kindler january - december 2012

KINDLERTHE JOURNAL OF ARMY INSTITUTE OF MANAGEMENT KOLKATA(FORMERLY NATIONAL INSTITUTE OF MANAGEMENT CALCUTTA)

VOLUME XII qqqqq NUMBERS 1 & 2 qqqqq ISSN 0973-0486 qqqqq JANUARY-JUNE 2012, JULY-DECEMBER 2012

Page No.

EDITOR'S NOTE 3STUDENTS CONTRIBUTIONSArticles :Social Media: A Business Perspective 7 W. ShaliniKey Performance Indicators 15 Warija PaurelThe Management of a Formula 1 Racing Team 21 Rahul MoitraRole of Capital Market in the Economic Development of India 27 Sayak NahaPoster Presentation on Exploring the Factors Motivating Consumers' 31Buying Behaviour Towards Baby Wipes W Shalini, Prerna Tyagi, Dr. Shovan Chowdhury & Prof. Protik BasuMaruti Suzuki Strike at Manesar: An Analysis 37 Sagun Sharma, Warija Paurel, Shweta Singh, Pinkey Biswas,

Varsha Nayer & Ritwik RanjanWorkers Participation in Management: A Generic View 43 Anirban Saha, Anisha Sengupta, Debalina Chakraborty,

Koushik Sarkar, Namrata Banerjee & Priyadarshini BharadwajCan HRIS Capture Human Imagination and Creativity? 61 Lavlesh Upadhyay, Amardeep Singh, Deepika Singh, Pankaj Sati,

Madhurima Roy & Amit Guha

Page No.

Project SynopsesLeveraging the Customer Service Point (CSP) Concept for 71Economic Development of Rural Areas Yugal Kishore JhaPerformance Management for Workmen Staff: How much Objective 75the Model is? How can it be made more Objective? Rajsekhar MandalKara: Consumer Knowledge & Ways of Promotion 85 Amit KumarMarket Research and Brand Promotion of Media Com Karaoke in Mumbai 89 Abdullah QureshiYouth Smartphone Usage, Behaviour and Relationship Study 93 S. Murali Choudhary

Editor's Note16 December 2012: The brutal 'Nirbhaya' incident occurred which caused an uproar inIndia with spontaneous and unprecedented mass uprising by the youth of India in Delhiand in other states in solidarity. Thousands of protesters clashed with police and battledRapid Action Force units; they were lathi charged, shot with water cannons and tear gasshells and arrested too but could not be contained. The uprising forced Hon'ble Presidentof India, Pranab Mukherjee to promulgate The Criminal Law (Amendment) Ordinance,2013, which provides for amendment of Indian Penal Code, Indian Evidence Act andCode of Criminal Procedure, 1973, on laws related to sexual offences. The Indian Parliamentconsidered dedicating a new criminal-law Bill in the name of 'Nirbhaya'. Indian FinanceMinister Mr. P. Chidambaram announced, in his annual budget speech, a Rs 10 billionNirbhaya Fund to empower and promote safety for women. On March 8, 2013, MichelleObama and Secretary of State, John Kerry posthumously honoured 'Nirbhaya' with anInternational Woman of Courage Award. 'Nirbhaya' died of her injuries but awakened theyouth of India to realize that if they want they can bring about a change. This Special Issueof 'Kindler' salutes that youth power of India and devotes the entire Issue to articles writtenonly by the students of Army Institute of Management, Kolkata.Our students have shown their academic interests by participating in poster presentationin International Conference and by winning the 2nd runner up at Money Matters essaywriting competition arranged by Calcutta Management Association. Both the contributionsare published in this Issue. Besides these, students have tried to find management lessonsin Formula 1 car racing and analyzed the reasons behind the Maruti Suzuki strike atManesar. The students have also delved into issues related to social media and KeyPerformance Indicators. Whether technology in the form of HRIS can capture humanimagination and creativity has also been assessed. Using case studies, the students havealso given a generic view of Workers' Participation in Management. Synposes of summerinternship projects, ranging from topics on promotion of face wipes and Karaoke, behaviorpattern and usage of smartphone by the youth to leveraging Customer Service Point foreconomic development of rural areas and Performance Management System for workmenat SBI, have also been included in this Issue.In view of the uncompromising standard that 'Kindler' has maintained so far in terms ofits quality of content, I understand that readers may find this issue a bit 'wanting'. However,keeping in mind the broader objective of encouraging the young blood into the world ofacademic publications, I am confident that the readers will overlook the shortcomings withtheir own magnanimity.

Dr. Parveen Ahmed AlamEditor, Kindler

STUDENTS CONTRIBUTIONS

ARTICLES

6 Kindler Vol. XII l Nos. 1 & 2 l January-June 2012, July-December 2012

Kindler Vol. XII l Nos. 1 & 2 l January-June 2012, July-December 2012 7

Social Media: A Business PerspectiveW. Shalini*

INTRODUCTIONThe mid 1990s saw one of the biggest surges in the world and that was the Internetand the World Wide Web and everyone wanted a piece of the action. Investors weregiving millions away to start up companies embracing the web. However, in 2000-2001,thousands of companies and billions of dollars were lost in what was infamously calledthe dot-com bubble. The survivors of this burst bubble continued to help to improvethe infrastructure of the internet and with that Web 2.0 was born. Like any big phenomena,Web 2.0 started out as a simple concept but later developed into a new advancementin current technology.The world saw the rise of blog technology taking form; web coding took a leap forwardwith the use of AJAX (Asynchronous JavaScript and XML), RSS (Really SimpleSyndication) feeds being used to keep someone updated on the latest happeningsacross the world in one location but more importantly social networking websites werebeginning to form.In its current form, Internet is primarily a source of communication, information andentertainment, but increasingly, it also acts as a vehicle for commercial transactions.Since the explosion of the web as a business medium, one of its primary uses hasbeen for marketing. Soon, the web could become a critical distribution channel for themajority of successful enterprises. One among them is marketing and spreading brandcommunication through Social networking sites. Social networking websites are onlinecommunities of people who share interests and activities or who are interested inexploring the interests and activities of others. They typically provide a variety of waysfor users to interact, through chat, messaging, e-mail, video, voice chat, file-sharing,blogging and discussion groups. As World Wide Web grew in popularity, social networkingmoved to web-based applications. In 2002, social networking era really started. In2006, anyone with an e-mail address could sign up in social networking sites.Now advertisers are resorting to social media due to the availability of a diverse audience.They utilize this fantastic platform to promote their brand and create a brand identity,that is popular, through interactive communication strategy that is highly effective.Most of the advertisers present their ads in an interactive form as people then tend to

* Student, Batch - MBA 15 (2011-13): Email: [email protected]


pay more attention and find out more about the product. There are various forms ofbrand communication available in social networking sites.SOCIAL MEDIAThe meaning of the term social media can be derived from two words which constituteit. Media generally refers to advertising and the communication of ideas or informationthrough publications/channels. Social implies the interaction of individuals within a groupor community. Taken together, social media simply refers to communication/publicationplatforms which are generated and sustained by the interpersonal interaction of individualsthrough the specific medium or tool.Wikipedia defines the term as: Social Media is the democratization of information,transforming people from content readers into content publishers. It is the shift from abroadcast mechanism to a many-to-many model, rooted in conversations betweenauthors, people, and peers.Social media uses the wisdom of crowds to connect information in a collaborativemanner. Social media can take many different forms, including Internet forums, messageboards, web blogs, wikis, podcasts, pictures, and video. It is made up of user-drivenwebsites that are usually centered on a specific focus (Digg = news) or feature (del.icio.us= bookmarking). Sometimes, the community itself is the main attraction (Facebook andMyspace = networking)Social media is a media for social interaction, using highly accessible and scalablepublishing techniques. It uses web-based technologies to turn communication intointeractive dialogues.Andreas Kaplan and Michael Haenlein defines social media as a group of Internet-based applications that are build on the ideological and technological foundations ofWeb 2.0, which allows the creation and exchange of user-generated content.Social media represents low-cost tools that are used to combine technology and socialinteraction with the use of words. These tools are typically Internet or mobile-based likeTwitter, Facebook, MySpace and YouTube.SOCIAL NETWORKING SITESA social networking site creates network communication among the user community.Though social networking sites serve for communication purposes among special interestgroups, the marketing strategy has also entered this medium for its reach. People getexposed to various kinds of brand communication through this media. They tend tointeract with the brand and acquire information about the brand and its service in aninteresting way.SOCIAL MEDIA IN BUSINESSSocial media advertising is a paid form of brand, service or business promotion andrequires a proper and planned communicative message and budget. Advertising is


customer-centric in nature. Customers play an important role in any major or minorcommunication because they are the ones who are going to decide the fate of theadvertising communication. Some benefits of social network advertising include:

1. Popularizing the brand, idea or service to the target group.2. Informing target audience about the brand or services present in the market.3. Encouraging healthy competition in the market.4. Providing social benefits for the brand.5. Encouraging the audience to interact and keep them intact with the brand.

Advertising on the Internet provides a major contribution to brand competition in themarket. Advertising here not only provides information about a product or service butalso promotes innovation. Besides, it also facilitates consumer satisfaction. Big andsmall companies, individuals from all walks of life, major and minor events, concepts,etc., now-a-days lay their base on social network advertising to get recognized in themarket. With over 200 million active users, Facebook, Twitter, YouTube and Google+have become a personal, product and corporate branding hub in India. Every brand thatexists on social networking sites has the same core features and benefits, such as theability to create a page, share resources, add multimedia and much more. The effectivebrand communication strategies are analyzed to find the impact among the users.There are two benefits of social media that are important to businesses. They include:

1. Cost reduction by decreasing staff time.2. Increase of probability of revenue generation.

Social media enables companies to:1. Share their expertise and knowledge.2. Tap into the wisdom of their consumers.3. Enables customers helping customers.4. Engages prospects through customer evangelism.

NEW TRENDSBusiness in 21st century has had a paradigm shift in its approach in advertising, reachingcustomers, being more customer-centric rather than product-centric. Some of themhave been mentioned which are more prominent in todays business world.1. B2B (Business-to-Business) Websites have become the Ultimate Social Destination

In the consumer world, many companies send their visitors directly to Facebook.This strategy seems to be based on the fact that people are already on Facebook.Also many B2B companies not only need to update their websites on regularbasis, but add social components like Facebook and LinkedIn shares to allowvisitors to spread the word about a companys solutions to industry issues.


2. Blogging as Hub of B2B Social Media SuccessA blog goes hand in hand with the B2B website as a social destination. Companiesthat post valuable, educational content to their blogs at least once or twice aweek will drive traffic to their blogs (and websites) through a combination ofsearch and social media. Many B2B companies are challenged by the idea ofcreating content, but there are enough resources and examples of compellingcontent that marketers running blogs will publish posts that make a differencein their traffic.

3. Social Media-led GenerationMany B2B companies launch dedicated programs to generate leads through socialmedia as a new strategy. This does not just need to apply for direct sales; companiesthat have well-established processes for sharing leads in a variety of sales channelscan also benefit from social media-led generation. Every stage of the buyingprocess benefits from the kind of better educated customer that results fromsignificant social media content efforts.

4. B2B Marketers Expand Social Media FollowersTraditionally B2B marketers kept their social media follower counts to a minimum,due to their limited customer base and prospect profiles; but lately they havediscovered the benefits of building greater reach through their social profiles.Between the benefits of social search, a wider social graph and the necessity ofa broader audience in adjacent industries has become apparent.

5. Social Media Tree-huggers Lie Down in Front of BulldozersBrand awareness through social media is not a sustainable activity but has becomea must for ever industry apart from following traditional sales and marketingapproaches.

6. Measurement of ROI for Social MediaMeasuring the ROI (Return-on-Investment) of social media requires one toadequately bucket the expenses required to drive the results. This also means oneneeds to have results that can be measured in Dollars/Rupees. Leads, which area proxy for sales, can be used for the return portion. These calculations can bedifferent for every B2B company, and one needs access to data as in the end itwill demonstrate the success of social media in the business.

7. Mobile Strategies Catch Up to RealityAs each mobile device is released, it sells more than its predecessor. B2Bcompanies are on course to develop their mobile strategies so they can moveforward with their customers.

8. The Beginning of the End for Twitter as a Social NetworkTwitter will become more a place to go for news and information and less a social


network. Its minimalistic approach and reluctance to add features will ultimately beits undoing.

9. Social Media AdvertisingAll social platforms have advertising components that let B2B marketers expandtheir reach and get their content in front of their prospects and customers. As moreB2B companies show success with these methods, these auction style bids willget more expensive which is still at its preliminary stage in India.

10. Social Media Adoption No Longer Driven by HobbyistsMany marketers who were passionate about social media and had fun keeping upwith the latest platforms and over-shared with all the other early adopters movedon and now work for agencies, technology companies and startups. People whoare most responsible for the broad support of social media in businesses are newto this communication revolution and have not mastered the art of Social Media.

11. Social Media Support for Offline ActivitiesAs social media has become a key component in the marketing mix, it hasbecome an important driver for offline activities like trade shows and direct mail.This will not be competing for budget resources, but has become a part of acoordinated plan to improve results of traditional tactics.

PROBLEMS WITH SOCIAL MEDIA1. Social media works like a virus, i.e., once it has been uploaded or shared, it

spreads like wild fire, whether it is an advertisement, comment or blog. This canact negatively for a companys image if not handled well, example: Volkswagensadvertisement blunder which was not handled well by the company made it on thefront page of Brand Equity blowing its reputation to the smoke.

2. Social media always gets pushed to the side in favour of other, more crucialmarketing tactics like advertising campaigns, Enterprise Data Management Solutions(EDMs), Pay per Click (PPC), etc. This means that traditional marketers are notable to properly immerse themselves in this field to become true experts.

3. Only 22% companies have a dedicated Social Media Manager which is not a goodsign in the current market scenario with cut-throat competition and increasingsocial population.

4. Smartphone users have increased recently in the past 3 years. With this, thenumber of applications and web-surfing has increased. There were around 100billion Smartphone application sessions during Q1 2012. Smartphone owners spendas much time using social networking applications such as Twitter and Facebookas they do playing games. Many companies have not yet adapted to this changeand many do not have mobile compatible sites.


5. There are many risk management issue associated with social media and dangersrelating to privacy implications.

6. A Community Manager does not make a Social Media Manager. One must possessknowledge from insights to Corporate Affairs to Public Relations to Marketing toCustomer Service and Recruitment and also manage campaigns, agenciesstakeholders, glean insights from monitoring and establish the right feedback processto translate these to actionable improvements, etc.

7. Universities are too slow to catch up and have only recently added social mediato their curriculum, so no one is properly trained in this field within the currentworkforce.

8. To be successful in social media, one must be a bit of an all-rounder. One needsto be good at marketing, strategy, analytics, reporting, and customer service.

CONCLUSIONSocial networking tools are spreading into core areas of the value chain, including theMarketing and Communications, Human Relations, and Customer Service Departments.Small and medium-sized businesses are actively using social networking channels togenerate leads, but this remains a growth opportunity for larger companies as theyare still traditional in their marketing approach.Social Media is a great tool for businesses to get their message and brand out there.It also helps build quality relationships with the younger generation of future consumers.The question remains though, how long will these services last? MySpace has turnedinto spam dump. Facebook is getting there slowly but surely, and Twitter is beginningto.

Beyond all the positivity there are many negatives also associated with social media,like risk management and educating people and companies about the danger andprivacy of information and data. Also most of the Social Media Managers are nottrained to exploit social media to their benefits. Information spreads like virus onlineand hence sometimes wrong information or bad reputation or comments can spreadlike wild fire and tarnish the image of an organization even before any damagemanagement can be done.Gone are the days of print media, gone are the days for the need to travel halfwayacross the world in order to hold a business meeting, and even the days when peoplehave to go to a mall to buy clothes. Organizations must realize that if they dont getinto the business of doing business through social networking websites like Facebook,LinkedIn, MySpace, they will see their profits drop and what used to be householdnames will be nothing but a past long forgotten by a technology-driven world.Of course, there are the traditionalists and business leaders who think otherwise, butthat Draconian thinking will hurt and when those businesses who have been in businessfor 50-100 years will realize too late that they made a mistake. So embrace the


social networking world, even though it is completely flawed and outright dangerousto society. Businesses need to communicate with their customers and employeessomehow because that memo that was just sent 5 minutes ago will feel like you justgot it last week. That is how communication works and that is the core of how socialnetworking websites and businesses are being run.REFERENCES1. http://socialmediab2b.com/2012/01/b2b-social-media-marketing-statistics-revealing/12

Revealing Stats About B2B Social Media Marketing2. http://socialmediab2b.com/2011/12/b2b-social-media-predictions-for-2012/12 B2B Social Media

Predictions for 20123. http://socialmediab2b.com/2011/12/b2b-social-media-predictions-for-2012/#ixzz27EmFxnnE4. http://www.forbes.com/sites/gyro/2012/07/10/making-nice-social-media-and-its-big-impact-on-

big-business/FORBES5. http://en.wikipedia.org/wiki/Social_networking_service6. http://blogs.cisco.com/news/social_networkings_impact_on_modern_business/7. http://businessimpactofsocialnetworking.wordpress.com/8. http://www.bligoo.com/media/users/1/50369/files/Business%20-%20Social%20Networking

%20Impact.pdf9. http://hbswk.hbs.edu/item/6187.html10. http://businessimpactofsocialnetworking.wordpress.com/statistics-of-social-networking-and-

business/11. http://thesocialskinny.com/99-new-social-media-stats-for-2012/12. http://thesocialskinny.com/100-social-media-statistics-for-2012/13. http://thesocialskinny.com/the-biggest-problem-with-social-media-today-and-how-to-turn-it-into-

an-opportunity/14. http://www.ijecbs.com (International Journal of Enterprise Computing and Business Systems-

ISSN(online):2230-8849, Vol. 1 Issue 2 July 2011)


Key Performance IndicatorsWarija Paurel*

ABSTRACTOver the years, studies have shown on how performance and productivity rates shoots up whenworkers know that they are being watched and evaluated. Thus, when we know that we are beingevaluated, we try our best to perform as productively as we can. Also the performance of anybusiness greatly relies on KPI or key performance indicators. Thus, knowing how to manipulatethese can bring significant results for businesss performance.

INTRODUCTIONTo accurately measure, control, improve employee productivity there is a need toimplement productivity metrics. Key Performance Indicators, also known as KPI or KeySuccess Indicators (KSI), help an organization define and measure progress towardorganizational goals. They are actually metrics used in quantifying corporate objectivesin line with the strategic performance of every worker and department in the workforce.KPI help the company determine the strengths of the workforce and capitalize on them.It also helps weed out the weaknesses in the workforce, and appropriate solutions canthen be determined.OBJECTIVEKPI aids in determining the proper course of action when certain situations take place.In their most basic form, KPIs determine how the human assets of the companycontribute to the overall performance of the company itself.HOW TO CONTROL BUSINESS PERFORMANCE WITH KPIThe underlying concept here involves a lot of factors. For business performance to becontrolled in a positive way, these factors have to be addressed. This includes:

* Student, Batch - MBA 16 (2012-14); Email: [email protected]

The design of ones KPI

Data collection that is to be plottedonto the KPI system

Analysis and usage of collected data


KPI design is the most important factor to be considered. There are a lot of indicatorsthat one can include however the selection of indicators according to their relevancy isimportant. These can vary from one organization to another, since different companieshave their own definite goals and objectives. Taking these things into consideration theorganization can control business performance with KPI.WHAT DOES A KPI REFLECT?Key Performance Indicators are quantifiable measurements, agreed to beforehand, thatreflect the critical success factors of an organization. They will differ depending on theorganization, e.g.,.

l A business may have as one of its KPIs, the percentage of its income thatcomes from return customers.

l A school may focus its KPI on graduation rates of its students.l A Customer Service Department may have as one of its KPIs, in line with

overall company KPIs, percentage of customer calls answered in the first minute.l A KPI for a social service organization might be number of clients assisted

during the year.An organization that has as one of its goals to be the most profitable company in ourindustry will have KPIs that measure profit and related fiscal measures. Pre-Tax Profitand Shareholder Equity will be among them. However, Percent of Profit Contributedto Community Causes probably will not be one of its KPIs. On the other hand, a schoolis not concerned with making a profit, so its Key Performance Indicators will be different.KPIs like Graduation Rate and Success in Finding Employment after Graduation,though different, accurately reflect the schools mission and goals.If a companys KPI is Increased Customer Satisfaction, that KPI will be focuseddifferently in different departments. The Manufacturing Department may have a KPI ofNumber of Units Rejected by Quality Inspection, while the Sales Department has aKPI of Minutes a Customer Is on Hold before a Sales Rep Answers. Success by theSales and Manufacturing Departments in meeting their respective departmental KeyPerformance Indicators will help the company meet its overall KPI.KPIs MUST BE QUANTIFIABLEIf a Key Performance Indicator is going to be of any value, there must be a way toaccurately define and measure it. Generate More Repeat Customers is useless as aKPI without some way to distinguish between new and repeat customers. Be The MostPopular Company wont work as a KPI because there is no way to measure thecompanys popularity or compare it to others.It is also important to define the KPIs and stay with the same definition from year toyear. For a KPI of Increase Sales, you need to address considerations like whetherto measure by units sold or by dollar value of sales. Will returns be deducted from sales


in the month of the sale or the month of the return? Will sales be recorded for the KPIat list price or at the actual sales price?You also need to set targets for each KPI. A company goal to be the employer of choicemight include a KPI of Turnover Rate. After the Key Performance Indicator has beendefined as the number of voluntary resignations and terminations for performance,divided by the total number of employees at the beginning of the period and a way tomeasure it has been set up by collecting the information, the target has to be established.Reduce turnover by five percent per year is a clear target that everyone will understandand be able to take specific action to accomplish.HOW TO GO ABOUT IT?Key Performance Indicators are used as a performance management tool. KPIs giveeveryone in the organization a clear picture of what is important, of what they need tomake happen. It is used to manage performance. Everything the employees in theorganization do should be focused on meeting or exceeding those KPIs. KPIs can alsobe posted everywhere: in the lunch room, on the walls of every conference room, onthe company intranet, even on the company web site for some of them. Both the targetand the progress towards that target for each KPI should be shown. People will bemotivated to reach those KPI targets.Let us now understand the concept of KPI with the help of a corporate example.KEY PERFORMANCE ANALYSIS OF TCS

TATA CONSULTANCY SERVICESThe comprehensive and independent EquaTerra survey reveals an 85% level of customersatisfaction with Tata Consultancy Services (TCS), versus an industry average of just66%. And TCS scored an unprecedented 93% on the recommendation index, themeasure of how likely Nordic IT decision makers are to recommend TCS to their peers.In terms of meeting expectations (delivering on what was promised), TCS again rankedfirst with 83% (versus an industry average of 64%), delivering on its promise ofExperience Certainty.The annual EquaTerra Nordic Service Provider Performance and Satisfaction Studytakes into account customer satisfaction, quality, flexibility, innovation, risk acceptance,and transition management. According to Jef Loos, Director at EquaTerra, these resultsrepresent a very strong performance by TCS. The company achieved excellent resultsin all key performance indicators.Quality of Delivery + Quality of Experience = Customer SatisfactionAcross Sweden, Finland, Norway and Denmark, TCS is helping more and morecompanies by delivering unique business value within IT.TCS combines both quality of delivery and quality of experience. Throughout theregion our people are flexible, eager, open, collaborative, responsible and accountable,


claims Amit Bajaj, Director Nordic & Baltic Region, TCS. Its a powerful combination,embedded in our corporate culture, which assures customer satisfaction.Tata Consultancy Services is the # 1 Service Provider in the Nordic region:

l Delivers on its promise of Experience Certaintyl 93% likelihood that IT decision makers will recommend TCSl Dominates the industry in customer satisfaction, quality, flexibility, innovation,

risk acceptance, and transition management.TCS Performance on Selected Key Performance Indicators

KPI Description TCS TCS 2nd-bestRank Performance Provider

1) QualityIn general, the service provider meets 1 84% 77%the service levels as set out in theService Level Agreement

2) RiskThe service provider shoulders 1 73% 69%reasonable commercial risk and makesnecessary investments to reduce that risk

3) InnovationThe service provider actively identifies 1 75% 64%innovation opportunities

4) FlexibilityThe service provider is flexible in bringing 1 80% 69%changes to the contract

5) TransitionThe service provider has completed the 1 83% 75%transition successfully on time and budgetand with the required functionality.

Key to scores: Totally agree 100%; Agree 80%; Agree 60%; Somewhat Disagree 40%; Disagree 20%; Totally Disagree 0%CONCLUSIONPerformance Management is crucial to the success of any business, particularly wherepay for performance is concerned, but its equally difficult to translate that recognitioninto action. Companies have to track and measure the right things and make sure the


metrics are top of mind across the organization. The measures have to be business-based, of course, and reviewed frequently for relevance in todays churning, challengingtimes.REFERENCES1. http://www.tcs.com/worldwide/europe/nordic/en/no1.html/ last accessed on 20.3.132. http://management.about.com/cs/generalmanagement/a/keyperfindic.htm/last accessed on

05.12.123. Parmenter, D. (2007), Key Performance Indicators, John Wiley & Sons, Canada


The Management of aFormula 1 Racing Team

Rahul Moitra*

The year - 1906, the country - France, the place - Le Mans.What started with 32 cars, years ago, has now grown into one of the most popularsports in the world. It appeals to millions and attracts huge sponsorships and thechampions are looked up to as Super humans. Why? Because it feeds the human needto push technology to the limit and see how far we can go. Formula One cars race atspeeds of up to 340 km/h and reach 5G in corners.There are 12 teams in Formula 1 and each team has 2 drivers. Hence, 24 driversparticipate in a race.WHAT IS FORMULA 1 ?Formula One (F1 or Formula1) is the highest class of single seater auto racing sanctionedby FIA (FdrationInternationale de lAutomobile).The FIA is a non-profit association established as the Association Internationale desAutomobile Clubs Reconnus (AIACR) on 20 June 1904 to represent the interests ofmotoring organizations and motor car users. To the general public, the FIA is mostlyknown as the governing body for many auto racing events.The F1 season consists of a series of races, known as Grand Prix, held on purpose-built circuits and public roads (street circuits). There are 12 teams in F1. Each team has2 main drivers who can take part in qualifying and on race day. In total, every race canhave maximum of 24 drivers according to present team structure and rules (2011).According to the current point system, in each race, top 10 drivers are awarded pointsfrom 25 to 1. The same score is being added to the drivers point scoring table andconstructor (teams) point scoring table. The results of each race are combined todetermine two annual World Championships, one for the drivers and one for theconstructors.

Each racing drivers, constructor teams, track officials, organizers, and circuits arerequired to be holders of valid Super Licences, the highest class of racing licenceissued by the FIA to be part of F1.

* Student, Batch - MBA 16 (2012-14); Email: [email protected]


Racing Calendar is the yearly championship calendar decided by FIA. The selection ofrace tracks where the race will be held depends upon the contracts between theFormula One Administration (FOA), tracks officials. FIA and teams put their say infinalizing the calendar to suit the general public interest and F1 members that includesdrivers, teams, officials, administration, etc.The circuit basically represent a country or a state. They are built as Governmentprojects or private companies projects. The complexity of final agreements can vary butgenerally FOA demands a fees to conduct a race on a track with FIA race director andhis team looking after the safety issues concerned with the track.Basically, FOA is an authority representing Formula One Group or a group of companiesthat holds the commercial rights to conduct F1 World Championship. FIA is an authoritymanaging all the norms, regulations, protocols and safe happenings during a year.Before moving into the detail of a race weekend, it is the sole responsibility or wish ofthe team to select drivers to race for their team. Generally drivers give test before thestart of season and are selected to be part of the team.Now, over a race weekend, there are three practice sessions, namely, Free PracticeSession 1, 2 and 3. Generally FP1 and FP2 takes place on Fridays unlike in Monacowhere it takes place on Thursdays. FP1 and FP2 are of 1hr 30min sessions. FP3 isa quick 1hr session on Saturday before qualifying. All the races have same fixed timeaccording to their local time.These practice sessions are meant for teams to get aware of the prevailing conditionson the track, weather effect on machinery and tyres, petrol usage, to build strategies,work on pit stop, drivers testing the new components, learning the track and behaviouron track put into different conditions. But allowing a third driver (Reserve Driver) toparticipate, this helps in grooming a new aspirant in F1.Fastest times set by drivers are taken as final standing during practice sessions. Thenumber of laps run during any session is uncontrolled.Qualifying, also record the fastest times set by drivers but in 3 parts. In Q1, all 24drivers participate of which last 7 are knocked out. Rest 17 take part in Q2, where againthe last 7 are knocked out. In the final session Q3, 10 drivers fight for pole position (1stposition to start the race). The qualifying hour is split into three sessions of 20, 15 and10 minutes, with a seven-minute break between the first and second sessions and aneight-minute break between the second and third sessions. Like practice session, thenumber of laps run during any session is uncontrolled.In the first two periods, cars may run any tyre compound they wish, and drivers eliminatedin these periods are allowed to change their choice of tyres prior to the race. Carstaking part in the final period, however, must start the race with the tyres used duringtheir fastest lap (exactly the same tyres, not just the same compound), barring changesin weather that require usage of wet-weather tyres. Also, if driver had not participated


in the final session due to some reason (mainly slow cars refusing a challenge andsave tyres), he can use any type of tyre during the race.Race day is the final showdown during a Grand Prix weekend. The race usually is of1hr 30mins with 50-60 laps depending upon the time per lap and number of kilometresto be covered during a race remain more or less around 305 kms.Formation on the race track is done according to their qualifying positions. A formationlap is done to warm the tyres, then the race is started as the five red lights illuminate.Every driver is on his own on the track but the two drivers of the same team can drivefor each others benefit. Every driver has to use two compounds of tyres during a race.For this, he requires at least one pit stop.Pit stop is carried in a pit garage following a pit lane usually run beside start finish onthe track. Every team has their own pit crew who are responsible for carrying out bodywork on car that normally includes tyre changes and adjustment of front wing. From2010, re-fuelling during a race is banned, so cars have to be loaded with complete tankbefore the race starts. During an accident or damage to the car, pit crew has to repairthe car within as minimum time as possible to bring the car back on track. This usuallyincludes removing busted tyres, front wing change, below the car minor repairs, etc.Heavy damage leads to drivers retirement from the race.There are various flags shown during a race. The most common ones are: Yellow Flag(Slow down as caution), Red Flag (Session Stopped), Green Flag (All Clear), ChequeredFlag (Indicates session end).Other than the normal scenario, there can be penalties during qualifying and race daysor penalties from last race can be carried forward to the next race. FIA is very particularabout the safety and protocols to be followed. Any discrepancies in the two can leadto severe punishments during race, qualifying with fines. There can be ban from therace or from the whole season also. Stewards are the race monitors/directors. Theirorders are mandatory for the teams to be followed. In normal cases, a drive throughpenalty or a 5-grid penalty is given to a driver. This depends upon the unsafe releaseduring a race, unsafe driving, causing accidents, qualifying issues, penalties from lastrace, gear box change, etc.Most people do not realize Formula 1 is a Team Sport, and there is a dedicated teamof hundreds behind each driver. This article is focused on the management of theFormula 1 teams and shed light on the heroes behind the curtains.Formula 1 teams follow a hierarchical organization structure.WHAT IS AN ORGANIZATION STRUCTURE?Organization Structure is basically a framework, typically hierarchical, within which anorganization arranges its lines of authority and communications, and allocates rightsand duties. Organizational Structure determines the manner and extent to which roles,


power, and responsibilities are delegated, controlled, and coordinated, and howinformation flows between levels of management.The structure depends entirely on the organizations objectives and the strategy chosento achieve them. In a centralized structure, the decision making power is concentratedin the top layer of the management and tight control is exercised over departments anddivisions. In a decentralized structure, the decision making power is distributed and thedepartments and divisions have varying degrees of autonomy. An organizational chartillustrates the organizational structure.In a hierarchical organization employees are ranked at various levels within theorganization, each level is one above the other. At each stage in the chain, one personhas a number of workers directly under him, within his span of control. A tall hierarchicalorganization has many levels and a flat hierarchical organization will only have a few.THE HIERARCHICAL STRUCTURE OF A TYPICAL F1 TEAMTeam BossThis varies from team to team. Some teams are owned by the car manufacturers, suchas Ferrari, which is managed by Jean Todt, the CEO of the company. Other teams areprivately owned, and hence the Team Boss is the owner himself; an example of thisis Sir Frank Williams of Williams F1.Technical DirectorThe Technical Director is the Head of the Engineers, Designers and R&D Scientistswho construct the cars.The Technical Director is the backbone of a F1 Team. The Chief Aerodynamicist, ChiefDesigner and Chief of Research and Development report to the Technical Director.Chief AerodynamicistThe Chief Aerodynamicist is the leader of the team of Aerodynamicists whose job is toensure the car is designed in such a way that the wind resistance is low and the carhas high down force. When the car has low down force it sticks to the race track andmakes the car go faster.Chief DesignerThe Chief Designer determines the basic layout of the car.Commercial DirectorThis person plays a very important role in getting revenue or the team. The CommercialDirector tries to get sponsorships. Many brands vie for positions on the cars to advertisetheir products. Sponsorship is one of the main ways of earning for F1 teams.DriversEach Formula One team has two drivers. A Formula One driver is out to beat his rivals,including the other driver on his team.


Drivers have many qualities, including strength, endurance, mental alertness, quickreflexes and a desire to be the best race car driver in the world.The organisation structure is diagramnitically given below :

Team Boss

Technical Director

Chief Aerodynamicist

Chief Designer Commercial Designer

Pit Crew Drivers Engineer

In conclusion, it can be said that Formula 1 is a very challenging and ever evolvingsport and is slowly becoming popular in India and the rest of the developing countries.REFERENCES1. Hotten, R. (2000), Winning: The Business of Formula, Texere2. Piola, G. (2012), Formula 1 Technical Analysis, Giorgio Nada Editore3. www.formula1.com/last accesed on 14.10.124. www.f1fanatic.com/last accesed on 14.10.12


Role of Capital Market in the EconomicDevelopment of India*

Sayak Naha**

The term Financial Market consists of two types of markets which are interrelated.The first type of market we can talk about is the Money Market; from which the shortterm financing is done by the companies (or specified types of organisation). The termCapital Market refers to the long term financing market. Capital Market can further bedivided according to the type of financing done.Firstly the Financial Institutions provide long term financing which is necessary foreconomic development in India. Let us discuss about the structure of FinancialInstitutions in India and their role in economic development of India.The classification of Financial Institutions are as follows:

l All India Development Financial Institutions like IFCI, IDBI and ICICI etc.l Specialisation Financial Institutions like EXIM Bank, TFCI ltd. and IDFC ltd.l Investment Institutions like LIC, GIC etc.l Refinance Institutions like NHB and NABARD.l State level Institutions like SFCs and SIDCs.l Other Financial Institutions like ECGC and DICGC.

These institutions have provided India a strong Capital Market and the financial assistancethey have provided has helped in developing industry in India which is of essence forsteady economic development. The financing done by such Financial Institutions hasgrown by leaps and bounds in the last decade. The total assistance sanctioned by suchinstitutions in 1961-62 was Rs. 60.5 crores and the total disbursements was Rs. 29.8crores. The growth in assistance has been huge as we can see that in 2004 the totalassistance sanctioned was Rs. 8,01,998 crores, of which Rs. 5,82,156 crores weredisbursed.As far as the quantitative aspect goes, we can see that the institutions themselves havegrown along with the industry. However, qualitative aspect is more important as suchFinancial Institutions have been crucial for developing industry as they were built withdevelopment as their focus. These institutions provide long term assistance to new

* 2nd runner up at Money Matters essay writing competition arranged by Calcutta Management Association

** Student, Batch - MBA 15 (2011-13): Email: [email protected]


enterprises and small and medium-sized industry established in the backward areas.The importance of the institutions can be clearly established by stating that developedstates like Maharashtra, Gujarat and Tamil Nadu had taken up 45.7 % of the totalassistance sanctioned in the year 2003. Thus, we can see the states who have beenfinanced by DFIs at a greater rate has also developed at a greater rate.However, with all the positives that the DFIs have, they are facing great difficulties inthe post-liberalization (post-1991) period. They have now great competition in commercialbanks and NBFCs. The advantage that DFIs previously had by taking up loans atconcessional rates from government and Reserve Bank of India has been erased andthey now have to raise funds at market-related interest rates. Hence, in the currentscenario, commercial banks and NBFCs have become more relevant as a catalyst foreconomic development.Secondly, the greater part of the Capital Market is the securities market, which can befurther classified into:

l Gilt-edged marketl Corporate Securities market.

The Gilt-edged market is the market in government securities. Therefore, this is a riskfree market. The market is divided into primary (new issues) market and secondary (oldissues) market. The primary market is totally controlled by RBI and here is a basicdifference between India and other countries (UK, USA, etc.). Other countries alsoallow other players into the Gilt-edged market, making it prone to market changes butIndia does not do so. This helped in reducing the impact the recent recession had overIndia. While many European and American economies really struggled, the securenature of this market provided some sort of stability to Indian economy.The Corporate Securities Market is controlled by the rules and regulations of the Securitiesand Exchange Board of India (SEBI). This is perhaps the most important part of theCapital Market in the current free market system of economy. This is also segregatedinto the primary and secondary market. The primary market is of utmost importance tothe newly formed ventures. Capital can be raised through prospectus, offer for sale,private placement or offering rights issue. The secondary market is basically operatedthrough the stock exchanges which are highly organized markets for purchase and saleof second-hand quoted or listed securities.The primary market moves a large amount of resources and hence, it is so important.Whereas in the pre-liberalization era, there were lower amounts raised by private players(in 1990-91 they raised Rs. 4,312 crores) now the amounts have grown significantly (in2007-08 they raised Rs. 63,638 crores). But due to the global slowdown, the resourcemobilization got reduced to just Rs. 14,671 crores in 2008-09. Hence, we can see thatresource mobilization from the hands of the saver to the hands of the investor is doneby the Capital Market.


The Capital Market in India has played a major role in fulfilling certain fundamentalduties which is very important for the economic development of any country. A fewof the important roles fulfilled by the Capital Market are discussed below:

l Financing the five year plans- Government securities like treasury bills andmarket loans sold to commercial banks and other institutions have played avery important part in fulfilling the capital needs of the government, therebycontinuing to fulfill the five year plans which have been the basis of economicdevelopment in India. In the past, the government has been able to appropriatefor itself more than 50% of the savings of the household sector.

l Mobilization of savings and acceleration of capital formation- In developingcountries like India where demand for investments are continuously increasing,Capital Market plays a very important role of mobilizing savings from differentsections of the population to the industry. In addition to this, the stock exchangeis a mechanism which ensures both reasonable return and liquidity, hencecapital formation is accelerated.

l Raising of long term capital- Capital Markets basic function is to providelong term capital to companies. Capital Market solves the conflict betweeninvestors will of not tying up too much of their resources for too much timeand will of companies of having long term capital. This is done through theefficient functioning of the primary and the secondary market together.

l Proper channelization of funds- An efficient Capital Market not only createsliquidity through its pricing mechanism but also functions to allocate resourcesto the most efficient industries. This ensures effective utilization of funds inpublic interest.

l Provision of variety of services given by the Capital Market- There area variety of services which the Capital Market provides in order to ensuresmooth functioning of the economy. The services are as follows: Provision of underwriting facilities Assistance in the promotion of the companies

Participation in equity capital

Expert advice on management of investment in Industrial Securities.In current days and age, Capital Market plays a huge role in development of theeconomy. It not only provides resource allocation facilities but also provides a riskmanagement facility by diversifying the risk throughout the economy. The properfunctioning of Capital Market improved the financial information quality throughout theeconomy as it played a major role in adopting stronger corporate governance norms.Plus it is the structure of the Indian Capital Market which is not letting it go into spiralof recession. The global slowdown is still having its effect upon the Indian economy and


whereas the FIIs (Foreign Institutional Investors) are withdrawing money from theeconomy, the Indian Institutional investors like Insurance companies and mutual fundscame to the rescue under SEBI guidelines so that market sentiment does not go down.Thus the confidence of the investors remained and the Indian economy was impacteda little less than other world economies in its development.Lastly we can see that how the Capital Market situation has changed in India and howit has been beneficial. The spectacular development of the Capital Market in Indiaduring the last decade is evidenced by the steady growth in the quantum of freshcapital raised, as already brought out. This testifies the inherent strength and ability toadapt the Capital Market to the emerging needs and challenges.In spite of capital constraints, there has been massive growth of business and tradeworld-wide. After own capital and loan capital, a new form of capital known as leasecapital has emerged in the Capital Market.The economic growth has been driven by the expansion of services that have beengrowing consistently faster than other sectors. It is argued that the pattern of Indiandevelopment has been a specific one and that the country may be able to skip theintermediate industrialization-led phase in the transformation of its economic structure.According to Index of Economic Freedom World Ranking, an annual survey on economicfreedom of the nations, India ranks 123rd as compared with China and Russia whichranks 138th and 144th respectively in 2012.Hence, we can say that the Capital Market has pushed the Indian economy in thecorrect direction.REFERENCE1. Misra, S K and Puri, V K (2012), Economic Environment of Business, Himalaya Publishing

House


Poster Presentation on:Exploring the Factors Motivating

Consumers' Buying BehaviourTowards Baby Wipes#

W Shalini*, Prerna Tyagi*, Dr. Shovan Chowdhury** & Prof. Protik Basu***

BACKGROUNDREALITY Wipes constituted less than 1% of retail hygiene value sales in India in 2010. With

such products not being traditionally popular in the country, the category still reliedon niche consumer segments or season-dependent sales.

Traditionally Indians never used wipes apart from a handkerchief and mothersalways used water to clean their babies. Many doctors also say that water is thebest practice rather than wipes. But lately with changing lifestyles wipes havebecome more common in India.

Wipes can be a paper, tissue or nonwoven; they are subjected to light rubbing orfriction, in order to remove dirt or liquid from the surface.

Consumers want wipes to absorb, retain or release dust or liquid on demand. Oneof the main benefits that wipes provide is convenience using a wipe is quickerand easier than the alternative of dispensing a liquid and using another cloth/papertowel to clean or remove the liquid.

Baby care industry comprises segments which address the needs of taking careof an infant between 0-4 years of age.

Baby wipes are wet wipes used to cleanse the sensitive skin of infants. These aresaturated with solutions anywhere from gentle cleansing ingredients to alcohol-based cleaners.

# The Poster was presented at International Marketing Conference (MARCON) 2012 at IIM Calcutta* Students, Batch 15 (2011-13), Army Institute of Management Kolkata Email: [email protected];

[email protected]

** Assistant Professor, IIM Kozhikode Email: [email protected]

*** Associate Professor, Army Institute of Management Kolkata Email: [email protected]


REASONS The birth rate has been growing since the early 2000s (and is expected to continue

until 2014) after a long period of decline in the 1990s. Parents are using baby wipes for more reasons such as on-the-go cleaning after

eating or playing, so extending the use beyond the traditional nappy-changingfunction.

Almost a third of parents buy whichever brand is on special offer although a thirdopt for the most reliable regardless of price.

There has been a key observation on better absorption so extending the timebetween changes and reducing overall volume.

About four in ten parents buy own-label and as they are becoming a more viablealternative to the brands for many as retailers have improved the quality.

Baby wipes came into visibility due to increasing standard of living of people inIndia and constant exposure to international culture and habits.

RESEARCH PURPOSE To analyze the finer perspective for the consumer sector in India for baby wipes. Translating consumer requirements into technical requirements so that researchers

and corporate strategies could interpret the same quantitatively. To identify relevant factors which motivate consumers buying behaviour in baby

wipes.RESEARCH DESIGNExploratory Study: Semi-structured in-depth qualitative interviews for consumers andcustomers to get their insights on baby wipes.Sample Size: Determined by confidence interval approachFactor Analysis: Multivariate factor analysis has been used to condense the informationcontained in a large number of original variables into a smaller set of variants withminimum loss of information.Quality Function Deployment: The process of QFD starts with Voice of the Customers(VoC), the customers requirements are stated in their own language. It addresses thecustomer satisfaction regarding the technical design of any product or service.House of Quality: HOQ shows the way in which each of the customers requirementsis technically defined and how experts plan to design the product/service that fulfils thecustomer requirements in a prioritized way.EMPERICAL EVIDENCE I love the smell of baby powder, but the scent on those wipes is EXTREMELY

strong. Its so strong that you could use the wipe, wash your hand twice and stillsmell the scent on your hands for hours later.


These gave our newborn rashes. We now use them on our sensitive toddlers facefor wipe down and they work fine for that, just not sensitive enough for a new bornfor the cost you might as well get something that works without the rashes.

They are thick so obviously they are not floppy and soft like fluff because theresmore of the actual wipe.

Occasionally they do leave a bit of white fuzz, but it doesnt seem to bother eitherof my kids, who both have very sensitive skin.

Perfect for my son who has eczema and is allergic to everything. The wipes arethick which makes cleaning up messy situations easier. And they dont leave asmuch white residue on clothing when you wipe up messes on clothing, like thecheap brands do.

They are also great for a quick clean up and the scent is strong but pleasant, verysimilar to the Johnson & Johnson lotion, which is nice change from other alcoholdisinfectants.

These wipes are alcohol-free as well as flushable. Thats hard combination to findand these wipes are also hard to find.

We dont have to use as many, thanks to how large and thick they are, and theprice is decent per wipe, so they also and up being the most economical.

HOUSE OF QUALITYHouse of Quality for the study has been presented in Annexure-1.IMPLICATIONS The inference drawn from this research may be used widely for the baby wipes

industry. Baby wipes industry is still in its nascent stage in India; based on the findings the

organization may create improvement plans for the future. Ranking of the quality factors is a good reference as one of the major tasks for

improving the product design of baby wipes. It would help bridge the gap between product design and customer requirement

in order to make a customized and superior quality product through listening toVoice of Customers (VoC) and satisfying their requirements.

This research would be useful to guide similar research work in other baby careproducts.

The technical characteristics ensued from the research would help guide corporatestrategists and inventors to optimize resources in order to generate additionalrevenue, profitability and customer satisfaction.

This result of the research would help create a distinctive competitive advantageand core competence within the industry.


REFERENCES1. Dube, L. Renaghan, L. M. and Miller, J. M. (1994). Measuring Customer Satisfaction for

Strategic Management, Cornell Hotel and Restaurant Administration Quarterly, 35(1): 39-472. Hauser, J. R. and Clausing, D. (1988). The House of Quality, Harvard Business Review,

66(3): 63-733. Johnson, Richard A and Wichern, Dean W. (2007). Applied Multivariate Statistical Analysis

6/E, Pearson Education International4. Kuo, Hui-Ming and Chen, Cheng-Wu. (2011). Application of quality function deployment to

improve the quality of Internet shopping website interface design, International Journal ofInnovative Computing, Information and Control, 7(1): 253-268

5. Shil, Nikhil Chandra and Das, Bhagaban. (2010). Product Planning Through HOQ: An Algorithm,IUP Journal of Management, 8(4): 61-75

6. Shahin, Arash and Chan, J. F. L. (2006). Customer Requirements Segmentation (CRS): APrerequisite Technique for Quality Function Deployment (QFD), Total Quality Management &Business Excellence, 17(5): 567-587

7. Suhr, Diana D. (2006). Exploratory or Confirmatory Factor Analysis? SUGI 31 Proceedings,San Francisco, California, Paper 200-31

8. Temponi, Cecilia, Yen, John and Tiao, W. Amos. (1999). House of Quality: A Fuzzy Logic-based Requirements Analysis, European Journal of Operational Research, 117(2): 340-354


ANNEXURE 1


Maruti Suzuki Strike at Manesar: An Analysis Sagun Sharma*, Warija Paurel*, Shweta Singh*,Pinkey Biswas*, Varsha Nayer* & Ritwik Ranjan*

ABSTRACTThe latest Labour Bureau data point out that industrial disputes leading to strikes and lockouts areon the rise, after registering a decline in 2011, and officials expect the trend to worsen in thecoming months. India is a continent whose least well known feature is its working class and thestruggles it engages in. Therefore this report aims at lifting the veil on the situation of industrialdisputes, from the example of a significant strike which took place three times (June, Septemberand October 2011). Also analysis of the situation is put forward to better understand the thingswhich are of major concerns.INTRODUCTIONMaruti Suzuki is a subsidiary company of Japanese automaker Suzuki Motor Corporation.It has a market share of 44.9% of the Indian passenger car market as of March 2011.In February 2012, the company sold its 10th million vehicle in India. It is India andNepals leading automobile manufacturer and the market leader in the car segment,both in terms of volume of vehicles sold and revenue earned. Until recently, 18.28% ofthe company was owned by the Indian government, and 54.2% by Suzuki of Japan. TheGovernment of India held an initial public offering of 25% of the company in June2003. As of 10 May 2007, the Government of India sold its complete share to Indianfinancial institutions and no longer has any stake in Maruti Udyog.The Indian labour it hired readily accepted Japanese work culture and the modernmanufacturing process. In 1997, there was a change in ownership, and Maruti becamepredominantly government controlled. Shortly thereafter, conflict between the Governmentand Suzuki started. Labour unrest started under management of Indian CentralGovernment. In 2000, a major industrial relations issue began and employees of Marutiwent on an indefinite strike, demanding among other things, major revisions to theirwages, incentives and pensions.After elections in 2000, the new Central Government pursued a disinvestment policy.It proposed to sell part of its stake in Maruti Suzuki in a public offering. The workersunion opposed this sell-off plan on the ground that the company will lose a majorbusiness advantage if it does not remain in control of the government.

* Students, Batch - MBA 16 (2012-14); Emails: [email protected]; [email protected];[email protected]; [email protected]; [email protected];[email protected]


The stand-off between the union and the management continued through 2001. Themanagement refused union demands citing increased competition and lower margins.The Central Government prevailed and privatized Maruti in 2002. Suzuki became themajority owner of Maruti Udyog Limited.THE UNRESTSMaruti-Suzuki workers went on strike first on 12th October, 2000 when nearly 4,700employees of Maruti Suzuki (MSIL), formerly Maruti Udyog Limited, boycotted work,protesting the companys demand for an undertaking of good conduct from them. Dailyoutput was cut by 86% as the company forbade entry to workers not signing theundertaking. The MU Employees Union treasurer said that signing it would have meantlosing their fundamental rights. It was also a protest against the managements decisionto link bonus and incentives to productivity and efficiency. The primary concern of themanagement was that production should not stop on account of agitation. Workersfrom suppliers were roped in to do the work and along with supervisors and managers,Maruti got the plant started within a weeks time. There was also indirect (political)pressure from the BJP Government on the Union and the issue came up for discussionin Parliament. The management meanwhile agreed to drop insistence on individualworkers to furnish a good conduct undertaking, but sought certain safeguards, andstipulated that the law would take its own course in regard to disciplinary action. Thedeadlock continued for 90 days. Finally on 9th January 2001, the strike broke on themanagements terms. The Union had to accept the new terms on production-linkedincentives and bonus. The face saver was that no undertaking had to be given. However,the 2000-01 confrontation did not die down.In August, 2005, the Maruti Udyog Employees Union (MUEU) sought the Prime MinisterDr Manmohan Singhs intervention to resolve several issues with Suzuki managementsince the Suzuki management had summarily dismissed 24 Union activists withoutholding any enquiry, another 36 after ex-parte enquiry, and 32 more for not signing theundertakings imposed by the management. Twenty-six were charge-sheeted andcompelled to take VRS, while hundreds of other employees also took VRS. The Unionalso alleged that Maruti Udyog had replaced over 2000 permanent employees withcontract workers, following the October 2000 dispute. The PM met them on 3rd Augustand voiced apprehension in taking up the issue, as the echo of the labour trouble atHondas facility had barely died down.A Maruti spokesperson said the companys Union (formed by ex-employees of thecompany) had long since been de-recognized and therefore was not representative ofthe workers. The workmen had been notified that only those workers could enter thefactory who gave an undertaking in writing that they would not indulge in any activitywhich adversely affected the production and discipline and that workmen who do notgive the undertaking would be deemed to be on illegal strike. In terms of the contractof employment the workmen are duty-bound to adhere to norms of discipline and givenormal output. Suzuki, which had already increased production from 5,50,000 in


2005-06 to nearly 8,00,000 in 2008-09, decided to step up capacity further to onemillion per annum by 2009, earmarking Rs 9000 crores investment for 2008-2011.Exports had also risen significantly (The Economic Times 5/5/09).MANESAR VIOLENCE: JULY 2012On 18th July 2012, Marutis Manesar plant was hit by violence as workers at one ofits auto factories attacked supervisors and started a fire that killed a company officialand injured 100 managers, including two Japanese expatriates. The violent mob alsoinjured 9 policemen. The companys General Manager of Human Resources had botharms and legs broken by his attackers; unable to leave the building that was set ablaze,he was charred to death. The incident was the worst-ever for Suzuki since the companybegan operations in India in 1983.Since April 2012, the Manesar union had demanded a five-fold increase in basic salary,a monthly conveyance allowance of 10,000, a laundry allowance of 3,000 a gift withevery new car launch, and a house for every worker who wants one or cheaper homeloans for those who want to build their own houses. In addition to this compensationand normal weekend/holidays, the union demanded the current 4 paid weeks of vacationbe increased to 7 weeks, plus each worker have 40 days allowance of sick and casualleave - for a total of 75 days.Maruti said the unrest began, not over wage discussions, but after the workers uniondemanded the reinstatement of a worker who had been suspended for beating asupervisor. The workers however, claimed, harsh working conditions and extensivehiring of low-paid contract workers as the reason for this. The management insisted thatthey must wait for completion of inquiry underway before they can take any action onthe employee suspended for beating up his supervisor. The management was then told,you will be beaten up after we get a signal. Thereafter, the workers broke up intogroups, went on to set the shop floor as well as all offices afire. They searched formanagement officials and proceeded with a barbaric beating of the officials at the sitewith iron rods.The police, in its First Information Report (FIR), claimed on 21 July that Manesarviolence may be the result of a planned violence by a section of workers and unionleaders. The report claimed the workers actions were recorded on close circuit cameras(CCTVs) installed within the company premises. The workers took several managersand high ranked management officials hostage. The responsible Special InvestigativeTeam official claimed, some union leaders may be aware of the facts, so they burntdown the main servers and more than 700 computers. The recorded CCTV footagehas been used to determine the sequence of events and people involved.As per the FIR, police have arrested 91 people and are searching for 55 additionalaccused. Haryana Government has started investigation and 90 odd workers havealready been picked up. FIR by Maruti named 55 workers and 600 others.Maruti Suzuki, in its statement on the unrest, announced that all work at the Manesar


plant has been suspended indefinitely. A Suzuki spokesman said Manesar violencewont affect the auto makers business plans for India. The shutdown of Manesar plantis leading to a loss of about Rs 75 crore per day. On July 21, 2012, citing safetyconcerns, the company announced a lockout under The Industrial Dispute Act 1947.On July 26 2012, Maruti announced employees would not be paid for the period of lock-out in accordance with labour laws of India. The company further announced that it willstop using contract workers by March 2013. The report claimed the salary differencebetween contract workers and permanent workers has been much smaller than initialmedia reports - the contract worker at Maruti received about 11,500 per month, whilea permanent worker received about 12,500 a month at start, which increased in threeyears to 21,000-22,000 per month. In a separate report, a contractor who was providingcontract employees to Maruti claimed the company gave its contract employees thebest wage, allowances and benefits package in the region.Contact workers complained that they are made to work on all heavy and laboriouswork while a permanent worker doesnt do such work but imposes his authority onthem. Moreover, the permanent workers are paid more than twice of what the contractworkers get.FINANCIAL IMPACTMaruti unrest has hit its net realization. For the quarter ended June 2012, its operatingmargins slid by more than 200 basis points year-on-year (YOY). At 7.3%, the companyreported its lowest Q1 margins in the past 4 years.

l Input cost (raw material) increased by 25% YOYl Employee cost increased by 33%l Employee cost/Sales = 2.2% (highest in past 4 years)

ANALYSISAfter scrutinizing the Maruti Suzuki strike, several issues have been brought to thefore that have been silently plaguing Industrial Relations over the years, of which thefollowing are of particular interest.Maruti Suzuki, like many other companies, engages over 50 per cent of its workforceas contract labour and temporary workers. This is a common practice used by employersto save on costs.

The problem is that in a country with great unemployment, the desire for permanentemployment, particularly in a blue chip company like Maruti Suzuki, is understandablyhigh. Reducing the permanent workforce is extremely difficult for industrial organizationsgiven the legal implications and business obligations. Consequently, employers haverealized that the archaic labour laws of the country are out of tune with the times andchanging business environment. Another factor that pre-disposes organizations to usecontract labour is that although the reduction of workforce or closure is allowed by law,


it is only after permission is granted by the Government which is often time consumingand tedious.As per reports, Maruti Suzuki did not recognise the union at its Manesar plant andthe authorities did not register it. While the Right of Association is guaranteed by theConstitution of India, there is no concomitant right to represent at the bargainingtable. In other words, it is not mandatory for the employers to bargain with a union,except in the State of Maharashtra, where the Court decides the representative status.Another reason why collective bargaining is not welcome in the Indian context is thatunions often have political connections. Multinational organizations operating in thecountry need to be sensitive to these cultural nuances.The young workforce in India is marked by high aspirations and flexibility. This givesrise to an opportunity to practice and shape industrial relations proactively. Gone arethe days when increasing productivity was resisted tooth and nail. There is, on thecontrary, a greater appreciation of the need to increase productivity. That severalorganizations have productivity-linked incentives for workmen in new industries aroundPune is a testimony to the fact that a new era in industrial relations has arrived.Organizations are increasingly appreciating that not just communication but a dialoguewith employees is essential. It calls for willingness to empathetically understand theother point of view and act on it. This is the enlightened practice of industrial democracy.CONCLUSIONHigh level of control exercised by management is an anathema to industrial democracy.The soul of proactively managing industrial relations is promoting trust. Researchshows that increasing trust between the managers and workforce will lead tostrengthening corporate governance. Many industrial organizations have experimentedwith redesigning jobs of employees to make them meaningful, and allowing greaterdiscretion in their hands.The golden rule in resolving conflicts is that even disagreement must be arrived atafter an effort is made to understand the position of the other party. Sometimes thereare irreconcilable differences. Patience must be shown to talk, negotiate and resolvethe dispute.Any partys conduct during the strife is indicative of its corporate persona, and acertain brand is created in the minds of people at large. Moreover, it also creates amindset which employees at various levels tend to follow. It is imperative, therefore,that the leadership knowingly takes steps to resolve the dispute.Handling conflict does not end when people return to work. It is important to makethe employees feel engaged.


REFERENCES1. Indo Asian News Service. Maruti violence may be planned: cops. New York Daily News, 21

July 20122. Police collect CCTV clips from Manesar MSIL plant. The Times of India, 21 July 20123. Maruti Suzukis statement on Manesar unrest. CNN-IBN, 19 July 20124. Maruti Suzuki declares lockout at Manesar factory. Report by Chauhan, C. P. The Economic Times, 22 July 20125. Marutis Manesar plant closed for third day, Rs 210 cr loss so far. The Times of India, 21

July 20126. Maruti Suzuki to Stop Using Contract Workers in Direct Manufacturing. The Wall Street

Journal, 26 July 20127. Violence at Marutis Manesar plant: Bloodlust had taken over, eyewitness says. The Times

of India, 26 July 20128. We will de-recognise Maruti Suzuki Workers Union: Shinzo Nakanishi. Report by Mukherjee

S. & Das Gupta, S. Business Standard, 22 July, 20129. Manesar Red Alert. Indian Express, 23 July 201210. Beyond Maruti: Indias progress calls for a new set of labour laws and labour relations. The Economic Times, 23 July 201211. Patwardhan,V. (2011) Four Industrial Relations Insights from the Maruti Suzuki Strike, SHRM

India


Workers Participation in Management:A Generic View

Anirban Saha*, Anisha Sengupta*, Debalina Chakraborty*,Koushik Sarkar*, Namrata Banerjee* & Priyadarshini Bharadwaj*

ABSTRACTThe participation of workers in management is a concept by which the principle of independentand democratic administration of an organisation is ensured for attaining peace and harmony init. It is a symbol of joint and cordial relationship, which explains the extent of adjustment betweenthe workers and management for the maintenance of peaceful and harmonious environment in theorganisation. The technique of Workers Participation in Management (WPM) has been regardedas the most powerful and strong behavioural tool for sustaining harmonious and cordial labour-management relations in corporations. This article traces the growth of Workers Participation inManagement with detailed discussion on the practice of WPM in 3 different countries and in Indiawith the help of case studies.

INTRODUCTONThe concept of Workers Participation in Management (WPM) is a universally knownpractise employed in one form or the other in most organizations particularly industrialorganizations. In France, it is known as the System of Works Committees, in the U.K.it is referred as Joint Consultation, in Italy it is named as the System of ManagementCommittees, and in USA it is called Collective Bargaining. In the erstwhile Yugoslaviawhere the practice has deep roots, it is known as the System of Self Management. Inthe erstwhile Federal Republic of Germany, it was called Mitbestimmung meaningnearer to the English expression of co-determination. Some observers argue that theJapanese practise of Quality Circles is a form of WPM. The practice of WPM is knownas Histadrut in Israel, Party Guided Participation in Poland and Worker PartnerSystem in erstwhile Soviet Union. WPM is an extension of democracy to work placeto involve the people to work for the organization purpose.Many observers opine that Participative Management is not alien to Indian culture andIndian ethos. In the pre-Vedic period, when the social development was in the Ganastage, people had gone for food gathering in groups after planning as to who should

* Students, Batch - MBA 16 (2012-14); Emails : [email protected]; [email protected];[email protected]; [email protected]; [email protected];[email protected]


do what and how. The same way the gathered food was also shared among themmostly based on their needs after discussion among them. It is not uncommon that theagricultural workers and the landlord of small holdings assemble in the paddy field anddiscuss about work allotment and modus operandi, before commencing the actualwork.EARLY FORMS OF PARTICIPATIVE MANAGEMENTIn 1910, it seems there was a system of informal consultation between managementand trade unions in the Cotton Textile Mills. In 1919, the Tata Iron and Steel CompanyLimited had set up Works Committee with management and trade unionrepresentatives. It was also reported that it did not last long due to trade unionrivalries. The Royal Commission on Labour (1931) had noted that Works Committeescan play an useful part in the Indian Industrial System. But Works Committees werenot established.In 1920, Mahatma Gandhi had suggested that employers should not regard themselvesas the sole owner of mills and factories, of which they might be the legal owners andthat they should regard themselves as trustees. According to him, workers contributelabour and brains, while shareholders contribute money to an enterprise and thereforeboth should have a share in the prosperity. There should be perfect friendship andco-operation among labour and employers. He advised that the Union should aim atraising the morale and intellectual height of labour and thus by sheer merit, make thelabour master of means of production.WORKERS PARTICIPATION IN MANAGEMENT DEFINEDWPM can be defined as a system of communication and consultation, either formalor informal, by which employees of an organization are kept informed about theaffairs of the undertaking and through which they express their opinion and contributeto the management decisions.The genesis of the term can be derived from the Latin word participare, participationmeans sharing/ taking part. Sharing, a bilateral process, has two aspects - functionaland motivational. WPM highlights both these aspects :

l The functional aspect is the role in deciding.l The motivational aspect is the natural involvement after deciding.

Workers Participation in Management provides a chance to employees to take partin the organisations decision making process. It assumes that there would be selfdiscipline and control among workers to ensure smooth running of management. Onthe other hand, management would have the willingness to share the responsibilityand accept commitment by workers in executing decisions of management withconsultation of workers. The workers participation is conducted through the mechanismof forums which provide for association of workers representatives. It may be at theshop level, departmental level or at the top level.


OBJECTIVES OF WPMThe objectives of WPM are:

l Pie enlarging NOT pie splitting.l Gain sharing - improving profitability.l Future sharing - improving competitiveness.l Power sharing - placing Stockholders and Stakeholders on an even keel.l Self actualization - availing opportunity to contribute meaningfully.

NEED FOR WPM

KF Walker Model

The concept of WPM crystallizes the concept of Industrial democracy, and indicates anattempt on the part of an employer to build his employees into a team which worktowards the realization of a common objective.The participation of each worker in management affairs should strictly confine to thefield for which he is competent and concerned with. This must have been the reasonworkers participation in management is defined as the involvement of workers only insuch areas of activities of the enterprises where they can make some positive contributionfor the betterment of the enterprise. Such participation should facilitate effective utilizationof available resources and effective execution of long-term expansion plans, includingdiversification. It should facilitate the day-to-day functioning as well as inventions andinnovations.

PlanningOrganisingMotivatingControlling

ManagerialHierarchy

EmployeeDirectors

WorksCouncil

SuggestionsSchemes

Area ofCollectiveBargaining

UnionHierarchy

ParticipativeSupervision

and JobEnlargement

Doing Workers


WPM in management has assumed great importance these days because of the followingadvantages:1. Reduced industrial unrest: Industrial conflict is a struggle between two organized

groups which are motivated by the belief that their respective interests areendangered by the self-interested behaviour of the other. Participation cuts at thisvery root of industrial conflict. It tries to remove or at least minimize the diverseand conflicting interests between the parties, by substituting in their place,cooperation, homogeneity of objects and common interests. Both sides areintegrated and decisions arrived at becomes ours rather than theirs.

2. Reduced misunderstanding: Participation helps dispelling employeesmisunderstanding about the outlook of management in industry.

3. Increased organization balance: If workers are invited to share in organizationalproblems, and to work towards common solutions, a greater degree of organizationalbalance occurs because of decreased misunderstanding of individual and groupconflict. Participation leads to increased understanding throughout the organization.People learn that others have problems beside themselves.

4. Higher productivity: Increased productivity is possible only when there existsfullest co-operation between labour and management. It has been empiricallytested that poor labour management relations do not encourage the workers tocontribute anything more than the minimum desirable to retain their jobs. Thus,participation of workers in management is essential to increase industrial productivity.

5. Increased commitment: An important prerequisite for forging greater commitmentis the individuals involvement and opportunity to express himself. Participationallows individuals to express themselves at the work place rather than beingabsorbed into a complex system of rules, procedures and systems. If an individualknows that he can express his opinion and ideas, a personal sense of gratificationand involvement takes place within him. This, in turn, fortifies his identification withthe organization resulting in greater commitment.

6. Industrial democracy: Participation helps to usher in an era of democracy inindustry. It is based on the principle of recognition of the human factor. It tendsto reduce class conflict between capital and labour. It also serves as a support topolitical democracy.

7. Development of Individuals: Participation enhances individual creativity andresponse to job challenges. Individuals are given an opportunity to direct theirinitiative and creativity towards the objectives of the group. This facilitates individualgrowth.

8. Less resistance to change: When changes are arbitrarily introduced from abovewithout explanation, subordinates tend to feel insecure and take counter measuresaimed at sabotage of innovations. But when they have participated in the decision


making process, they have had an opportunity to be heard. They know what toexpect and why. Their resistance to change is reduced.

LEVELS OF WORKERS PARTICIPATION IN MANAGEMENT Workers participation may exist at all levels of management; however it may vary frommanagement to management. Participation of workers in management is more likely atlower level and less involvement at top level of management. Broadly speaking, thereare following the five levels of participation of workers in management:1. Information participation of workers: It ensures that employees are able to

receive information and express their views pertaining to the matters of generaleconomic importance.

2. Consultative participation of workers: Under this kind of workers participation inmanagement, the participating workers may act as a consultant in the matters ofworkers safety, health and their welfare at workplace. Even so, ultimate decisionlie in the hands of management, only employees views are considered as advice.

3. Associative participation of workers: This kind of workers participation inm

kindler january - december 2012

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