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International Journals of Multidisciplinary Research Academy
Editorial BoardDr. CRAIG E. REESE
Professor, School of Business, St. Thomas University, Miami Gardens
Dr. S. N. TAKALIKAR
Principal, St. Johns Institute of Engineering, PALGHAR (M.S.)
Dr. RAMPRATAP SINGH Professor, Bangalore Institute of International Management, KARNATAKA
Dr. P. MALYADRI Principal, Government Degree College, Osmania University, TANDUR
Dr. Y. LOKESWARA CHOUDARY Asst. Professor Cum, SRM B-School, SRM University, CHENNAI
Prof. Dr. TEKI SURAYYA Professor, Adikavi Nannaya University, ANDHRA PRADESH, INDIA
Dr. T. DULABABU Principal, The Oxford College of Business Management,BANGALORE
Dr. A. ARUL LAWRENCE SELVAKUMAR Professor, Adhiparasakthi Engineering College, MELMARAVATHUR, TN
Dr. S. D. SURYAWANSHI Lecturer, College of Engineering Pune, SHIVAJINAGAR
Mr. PIYUSH TIWARI Ir. Executive, Dispatch (Supply Chain), SAB Miller India (Skal Brewaries Ltd.)
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IJMT Volume 1, Issue 1 ISSN: 2249-1058 __________________________________________________________
International Journal of Marketing and Technology
http://www.ijmra.us Page 2
une
2011
Prof S. R. BADRINARAYAN Sinhgad Institute for Management & Computer Applications, PUNE
Mr. GURSEL ILIPINAR ESADE Business School, Department of Marketing, SPAIN
Mr. ZEESHAN AHMED Software Research Eng, Department of Bioinformatics, GERMANY
Mr. SANJAY ASATI
Dept of ME, M. Patel Institute of Engg. & Tech., GONDIA(M.S.)
Mr. G. Y. KUDALE
N.M.D. College of Management and Research, GONDIA(M.S.)
Editorial Advisory Board
Dr.MANJIT DASAssitant Professor, Deptt. of Economics, M.C.College, ASSAM
Dr. ROLI PRADHANMaulana Azad National Institute of Technology, BHOPAL
Dr. N. KAVITHAAssistant Professor, Department of Management, Mekelle University, ETHIOPIA
Prof C. M. MARAN Assistant Professor (Senior), VIT Business School, TAMIL NADU
DR. RAJIV KHOSLAAssociate Professor and Head, Chandigarh Business School, MOHALI
Dr. S. K. SINGH Asst. Professor and Head of the Dept. of Humanities, R. D. Foundation Group of Institutions,
MODINAGAR
Dr. (Mrs.) MANISHA N. PALIWAL Associate Professor, Sinhgad Institute of Management, PUNE
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2011
DR. (Mrs.) ARCHANA ARJUN GHATULEDirector, SPSPM, SKN Sinhgad Business School, MAHARASHTRA
DR. NEELAM RANI DHANDA
Associate Professor, Department of Commerce, kuk, HARYANA
Dr. FARAH NAAZ GAURIAssociate Professor, Department of Commerce, Dr. Babasaheb Ambedkar Marathwada
University, AURANGABAD
Prof. Dr. BADAR ALAM IQBAL Associate Professor, Department of Commerce, Aligarh Muslim University, UP
Associate Editors
Dr. SANJAY J. BHAYANIAssociate Professor ,Department of Business Management,RAJKOT (INDIA)
MOID UDDIN AHMADAssistant Professor, Jaipuria Institute of Management, NOIDA
Dr. SUNEEL ARORAAssistant Professor, G D Goenka World Institute, Lancaster University, NEW DELHI
Mr. P. PRABHUAssistant Professor, Alagappa University, KARAIKUDI
Mr. MANISH KUMAR Assistant Professor, DBIT, Deptt. Of MBA, DEHRADUN
Mrs. BABITA VERMA Assistant Professor ,Bhilai Institute Of Technology, INDORE
Ms. MONIKA BHATNAGAR Assistant Professor, Technocrat Institute of Technology, BHOPAL
Ms. SUPRIYA RAHEJA Assistant Professor, CSE Department of ITM University, GURGAON
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IJMT Volume 1, Issue 1 ISSN: 2249-1058 __________________________________________________________
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2011
Customer Pre Purchase Evaluation of Age Group
(18-23) for Fairness Cream FAIR & HANDSOME Attitude
Formation towards Men’s fairness CreaMs
(A Case Study of Yamuna Nagar City)
Ms. Sapna Sanserwal
Mr. Gaurav Bakshi
Title
Author(s)
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2011
ABSTRACT:
The Indians have long been fixated with the fairness of skin. With an established women‘s
fairness cream market, the time was ripe for the development of a market for fairness creams for
men. The researchers have attempted to study the attitude formation towards men‘s fairness
cream with the help of Fishbein model. The paper reveals the important factors that determine
the formation of attitude towards the fairness creams along with the role of important factors,
such as perceived value, pricing, advertisement, role of celebrity endorser on the formation of the
attitude.
KEY WORDS:
Fishbein TORA Model, Social Norms, Customer Pre Purchase Evaluation
INTRODUCTION:
Scientists say that skin colour is determined by the amount and type of melanin, the pigment in
the skin. It is said that whether one is fair or dark is dependent more on genetic rather than
environmental causes. Yet, people all over the world are preoccupied with the colour of their
skins. Fair skinned people in subtropical regions spend lots of time and energy getting tanned --
while darker skinned people in the tropics covet milky fair skin.
Fairness Cream for Men
Asian men no longer believe that fairness is only for women. Indian men, as well as their counterparts in
other Asian countries, including Korea and Japan are turning to fairness cream. According to trade
analysts, the market for men’s fairness products is valued at Rs 30 million, and constitutes 35 percent of
the market. It does not come as a surprise that India leads the markets, followed by Saudi Arabia. The
early 2000s had witnessed an increased interest in personal grooming among men. According to
analysts, men were becoming more conscious of their looks, as in the business world as well as in
society, a lot rode on how a person presented himself. Ill-groomed men ran the risk of coming across as
shoddy and irresponsible.
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2011
The grooming fad was not limited to men in the corporate field; it had spread to college goers and
youngsters too. It also helped that a large number of celebrities were becoming increasingly voluble
about their personal grooming habits.
The Indian cosmetics industry was quick to latch on to the phenomenon. Surveys carried out bycosmetics companies suggested that a large number of Indian men were using fairness creams that were
originally targeted at women.
Fair and Handsome is a brand that created the Men's fairness cream segment in India. Launched in
2005, the brand became the creater and the market leader of this segment. Emami was looking for ways
to challenge the Fair and Lovely brand from HUL. Emami had a brand Naturally Fair which was small
compared to FAL.
Emami went for serious customer research which showed that 25-30% of customers of Fairness creams
were men. That customer insight paved way for a specialized brand for men. Fair and Handsome is
targeted at young urban men aged 15- 35. The brand was launched with much promotion across visual
media.
The brand has to be appreciated for creating a category. It is true that men uses creams meant for
women. Hence there is a logic in creating a brand for men in this category. The total fairness market is
estimated to be around Rs 900 crore and men's segment is around Rs 160 crore. Although Fair and
Handsome has gained the first mover advantage, already competition is hotting up. HUL has extended
FAL into men's category with a variant Menz Active. Nivea and Lo'real also have moved into this
segment. Unlike Fair and Handsome (FAH), other brands are little subtle in positioning their brands as a
fairness cream. In the face of emerging competition Emami has moved aggressively to promote Fair &
Handsome by roping in Bollywood icon ShahRukh Khan as its brand ambassador.
Pre-purchase behaviour data is essential in understanding what buyers are looking for, and what
in-person experiential marketing and merchandising tactics will best inform and satisfy these
decision-makers. Whether at a tradeshow, in a store, or at other offline venues, more focus and
attention must be paid to capturing data that exposes customer behavior -- which products they
looked at, which features they spent time examining, what problems they are trying to solve.
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2011
The purchase decision is a critical milestone for everyone involved in the sales process. But
learning about pre-purchase behaviour is equally important. Understanding what makes the
customer buy a product will eliminate guesswork and lead to long-term successful customer
relationships.
This study aims at measuring customer attitude with regard to perceived value, pricing, advertisement &
role of celebrity for Fairness Cream Fair & Handsome, Weight Range 50gms with regard to Perceived
Value, Pricing, Advertisement, Role of Celebrity & its impact on customer attitude formation.
LITERATURE REVIEW:
Sahoo Debajani and Vyas H.Preela(July,Sept2007), “Emami-identification of Brand extension
opportunities in fairness cream industry”, Vision The journal of business perspective”, vol. 11
no.3, elaborate the major players in fairness cream for men and market expansion strategies
adopted by these players as also the ethical dimension and positioning strategies for Fair and
Handsome. Liu Yuping(oct.2007) in ―The long term impact of loyalty programs on consumer
purchase behaviour and loyalty”, Journal of marketing , vol. 71, discuss how consumer
behaviour changes after the customers join the loyalty program. Jahangir Nadim and Begum
Noorjahan (Dec.2007), ―Effect of Perceived usefulness, Ease of use, Security and Privacy oncustomer Attitude and adaptation in the context of E-Banking‖. Journal of marketing research,
vol.7, illustrates the various aspects of customer attitude. Homburg Christian, Nicole Koschate
& Wayne D. Hoyer (April 2005), ―Do satisfied customer really pay more? A study of the
relationship between Customer satisfaction and willingness to Pay‖, Journal of marketing,
stresses that the higher the customer satisfaction would lead to improved company performance.
Thus many companies have implemented programs for measuring & involving customer
satisfaction. Kerin Rager A & Daniel J. Howard (Oct 2006) broadened the scope of references
price advertising research: A field study of consumer shopping involvement . “Journal of
marketing”, vol-70, article relates the price of product with the consumer purchasing decision.
Schouten & Mc Alexander (1995),‖Moderating effect of consumer brand knowledge &
community”, “The journal of Marketing ‖, predicts the effect of brand community because
knowledge captures both the aspects of interest in the brand & the consumer previous experience
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2011
level with it. This paper suggested that the knowledgeable consumers are more engaged with the
brand & the community.
Wesel Thorsten, Berndskiera & Julian Villanuena (July 2005), ―The social influence of brand
community‖, ―The journal of Marketing‖ vol.68, No. 2, considers that the cognitive component
identifies with the brand community and involves categorization processes, where by consumer
formulates & maintains a self awareness of his or her membership within the community.
Customer makes the brand performance according the performance & services provided by the
company.
Likert Scale.(Interval Scale) was used to measure the responses of respondents in determining
the attitude formation towards Fair & Handsome. 200 men were selected using non-probabilistic
sampling.
NULL HYPOTHESIS (Ho):- There is insignificant impact of price, perceived value ,role of
celebrity& advertisement on attitude formation.
ALTERNATIVE HYPOTHESIS (H1:- There is a significant impact of price, perceived value, role of
celebrity & advertisement on attitude formation.
DATA – INTERPRETATION:
Option Respondents
Users 62.5%
Non-users 37.5%
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2011
Source: - Questionnaire
Interpretation: - This graph shows that 62.5% of respondent use fairness cream.
Have you ever used a fairness cream for women?
Source: - Questionnaire
Interpretation: - This graph shows that 27% respondent use fairness cream for women.
How is Fair & Handsome different from women`s fairness creams?
62.50%
37.50%
Respondents
27%
73%
Respondents
Option Respondents
Males using fairness cream for women 27%
Males not using fairness creams for women 73%
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Option Respondents
1. Better suited to male skin. 7.5%
2. More effective than women`s cream. 5.5%
3. Constitution is different. 12%
4. All above reasons. 2%
Interpretation: - This graph shows that 12% respondent feel that constitution is different in
fairness cream for men.
Which fairness cream do you use?
Source:- Questionnaire
Interpretation: - This graph shows that 30% of respondent use fair & handsome while 20% fair one men.
31%
13%17%
13%
26%
Respondents
Fair & Handsome
Menz active
Fair ever
Nivea
Fair one man
Option Respondents
Fair & Handsome 31%
Menz active 13%
Fair ever 17%
Nivea 13%
Fair one man 26%
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2011
How frequently do you purchase fairness cream?
Source:- Questionnaire
Interpretation: - This graph shows that 40% of the respondent purchase fairness cream as per their need.
ATTITUDE MEASUREMENT MODEL:
Fishbein‘s Attitude Model, a multi attribute attitude model has been used to analyse the formation of
attitude towards men‘s fairness cream. This model says that people form attitude towards objects on the
basis of their beliefs (perceptions and knowledge) about these objects.
Ao= i=1 to n∑ biei
Where Ao=the person‘s overall attitude towards the object.
bi=the strength customer‘s belief that the object is related to attitude i.
ei=customer‘s evaluation or intensity of feelings towards attribute i.
n=the number of relevant beliefs for the customer.
The following asks a consumer to evaluate these attributes for fairness cream:
0 16%
24%
20%
40%
RespondentsDaily
weekly
occasionally
Monthly
Option Respondents
Daily -
Weekly 16%
Occasionally 24%
Monthly 20%
As per need 40%
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Attribute:
Fairer skin tone
Provide confidence
Advertising
Packaging and designing
Quality
Value for money
The numbers from the following scale have been used to evaluate each characteristic of fairness cream.
Neither
Good
Extremely Moderately nor Moderately Extremely
Good Good Bad Bad Bad
+2 +1 0 -1 -2
The consumer provides the following responses, which represent e i (an evaluation of the attribute as
being good or bad)
Attribute Rating (ei)
Fairer skin tone +1
Provide confidence +1
Advertising +2
Packaging and designing +1
Quality 0
Value for money +2
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2011
The following scale is used to analyze how likely it is that the Fair & Handsome fairness cream possesses
the characteristic.
Neither
Likely
Extremely Moderately nor Moderately Extremely
Likely Likely Unlikely Unlikely Unlikely
+2 +1 0 -1 -2
Attribute Rating (bi)
Fairer skin tone +2
Provide confidence 0
Advertising +2
Packaging and designing +1
Quality +1
Value for money +2
To calculate the consumer’s attitude about fairness cream using the original Fishbein Attitude Model,
the attribute evaluations have been multiplied with the brand’s rating and sum for each brand:
Ao = biei
n
i=1
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Attribute Rating(ei) Rating(bi) Maximum
score(eibi)
Attained score
(eibi)
Fairer skin tone +1 +2 +4 +2
Provide
confidence
+1 0 +4 0
Advertising +2 +2 +4 +4
Packaging and
designing
+1 +1 +4 +1
Quality 0 +1 +4 0
Value for money +2 +2 +4 +4
Total +24 +11
Source:- Questionnaire
Interpretation : the attained score i.e.(e ibi) is +11.This score has been used in comparing this brand withother brands and gives a better positive attitude formation towards Fair & Handsome as compared to
its’ competitors.
ANALYTICAL TOOLS
Factor Analysis is a statistical method used to describe variability among observed variables in
terms of fewer unobserved variables called factors.
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Interpretation:-
The table that precedes displays that total variance explained in three stages. At the initial stage, it
shows the factors and their associated eigen values, the percentage of variance explained and the
cumulative percentage.
In reference to the eigen values, you would expect seven factors to be extracted because they
have eigen values greater than 1.
If seven factors were extracted, than 65 percent of the variance would be explained
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Rotated Component Matrixa
Component
1 2 3 4 5
Packaging .766 .186 .313
Awareness .681 -.216 -.375 -.146
advertisement -.122 .814 -.226 -.136
Quality .237 .655 -.219 .302 .267
brandname .856
Attitude .132 .829 .103
Availiblity .319 .190 -.454 .246
Price -.124 .880
Clbrtyends -.104 .284 -.340 .392
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IJMT Volume 1, Issue 1 ISSN: 2249-1058 __________________________________________________________
International Journal of Marketing and Technology
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2011
Rotated Component Matrixa
Component
1 2 3 4 5
Packaging .766 .186 .313
Awareness .681 -.216 -.375 -.146
advertisement -.122 .814 -.226 -.136
Quality .237 .655 -.219 .302 .267
brandname .856
Attitude .132 .829 .103
Availiblity .319 .190 -.454 .246
Price -.124 .880
Clbrtyends -.104 .284 -.340 .392
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 13 iterations.
Interpretation: - The Varimax rotation is used here where the factor axes are kept at right angles to each
other. Ordinarily, rotation reduces the number of complex variables and improves interpretation.
REGRESSION is the study of the nature of relationship between the variables so that one may be able to
predict the unknown value of one variable for a known value of another value. The coefficient of
determination (R-square or R²), allows to evaluate the proportion of the variability of the dependent
variable that is explained by the selected explanatory variables. This coefficient ranges between 0 to 1.
The closer the model to 1, the better the model. Since the value lies very close to 1, therefore, the model is
quite befitting.
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The adjusted coefficient of determination (or adjusted R²) which writes
R^2
= [(n-1) R2-1]/(n-p-1)
Where ‘n‘is the number of observations and ‘p’ the number of explanatory
The sum of squares of residuals (SSR), also named sum of squares of errors (SSE) which writes
Where yi is the observed value and ÿi is the predicted value.
Variables Entered/Removedb
Model Variables Entered Variables Removed Method
1 Price
Advertisement
Brand name
. Enter
a. All requested variables entered.
b. Dependent Variable: attitude
Model Summaryb
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .102
a
.010 -.005 1.330
a. Predictors: (Constant), Price, Advertisement, Brand name
b. Dependent Variable: Attitude
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ANOVAb
Model Sum of Squares Df Mean Square F Sig.
1 Regression 3.672 3 1.224 .692 .558a
Residual 346.708 196 1.769
Total 350.380 199
a. Predictors: (Constant), Price, Advertisement, Brand name
b. Dependent Variable: Attitude
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Interpretation:-
This shows that value of R is 10% & value of R square is 1%. It means that there is low average
relationship between the variables.
RESULT AND FINDINGS
Fairness creams have a very huge and growing market in India. Male consumers, who are
conscious about their grooming, are purchasing it because it gives them a feeling of enhanced
self-esteem and confidence as traditionally fair skinned people in India have been considered
more successful and beautiful. The fairness brands have a very aggressive policy in targeting the
youth mostly. Celebrities and youth icons like Shahrukh Khan, John Abraham and Virat Kohli
have been roped in to influence the potential customers. The market for the men‘s fairness
creams may still be in nascent stage, but has the potential to grow in leaps and bounds in the near
future given the emphasis laid on grooming and good looks by the youth in India.
REFERENCES
Sahoo Debajani and Vyas H.Preela(July,Sept2007)”Emami-identification of Brand
extension opportunities in fairness cream industry”,”Vision The journal of business
perspective”, vol. 11 no.3,pp67-77.
Sahoo Debajani and Vyas H.Preela(July,Sept2007)”Emami-identification of Brand
extension opportunities in fairness cream industry”,”Vision The journal of business
perspective”, vol. 11 no.3,pp67-77.
Liu Yuping(oct.2007)”The long term impact of loyalty programs on consumer purchase
behaviour and loyalty” Journal of marketing , vol. 71.
Jahangir Nadim and Begum Noorjahan(dec.2007)”Effect of Perceived usefulness, Ease
of use, Security and Privacy on customer Attitude and adaptation in the context of E-
Banking‖. Journal of Marketing Research, vol.7.
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2011
Homburg Christian, Nicole Koschate & Wayne D. Hoyer (April 2005).‖Do satisfied
customer really pay more? A study of the relationship between Customer satisfaction and
willingness to Pay”, Journal of Marketing”
KERIN RAGER A & DENIAL .J. HOWARD (Oct 2006) broadening the scope of references price advertising research: A field study of consumer shopping involvement.
“Journal of Marketing”,vol-70.
Schouten & Mc Alexander (1995),‖Moderating effect of consumer brand knowledge &
communit y”, “The journal of Marketing ‖, vol.53.
Wesel Thorsten, Berndskiera & Julian Villanuena (July 2005), “The social influence of brand
community”, “The journal of Marketing” vol.68, No. 2.
Gips James &Adam Brasel S. (November 2008) ―Breaking Through fast
Forwarding:Brand information and Visual Attention‖ Journal of marketing Volume 72.
DelVecchlo Devon, Krishnam Shankar and C.Smiths Daniel (May 2007) ―Cents or
percent framing on price exceptation and choice‖, ― Journal of Marketing”
Shukla Rajendra(April 2005), Journal of Business Research
Dulaney Paul, “The Elements of Marketing”,August 2007, Journal of Marketing Research.
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International Journals of Multidisciplinary Research Academy
Editorial BoardDr. CRAIG E. REESE
Professor, School of Business, St. Thomas University, Miami Gardens
Dr. S. N. TAKALIKAR
Principal, St. Johns Institute of Engineering, PALGHAR (M.S.)
Dr. RAMPRATAP SINGH Professor, Bangalore Institute of International Management, KARNATAKA
Dr. P. MALYADRI Principal, Government Degree College, Osmania University, TANDUR
Dr. Y. LOKESWARA CHOUDARY Asst. Professor Cum, SRM B-School, SRM University, CHENNAI
Prof. Dr. TEKI SURAYYA Professor, Adikavi Nannaya University, ANDHRA PRADESH, INDIA
Dr. T. DULABABU Principal, The Oxford College of Business Management, BANGALORE
Dr. A. ARUL LAWRENCE SELVAKUMAR Professor, Adhiparasakthi Engineering College, MELMARAVATHUR, TN
Dr. S. D. SURYAWANSHI Lecturer, College of Engineering Pune, SHIVAJINAGAR
Mr. PIYUSH TIWARI Ir. Executive, Dispatch (Supply Chain), SAB Miller India (Skal Brewaries Ltd.)
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Prof S. R. BADRINARAYAN Sinhgad Institute for Management & Computer Applications, PUNE
Mr. GURSEL ILIPINAR ESADE Business School, Department of Marketing, SPAIN
Mr. ZEESHAN AHMED Software Research Eng, Department of Bioinformatics, GERMANY
Mr. SANJAY ASATI
Dept of ME, M. Patel Institute of Engg. & Tech., GONDIA (M.S.)
Mr. G. Y. KUDALE
N.M.D. College of Management and Research, GONDIA(M.S.)
Editorial Advisory Board
Dr.MANJIT DASAssitant Professor, Deptt. of Economics, M.C.College, ASSAM
Dr. ROLI PRADHANMaulana Azad National Institute of Technology, BHOPAL
Dr. N. KAVITHAAssistant Professor, Department of Management, Mekelle University, ETHIOPIA
Prof C. M. MARAN Assistant Professor (Senior), VIT Business School, TAMIL NADU
DR. RAJIV KHOSLAAssociate Professor and Head, Chandigarh Business School, MOHALI
Dr. S. K. SINGH Asst. Professor and Head of the Dept. of Humanities, R. D. Foundation Group of Institutions,
MODINAGAR
Dr. (Mrs.) MANISHA N. PALIWAL Associate Professor, Sinhgad Institute of Management, PUNE
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DR. (Mrs.) ARCHANA ARJUN GHATULEDirector, SPSPM, SKN Sinhgad Business School, MAHARASHTRA
DR. NEELAM RANI DHANDA
Associate Professor, Department of Commerce, kuk, HARYANA
Dr. FARAH NAAZ GAURIAssociate Professor, Department of Commerce, Dr. Babasaheb Ambedkar Marathwada
University, AURANGABAD
Prof. Dr. BADAR ALAM IQBAL Associate Professor, Department of Commerce, Aligarh Muslim University, UP
Associate Editors
Dr. SANJAY J. BHAYANIAssociate Professor ,Department of Business Management,RAJKOT (INDIA)
MOID UDDIN AHMADAssistant Professor, Jaipuria Institute of Management, NOIDA
Dr. SUNEEL ARORAAssistant Professor, G D Goenka World Institute, Lancaster University, NEW DELHI
Mr. P. PRABHUAssistant Professor, Alagappa University, KARAIKUDI
Mr. MANISH KUMAR Assistant Professor, DBIT, Deptt. Of MBA, DEHRADUN
Mrs. BABITA VERMA Assistant Professor ,Bhilai Institute Of Technology, INDORE
Ms. MONIKA BHATNAGAR Assistant Professor, Technocrat Institute of Technology, BHOPAL
Ms. SUPRIYA RAHEJA Assistant Professor, CSE Department of ITM University, GURGAON
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Product Lifecycle Management
Phases of Product Lifecycle and
Corresponding Technologies
Ms. Kiran Chaudhary
Ms. Tanu Chandhiok
Title
Author(s)
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Abstract:
Product Lifecycle Management makes it possible to command the whole lifespan of a product
and the information connected with it. Efficient product lifecycle management enables
companies to compete successfully in international and global market. The core of product life
cycle management is the creation, preservation and storage of information relating to the
company‘s product and activities in order to ensure the fast, fast and trouble free finding,
refining, distribution and reutilization of data required for daily operations. This paper describes
phases of product lifecycle and corresponding technologies of Product Lifecycle Management.
The paper also describes with a further discussion of the business concept of product lifecycle
management, marketing strategies, approaches and benefits of Product Lifecycle Management.
Keywords: - Product Lifecycle Management, Global Market Management, Marketing Strategies
Introduction:
Product Lifecycle Management (PLM) is a systematic business management approach that can
be utilized by all types of businesses in order to improve their products, for their growth and thus
the sustainability performance of the companies. This technique can be used equally by both
large and small organizations and its purpose is to ensure more sustainable value chain
management. Product Lifecycle Management (PLM) is an integrated concept to assist in
businesses managing the total life cycle of products and services towards more sustainable
consumption and production patterns. It can be used to target, organize, analyze and manage
product-related information and activities towards continuous improvement through out the
duration or the life cycle of the product.
Definitions:
Product Lifecycle management (PLM): A strategic business approach that applies a
consistent set of business solutions in support of the collaborative creation, management,
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dissemination, and use of product definition information across the extended enterprise from
concept to end of life — integrating people, processes, business systems, and information.
Product Life Cycle (PLC): A product passes through certain distinct stages during its life,
and this is called the product life cycle.
Product Life Cycle Concept:
A product‘s sales potential and profitability changes over a period of time. The product
life cycle (PLC) is the course of a product‘s sales and profits over its life-time. A product passes
through various distinct stages during its whole life span, and this is termed as product life cycle
(PLC). Product Life Cycle is the progressive of a product through four stages. They are
Introduction
Growth
Maturity
Obsolesce and Death.
Typical Product Life Cycle
Product Lifecycle Management (PLM) is the process of managing the entire lifecycle of a
product from its conception, through design and manufacture, to service and disposal. PLM
integrates people, data, processes and business systems and provides a product information
backbone for companies and their extended enterprise.
'Product lifecycle management' (PLM) should be distinguished from 'Product life cycle
management (marketing)' (PLCM). PLM describes the engineering aspect of a product, from
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managing descriptions and properties of a product through its development and useful life;
whereas, PLCM refers to the commercial management of life of a product in the business market
with respect to costs and sales measures.
Product lifecycle management is one of the four cornerstones of a corporation's information
technology structure. All companies need to manage communications and information with their
customers (CRM-Customer Relationship Management), their suppliers (SCM-Supply Chain
Management), their resources within the enterprise (ERP-Enterprise Resource Planning) and
their planning (SDLC-Systems Development Life Cycle). In addition, manufacturing
engineering companies must also develop, describe, manage and communicate information about
their products.
One form of PLM is called people-centric PLM. While traditional PLM tools have been
deployed only on release or during the release phase, people-centric PLM targets the design
phase.
Recent (as of 2009) ICT development (EU funded PROMISE project 2004-2008) has allowed
PLM to extend beyond traditional PLM and integrate sensor data and real time 'lifecycle event
data' into PLM, as well as allowing this information to be made available to different players in
the total lifecycle of an individual product (closing the information loop). This has resulted in theextension of PLM into Closed Loop Lifecycle Management (CL2M).
Marketing Strategies related to PLC
Marketing Mix
Element
Introduction Growth Maturity Decline
Product Basic Product. Improvement. Diversity of
models, brands.
Withdrawal of
weak products in
a phased manner.
Price Skimming or
Penetrating
policy.
Penetrating
policy. Lower
price.
Competitive
parity.
Prices are cut.
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Distribution
(Place)
Build selective
distribution.
Built intensive
distribution.
Built more
intensive
distribution.
Go selective
phase out
unprofitable
outlets.
Promotion
(Sales)
Use heavy sales
promotion to
entice trail.
Reduce to take
advantage of
heavy consumer
demand.
Increase to
encourage brand
switching.
Reduce to
minimal level.
Advertising Build product
awareness
among early
adapters and
dealers.
Built awareness
and interest in
the mass market.
Stress brand
difference and
benefits.
Reduce to level
needed to retain
hard core loyals.
Marketing Objectives.
Objectives Introduction Growth Maturity Decline
Create product
awareness and
Trail.
Maximize
market share.
Maximize profit
while defending
market share.
Reduce
expenditure and
milk the brand.
Phases of product lifecycle and corresponding technologies
Many software solutions have developed to organize and integrate the different phases of a
product‘s lifecycle. PLM should not be seen as a single software product but a collection of software tools and working methods integrated together to address either single stages of the
lifecycle or connect different tasks or manage the whole process. Some software providers cover
the whole PLM range while others a single niche application. Some applications can span many
fields of PLM with different modules within the same data model. An overview of the fields
within PLM is covered here. It should be noted however that the simple classifications do not
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always fit exactly, many areas overlap and many software products cover more than one area or
do not fit easily into one category. It should also not be forgotten that one of the main goals of
PLM is to collect knowledge that can be reused for other projects and to coordinate simultaneous
concurrent development of many products. It is about business processes, people and methods as
much as software application solutions. Although PLM is mainly associated with engineering
tasks it also involves marketing activities such as Product Portfolio Management (PPM),
particularly with regards to new product development (NPD). There are several life-cycle models
in industry to consider, but most are rather similar. What follows below is one possible life-cycle
model; while it emphasizes hardware-oriented products, similar phases would describe any form
of product or service, including non-technical or software-based products:
Phase 1: Conceive
Imagine, specify, plan, and innovate
The first stage in idea is the definition of its requirements based on customer, company, market
and regulatory bodies‘ viewpoints. From this specification of the products major technical
parameters can be defined. Parallel to the requirements specification the initial concept design
work is carried out defining the aesthetics of the product together with its main functional
aspects. For the Industrial Design, Styling, work many different media are used from pencil andpaper, clay models to 3D CAID Computer-aided industrial design software.
In some concepts, the investment of resources into research or analysis-of-options may be included in the
conception phase - e.g. bringing the technology to a level of maturity sufficient to move to the next phase.
However, life-cycle engineering is iterative. It is always possible that something doesn't work well in any
phase enough to back up into a prior phase - perhaps all the way back to conception or research. There are
many examples to draw from.
Phase 2: Design
Describe, define, develop, test, analyze and validate
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This is where the detailed design and development of the product‘s form star ts, progressing to
prototype testing, through pilot release to full product launch. It can also involve redesign and
ramp for improvement to existing products as well as planned obsolescence. The main tool used
for design and development is CAD Computer-aided design. This can be simple 2D Drawing /
Drafting or 3D Parametric Feature Based Solid/Surface Modeling. Such software includes
technology such as Hybrid Modeling, Reverse Engineering, KBE (Knowledge-Based
Engineering), NDT (Nondestructive testing), and Assembly construction.
This step covers many engineering disciplines including: Mechanical, Electrical, Electronic,
Software (embedded), and domain-specific, such as Architectural, Aerospace, Automotive, ...
Along with the actual creation of geometry there is the analysis of the components and product
assemblies. Simulation, validation and optimization tasks are carried out using CAE (Computer-aided engineering) software either integrated in the CAD package or stand-alone. These are used
to perform tasks such as:- Stress analysis, FEA (Finite Element Analysis); Kinematics;
Computational fluid dynamics (CFD); and mechanical event simulation (MES). CAQ
(Computer-aided quality) is used for tasks such as Dimensional Tolerance (engineering)
Analysis. Another task performed at this stage is the sourcing of bought out components,
possibly with the aid of Procurement systems.
Phase 3: Realize
Manufacture, make, build, procure, produce, sell and deliver
Once the design of the product‘s components is complete the method of manufacturing is
defined. This includes CAD tasks such as tool design; creation of CNC Machining instructions
for the product‘s parts as well as tools to manufacture those parts, usi ng integrated or separate
CAM Computer-aided manufacturing software. This will also involve analysis tools for process
simulation for operations such as casting, molding, and die press forming. Once the
manufacturing method has been identified CPM comes into play. This involves CAPE
(Computer-aided Production Engineering) or CAP/CAPP – (Production Planning) tools for
carrying out Factory, Plant and Facility Layout and Production Simulation. For example: Press-
Line Simulation; and Industrial Ergonomics; as well as tool selection management. Once
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components are manufactured their geometrical form and size can be checked against the
original CAD data with the use of Computer Aided Inspection equipment and software. Parallel
to the engineering tasks, sales product configuration and marketing documentation work will be
taking place. This could include transferring engineering data (geometry and part list data) to a
web based sales configurator and other Desktop Publishing systems.
Phase 4: Service
Use, operate, maintain, support, sustain, phase-out, retire, recycle and disposal
The final phase of the lifecycle involves managing of in service information. Providing
customers and service engineers with support information for repair and maintenance, as well as
waste management /recycling information. This involves using such tools as Maintenance, Repair
and Operations Management (MRO) software.
It is easy to forget that there is an end-of-life to every product. Whether it be disposal or
destruction of material objects or information, this needs to be considered since it may not be
free from ramifications.
The Ten Step Approach to PLM includes the following ten activities:
PLM Status Review, Data
Gathering
Executive PLM Education
and Awareness
Best Practice Positioning
PLM Concept Generation and
Analysis
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The Ten Step Approach to PLM is applicable in companies of all sizes in almost any industry
and can be beneficial at all stages of PLM investigation and use. It is as applicable during the
initial introduction of PLM as when extending an existing PDM implementation. It can be used
to review current PLM performance, to clarify PLM concepts, to choose between different
options, or to gain a deep understanding of an individual option. Experience shows that these ten
steps help in understanding where PLM can be applied to a business most effectively. They help
to get that all-important executive approval for the PLM initiative to proceed. The Ten Step
Approach is a tried-and-tested methodology that has been used in many companies, at different
stages of PLM progress, in many industries. The ten steps make it clear to everyone involved
what has to be done, with clear deliverables at each step to show what has been achieved.
PLM Roadmap and Plan
Generation
Business Benefits and Business
Case Development
ROI Calculation
Management Report
Preparation
Executive Presentation
Executive Decision Support
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Importance of PLM:
PLM - is an essential tool for coping with the challenges of more demanding global competition
and ever shortening product and component lifecycles. New and better products must be
introduced to markets more quickly, with more profit and less labor, and the lifecycle of each
product must be better controlled, for example from financial and environmental perspectives.
Fierce competition in global markets drives companies to perform better. In order to perform
well financially, companies must be able to make informed decisions concerning the lifecycle of
each product in their portfolio. Winner products must be introduced to market quickly and poorly
performing products must be removed from the market. To do this well, companies must have a
very good command of the lifecycle of each product. A good command of product and process
definitions over a large product portfolio requires that ways of operation and IT systems must
support each other flawlessly. Today‘s complex products require the collaboration of large
specialist networks. In this kind of supplier and partner network, product information must be
transferred between companies in electronic form, with a high level of information security.
Overall, PLM can also be considered as a tool for collaboration in the supply network and for
managing product creation and lifecycle processes in today's networked world, bringing new
products to market with less expenditure of time and effort. However, the benefits of operational
PLM go far beyond incremental savings, yielding greater bottom line savings and top-line
revenue growth not only by implementing tools and technologies, but also by making necessary,
and often tough, changes in processes, practices and methods and gaining control over product
lifecycles and lifecycle processes. The return on investment for PLM is based on a broader
corporate business value, specifically the greater market share and increased profitability
achieved by streamlining the business processes that help deliver innovative, winning products
with high brand image quickly to market, while being able to make informed lifecycle decisions
over the complete product portfolio during the lifecycle of each individual product. Operational
efficiencies are improved with PLM because groups all across the value chain can work faster
through advanced information retrieval, electronic information sharing, data reuse, and numerous
automated capabilities, with greater information traceability and data security. This allows
companies to process engineering change orders and respond to product support calls more
quickly and with less labor. They can also work more effectively with suppliers in handling bids
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and quotes, exchange critical product information more smoothly with manufacturing facilities,
and allow service technicians and spare part sales reps to quickly access required engineering
data in the field. In this way, PLM can result in impressive cost savings, with many companies
reporting pay-off periods of one to two years or less based solely on reduced development costs.
PLM also enables better control over the product lifecycle. This gives opportunities for
companies to boost revenue streams by accelerating the pace at which innovative products are
brought to market. Excellent lifecycle control over products also gives new opportunities to
control product margins more carefully and remove poorly performing products from the
markets. This set of benefits, driving top line revenue growth and bottom line profitability,
makes ROI extremely compelling, with some industry analysts characterizing PLM as a
competitive necessity for manufacturers.
Conclusion:
PLM is a strategic business approach to empower the business, to enable product and
process innovation, and enhance both top and bottom line business performance. It includes
technology, processes, best practices, and other elements that provide a complete solution to
business problems. PLM helps to understand the product‘s life cycle and can help a company to
understand and realize when it is time to introduce and withdraw a product from a market, its
position in the market compared to competitors, and the product‘s success or failure.
Product Lifecycle Management is a complete product solution from initial phases of product
development to product marketing. PLM integrates and automates business processes which
generally results in efficiency and consequently enables companies to develop more new
products, in less time than their competition, reduced costs, increased productivity and improved
the quality of products and procedures. These efficiency improvements can generally be
leveraged in two ways: Increased output with the same resources (labor, time, material) orconstant output with fewer resources. The result in the first case is a higher revenue at the same
costs, in the latter case it is constant revenue at lower costs. In both instances the gross margin
will increase as a result of using PLM.
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References:
S. A. Chunawalla (2006), ―Marketing Principles and Practices‖, Himalaya Publishing
House, Mumbai, Second Edition, Page called the product life cycle 235.
V. S. Ramaswamy and S. Namakumari (2002), ―Marketing Management‖, Macmillan
Business Books, Third Edition, Page No.349.
Dr. K. Karunakaran (2008), ―Marketing Management‖, Himalaya Publishing House,
Mumbai, First Edition, Page No. 158 and 161.
Philip Kotler and Gray Armstrong (2008), ―Principles of Marketing‖, Pearson Prentice
Hall, 12th
Edition, Page No.251 and 258.
SME Product Lifecycle Management Tech Group PLM Matrix
Grieves, Michael (1 edition (2006)). Product Lifecycle Management: Driving the Next
Generation of Lean Thinking (Hardcover). McGraw-Hill.
Stark, John (1 edition (August 27, 2004)). Product Lifecycle Management: 21st century Paradigm
for Product Realisation (Hardcover). Springer. ISBN 1-85233-810-5.
Stark, John (1 edition (August 24, 2007)). Global Product: Strategy, Product Lifecycle
Management and the Billion Customer Question (Hardcover). Springer. ISBN 1-84628-914-9.
Bergsjö, Dag (2009). Product Lifecycle Management – Architectural and Organisational
Perspectives. Chalmers University of Technology. ISBN 978-91-7385-257-9.
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International Journals of Multidisciplinary Research Academy
Editorial BoardDr. CRAIG E. REESE
Professor, School of Business, St. Thomas University, Miami Gardens
Dr. S. N. TAKALIKAR
Principal, St. Johns Institute of Engineering, PALGHAR (M.S.)
Dr. RAMPRATAP SINGH Professor, Bangalore Institute of International Management, KARNATAKA
Dr. P. MALYADRI Principal, Government Degree College, Osmania University, TANDUR
Dr. Y. LOKESWARA CHOUDARY Asst. Professor Cum, SRM B-School, SRM University, CHENNAI
Prof. Dr. TEKI SURAYYA Professor, Adikavi Nannaya University, ANDHRA PRADESH, INDIA
Dr. T. DULABABU Principal, The Oxford College of Business Management,BANGALORE
Dr. A. ARUL LAWRENCE SELVAKUMAR Professor, Adhiparasakthi Engineering College, MELMARAVATHUR, TN
Dr. S. D. SURYAWANSHI Lecturer, College of Engineering Pune, SHIVAJINAGAR
Mr. PIYUSH TIWARI Ir. Executive, Dispatch (Supply Chain), SAB Miller India (Skal Brewaries Ltd.)
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Prof S. R. BADRINARAYAN Sinhgad Institute for Management & Computer Applications, PUNE
Mr. GURSEL ILIPINAR ESADE Business School, Department of Marketing, SPAIN
Mr. ZEESHAN AHMED Software Research Eng, Department of Bioinformatics, GERMANY
Mr. SANJAY ASATI
Dept of ME, M. Patel Institute of Engg. & Tech., GONDIA(M.S.)
Mr. G. Y. KUDALE
N.M.D. College of Management and Research, GONDIA(M.S.)
Editorial Advisory Board
Dr.MANJIT DASAssitant Professor, Deptt. of Economics, M.C.College, ASSAM
Dr. ROLI PRADHANMaulana Azad National Institute of Technology, BHOPAL
Dr. N. KAVITHAAssistant Professor, Department of Management, Mekelle University, ETHIOPIA
Prof C. M. MARAN Assistant Professor (Senior), VIT Business School, TAMIL NADU
DR. RAJIV KHOSLAAssociate Professor and Head, Chandigarh Business School, MOHALI
Dr. S. K. SINGH Asst. Professor and Head of the Dept. of Humanities, R. D. Foundation Group of Institutions,
MODINAGAR
Dr. (Mrs.) MANISHA N. PALIWAL Associate Professor, Sinhgad Institute of Management, PUNE
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DR. (Mrs.) ARCHANA ARJUN GHATULEDirector, SPSPM, SKN Sinhgad Business School, MAHARASHTRA
DR. NEELAM RANI DHANDA
Associate Professor, Department of Commerce, kuk, HARYANA
Dr. FARAH NAAZ GAURIAssociate Professor, Department of Commerce, Dr. Babasaheb Ambedkar Marathwada
University, AURANGABAD
Prof. Dr. BADAR ALAM IQBAL Associate Professor, Department of Commerce,Aligarh Muslim University, UP
Associate Editors
Dr. SANJAY J. BHAYANIAssociate Professor ,Department of Business Management,RAJKOT (INDIA)
MOID UDDIN AHMADAssistant Professor, Jaipuria Institute of Management, NOIDA
Dr. SUNEEL ARORAAssistant Professor, G D Goenka World Institute, Lancaster University, NEW DELHI
Mr. P. PRABHUAssistant Professor, Alagappa University, KARAIKUDI
Mr. MANISH KUMAR Assistant Professor, DBIT, Deptt. Of MBA, DEHRADUN
Mrs. BABITA VERMA Assistant Professor ,Bhilai Institute Of Technology, INDORE
Ms. MONIKA BHATNAGAR Assistant Professor, Technocrat Institute of Technology, BHOPAL
Ms. SUPRIYA RAHEJA Assistant Professor, CSE Department of ITM University, GURGAON
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Convergence of Information And
Communications Technology and
Business IntelligenceWith Human Resource Functions
Ms. Tanushree Gulati
Title
Author(s)
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Abstract:
The role of ICT (Information and Communications Technology) accelerating the overall
functions of Human Resource Department in this highly competitive age acquires a new
definition altogether. The competitive edge of a business in today‘s global competition with an
ever-changing world economic scenario has made success for any organization highly dependenton how it attracts, recruits, motivates and retains its workforce. There is a constant need for
developing workforce to attain sustainable competitive advantage. Business Intelligence
Application which is a specialized software that generates Business Intelligence or ‗actionable
information‘ to managerial functions finds solutions thus enabling one to improve business
performance by pulling data from transaction processing systems and sometimes relating them to
market related data sources. Today‘s organizations need to be more flexible and strategic so that
they are equipped to develop their workforce and enjoy their commitment. Proactive managers
and human resource departments respond to this challenge by finding new ways to optimize
return on workforce investment while also implementing an effective quality work-life balance.
However, the authors through this paper try to establish the convergence of Human Resource
Functions with ICT and Business Intelligence which is inevitably making a positive impact on
fast, transparent, convenient and cost-effective flow of HR business practices and promising the
advent of a new era of HR in centuries to come.
Keywords:
Business Intelligence, ICT, HR Capital, Human Resource Functions, HR Metrics, Strategic
HRM
Introduction:
Prior to the start of the Information Age in the late 20th century, businesses at times took the
trouble to laboriously collect data from non-automated sources. As they lacked in computing
resources to properly analyze the data, they often made commercial decisions primarily on the
basis of intuition and on business instinct. As businesses started more and more automationsystems, more and more data became available. However, collection of data often remained a
challenge due to a lack of infrastructure for data exchange or due to incompatibilities between
these systems. Reports on the data collected sometimes took weeks and months to generate. Such
reports allowed well-informed long-term strategic decision-making. However, tactical and short-term decision-making often continued to rely on intuition.
In 1989 Howard Dresner, a research analyst at Gartner, made "Business Intelligence" (BI)
popular as an umbrella term to describe a set of concepts and methods to improve business
decision-making by using ‗fact- based support systems‘. Performance management built on a
foundation of BI, but along with the planning and control cycle of the enterprise - with enterpriseplanning, consolidation and modeling capabilities.
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Business Intelligence (BI) is a term coined for applications and technologies employed in data
collection, data access and analysis of information about an organization‘s business. It refers tothe use of several financial or non-financial metrics or key performance indicators to assess the
present state of business and to assist in deciding future course of action. It is thus, referred to as
‗actionable intelligence'. Increasing standards, automation, and technologies have led to vast
amounts of data and information becoming available. Data warehouse technologies have allowedthe building of repositories to store this data. Improved enterprise application integration tools
have increased the timely collecting of data. As of last year, 2010, Business Intelligence has
become the art of sieving through large amounts of data, extracting useful information andturning that information into actionable knowledge
Investment on implementation of BI pays off :
On closer examination of BI applications one finds that investment in BI Application is well
rewarded for the following reasons:
More efficient access to information by end-users without involvement of ICTMuch higher scope for developing more intelligence in one‘s business by analysis of relevant data
Looking at summary information by variety of Key Performance Indicators and
Dimensions
Graphical presentation of information
Longitudinal information – trend of performance over several years; ERP data is archivedevery year
Drill-down into details of summary information
Slice and dice such information by different dimensions
Study correlation between certain business drivers and outcomes
KEY CHALLENGES OF BI THAT NEED FOCUS:
Delivering Business Intelligence to a Global and Transnational Organization: BI is an especially
critical area and a challenge for global organizations, given the complexities of managing a
geographically and culturally diverse workforce. An organization should start with a clear
understanding of what it needs to measure and why, and take an inventory of the systems that in-house the base data.
Often, a capital investment is necessary to obtain the requisite tools and infrastructure. It‘s best
for companies to start with a few key business challenges that are significant to overall results.
Although a long-term vision is essential, it is better to implement in stages.
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Benchmarking also considerably increases the value of Business Intelligence as HR outsourcing
has matured and more industry benchmarking information is becoming available. Proprietary
databases are being developed that can be used with benchmarking data maintained by third-
party vendors, industry groups and government.
By comparing typical ranges for workforce metrics in the marketplace, HR can set appropriate
targets. For example, a company can consider payroll tax, labor supply, compensation;
healthcare and norms to understand what will drive its future profitability and productivity, to
evaluate the impact of changing workforce demographics or to consider where to expand its
operations geographically.
Linking of workforce value to Financial Performance is done by Business intelligence and serves
as an important input in measuring the value of a company‘s workforce because it helps link
people data and programs to financial performance. Sophisticated analytics now can measure
how HR programs and systems may affect employee behavior and how that, in turn, influences
customer behavior which ultimately drives financial outcomes.
Companies need to know the demographic and skills profile of their workforce in order to
optimize the value of that workforce. That is increasingly the job of a strategic HR function and
companies must be able to link workforce measurement and the role of the HR function to their
business goals. That allows them to evaluate whether HR is doing the right things to help the
company grow.
With the use of current employee data and projections about future workforce trends, companies
can model the people implications of their business plans. HR can then develop targetedworkforce strategies to help it attract, engage and retain the right people, in the right locations, at
the right cost. For example, a global banking organization modeled on its total projected labor
costs to make decisions about where non-customer-facing employees should be located. In
another instance, a leading information services provider was able to better understand current
and future staffing trends to better align its reward programs.
SCOPE OF HUMAN RESOURCE FUNCTIONS THROUGH BUSINESS
INTELLIGENCE
Business intelligence (BI) can be used in HR to improve results across all aspects of the
organization — candidate screening, performance appraisals, cost-containment, retention and
productivity. With BI HR can accelerate to:
Acquire Talent: Key insights can help HR cost-effectively find the right people in theshortest time.
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Apart from HR‘s administrative issues its value will lie in using a fact-based analytic
approach to solve business problems and providing a longer-term viewpoint about howthe organization should adjust to environmental changes.
Deploy Staff: To segment workforce and invest time in the key employees who make the
biggest contribution.
Segment Talent: To provide opportunities for growth such as training, on-the-jobexperience, and mentoring.
Retain Top Talent: To identify the critical talent within the organization and ensure HR
retains it.
Aligning payroll and incentives with corporate goals
Monitoring key metrics like turnover, demographics, cost per employee, recruiting, and
training effectiveness
Analyzing opportunities for improvement in areas such as recruitment, attrition, and
retention
Minimizing the administrative burden of manual processes involved with spreadsheets
BI acts as a decision support system that helps analyze and manage all HR processes. Itprovides access to accurate, timely, comprehensive data from HRMS applications and provides
the tools to make better, more strategic decisions. Perform comprehensive manpower analysis
and budget reports. View employee development and performance reports. Analyze salary,
recruitment, vacancy and termination trends. The results: drive faster, better decision-making
that aligns your workforce with corporate objectives.
By accessing HR data horizontally across functional areas, companies can establish an
informational baseline. That, in turn, allows them to measure the results of HR programs and
practices, and identify critical insights about their workforce. They can examine trends over time
and build a base for modeling and conducting ―what-if‖ projections for the future.
AGEING WORKFORCE AND TALENT ACQUISITION THROUGH BI
Companies around the world face a workforce that is getting older. This will make attracting and
retaining talent a top priority. This trend will catapult into the role of HR department right into
the middle of formulating a people centric business strategy, especially in Knowledge Industry.
As the global war on talent continues, it will become increasingly difficult for largeorganizations to hire, motivate and retain talent. With the technological advances and
globalization, organizations will be subjected to intense competition. Thus, utilizing the right
human capital will be of paramount importance. Intense competition will also lead to growing
attrition. This is where HR can play an important role in ‗Talent Management‘. Rather than
doing only administrative work and ‗reactive‘ hiring/firing employees, the HR professional need
to ‗proactively‘ start solving people issues. IT executives will not be able to address this on their
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own. Like it or not, they will have to collaborate with HR department in producing solutions to
strategic ‗people‘ issues facing the organization.
With BI tool, HR department can utilize all the data related to their existing employees to
analyze their human capital and provide decisions around staffing and retention. Business
intelligence can also help HR Department to mine out information regarding:
How to motivate individuals and departments within organizations
Do one‘s incentives and benefits reward smart contribution
How to flush out innovation from individuals and departmentsWhether the individuals work their best in collaborative environmentThe best technique to train employees?
How to incorporate feedback from individuals
Why do employees leave the Organization and where do they go
What does the individual employee think of work environment and its culture
BENEFITS OF HR FUNCTIONS „MASS CUSTOMIZATION‟ THROUGH
BI
With the BI tools, the HR can tailor the incentives and benefits. The era of providing generic
benefits is over. BI tools help get ‗Mass Customization‘ of benefits to suit individual employee.
This is very critical in the age of competitive attracting and retaining talent.
Getting answers to questions like whether workforce is capable enough to meet the target or why
the employee turnover is so high or even to have the right people recruited is very critical not just
for formulation of HR strategy but to make HR competent for business as a whole. But are the
systems giving the right information to help the HR answer these questions. They might be
giving one numbers, percentages and statistics. But a lot of times an HR personnel would not
have known what to do with them. Unless and until they facilitate good decision making and
intelligent choices, they mean nothing.
Thus, HR is a key function and BI is required for better people management and overall business
management. One understands the critical need of good decision making whatever be the
functional domain. It is with this vision that one designs and integrates business intelligencesolutions with HR solutions.
BI AND HR METRICS
Along with integrating HR with one‘s core business strategy, one will have a reporting system
which will take care of its metrics. One needs to get metrics for:
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Trends analysis
Budget controlWorkforce analysis
Salary Monitoring
Recruitment cost analysis
Employee turnover
BI can help HR departments become a strategic asset within the respective organization in two
ways: by generating efficiencies within the department itself; and by using the insight that BI
delivers to help their organizations make strategic decisions around staffing, planning, and
budgeting to support key goals.
HR is benefitted out of BI through attaining answers to the questions that have a direct bearing
on their organization‘s strategy like answers to questions like whether the recruitment program
attracts one‘s future managers, whether employees are ready for management positions, or what
would one‘s staffing be like five years down the line or which are the employees who would beat the risk of leaving and what would be the right skill mix to achieve one‘s goals, or whether HR
can identify trends in their workforce that lead to a better understanding of how to maximize
human capital. Positive trends can be leveraged for greater value; negative trends can serve as an
early warning system to spur corrective action before problems become acute.
Hiring, retaining, and deploying employees with the right skill sets can be challenging and has
strategic implications to firms across industries. With software like Business Intelligence
Reporting & Analytics, the decisions that determine the composition of the workforce can be
done with greater insight and accuracy than ever before.
INTEGRATE BUSINESS INTELLIGENCE SOLUTIONS WITH HR
SOLUTIONS
Human Resources metrics have always been linked to other key performance indicators such as
profits and revenue accumulation. However, applying measurements systems, includingBalanced Scorecard, to people management has always been a challenging task. HR is not
usually viewed as a source for hard measures. In order to analyze the return on all workforce
investments, such as recruiting, developing capabilities, compensation and directing behavior,HR function should understand the business challenges of its entire organization. HRprofessionals must understand the organization's business plans and the operational, financial
and customer-facing goals they are expected to achieve. Then they should associate these goals
with the existing workforce metrics.
In majority of the cases, HR information is scattered, which leads to non-systematic HR
Functions like ineffective hiring, training, performance management and compensation
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processes. Detailed HR measurement data is essential these days, as globalization, tight labor
markets and an aging workforce are causing many businesses to more closely inspect theperformance of their largest investment: the workforce whose compensation represents 60
percent to 70 percent of the general expenses. New Business Intelligence technologies offer HR
departments the ability to invest in Human Capital Management analytics solutions designed to
yield the insights essential for making informed decisions on HR.
Business Intelligence allows HR departments to become a strategic asset within the organization.It helps boost the efficiency within the HR department and make key decisions around
recruitment, planning, and budgeting to support the strategic goals. Business Intelligence systems
help HR professional access information from data warehouses and other sources, structureanalyses to find areas of improvement, and communicate the results in a way that is convincing
to others.
HR function in the organization is not limited by administrative issues. HR department should
use a fact-based systematic approach to solve business problems and offer a longer-term
viewpoint in order to adjust to environmental changes. The key task of the HR professional is toproactively produce solutions to strategic business issues facing the organization as demonstrated
in Figure 1 displaying the Graphical Dash Board for Quick Grasp of Performance, a BI
Application used at M/s. Syscon Infotech Pvt. Ltd.
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Figure 1: Graphical Dash Board for Quick Grasp of Performance, a BI Application used at M/s.
Syscon Infotech Pvt. Ltd.
Challenges of Managing Performance in Human Resources Management Function areincreasingly becoming an important area in most organizations spanning across industries. It is
also becoming an area which is beginning to rely more and more on hard facts and data analysis
to come up with innovative ideas to benefit all the employees of the organization. However, the
following types of questions still bother most HR functions:
How much is one spending on one‘s people resources? Is one matching up to the
industry standards?
Is one providing the right kind of work to every employee appropriate to their skills?
Is one able to acquire and retain the best talents in the industry?How does one‘s attrition rate compare to that of the industry and of one‘s competitor?
Is one taking adequate care of the training and development needs of one‘s employees?
How do different departments and functions utilize the available people resources? Is thedemand-supply well matched?
Is one getting the full advantage of the manpower of one‘s organization?
How does one measure the performance of the HR function with respect to their Key
Result Areas?
Business Intelligence (BI) Application is extremely useful to assist HR
Functions in today‟s challenging managing performance.
ALIGNING OF BUSINESS INTELLIGENCE WITH STRATEGIC HR
DECISION-MAKING
Many companies struggle with the problem of disparate data that is housed in separate HRsystems, making it difficult to extricate, and even tougher to interpret.
The first step is to extract and combine data from the various vertical HR functions, such as
benefits, payroll and staffing. This integrated information can then be examined using
appropriate metrics and analytics to produce business intelligence (BI) - the useful information
on which HR professionals can base strategic decisions. For example, a company can discover
what is really driving the cost of benefits - the plan design or a hiring freeze that was instituted to
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control near-term expense and has created an older workforce over time. or, whether increased
hiring is due to growth and skill upgrades or to unwanted turnover. Additionally, BI incorporates
insight into statutory and regulatory compliance issues that are front of mind .
By accessing HR data horizontally across functional areas, companies can establish an
informational baseline. That, in turn, allows one to measure the results of HR programs and practices, and identify critical insights about one‘s workforce. One can examine trends over time
and build a base for modeling and conducting 'what-if' projections for the future.
Leading companies create capability in workforce management. By leveraging a combination of
excellent processes and technology, one may take control of one‘s future workforce today and
position oneself to be ready to deliver on one‘s strategy.
Identifies and links performance drivers and critical workforce trends that better inform
the strategy for end-to-end business solutions
Introduces modeling capabilities based on real data to make projections about thechanging dynamics of a company‘s workforce in advance of, during and after policy,
regulatory and other changesProvides accurate, meaningful and actionable informationDelivers the methodologies, tools and analyses to understand the business impact of
workplace trends, decisions and policies
Gain Daily Business Intelligence: Leverage predefined set management goals.Consolidate all key information on a single homepage, with one-click access to
automated out-of-tolerance notifications, reports, and more.
Manage Workforce Development and Learning: Analyze competence gaps by person and
job. Analyze skills gaps for groups and individuals. Manage training attendance, resource
use, costs, and success rates.Optimize Compensation: Analyze salary trends. Compare average salaries by group.
Look at salary distributions and skews by grade, performance, and service test. Evaluatebenefits plans for maximum value.
Manage Recruitment: Analyze time and costs by recruitment method. Review
recruitment success rates. Analyze applicant statistics and dropout reasons.Analyze Workforce Composition: Understand workforce trends by job, geography, user-
defined categories, minority groups, and business areas.
Manage Utilization and Productivity: Analyze planned and unplanned hours by cost band
over time. Analyze absenteeism by reason over time.
CONCLUSION
HRM has various functions as in improving performance standards and excellence, staffing
motivation to name a few. When HRM is clubbed with ICT and Business Intelligence it promises
some excellent results and also enhances the value of HRM. The statistical techniques applied in
BI are sure to yield precise and reliable results in solving many problems proactively.
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More than ever before, HR professionals are being asked to show how their company's
workforce policies affect its overall business plan. As a rule, this information is not readily
available. In order to provide strategically sound answers, the HR staff needs the critical
information provided by the right technology processes and analytical tools. To be able to access
and analyze data from all HR functional areas and employ appropriate methodologies to interpret
the data, draw meaningful conclusions and make fact-based decisions, the usage of BI has almost
become mandatory.
Fortunately, today's advanced technology systems can assimilate essential data and transform
that data into business acumen that supports the broader enterprise business plan. Companies
may have this expertise in house, or that one may turn to HR outsourcers and consultants who
have the data, technology and knowledge to provide solutions.
To conclude Business Intelligence would inevitably help HR departments to solve people's
issues proactively. It will help HR in Talent acquisition, reducing costs, retaining better talent,
work force segmentation, accessing the performance of the employees or workforce etc. BI givesa new facet to HRM. BI helps HR departments to generate wide variety of on demand HR
reports and thus contributes for the effective functioning of HR in organizations through accurate
decision making. Thus an appropriate use of BI helps in creating and adding an optimum value
to the Human Capital Management.
REFERENCES
Trednick 2008 ―HR and Business Intelligence‖ Business Information Review, Sage
Publications Vol. 34, No. 1, 24-29
Wyld, David 2009 ―Management with Business Intelligence: a primer on HR for executives‖ Management Research News Vol. 21 No. 4, pp. 464-473.
Angstrom, J. (2005) ―HR Performance Metrics and BI‖, Bertonn Newsletter Volume 32pp.18.
Anderson, P. 2007, "What is Web 2.0? Ideas, technologies, and implications foreducation", JISC Tech Watch, available at
www.jisc.ac.uk/media/documents/techwatch/tsw0701b.pdf
Vardah, V. 2009, ‗‗Office co-opts consumer Business tools, The Wall Street Journal, 12September, pp. 56-87.
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Hede, E. 2010, "Review of the year's best BI and HR Functions explanations", PHIPublications
Eminash, H. 2009, "Web as a non-foundational network-centric Business learning space",
Campus-Wide Information Systems, Vol. 2, pp. 112-114.
RL Heneman, JW Tansky, 2010 ―Human Resource Management Practices in Small andMedium-Sized Enterprises: Unanswered Questions and Future Research Perspectives‖,SM Camp.
Wimbley Online Library 2005, ―The four pillars of HRM: are they connected?-S Wood -
Human Resource Management Journal
J Söderlund, K Bredin, 2006, ―HRM in project-intensive firms: changes and challenges- -Human resource management‖
Söderlund, K Bredin, 2006, ―HRM in project-intensive firms: changes and challenges- -
Human resource management‖
Vipul Mehta (2008 ), ―Business Intelligence for HR‖, retreived from citehr.com on 30th
January 2010
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International Journals of Multidisciplinary Research Academy
Editorial BoardDr. CRAIG E. REESE
Professor, School of Business, St. Thomas University, Miami Gardens
Dr. S. N. TAKALIKAR
Principal, St. Johns Institute of Engineering, PALGHAR (M.S.)
Dr. RAMPRATAP SINGH Professor, Bangalore Institute of International Management, KARNATAKA
Dr. P. MALYADRI Principal, Government Degree College, Osmania University, TANDUR
Dr. Y. LOKESWARA CHOUDARY Asst. Professor Cum, SRM B-School, SRM University, CHENNAI
Prof. Dr. TEKI SURAYYA Professor, Adikavi Nannaya University, ANDHRA PRADESH, INDIA
Dr. T. DULABABU Principal, The Oxford College of Business Management,BANGALORE
Dr. A. ARUL LAWRENCE SELVAKUMAR Professor, Adhiparasakthi Engineering College, MELMARAVATHUR, TN
Dr. S. D. SURYAWANSHI Lecturer, College of Engineering Pune, SHIVAJINAGAR
Mr. PIYUSH TIWARI Ir. Executive, Dispatch (Supply Chain), SAB Miller India (Skal Brewaries Ltd.)
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Prof S. R. BADRINARAYAN Sinhgad Institute for Management & Computer Applications, PUNE
Mr. GURSEL ILIPINAR ESADE Business School, Department of Marketing, SPAIN
Mr. ZEESHAN AHMED Software Research Eng, Department of Bioinformatics, GERMANY
Mr. SANJAY ASATI
Dept of ME, M. Patel Institute of Engg. & Tech., GONDIA(M.S.)
Mr. G. Y. KUDALE
N.M.D. College of Management and Research, GONDIA(M.S.)
Editorial Advisory Board
Dr.MANJIT DASAssitant Professor, Deptt. of Economics, M.C.College, ASSAM
Dr. ROLI PRADHANMaulana Azad National Institute of Technology, BHOPAL
Dr. N. KAVITHAAssistant Professor, Department of Management, Mekelle University, ETHIOPIA
Prof C. M. MARAN Assistant Professor (Senior), VIT Business School, TAMIL NADU
DR. RAJIV KHOSLAAssociate Professor and Head, Chandigarh Business School, MOHALI
Dr. S. K. SINGH Asst. Professor and Head of the Dept. of Humanities, R. D. Foundation Group of Institutions,
MODINAGAR
Dr. (Mrs.) MANISHA N. PALIWAL Associate Professor, Sinhgad Institute of Management, PUNE
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DR. (Mrs.) ARCHANA ARJUN GHATULEDirector, SPSPM, SKN Sinhgad Business School, MAHARASHTRA
DR. NEELAM RANI DHANDA
Associate Professor, Department of Commerce, kuk, HARYANA
Dr. FARAH NAAZ GAURIAssociate Professor, Department of Commerce, Dr. Babasaheb Ambedkar Marathwada
University, AURANGABAD
Prof. Dr. BADAR ALAM IQBAL Associate Professor, Department of Commerce,Aligarh Muslim University, UP
Associate Editors
Dr. SANJAY J. BHAYANIAssociate Professor ,Department of Business Management,RAJKOT (INDIA)
MOID UDDIN AHMADAssistant Professor, Jaipuria Institute of Management, NOIDA
Dr. SUNEEL ARORAAssistant Professor, G D Goenka World Institute, Lancaster University, NEW DELHI
Mr. P. PRABHUAssistant Professor, Alagappa University, KARAIKUDI
Mr. MANISH KUMAR Assistant Professor, DBIT, Deptt. Of MBA, DEHRADUN
Mrs. BABITA VERMA Assistant Professor ,Bhilai Institute Of Technology, INDORE
Ms. MONIKA BHATNAGAR Assistant Professor, Technocrat Institute of Technology, BHOPAL
Ms. SUPRIYA RAHEJA Assistant Professor, CSE Department of ITM University, GURGAON
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BANKING SECTOR REFORMS
and it’s iMpaCt on indian eConoMY
Pankaj Mishra
Title
Author(s)
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ABSTRACT:
Indian economy has been recording impressive growth rates since 1991. The main thrust
of the financial sector reforms has been the creation of efficient and stable financial
institutions and development of the markets, especially the money and government
securities market. In addition, fiscal correction was undertaken and reforms in the
banking and external sector were also initiated. The year 1991-92 is the year of
remarkable initiatives taken by the Government of India affecting the various facets of
the Indian economy. Considering the scenario in which banking sector was in the year
1990-91, a number of initiatives were taken by the Reserve Bank of India for improving
the efficiency of the banking sector and for opening up the banking sector. Taking this as
a base, the author intends to examine the impact of the reforms on Credit Deposit ratio,
Credit to GDP ratio, Investment in Government securities to deposits, share of business
of public sector banks, the proportion of various types of advances etc. Further, it goes on
to examine the difference in various aspects of the working results of the Public sector
banks and private banks when compared with foreign banks.
Keywords:
Indian economy, Capital market, Foreign exchange reserves, Economic growth, banking
sector reforms.
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Introduction:
Financial sector reforms introduced in the early 1990s as a part of the structural reforms
have touched upon almost all aspects of banking operation. For a few decades preceding
the onset of banking and financial sector reforms in India, banks operated in an
environment that was heavily regulated and characterized by sufficient barriers to entry
which protected them against too much competition. The banking reform package was
based on the recommendation proposed by Narsimhan Committee report (1992) that
advocated a move to a more market oriented banking system, which could operate in an
environment of prudential regulation and transparent accounting. One of the primary
motives behind this drive was to introduce an element of market discipline into the
regulatory process that would reinforce the supervisory effort of the reserve bank of
India(RBI). Market discipline, especially in the financial liberalization phase, reinforces
regulatory and supervisory efforts and provides a strong incentive to banks to conduct
their business in a prudent and efficient manner and to maintain adequate capital as a
cushion against risk exposures. The administered interest rate structure, both on the
liability and the assets side, allowed banks to earn reasonable spread without much
efforts. Although banks operated under regulatory constraints in the form of statutory
holding of government securities and the cash reserve ratio (CRR) and lacked functional
autonomy and operational efficiency, the fact was that most banks did not efficiently. The
functioning of the market‘s disciplining mechanism and also the effectiveness of the
supervisory process, however, is hindered by weak accounting and legal system, and
inadequate transparency of accounting disclosures. From a central bank‘s perspective,
such high-quality disclosures help the early detection of problem banks by the market and
reduce the severity of market disruptions. Consequently, the RBI as part and parcel of thefinancial sector deregulation, attempted to enhance the transparency of the annual reports
of Indian banks by, among other things, introducing stricter income recognition and
assets classification rules, enhancing the capital adequacy norms, and by requiring a
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number of additional disclosures sought by investors to make better cash flow and risk
assessment.
Review literature:
Joshi (1986) in his study of all scheduled commercial banks operating in India
analyses the profitability and profit planning relating to the period 1970-1982. The study
discusses and trends in profits and profitability of commercial banks nationalization. The
factors leading to the deterioration of profitability are highlighted.
Minakshi and Kaur (1990) attempted to measure quantitatively the impact of thevarious instruments of monetary policy on the profitability of commercial banks. The
study empirically proves that pre-liberalization banking being highly regulated and
controlled industry, has suffered a lot so far as profitability concerned. The bank rates and
reserve requirements ratio has played a significant role in having a negative impact on the
bank‘s profitability.
Ojha (1992) in his study attempts to measure the productivity of public sector
commercial banks in India. After identifying various measures of productivity like total
assets per employee, total credit per employee, total deposits per employee, pre-tax
profits per employee, net profit per employee, working funds per employee, ratio of
establishment expenses to working funds and net interest per employee, comparison is
made with the banks at the international level. The study concludes the Indian banks have
very less productivity ratio compared with western countries. Since in his study a
comparison has been made of Indian public sector banks, which have to perform other
social functions unlike western commercial banks.
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Impact on Corporate Sector:
Corporate governance:
Capital markets have always had the potential to exercise discipline over promoters and
management alike, but it was the structural changes created by economic reforms that
effectively unleashed this power. Minority investors can bring the discipline of capital
markets to bear on companies by voting with their wallets. They can vote with their
wallets in the primary market by refusing to subscribe to any fresh issues by the
company. They can also sell their shares in the secondary markets their by depressing the
share price. Financial sector set in motion several key forces that made these forces far
more potent than in the past:
Deregulation: economic reforms have not only increased growth prospects, but they have
also made markets more competitive. This means that in order to survive companies will
need to invest continuously on large scale. The most powerful impact of voting with the
wallet is on companies with large growth opportunities that have a constant need to
approach the capital market for additional funds.
Disintermediation: meanwhile, financial sector reforms have made it imperative for firms
to rely on capital markets to a greater degree for their needs of additional capital. As long
as firms relied on directed credit, what mattered was the ability to manipulate
bureaucratic and political processes; the capital markets, however, demand performance.
Globalization: globalization of our financial markets has exposed issuers, investors and
intermediaries to the higher standards of disclosures and corporate governance that
prevail in more developed capital markets.
Tax reforms: tax reforms coupled with deregulation and competition have titled the
balance away from black money transaction. It is not often realized that when a company
makes profits in black money, it is cheating not only the government, but also the
minority shareholders. Black money profits do not enter the books of account of the
company at all, but usually go into the pockets of the promoters.
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Risk management:
In the days when interest rate were fixed by the government and remained stable for long
periods of time, interest rate risk was a relatively minor problem. The deregulation of
interest rate as a part of financial sector reforms has changed all that and made interest
rate highly volatile. For instance, the rate of interest on short term commercial paper was
about 7.75-8.50% at the end of 2008-2009 dropped back 6.50-7.50% at the year of 2009-
2010 and constant by 7.00-7.50% at the year of 2010-11
Companies which borrow short term to fund their new projects may face difficulties if
interest rates go up[ sharply. It may turn out that at the higher cost of finance, the project
is not viable at all. Worse, companies may find it difficult to refinance their borrowings at
any price in times when money is tight. Many companies which borrowed in inter
corporate deposit (ICD) market in 2008 to finance acquisitions and expansion face this
difficulty in 2009 and 2010 when the ICD market dried up. Large scale defaults
(euphemistically described as rollover) took place during this time.
In the post reform era, corporate have also been faced with high volatility in foreign
exchange rate. The rupee – dollar rate has on several occasions moved up or down by
several percentage points in a single days as compared to the gradual, predictable changes
of the eighties. Indian companies have found their dismay that foreign currency
borrowings which looked very cheap because of low coupon rate of interest can suddenly
become very expensive if the rupee depreciates against the currency in which the bond is
denominated.
Capital stricter:
At the beginning of the reforms process, the Indian corporate sector found itself
significantly over-levered. This was because of several reasons:
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Subsidized institutional finance so attractive that it made sense for companies to
avail of as much of it as they could get away with. This usually meant the
maximum debt-equity ratios laid down by th government for various industries.
In a protected economy, operating (business) risk were lower and companies couldtherefore afford to take more risks on the financing side.
Mostly of debt was institutional and could usually be rescheduled at little cost.
Bond covenants: international bond covenants are quite restrictive specially for
companies whose credit worthiness is less than top class. These covenants may
restrict the investment and dividend policies of the companies may mandate
sinking funds, may include cross- default clauses and may contain me- too clauses
which restrict the future borrowing ability of the company. Bonds covenants have
typically been quite lacks in India. Moreover bond (and debentures) trustees have
been generally very lacks in the performance of their duties.
Cash flow discipline:
Equity has no fixed service cost and year to year fluctuations in income are not very
serious so long as over all enough is earned to provide a decent return to the shareholder.
Debt on the other hand has a fixed re payment schedule and interest obligations. A
company that is enabling to generate enough cash flow to meet this debt service
requirement faces in solvency or painful restructuring of liability. Again, Indian
companies have not experienced much of this discipline in the past because much of their
debt was owed to banks and institutions who have historical been willing to re schedule
loan quite generously. Institutions may be less willing to do so in future. More
importantly, rescheduled is not an easy option when the debt is raised in the market from
the public. Bonds are typically rescheduled only a part of bankruptcy proceeding or a
BIFR restructuring. As the next face of economic reforms targets bankruptcy related
laws, cash flow discipline can be expected to become far more stringent.
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Group structure and business portfolio:
Indian business groups have been doing serious introspection about their business
portfolio and about their group structure under the influence of academic like C.K.
Prahalad, Indian business groups which have traditionally been involved in a wide range
of business have been contemplating a shift to a more focused strategy. At the same
time, they have been trying to create a group organizations structure that would enable
the formulation and implementation of a group wide corporate strategy. In many cases
they have not gone beyond a statement of intend.
Working capital management:
Working capital management has been impacted by a number of the developments
discussed above – operational reforms in the area of credit assessment and delivery,
interest rate deregulation, change in the competitive structure of the banking and credit
system, and the emergency of the money and debt markets.
Cash management has become an important task with the facing out of the cash credit
system. Companies now have to decide on the optimal amount of cash and near cash that
they need to hold, and also on how to deploy the cash. Deployment in tern involves
decision about maturity, credit risk and liquidity. During the tight money this policy of
this period, some companies were left with to little liquidity cash, while other found that
their cash looked up in unrealizable or illiquid assets of uncertain value.
Conclusion:
With the increasing levels of globalization of the Indian banking industry, evolution of
universal banks and bundling of financial services, competition in the banking industry
will intensify further. The banking industry has the positional and ability to rise to the
occasion as demonstrated by the rapid pace of automation which has already had a
profound impact on raising the standard of banking services. Indian corporate finds
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themselves equipped to operate in highly competitive and financial market place they will
have only themselves to blame.
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