rose in the year 2007-08 and stood at US$22.15 billion.But in the year 2008-09 the exports to the overseas markets declined by over 5 percent and slipped to US$ 20.94 billion. The reason for the reduced demands was due to economic slowdown in the US and the European markets. The exports again gained pace in the year 200910 and rose to US$ 22.42 bn thereby registering an increase of over 5 percent over the previous years. Strategies for Indian Exports: Quota free market means competition amongst firms and not nations. Quotas have frozen the growth in market share. They encouraged the high cost domestic industry in many textile-importing countries by freezing the market share. Even the high cost exporting countries (Hong Kong, South Korea, Taiwan) continued to have high market share taking advantage of quotas. Quotas also assured fixed market opportunities in early years to Indian garment industry and textile industry despite low productivity, poor time delivery and quality. Number of incentives was provided in India including Duty drawback and cash compensatory support. Garment quotas are distributed by AEPC based on Government policy from time to time regarding past performance, etc and quotas were traded in gray market for long time. This is in sharp contrast to world-class manufacturing and supply chain tried by some units in Europe and USA in online transmission of high sale garment designs in departmental stores and replenishing the sold stocks quickly through a very low delivery cycle.Where as Indian domestic market shall hot up by entry of both retailing chains in India (FDI has been now permitted up to 51% in single brand stores) and Outsourcing centers for International chains like Wal-Mart, the
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Indian exporters will get on one hand newer opportunities to enter restrained markets, while on other hand they will face stiff competition from countries like Turkey, Brazil, Mexico, Korea, China, Tunisia, Romania, Bangladesh and Pakistan. Quotas by restricting market supply have also kept the export prices artificially high. There is bound to be a price war in post quota regime. Already it has started happening with Indian exporters (at least for price elastic goods). Developed countries have relocated facilities offshore or have shifted to high value products. Developing countries that were free from MFA restraints will loose out due to fall in prices. The Indian textile and clothing Industry except for cotton yarn sector should test waters within domestic markets to establish their global competitiveness and consumer acceptance. Developed countries and many other countries are trying to extend quotas up to end of 2007 as evident from Istanbul declaration in March 2004.USA is developing a DNA marker system to trace the fabric origin. The technology can identify the US produced cotton yarn and check illegal textile imports. Instead of criticizing, countries llike India should hold high vision as regards standards of health, safety and child labor to conform to international standards and to avoid non-tariff barriers. Technology Up gradation Fund (TUF) has to be better utilized and textile technology training infrastructure has to be improved in country.Global trade is expected to be in range of US $ 800 Billions in 2014 up from US $ 350 Billion in 2002 with share of textiles at 40% and clothing at 60%.According to some studies China and India will be major gainers. India could increase their share from present 8 % in US textile market to 13.5% and from 3% to 8% in US Garment market. For EU the projections are from 3.6 to 8% and 3% to 8 % in textiles and garment sectors. As on date China has distinct advantage in terms of supply chain management, low cost and better designs. China lacks capability in value addition and fashion design. India stands to gain in ladies blouses because of strength in hand-works, like embroidery, sequins, printing etc. On the other hand China has clear advantage in Nightwear due to large capacity and lower costs. Therefore, while China will focus on low value high volume capabilities, India should gain through fashion content. India will also be favorite destination as alternative source other than China for major retailers globally. India can emerge as good outsourcing center for EU and US giants. Another important factor is under valuation of Chinese currency by at east 20% vis--vis Dollar. China may retain their operations in Sri Lanka, Cambodia and Vietnam due to low costs prevailing there, when china set up facilities there for taking quota advantage. India's Textile Exports: Past and Present: India has traditionally been a net cotton exporter, but emerged as a significant net importer in 1998. Increased import demand has been associated with a combination of steady growth in domestic consumption, rising exports of cotton-based textiles, and a period of stagnating cotton production during 1997-2002. Rising imports have also been supported by more liberal import policies for cotton since the early 1990s and, in the late 1990s, by increased demand for quality cotton not available in India. Although imports declined in 2003 and 2004 along with the recovery in cotton production, after that the except the period of global slowdown Indian textile exports have shown a positive growth with consistency and is expected to rise and achieve its desired targets set by the government by 2012. Import Policy: Cotton imports were liberalized in 1991, when the import monopoly of the Cotton Corporation of India was terminated and imports were placed on Open General License, allowing unrestricted imports by private traders. The import duty was originally set at zero, but little import trade occurred until the late 1990s, when world prices declined and India faced domestic supply shortfalls . The import duty was raised to 5.5 percent in 2000 and to 10 percent
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in 2002 but remains low relative to tariffs imposed on most other agricultural products. Exportoriented textile units, which are exempt from the import duty, account for most, if not all, of India's cotton imports. Diversification of Export Markets with new Products : While the recovery of global economy is slow and feeble, demand for textile products seems to be outperforming the general economy in most of the developed countries. This is especially discernible in the US, which also happens to be the largest single market for textile products. In 2010, import of textiles and clothing by the USA registered a growth of over 15 % in value terms compared to the previous year. This was a remarkable recovery, considering that their imports had a negative growth of over 13% in 2009. Contrary to the recent trends and expectations, there has apparently not been any decline in apparel production in the US last year. While their clothing imports grew by 13 percent, non-apparel imports achieved a growth of over 22%. This would mean that consumption of raw material and production by their domestic apparel industry went up significantly. This only brings into sharper focus the scope for increasing our exports of apparel to the USA by replacing part of their present high cost production.Imports from India also registered an impressive growth in the US market during 2010. In total textile imports as well as non-apparel imports,we outperformed the market trend by registering a growth of 17% and 29% respectively. In fact in the case of non-apparel imports, none of the major suppliers including China could match Indias growth.In the case of apparel products, however, Indias growth was less than 10% and it was behind China, Vietnam, Indonesia and Bangladesh; all of them also had larger market shares compared to India. Interestingly, three out of these four countries have very limited domestic raw material supplies. In fact, they depend at least partly on India for raw materials. That the other countries using Indian raw materials at a higher cost are able to beat us in the global apparel markets is something that should make Indian industry to sit up and take notice.The USA is a single market whereas EU consists of 27 Member States including some economic giants like Germany, UK, France and Italy. Traditionally, EU has been absorbing substantially larger volumes of our textile products than the USA. However, the US market is catching up fast; in 2010, the USA registered an increase of 17 percent in their imports from India compared to the previous year, as against a growth of 3.6 percent in EU. In fact the USA is growing faster than the combined market of EU Member States in their imports of textile products from India. In the case of market share, however, we have 7.8 percent in EU as against 5.8 percent in the US. In other words, we have lower growth in the market where we have larger share and vice versa. Moreover, total imports of textile products into EU amounted to US$111 billion in 2010, as against US$93 billion in the US. It is obvious that the scope for increasing our export of textile products to the EU is tremendous. In our enthusiasm to diversify into new markets, we tend to ignore the potential of our traditional markets to absorb additional imports. For example, constructed suits and formal jackets are among the largest import items among garments in the USA and EU. And in both these markets our share in these products is next to nil. Processed fabrics for regular wear have substantial demand in these markets, whereas our fabrics exports to them are substantially in grey, except in the case of denims and a few others. Exploring non-traditional markets is important, especially when the traditional markets are going through the after effects of the slow down. But the primacy of the Western markets would continue because an increase of even one percent in those markets will give us a larger export performance than the total demand we can hope to get from some of the non-traditional markets, in absolute terms. A viable strategy for our T&C exports, therefore, would be to achieve a proper balance between market diversification on the one hand and product diversification in the present major markets on the other.
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Textile Trade Challenges: The fiber, textile and apparel industries are in the midst of radical changes. Global competition is intense. Although the United States is the worlds seventhlargest exporter of textiles and has increased exports by 15 times its 1970 rate, an astoundingly rapid growth of imports, especially in apparel, has caused a major trade deficit. The U.S. textile trade deficit rose 10.4 percent in 1999 and accounted for 1.2 percent of the countrys total trade deficit. The apparel trade deficit increased 7.1 percent and now accounts for 14 percent of the total. With only 4.3 percent of the worlds population and 16 percent of the worlds textile-mill output, the United States consumes nearly 20 percent of the worlds textiles and receives close to 20 percent of the worlds textile and apparel imports. The industries markets are becoming more complex. Short life cycles are common, and demands for rapid response and just-in-time delivery are increasing. There are still many handoffs in the production and delivery processes, and few companies are able to control the entire process. As competition continues to increase, U.S. fiber, textile and apparel companies must rely more on superior quality, innovative products and rapid response to customer needs to secure markets and continue to grow. Breakthroughs in nanosciences, electro textiles, nonwovens, medical textiles and geotextiles are providing new hope and new challenges. Problems faced by Textile Industry in India: There are various problems which are faced by Indian Textile industry.The present model shows about the significant factors causing the barrier to textile industry.
Industry Sickness
Accumulation of stocks
Obsolescence
Barriers
Competition
Govt. Regulations
Low Yield and Fluctuation
Industry Sickness: Sickness is widespread in the cotton textile industry. After the engineering industry, the cotton textile industry has the highest incidence of sickness. As many as 125 sick units have been taken over by the Central Government. Obsolescence: The plant and machinery and technology employed by a number of units are obsolete. The need today is to make the industry technologically up-to-date rather than expand capacity as such. This need was foreseen quite sometime back and schemes for modernization of textile industry had been introduced. The soft loan scheme was introduced a few years back and some units were able to take advantage of the scheme and modernize their equipment. However, the problem has not been fully tackled and it is of utmost importance that the whole industry is technologically updated. Not many companies would be able to find resources internally and will have to depend on financial institutions and other sources. Government Regulations: Government regulations like the obligation to produced controlled cloth are against the interest of the industry. During the last two decades the excessive regulations exercised by the government on the mill sector has promoted inefficiency in both production and management. This has also resulted in a colossal waste of
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raw materials and productive facilities. For example, the mills are not allowed to use filament yarn in warp in order to protect the interest of art silk and power loom sector which use this yarn to cater to the affluent section of society. Low Yield and Fluctuation of Cotton Output: The cotton yield per hectare of land is very low in India. This results in high cost and price. Further, being largely dependent on the climatic factors, the total raw cotton production is subject to wide fluctuation causing serious problems for the mills in respect of the supply of this vital raw material. Competition from Man-made Fibres: One of the serious challenges facing the cotton textile industry is the competition from the man-made fibres and synthetics. These textures are gradually replacing cotton textiles. This substitution has in fact been supported by a number of people on the ground that it is not possible to increase substantially the raw cotton production without affecting other crops particularly food crops. Competition from other Countries: In the international market, India has been facing severe competition from other countries like Taiwan, South Korea, China and Japan. The high cost of production of the Indian industry is a serious adverse factor. India's poor position as a Competitor : To understand India's position among other textile producing the industry contributes 9% of GDP and 35% of foreign exchange earning, India's share in global exports is only 3% compared to China's 13.75% percent. In addition to China, other developing countries are emerging as serious competitive threats to India. Looking at export shares, Korea (6%) and Taiwan (5.5%) are ahead of India, while Turkey (2.9%) has already caught up and others like Thailand (2.3%) and Indonesia (2%) are not much further behind. The reason for this development is the fact that India lags behind these countries in investment levels, technology, quality and logistics. If India were competitive in some key segments it could serve as a basis for building a modern industry, but there is no evidence of such signs, except to some extent in the spinning industry. India's competitive position in stages of textile manufacture. Labour Problems: The cotton textile industry is frequently plagued by labour problems. The very long strike of the textile workers of Bombay caused losses amounting to millions of rupees not only to the workers and industry but also to the nation in terms of excise and other taxes and exports. Accumulation of Stock: At times the industry faces the problems of very low off take of stocks resulting in accumulation of huge stocks. The situation leads to price cuts and the like leading to loss or low profits. Miscellaneous: The industry faces a number of other problems like power cuts, infrastructural problems, lack of finance, exorbitant rise in raw material prices and production costs etc. Globalization/Competition in Textiles Industry: Global Scenario: The textile and clothing trade is governed by the Multi-Fibre Agreement (MFA) which came into force on January 1, 1974 replacing short-term and long-term arrangements of the 1960's which protected US textile producers from booming Japanese textiles exports. Later, it was extended to other developing countries like India, Korea, Hong Kong, etc. which had acquired a comparative advantage in textiles. Currently, India has bilateral arrangements under MFA with USA, Canada, Australia, countries of the European Commission, etc. Under MFA, foreign trade is subject to relatively high tariffs and export quotas restricting India's penetration into these markets. India was interested in the early phasing out of these quotas in the Uruguay Round of
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Negotiations but this did not happen due to the reluctance of the developed countries like the US and EC to open up their textile markets to Third World imports because of high labour costs. With the removal of quotas, exports of textiles have now to cope with new challenges in the form of growing non-tariff / non-trade barriers such as growing regionalisation of trade between blocks of nations, child labour, anti-dumping duties, etc. Nevertheless, it must be realised that the picture is not all rosy. It is now being admitted universally and even officially that the year 2005 AD is likely to present more of a challenge than opportunity. If the industry does not pay attention to the very vital needs of modernisation, quality control, technology upgradation, etc. it is likely to be left behind. Already, its comparative advantage of cheap labour is being nullified by the use of outmoded machinery. With the dismantling of the MFA, it becomes imperative for the textile industry to take on competitors like China, Pakistan, etc., which enjoy lower labour costs. In fact the seriousness of the situation becomes even more apparent when it is realised that the non-quota exports have not really risen dramatically over the past few years. The continued dominance of yarn in exports of cotton, synthetics, and blends, is another cause for worry while exports of fabrics is not growing.The lack of value added products in textile exports do not augur well for India in a non-MFA world. Global factors influencing Textile Industry: The history of the textile and clothing industry has been replete with the use of various bilateral quotas, protectionist policies, discriminatory tariffs, etc. by the developed world against the developing countries. The result was a highly distorted structure, which imposed hidden costs on the export sectors of the Third World. Despite the fact that GATT was established way back in 1947, the textile industry, till 1994, remained largely out of its liberalisation agreements. In fact, trade in this sector, until the Uruguay Round, evolved in the opposite direction. Consequently, since 1974 global trade in the textiles and clothing sector had been governed by the Multi-fibre agreement, which was the sequel to an increasingly pervasive quota regime that began with the Short-term arrangement on cotton products in 1962 and followed by the Long-Term arrangement. After the successful conclusion of the Uruguay Round in 1994, the MFA was replaced by the Agreement on Textiles and Clothing (ATC), which had the same MFA framework in the context of an agreed, ten year phasing out of all quotas by the year 2005. The section that follows takes a brief look at the history of these protectionist regimes as also a more detailed look at the MFA and the ATC. The MFA permitted certain flexibility in quota restrictions for the exporters so that they could adjust to changing market conditions, export demands and their own capabilities. The MFA also provided for higher quotas and liberal growth for developing countries whose exports were already restrained. The MFA asked the participants to refrain from restraining the trade of small suppliers under normal circumstances. In general, developed countries, under MFA, chose not to impose restrictions on imports from other developed countries The TSB ensured compliance by all parties to the obligations of bilateral agreements or unilateral agreements. It called for notification of all restrictive measures. A Textiles Committee established as a management body consisting of all member countries was the final arbiter under the MFA and worked as a court of appeal for disputes that could not be resolved under TSB. Unsatisfactory experience with several extension protocols of the MFA, retention clauses, such as good will, exceptional cases, and anti-surge and other trade related factors led the developing countries to press for the inclusion of the textile issue in the agenda of the GATT Ministerial meeting.
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Effects of Globalization: Globalization means the dismantling of trade barriers between nations and the integration of the nations economies through financial flow, trade in goods and services, and corporate investments between nations. Globalization has increased across the world in recent years due to the fast progress that has been made in the field of technology especially in communications and transport. The government of India made changes in its economic policy in 1991 by which it allowed direct foreign investments in the country. As a result of this, globalization of the Indian Industry took place on a major scale. The various beneficial effects of globalization in Indian Industry are that it brought in huge amounts of foreign investments into the industry especially in the BPO, pharmaceutical, petroleum, and manufacturing industries. As huge amounts of foreign direct investments were coming to the Indian Industry, they boosted the Indian economy quite significantly. The benefits of the effects of globalization in the Indian Industry are that many foreign companies set up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing, and chemical sectors and this helped to provide employment to many people in the country. This helped reduce the level of unemployment and poverty in the country. Also the benefit of the Effects of Globalization on Indian Industry are that the foreign companies brought in highly advanced technology with them and this helped to make the Indian Industry more technologically advanced. The various negative Effects of Globalization on Indian Industry are that it increased competition in the Indian market between the foreign companies and domestic companies. With the foreign goods being better than the Indian goods, the consumer preferred to buy the foreign goods. This reduced the amount of profit of the Indian Industry companies. This happened mainly in the pharmaceutical, manufacturing, chemical, and steel industries. The negative Effects of Globalization on Indian Industry are that with the coming of technology the number of labor required decreased and this resulted in many people being removed from their jobs. The effects of globalization on Indian Industry have proved to be positive as well as negative. The initiation and development of globalization and Indian textile industry took place simultaneously in the 1990s. The Indian textile industry, until the economic liberalization of Indian economy was predominantly an unorganized industry. The economic liberalization of Indian economy in the early 1990s led to stupendous growth of this Indian industry. The Indian textile industry is one of the largest textile industries in the world and India earns around 27% of the foreign exchange from exports of textiles and its related products. Further, globalization of India textile Industry has seen a paradigm increase in the 'total industrial production' factor of this Industry, which presently stands at 14%. Furthermore, the contribution of the Indian textile Industry towards the gross domestic product (GDP) of India is around 3% and the numbers are steadily increasing. The process of globalization and Indian textile industry development was the effect of rapid acceptance of 'open market' policy by the developing countries, much in the lines of the developed countries of the world. The initiation and its subsequent development of globalization and Indian textile industry respectively, was effected by the Ministry of Textiles under the Government of India. The aggressive policy that was undertaken for the rapid development of globalization and Indian textile industry were really praiseworthy. "The National Textile Policy 2000" envisaged to address the following issues Increased global competition in the post 2005 trade regime under WTO Huge import volume of cheap textiles from other Asian neighbors High production cost with respect to other Asian competitors
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Use of outdated manufacturing technology Poor supply chain management and huge transit cost Huge unorganized and decentralized sector It includes rational projections for the overall development and promotion of all the sectors involved directly or indirectly with the Indian textile industry. Furthermore, this policy also envisages the inclusion of the huge unorganized and decentralized Indian textile sector under the organized textile industry. This is because the unorganized textile manufacturing sector in India accounts for 76% of the total textile production.The globalization of the Indian textile sector was the cumulative effect of the following factors:
Hueg production capacity
Huge Production capacity
Raw material manufacturing capacity
Globalization
large domestic market Entre preneurical skilss
Huege export potenial
Lagre pool of skilled labour
Huge textile production capacity Effcient multi-fiber raw material manufacturing capacity Large pool of skilled and cheap work force Entrepreneurial skills Huge export potential Large domestic market Very low import content Flexible textile manufacturing system. The Indian textile industry consist of the following sectors Man-made Fiber Filament Yarn Industry Cotton Textile Industry Jute Industry Silk and Silk Textile Industry Wool & Woolen Industry Power loom Sector The overall growth of the Indian textile industry can be attributed to the globalization. Today, the Indian textile industry employs around 35 million personnel directly and it accounts for 21% of the total employment generated in the economy. Globalization of the Indian textile industry has also facilitated introduction of modern and efficient manufacturing machineries and techniques in the Indian textile sector. Thus, much of India's economic growth is largely dependent on textile manufacturing and exports.Since Textile is the second largest employment provider in India.To support this sector, textile machinery industry forms the backbone of the textile sector.Currently Indian textile machinery industry facing some of the major problems which hampers the growth of the industry. Some of these are demand of second hand machinery, technology transfer, lack of R&D, quota system, recession, TUFS scheme etc. An address to such issues can bring bright days to this weakening industry.
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Business challenges in the twenty-first century: The information age competition has ushered in a new set of challenges for business competitiveness (Luftman, 1996). These include: Understanding customers. There is no escaping the fact that the customer in today's marketplace is more demanding, not just of product quality, but also of service. As more and more markets become in effect "commodity" markets, where the customer perceives little technical difference between competing offers, the need is for the creation of differential advantage through added value. Hence, it is increasingly becoming important to understand customers' needs and wants and to translate these into a unique value-added business mission. Managing time compression. Time is the primary competitive motive of business in the 1990s. This does not mean, however, that other motives such as cost, quality, and service can be ignored. In fact, these are pre-requisites to sustain competitiveness. But the winning factor is provided by time-based competition, which becomes the highest priority to gain responsiveness and flexibility. Product life cycles are shorter than ever before, industrial customers and distributors require just-in-time deliveries, and end-users are ever more willing to accept a substitute product if their first choice is not instantly available. Mastering mass customisation. The driving force behind the importance of responsiveness and flexibility is the need and the wish to respond to virtually any customer request just in time. Mass customisation offers a viable solution. It involves the delivery of a wide variety of customised goods or services quickly and efficiently at low cost. The key to making mass customisation work is highly-skilled and autonomous workers, processes, and modular units, so that managers can co-ordinate and reconfigure these modules to meet customer specific customer request and demands. Mastering mass customisation is the step towards gaining a competitive edge and is driving new business models. Undertaking globalisation. There is an increasing trend towards globalisation. Almost every sector of business is influenced by global forces due to globalisation. In the global business, materials and components are sourced worldwide, manufactured offshore and sold in many different countries, often with local customisation. The challenge for the global company, then, is to achieve the cost advantage of standardisation while still catering for the local demand for variety. This has given rise to intense competition blurring the boundaries between domestic and global markets. Business, therefore, can no longer act as an isolated and independent entity in competitive world, the real test of competitiveness takes place in "international markets" (Salcedo and Grackin, 2000). There is a need to create value delivery systems that are more responsive to fast changing global markets and much more consistent, focused and reliable. Prospects and Challenges of Indian Textiles Industry : During the study of textile Industry our country is replete with natural resources like cotton, jute and silk. Indian products were known for fine designing, embellishment and craft. Besides this the ancient Indian fabric designers and weavers were one of the best in the world (Reference: The Dhaka Muslin-one of finest and light weight weaving that could pass through a finger ring) Indian textile Industry is also largest employer (after agriculture) of workers directly and indirectly. Due to ethnic diversity and cultural multiplicity besides racial traces in India's hinterland, several designs and variety of costumes and apparels are used that enrich Indian textile garments design possibilities.Industry plays significant role by contribution of 4% of GDP and 20% to the Indian exports kitty. Indian textile Industry is completely self reliant in the entire value-chain from cotton crop to Hi-fashion garment making.India has around 40 Million Spindles (23% of world) and 0.5 million rotors (6% of world capacity). India has 1.8 Million
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Shuttle looms (45% of world capacity), 0.02 Million shuttle less looms (3% of world capacity) and 3.90 Million handlooms (85 % of world capacity). The Industry is highly fragmented except for spinning sub-sector and thus manually intensive. This is obvious from data of weaving sector mentioned above. Organized sector contributes to almost 100% of spinning but hardly 5 % of weaving of fabric. Cotton products are stronghold of India. As of March 2004 India had 1787 cotton/man made fiber textile mills including 1564 spinning mills (stand alone) and 223 Composite verticals. Many organized sector giants are actually conglomerates of medium sized mills, for example, Vardhman Group in Punjab. The Indian textile Industry had been plagued by obsolescence, labor problems, raw material vagaries and lack of modernization including that of spindles. The post fabric stage processing technology has also been lagging but is now coming up fast with infusion of textile processing technology. SSI firms perform the majority of weaving and processing operations. The level of weaving technology is of lower order and knitting units don't possess capacity to perform dyeing, processing and finishing to international standards. The apparel sector has over 25000 domestic manufacturers, 48,000 fabricators and around 4000 manufacturers/exporters. Over 80% of these are small operations (less than 20 machines) and are proprietorship or partnership firms. In 2001, GOI de-notified RMG products from SSI reservation list for obvious reasons. As stated before, cotton apparels constitute major part of India's apparel exports, although cotton appears to be out-thing in current global markets with share declining from 50% in 1982 to 38% in 2008. The export product mix of India is quite interesting with low and mid priced products and also high fashion items. Prospects: The estimation for the exports in the current financial year is about $50bn as perthe estimates of textile ministry in 2013.As per the statistics of the textile ministry india produce around 340 lakh bales or domestic use ,leaving a surplus of 70-80 lakh bales.the idea of the textile policy is to export finished products instead of cotton which will create jobs and get more foreign exchange. There is substantial potential in Indian exports of technical textiles and home-textiles, as most European companies want to set up facilities near-by the emerging markets, such as China and India. Apparel is the most preferred and important of all the other applications. Woven fabrics are widely used in apparel assortments, including innerwear, outerwear, nightwear and underwear, as well as in specialized apparels like protective clothing and sportswear. Home textile also contributes considerably in woven fabric in products assortments like curtains, furnishing fabrics, carpets, table cloths etc.Special kind of woven fabrics are utilized in medical as well as industrial applications. The medical applications include adhesives, dressing bandages, plasters etc. Whereas, industrial applications includes; Geotextile-Interior upholstery, trim, airbags and seat belts and lyre fabrics. Sailcloth-Tent and fabrics used architectures, transportation and tarpaulins. And many more applications The Indian Industry foresees huge demand for industrial woven products for medical and automotive applications. Demand for woven fabrics is anticipated to be rise vertically in the sector of home textiles. Non woven sector has great future in terms of global demand, thus major facilities of cotton yarn are currently concentrating just on home textiles. It is mandatory, that the peak management of the cotton yarn manufacturers analyze the future prospect and growing graph of demand for non woven products. Anticipating massive growth in medical and automobile sectors, these sectors assures substantial demand for non woven facilities in India. Albeit, home textiles also will lure higher demand, there are specific demands for home textile
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facilities also. The 7th Five Year Plan has huge consideration on agricultural growth that also includes cotton textile industry, resulting a prosperous future forecast for the textile industry in India. Indian cotton yarn manufacturers should rush forward for joint ventures and integrated plans for establishing processing and weaving facilities in home textiles and technical textiles in order to meet export target of $50bn, and a total textile production of $85bn by 2012-2013. Textile Trade challenges: The fiber, textile and apparel industries are in the midst of radical changes. Global competition is intense. Although the United States is the world's seventhlargest exporter of textiles and has increased exports by 15 times its 1970 rate, an astoundingly rapid growth of imports, especially in apparel, has caused a major trade deficit. The U.S. textile trade deficit rose 10.4 percent in 1999 and accounted for 1.2% of the country's total trade deficit.The apparel trade deficit increased 7.1% and accounts for 14 % of the total.With only 4.3% of the world's population and 16% of the world's textile-mill output, the United States consumes nearly 20% of the world's textiles and receives close to 20% of the world's textile and apparel imports. The industries' markets are becoming more complex. Short life cycles are common, and demands for rapid response and just-in-time delivery are increasing. There are still many handoffs in the production and delivery processes, and few companies are able to control the entire process. As competition continues to increase, U.S. fiber, textile and apparel companies must rely more on superior quality, innovative products and rapid response to customer needs to secure markets and continue to grow. Breakthroughs in nanosciences, electro textiles, nonwovens, medical textiles and geotextiles are providing new hope and new challenges. Strategic Imperatives for Upholding Textile Industry: Weak infrastructure may be a hindrance which can be overcome with better network and with the willingness to share profit by loyalty bottom up and patronization from above downwards By putting more retail outlets With better value added products, By taking the lowest end of the chain into confidence and building their capability to innovate more and more. By upholding the market knowledge at every level that happens at higher-end that lifts the chain. By building on the expertise for technical textiles that include bed sheets; filtration and abrasive materials; furniture and healthcare upholstery; thermal protection and bloodabsorbing materials; seatbelts; adhesive tape, etc which need skilled workers who are not easy to find in an Indian market. By keeping a regular research and development department with regards to the industry By building up the peripheral market with regular update of new accessories. By integrating the disorganized sectors into one segment that is functionally independent of each other's unwanted stranglehold By creating a state owned cargo-shipping mechanism : with rationalizing fiscal duties; upgrading technology through the Technology Up-gradation Fund Scheme (TUFS); By setting up of Apparel Parks By clearing off bottlenecks in the form of regulatory practices By replacing the indirect taxes with a single nationwide VAT With liberalization of contract norms for textile and garments units By controlling export of raw materials By curtailing the drawback claims falsely boosted invoice value of exports
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By effectively installing a price discovery mechanism to track market trend to take effective measures before hand a slump. Findings: On the basis of study it was found that: Although Indian textile is one of the world's largest in terms of employment generation and in terms of revenue, but it is not been allocated the required funds and resources by the government. U.S is the single largest importer of Indian textile products. Exports to U.S contribute almost 28% of the total overseas exports. Because of globalization, Indian textile industry got enormous foreign investments which led to change the face downsizing of industry. Indian textile industry is suffering sickness because of lack of infrastructure and lack of investments into the industry. Indian textile export is growing at a rate between 5-6 % per annum. Although growing constantly, export from Indian textile industry is growing at a lowerrate as compared to its competitors. Textile industry is facing a tough competition from countries like china, Korea, Thailand, Taiwan and Pakistan. In order to compete with the ever growing competitors, more investment and resource allocation is required. Recommendations: Allocation of more investments and resources to the industry Promotion of Indian textile products in overseas markets is required in order to enhance the exports. Foreign investments must be encouraged. Custom and Excise Duty on Synthetics Technology Up-gradation Fund Scheme should be launched Exemption from Service Tax must be provided to textile goods Excise Duty on Textile Machinery & Spares to be reduced Exemption route to be extended to Export Oriented Units (EOUs) Refund of State Taxes & Duties to Exporters Uniform rate of VAT on Industrial Inputs Reduction of Excise Duty on ManMade fibre Products Competition from countries like china, Korea, Thailand, Taiwan and Pakistan should be kept in mind in drafting schemes. Conclusion: The Indian textile industry is currently one of the largest and most important sector in the economy in terms of output foreign exchange earnings and employment in India The Indian textile industry has a significant presence in the Indian economy as well as in the international textile economy. Its contribution to the Indian economy is manifested in terms of its contribution to the industrial production, employment generation and foreign exchange earnings. The industry also contributes significantly to the world production of textile fibres and yarns including jute. In the world textile scenario, it is the largest producer of jute, second largest producer of silk, third largest producer of cotton and cellulosic fibre\yarn and fifth largest producer of synthetic fibre\yarn. The industry is facing numerous problems and among them the most important once are those of liquidity for many organized sector units, demand recession and insufficient price realization. The long-range problems include the need for sufficient modernization and restructuring of the entire industry to cater more effectively to the demands of the domestic and foreign markets for textiles as per the needs of today and
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tomorrow. There have been several factors influencing the performance of Indian textile firms. Various inherent strengths include availability of cheap unskilled labour, strong raw material base (cotton, jute, silk), growing domestic as well as international market, effective supply chain management and variety of distinct local structure. Whereas the weaknesses which has affected the productivity and have constrained the growth of this industry includes, highly fragmented infrastructure, rigid labour laws, low foreign investment, poor domestic policies and usage of obsolete technology. The textile industry is expected to grow with the factors like growing world economies, with rising per-capita income, spurring consumption, increased trade in apparel, driving the demand for fiber, yarn and fabrics, a surge in demand for technical textiles, a shift from manufacturing/stitching to design-cum-manufacturing and increasing penetration of high format retail stores. There are various opportunities knocking the doors of this industry with which it can be the market leader worldwide. Therefore, to effectively tackle the weaknesses of this sector the country needs to put high investment in R&D to launch new products and by reducing transaction cost per unit. It also needs to move towards middle or high end market from low end market scenario to improve their international standards. More over there is urgent need to focus on organizing the skilled human resource. References: 1. Abernathy, Frederick H., John T. Dunlop, Janice Hammond, and David Weil. 1999. A Stitch in Time: Lean retailing and the transformation of manufacturing - Lessons from the apparel and textile industry.Oxford University Press. 2. Abernathy, Frederick, Anthony Volpe and David Weil. 2004. The Apparel and Textile Industries after 2005: Prospects and Choices. Harvard Center for Textile and Apparel Research, Harvard University, Cambridge, MA. Draft. 3. Anuradha Balaram, Surendra S. Yadav, Rajat K. Baisya(2003), Competitiveness of Indian Apparel Export Firms: An Analysis of Select Delhi-based Firms Global Business Review, Vol. 4(1), 57-76. 4. Blustein, Paul, 2004. China to Put Export Tax on Clothing, Tariffs to begin on Jan 1 as Quotas Disappear, Washington Post, December 14. 5. Blustein, Paul, 2004. Textile Makers Fight for Limits, Washington Post, Oct 13. 6. Bradsher, Keith, 2004. Bangladesh is surviving to export another day, New York Times, December 14, 2004. 7. Chatterjee, Sumeet, 2005. Raymond to focus on branded garments segments, IndoAsian News Service, July 31 8. Elbehri, Aziz, Thomas Hertel and Will Martin. 2003. Estimating the impact of WTO and Domestic Reforms on the Indian Cotton Industry. Review of Development Economics 7(3): 343-359. 9. Gangopadhyay, Subhashish and Shagun Krishnan. 2005. Churning in Indian Industry: Cases of Textiles and Electrical Machinery in the Eighties and the Nineties, India Development Foundation, Presentation. 10. Gereffi, Gary, 1999. International Trade and industrial upgrading in the apparel Commodity chain, Journal of International Economics 48(1):37-70. 11. Gereffi, Gary, D. Spenner and J. Bair (eds.) 2002. Free Trade and Uneven Development: The North American Apparel Industry after NAFTA. Philadelphia: Temple University Press. 12. Ghosh, Santanu,2005.Post-quota, Textile Inc shoots from the wallet, Indian Express, April1. pp. 11.
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13. Gibbon P, 2000. Back to the basics through delocalization: the Mauritius garment industry at the end of the 20th century, Copenhagen, Center for Development Research, Working Paper 00.07. 14. Gordhan K. Saini ,(2002), Non-tariff measures and Indian textiles and clothing exports,Indira Gandhi Institute of Development Research, Mumbai, working papers with number 2009-002 15. Hashim, Danish, 2005. Making the Textile Industry competitive after MFA, Economic and Political Weekly, Vol. XL No. 2, January 8-14, p. 117-127. 16. Humphrey, John and Hubert Schmitz, 2000. Governance and upgrading: linking Industrial cluster and global value-chain research, IDS Working Paper No. 120, Institute of Development Studies, University of Sussex, Brighton. 17. International Labour Organization. 2003 (Reprinted; original 2002). Garment Industry in South Asia: Rags or Riches? ILO. 18. Kathuria, Sanjay, Will Martin and Anjali Bharadwaj, 2001. Export Quotas and Policy Constraints in the Indian Textile and Garment Industries, World Bank, Washington D.C. 19. Knappe, Matthias, 2003 Textiles and clothing: what happens after 2005? International Trade Forum, Issue 2/2003, International Trade Center, page 16, 20. Konrad Specker, Madras Handlooms in the Nineteenth Century, reprinted from IESHR in Roy, ed., Cloth and Commerce. 21. L. Lakshmanan, S. Chinngaihlian and Raj Rajesh, (2007), Competitiveness of India's Manufacturing Sector:An Assessment of Related IssuesR.B.I., Occasional Papers,Vol. 28(1), Summer 22. Masakazu Someya, Hazem Shunnar and T.G. Srinvasan,(2002) Textile and Clothing Exports in MENA -Past Performance, Prospects and Policy Issues In Post MFA Context, Social and Economic Development Group Middle East and North Africa Region 23. Ministry of Textiles, Govt of India, 2010.Annual Report, 2009-2010, and Annual Report 2010-11, http://texmin.nic.in/annualrep/ar05_con.htm 24. Mukherjee, Arpita and Nitisha Patel. 2005. FDI in retail sector in India. Academic Foundation, N.Delhi, India. 25. Mukherkee, Shubham. 2005. S Kulars to pump in Rs. 300 crore to revamp wardrobe.Economic Times, April 9, 2005. 26. Nords, Hildegunn Kyvik. 2004. The Global Textile and Clothing Industry post the Agreement on Textiles and Clothing. Discussion No. 15, World Trade Organization,Geneva, Switzerland. 27. On the development of a regional trade network with reference to handlooms, see Douglas Haynes,Market Formation in Khandesh, c. 1820-1930, IESHR, 36 (1999), pp. 275-302. 28. P. Harnetty, Deindustrialization Revisited: The Handloom Weavers of the Central Provinces of India Modern Asian Studies, 25 (1991), pp. 455-510; 29. Rakshit Arup ,Manisha Hira & U. K. Gangopadhyay (2007), Technical Textiles What India need to do now, Texsummit ,Synthetic & Art silk Mills' Research Association, SASMIRA, Worli, Mumbai 30. Ramaswamy, K.V. and Gary Gereffi, 1998. India's Apparel Sector in the Global Economy: Catching Up or Falling Behind? Economic and Political Weekly 33 (3):122- 130. 31. Roy, Tirthankar, 1998. Economic Reforms and Textile Industry in India, Economic and Political Weekly 33(32):2173-2182. 32. Seshadri Ramkumar and Appachi Arunachalam (2006), India rising: Opportunities in nonwovens and technical textiles. Nonwoven and Advanced Materials Laboratory Texas
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Tech University, Lubbock, Texas. 33. Sidhartha (2013) 'Textile exports can touch $50 bn' The times of India, July 13, pp.16 34. Singhal, Arvind, et. al. 2004. Creating and Preserving Value in the Textile and Apparel Supply Chain: From Fibre to Retail. Textile Outlook International, January-February 2004. pp.135-156. 35. Smith, Adrian, et. al. 2004. Upgrading the East European Apparel Industry: Outsourcing and the 'Embedded Geographies' of Production, Paper presented at the conference, 36. Subramaniam, G. Ganapathy, 2005. Garment exporters facing tough post-MFA bargain, The Economic Times, New Delhi, February 16. 37. T. Roy, Artisans and Industrialization: Indian Weaving in the Twentieth Century (Delhi,1993),Ch. 2. 38. T. Roy, Traditional Industry in the Economy of Colonial India (Cambridge, 1999). 39. Tewari, M, 2003. Engaging the Dragon: The emerging dynamics of inter-regional trade and investment between India and China. Draft paper prepared for the South Asia Program, Columbia University's Earth Institute and the Ministry of Commerce, India. 40. Tewari, M, 2004. Regional repositioning within India's garment industry: Elements of a third generation narrative in global commodity chains,' Draft, October 14. 41. Tewari, Meenu (2005), Post-MFA adjustments in India's textile and apparel industry: emerging issues and trends Indian Council for Research on International Economic Relations .working paper , 48, July 42. Verma, Samar. 2002. Export Competitiveness of the Indian Textile and Garment Industry, Working Paper No. 94, ICRIER, Indian Council for Research on International Economic Relations New Delhi. 43. Virmani, Arvind, 2004. Economic Reforms: Policy and Institutions Some lessons from Indian reforms. ICRIER Working paper No. 121, Indian Council for Research on International Economic Relations, New Delhi.
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GUMBAD BUSINESS REVIEW

DEPARTMENT OF BUSINESS MANAGEMENT

GUMBAD BUSINESS REVIEW

Prof. Jesus Vicens Vich

Dr. Lukasz Wall

Prof. J.N. Mishra

Mohd. Nayeem Abdullah

Prof. Raj Kumar

Prof. J.S. Bisht

GUMBAD BUSINESS REVIEW

July 2011 - December 2011

Dyutiman Choudhary S.P. Kala N. P. Todaria

Is the Stock Market Overvalued: A Study in the Context of Bangladesh

Mohammad Nayeem Abdullah

Reciprocity with the natural environment

Dr. Jaskaran Singh Dhillon

PriyankaSrivastava PallaveeShrivastava Prof. Rekha Prasad Ms. Payal Johari

Jog Singh Bhatia Prof. J.S. Bisht Avanish Chandra Pandey

ABOUT THE UNIVERSITY AND THE DEPARTMENT

ABOUT DEPARTMENT OF BUSINESS MANAGEMENT

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

% of fat 3.0 6.0

% of SNF 8.5 9.0

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Source: Primary data

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Is the Stock Market Overvalued: A Study in the Context of Bangladesh

Is the Stock Market Overvalued: A Study in the Context of Bangladesh

Is the Stock Market Overvalued: A Study in the Context of Bangladesh

Is the Stock Market Overvalued: A Study in the Context of Bangladesh

Is the Stock Market Overvalued: A Study in the Context of Bangladesh

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Is the Stock Market Overvalued: A Study in the Context of Bangladesh

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

TABLE -3 CALCULATIONS OF P-ERATIO,P-CFPSRATIO AND P-SPS RATIO ON YEAR BASIS

Is the Stock Market Overvalued: A Study in the Context of Bangladesh

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Is the Stock Market Overvalued: A Study in the Context of Bangladesh

Is the Stock Market Overvalued: A Study in the Context of Bangladesh

Reciprocity with the natural environment

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Reciprocity with the natural environment

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Reciprocity with the natural environment

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Reciprocity with the natural environment

Reciprocity with the natural environment

Reciprocity with the natural environment

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Reciprocity with the natural environment

Reciprocity with the natural environment

Biodiversity Economy Culture

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Gumbad Business Review, Vol.-VII, No.1 (July-December 2011), ISSN: 0973-6158

Marketing & Sales

Human resources management

Primary Activities Technological development Infrastructure

Fig.3: Secondary Activities

n Technological development - These activities relate to managing and processing

Training and development

Employee and community relations

Personnel records Health and safety