Cinemugam (Kollywood): T.Y.B.COM

OMTEX Chapter 1: MARKETING

1. NATURE OF MARKETING?

Marketing is important to business and non business organization. It is also beneficial to customers and society. Marketing is one of the vital functional areas of a business organization. Marketing is the art and science of getting and growing customers by offering products/services that enhance their satisfaction. Today’s business is customer oriented. One need to build, maintain and enhance long term customer relationship.

Definition: -In 2008 American Marketing association gave a broader definition of marketing as follow:- “Marketing is the activity, set of institution and process for creating, communicating, delivering and exchanging offering value that have value for customers, clients, partners and society at large.”

1. Systematic process: -Marketing is a systematic process of identifying customer need and wants; and satisfying them by designing and distributing the right products. The marketing process involves.

1. Identification of customer’s strength 2. Designing the products. 3. Fixing the right price. 4. Effective promotion of product. 5. Distributing the products at the right place. Etc.

2. Continuous process: -The Marketing process is a continuous in nature. It starts with marketing research and after the sales is over, it continues with customer feedback and after sale services.

3. Ideas, goods and services: -Marketing is undertaken to design and sell gods and services, as well as ideas.

· Marketers design and distribute tangible goods like FMCG products and customer durables.

· Marketers sell services such as that of banks, airlines, hotels, insurance, etc.

· Charles Revson: -of Revlon remarked ‘In a factory, we make cosmetics; in the store we sell hope’.

4. Target Markets: -Marketing is concerned with target markets. One cannot sell everything to everyone. Therefore, one has to be selective in deciding the target market or buyers.

5. Customer Satisfaction: -Nowadays, marketing places focus on customer satisfaction. Customer has a correlation between product performance and customer expectation. Nowadays, marketers must work towards not only customer satisfaction, but they must delight the customers by offering value added services.

6. Competitive Advantages: -Effective marketing helps to face competition in the market. Professional marketers are proactive in decision making. They come up with innovative designs or models, creative promotion schemes etc.

7. Corporate Image: -Effective marketing enables a firm to develop and enhance its corporate image. Due to effective marketing (right product, price..,) the firm achieves higher performance which in turn it able to develop corporate image.

8. Organizational Objectives: -Marketing is undertaken to achieve organizational objectives. Commercial organization cannot survive without achieving marketing objectives. Such as increase in profits, improved brand image, increase in market share, improved corporate image, enhance customer loyalty, etc.

9. Marketing Environment: -Marketing influence by various environmental factors such as customer preferences, competitors, strategies, government policies, and international environment, economic, etc., marketers should actively scan the environment regularly.

10. All Pervasive: -The process of marketing is applicable not only to business organization but also to non-business. For instance, an educational institution needs to offer; the right courses (product), charge the right fees (price). Etc.

11. Societal Interest: -Modern marketing intends to maintain and enhance customers and society welfare. Marketers need to achieve a balance between; profits + customer Satisfaction + Public Interest.

2. IMPORTANCE OF MARKETING?

Meaning: -Marketing is important to business and non business organization. It is also beneficial to customers and society. Marketing is one of the vital functional areas of a business organization. Marketing is the art and science of getting and growing customers by offering products/services that enhance their satisfaction. Today’s business is customer oriented. One need to build, maintain and enhance long term customer relationship.

1. Organizational objectives: -Marketing helps to achieve organizational objectives. Systematic activities such as effective product designs, pricing, promotion and distribution helps a firm to increase its sales and generate profits, brand image, market shares, corporate image etc.

2. Customer satisfaction:- Nowadays. Marketers place focus on customer satisfaction. Customer satisfaction has a connection between product performance and customer expectation.

3. Competitive advantage: -Effective marketing helps to face competition in the market. Professional marketers are proactive in decision-making. They need to come up with; 1. Innovative design or models. 2. Creative promotion schemes. 3. Effective customer relationship techniques, etc.

4. Corporate image: -Effective marketing enables a firm to develop and enhance its corporate image. Due to effective marketing (right product, price, etc.,) the firm achieves higher performance. A good corporate image in the minds of customers, employees, shareholders, suppliers, dealers, etc., helps a firm to expand and grow.

5. Brand Loyalty: - Effective marketing helps to develop brand loyalty. Brand loyalty refers to;

· Repeat purchase by satisfied customers

· Recommendations by existing customers to friends, neighbors’ and others.

· Marketing guru A1 Ries says that customer word of mouth is the best alternative to advertising.

6. Brand Equity: -Marketing activities develop brand equity. Brand equity is the incremental value of brand over and above its physical qualities. Customers are willing to pay premium price for effectively marketed brands.

7. Business Expansion: -Marketing enables a firm to expand its business from local level to national and even at international level. A firm can expand its business with the help of market related activities brands.

8. Brand Image: -Marketing activities improves brand image. Brand image is the perception (awareness) of the brand in the mind of customers. Good brand image gives competitive edge to the firm in the market.

9. Helps to introduce new product: -Reputed firms find it easier to introduce new products in the market, this is because; they enjoy confidence and support of the loyal customers. They also provide unsolicited (unwelcome) feedback.

10. Motivation to employees: -Marketing helps to motivate employees, especially, that of the marketing department. Due to effective marketing, the company may get higher performance in terms of market share, profits, etc. therefore, the employees may be motivated by giving higher incentives, monetary incentives and non-monetary incentives.

11. Higher returns to share holders: -Effective marketing may bring in more returns in terms of profit to the firm; therefore, the shareholders may be rewarded in terms of regular and higher dividend, bonus shares. Etc.

12. Benefits to other stake holders: - Effective marketing may bring in higher returns to the firm. Not only the employees and shareholders are benefited, but also the other stakeholders, like 1. Government may get higher tax revenue, 2. Dealers may get extra incentives. 3. Suppliers may get more orders and payment on time. 4. Society may be benefited to social development activities by profitable firms.

3. SCOPE OF MARKETING?

The scope of marketing is explained from the view point of functional areas of marketing which are as follows:

1. Marketing Research: - It is one of the important areas of marketing. Marketing research is a process which consists of systematic gathering, recording and analyzing data about marketing problems. Marketing Research helps to design effective marketing plans to develop and sell products in the market.

TWO main areas of marketing research are; 1. Consumer Research…2. Dealer Research.

2. Product Design: -Firms need to come up with new products designs or models to cater to the satisfaction of customers, introduction of new products design helps to generate goodwill in the market which in turn expands the business.

3. Advertising: -Now-a-days, advertising is considered to be one of the most effective ways of promoting goods and services. Advertising is the paid form of non-personal promotion of ideas, goods and services by an identified sponsor. The main objectives of advertising are to create awareness of the product.

4. Sales Promotion: -Sales promotion is an important element of promotion mix; sales promotion involves various tools to induce the customers to buy the products. The sales promotion tools include; 1. Buyback offer 2. With stripes or to induce the customers to buy the products. 3. Coupons or cash vouchers. 4. Discounts. 5. Exchange offers. 6. Free samples. Etc.

5. Pricing: -Price refers to the exchange value at which the seller is willing to sell and buyer is willing to buy. Effective pricing is vital to the success of the product in the market. The price should be right and within the lines of the competitors.

6. Physical distribution: -it refers to the place of sale and the channel used for selling. Consumers want products to be available at a convenient place and on time. The marketer can use either direct or indirect channel to reach the products to the buyer.

7. Personal selling: -one of the important areas of marketing involves personal selling. The personal selling staff or the sales force makes a big difference not only in promoting the products but also to generate goodwill of the firm. The sales force needs to be constantly motivated to achieve sales targets.

8. After sale service: - Effective after sale service is a must in case of consumer durables. Consumers value a company by the quality and speed of after sale service. To promote a good name and reputation in the market, the marketer must offer very well after sale service to its customer.

9. Branding: -Branding is a important aspect in today’s competitive business world. The marketer must consider certain essential while selecting a suitable brand name for a particular product. A good brand name aids customers in identifying the branded item. It creates brand loyalty and among other things aids in brand extensions.

10. Test Marketing: -it is a process of introducing a product or service in a very limited market area in order to find out whether or not the consumers would accept with product or service. If test marketing is successful; the product may be launched over a large market area.

11. Customer Relationship Management: - Now-a-days, professional firms place lot of emphasis on CRM. It is concerned with managing detailed information about individual customers and all ‘customer touch points’ (every contact between the customer and the company-right from order placement to after-sale-service), the product of CRM is to enhance customer loyalty.

12. Other Areas: -There are several other areas which need attention of the marketers. The other areas include, product positioning, packaging, public relations, participation in trade fairs and exhibitions, etc.

4. CONCEPTS OF MARKETING?

Meaning: - The concept of marketing has changed over the years, in olden days, marketers adopted the exchange concepts and now a days , professional marketers follow the holistic concept of marketing; the main concepts of marketing are as follows :

1. The exchange concept:

It is the traditional concept of marketing. According to this concept, marketing involves the exchange of a product between the seller and the buyer. This concept assumes;

· Customer will accept products of any design, quality, etc., available in the market.

The main features of marketing concept include;

1. Lack of marketing research to find out customer preferences.

2. No emphasis on research and development

3. Emphasis only on profits

4. No emphasis on after sale service.

It is to be noted that this concept is still practiced by sellers in third world countries and by some small traders. (Both in developed and developing countries), who are merely involved in trading rather than in real marketing.

2. The Production concept:

This concept came into existence after the industrial revolution in England (as a result of large scale production). This concept assumes;

· Customer will prefer those products that are widely available and are of low price.

The main features of production concept include;

1. Firms focus on large scale production to reduce costs

2. Focus on profit objective.

3. Lack of marketing research.

4. Lack of emphasis on research and development to improve quality. Etc.

Under this concept, marketers concentrate on achieving high production efficiency and wide distribution coverage. They treat marketing as an extension of production function, i.e., marketing performs the role of physical distribution of mass production. This concept makes sense in less developed countries, where consumers are more interested in purchasing the product rather than its features.

3. The Societal concept:

The 1980s and 1990s saw the emergence of societal concept of marketing. This concept assumes that a company can prosper, if it strikes a balance between;

· Society’s welfare + Customer Satisfaction + Company’s Profits.

The main features of societal concept include;

1. Emphasis on preservation of environment

2. Focus on research and development to produce ‘green goods’.

3. Emphasis on profits as well as customer satisfaction.

4. Focus on marketing research.

The societal marketing concept calls upon marketers to build social and ethical values into their marketing practices. It stresses the need for a firm to balance three factor while taking decisions; society’s well being + Consumer Satisfaction + Company’s Profits., firms should not just make consumer-satisfying goods but also ‘environmental friendly’ (green goods).

4. The product concept:

This concept came into existence in the early 20^th century. There is a shift from marketing of low cost products to marketing of high quality products. This concept assumes;

· Consumers will prefer those products that offer best quality and performance.

The main features of societal concept include;

1. Firms place emphasis on research and development to improve quality.

2. Focus on profit motive.

3. Lack of emphasis on marketing research.

4. Less concern for customer satisfaction.

Product-oriented companies suffer from the phenomenon of ‘marketing myopia’---the term coined by prof. Theodore Levitt. ‘According to Prof. Levitt, “marketing myopia refers to narrow perception of marketing, where excessive attention is given to the product and ignoring the customer in the process,

5. The Selling concept:

This concept gained importance after the great depression of 1930s. This concept places emphasis on promotional efforts to expand the business. It assumes;

· Consumers will prefer those products which are aggressively promoted with the help of publicity, advertising, salesmanship and sales promotion.

The main features of societal concept include;

1. More emphasis on promotional efforts like advertising and sales promotion.

2. Focus of emphasis on marketing research.

3. Lack of emphasis on marketing research.

4. Less emphasis is placed on customer satisfaction.

This concept is adopted most aggressively with unsought goods, goods that buyers normally do not think of buying such as insurance policies magazine subscriptions, etc. firms use hard-sell techniques such as aggressive advertising and sales promotion to persuade customers.

6. The Marketing concept:

This concept came into existence in the 1950s due to large scale competition especially in advanced countries. This concept is also known as customer oriented concept. The target customer becomes the focus of all marketing decisions. This concept holds the view that.

· The key to organizational success is to identify and satisfy customer requirements more effectively than the competitors.

The marketing concept considers four factors;

1. Target customer

2. Integrated approach

3. Customer satisfaction

4. Emphasis on profits

The marketing decisions start with the identification of target customers and their requirements. The activities of all departments are integrated with each other, keeping marketing function as the pivot (turn). All activities such as R&D, production, finance, HR and marketing are undertaken to generate customer satisfaction. At the same time, equal emphasis is placed on profits.

The marketing concept differs from the selling concept as follows:

· Selling concept focuses on the requirements of the seller; marketing concept focuses on the needs of the customer.

· The purpose of selling is to sell what is made; purpose of marketing is to make what customer needs.

· Selling concept starts with the existing products of the firm; marketing concept starts with the identification of customer requirements.

7. The Relationship Marketing concept:

In the 1990s, a new concept of marketing has emerged called the ‘relationship marketing concept’. In a narrow sense of the firm, relationship marketing refers to building long term customer relationship. In a broader sense, relationship marketing involves creating, maintain and enhancing profitable and long term relationship with all stake holders such as customers, distributors, dealers, employees, financiers, shareholders, suppliers and society.

· This concept hold the view that..

Company will prosper and progress, if it maintains excellent relationship with various stakeholders.

8. The HOLISTIC concept of marketing

Philip Kotler introduced the Holistic Concept of Marketing, which gives competitive advantage to business firms. Nowadays, professional marketers adopt the holistic approach. The holistic marketing concept consists of four elements.

1. Integrated Marketing: all elements of marketing-mix (product, price, promotion and place) are integrated to deliver superior customer value.

2. Relationship Marketing: -efforts are made to build, maintain and enhance long-term relationship with customers, dealers, suppliers and other stakeholders.

3. Internal Marketing: -the task of selecting, training and motivating employees to serve the customers well. Employees within the organizational are treated as internal customers, so that they treat the external customers more effectively.

4. Performance Marketing: -emphasis is placed on profits as well as other concerns or issues such as customer loyalty, customer satisfaction, market share, product quality and other related issues.

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5. MARKET OPPORTUNITY ANALYSIS?

Market opportunity analysis is conducted to evaluate market opportunities. Business firms need to conduct external environment analysis with special emphasis on customer requirements and strategies adopted by the competitors.

Philip Kotler identifies three main sources of market opportunity

1. Product in Short Supply: - a firm may identify a product/service which is in short supply. A firm may grab this opportunity to take advantage of the market demand.

2. Modified Product: -The product may have additional features beneficial to the customers. The company can use certain methods this regard;

· Problem Detection Method, where customers give suggestions for improvement.

· Ideal Method, which enables customers to imagine an ideal version of the product.

· Internal Research and Development to launch modified products.

3. New Product: - A firm may develop and supply a totally new product. Consumption chain method can be used, where customers are asked to state steps in acquiring, using and disposing of a product. Companies undertake market opportunity analysis to determine their attractiveness and the profitability of success by asking certain question such as;

1. Does the company have adequate resources to produce and deliver the product?

2. Will the company be able to satisfy the customers better than the competitors?

3. Will the company be able to convince about product beneficial to the target market?

4. Will the company get adequate return on investment?

5. Will the new product impact the performance of firm’s existing product line?

If the answer to the above questions is positive, the marketer may grab the opportunity, otherwise, the opportunity is allowed to pass by;

Advantages of Market opportunity analysis:

1. It helps to identify customer’s needs and accordingly design and deliver the products to generate customer satisfacti0on.

2. It enables a firm to launch new models or products as per the market needs.

3. It enables a firm to face competition in the market because of customer-oriented marketing mix.

4. It facilitates a firm to achieve its organizational objectives such as increase in market share, profits, corporate image, etc.

6. NATURE OF MARKETING RESEARCH?

Meaning: - Marketing research is a systematic approach to solve marketing problems. The American marketing association defines marketing research “The systematic gathering, recording, and analyzing of data about problems relating to marketing of goods and services.”

The nature of marketing research is briefly stated as follows

1. Systematic process: - Marketing Research is a systematic process to identify and to solve problems. The process of marketing research involves the following steps: 1. Identify the marketing problems. 2. Create the research design. 3. Collection of data through primary and secondary sources. 4. Processing of data. 5. Analysis of data. 6. Implementation of data. 7. Finally, review or follow up of action taken.

2. Scope: -Marketing Research attempts to solve problems in a wide range of areas. The problem relates to various areas of marketing such as:

· Product Research

· Promotion Research

· Pricing Research

· Place Research

3. Continuous in Nature: -Marketing research is continuous in nature. As long as the firm exists, there is a need for marketing research; to overcome certain marketing problems arise during existence of the firm.

4. Applied Research: -Marketing Research is conducted to solve specific problems of commercial importance. Since, marketing research is subject to commercial considerations, it is not a basic or fundamental research but an applied research which is used to solve specific problems.

5. Bridges Company-customer Gab: -Marketing Research bridges the gap between the producers and the consumers. The company comes to know more about its consumers-their likes and dislikes, tastes, preferences and buying patterns.

6. Company Objectives: -Due to marketing research, the company is a position to achieve its objectives. Marketing research enables a firm to solve marketing problems. The resolving of marketing problems enables the company to achieve its objectives in a profitable manner.

7. Marketing mix decisions: -Marketing Research provides necessary information to arrive at appropriate solutions to marketing problems. Effective marketing mix like packaging, pricing, promotion, distribution enables the firm to achieve marketing objectives.

8. Methods of Data collection: -Marketing research data can be conducted with the help of various methods such as;

· Survey/interview method

· Observation Method

· Experimentation method. (R&D, product trials).

9. Suffers from certain limitation: -Although marketing research is beneficial to the company and the customers, yet it suffers from certain limitations, such as; limitation of time, limitation of funds, limitation of data collection and data analysis techniques, problem of bias (partiality) on the part of the respondents and of the interviewers and so on. Etc.

7. NEED AND IMPORTANCE OF MARKETING RESEARCH?

Marketing research facilitates decision-making in a number of marketing areas. The need and importance of marketing research explained as follow:

1. Marketing mix decisions: - Marketing research enables a firm to arrive at sound marketing mix decisions;

v Product Development: -A firm can design the right product depending on the needs and wants of the target customers. Due to marketing research, the company identifies the requirements of the customers and, therefore, it may be in a position to modify the existing products and designs new models/products to meet the customer requirements.

v Pricing Decisions: -Marketing research may facilitate the right pricing of products after analyze the competitors pricing.

v Promotion-mix decisions: - Marketing research may enable a firm to adopt effective promotion-mix (publicity, advertising, sales promotion, etc).

v Place Decisions: -A firm can also undertake appropriate place decisions. With reference to channel selection, compensation to channel intermediaries, etc.

2. Customer Satisfaction: -One of the main objectives of marketing is customer satisfaction. Marketing research facilitates customer satisfaction. Customer satisfaction takes place when product/services performance matches with customer expectations.

3. Competitive Advantage: -Research is conducted to find out the strength of the competitors. An attempt is made to find out why some consumers prefer competitors brands and also the special features that appeal to them. Accordingly, the company may incorporate and improve on such features in its products to gain competitive advantage.

4. Corporate Image: - The Company may be able to maintain and enhance corporate image in the minds of customers, dealers and other stakeholders. For instance;

v Customer research provides feedback on customers’ requirements and expectations. Accordingly, the company may make efforts to satisfy customer requirements.

v Dealer research provides feedback on dealers’ expectations and the incentives provided by the competitors. This information may be used design effective dealers’ incentives, which would motivate the dealers and therefore, the dealers may develop a good image of the firm.

5. Forecasting Sales: -A research can be conducted to judge whether there would be demand for a new product in the market or not. Also, the demand for existing products can be forecasted. Accordingly, sales programmes can be designed.

6. Expansion of markets: -Marketing research facilitates expansion of markets. With the help of marketing research inputs, the company can identify the markets that have good potential. Accordingly, the marketer can enter in new markets.

7. Dealer’s Relationship: -Marketing research enables a firm to maintain good relationship with the dealers. Through dealer’s research, the firm can get feedback from the dealers regarding their expectations. Accordingly, the firm may take appropriate decisions relating to dealer’s compensation and incentives, which will help to maintain good dealer’s relationship.

8. Brand Loyalty: -Marketing research may facilitate brand loyalty. Brand loyalty takes place when existing customers go for repeat purchase and also recommend the brand to others. Due to marketing research, the company not only produces customer-oriented products, but also comes up special schemes for loyal customers.

8. NATURE OF MARKETING INFORMATION SYSTEM?

Meaning: -Marketing information includes all the date, in terms of facts, opinions, views, guidelines and policies, which are necessary to make vital marketing decisions. The data is collected from customers, competitors, company sales force and other staff, government sources, specialized agencies and sources.

Definition: -“A marketing information system consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers.’ Defined by… (Philip Kotler)

1. Systematic process: -MIS is a systematic of collecting and maintain a record of marketing information. The MIS process consists of;

v Gathering of marketing information.

v Sorting classification of data.

v Analyzing of marketing data.

v Transmitting the data to marketing decision makers.

2. Components of MIS: - MIS consists of four components;

v Internal Records: -It provides current data on internal marketing environment such as sales, costs, inventories, cash flow and accounts receivable and payable.

v Marketing Intelligence System: - The marketing intelligence system supplies marketing mangers with everyday information about developments in the external marketing environment.

v Marketing Research: -Besides, internal records and marketing intelligence, marketing managers may often conduct marketing research to solve specific problems.

v Marketing Decision support system (MDSS): -A MDSS is a set of statistical tools and decision models with supporting hardware and software available to marketing managers to assist them in analyzing data and making better marketing decisions.

3. Unified and centralized making: -There are several information components (internal records, marketing research, etc.) in every MIS. Also, there are several activities in each component-collection of data, processing, storing and transmission. The components and the activities must be integrated into a unified system. The unified system managed at a centralized place.

4. Facilitates Decision making: - MIS aids in decision making relating to various elements of marketing mix such as product-designing, pricing, promotion and distribution. By making available timely information, which is relevant and reliable, MIS aids marketing managers to take effective decisions to achieve objectives of the marketing and that of the organization.

5. Cost-effective information: -There is no sense in collecting whatever information that is available in the market. MIS facilitates the collection of only relevant information. Efforts are made to collect not only relevant data but also cost effective.

6. Future oriented: - To manage the business well, marketing managers should be future oriented. Therefore, MIS should be in a position to provide information to solve problems that may crop up in future. More emphasis must be placed on future oriented information rather than past information.

7. Regular Supply of Information: -There is a constant and continuous need to make marketing decisions. This is because if the constant and continuous changes in the business environment. Therefore, to make effective decision. MIS should supply information regularly on a continuous basis.

8. Use of Latest Techniques: -Management should use of latest techniques such as sophisticated (classy) computers, micro-films etc., to collect, store and process meaningful information.

9. IMPORTANCE OF MARKETING INFORMATION SYSTEM?

Marketing information includes all the date, in terms of facts, opinions, views, guidelines and policies, which are necessary to make vital marketing decisions. The data is collected from customers, competitors, company sales force and other staff, government sources, specialized agencies and sources.

MIS provides relevant, reliable and required information in respect of business environment-both internal and external environments. Such information is vital for successful decision making.

The following are the benefits or advantages of MIS;

1. Helps to recognize trends: - MIS helps managers to recognize marketing trends. The changing trends may be in respect of prices, product design, packaging, promotion schemes, etc. managers can take effective decisions in respect of prices, product designs, etc., in response to changing trends in the environment.

2. Facilitates Marketing Planning and Control: -Effective market planning is required in terms of product planning, pricing, promotion and distribution. Such planning will be possible only f the company is possessing adequate and relevant information.

3. Quick supply of information: -A firm has to take quick decision for this purpose; it requires fast flow of information which is facilitated by a properly designed MIS. Due to timely supply of marketing information, the marketing managers can make quick and effective decisions.

4. Quality of decision Making: -in every aspect of marketing, there is need to make constant and correct decisions. A properly designed marketing information system promptly supplies reliable and relevant information. With the help of computers and other data processing equipments, the marketing managers can make the right decisions at the right time.

5. Tapping of business Opportunities: -There are number of business opportunities which have remained untapped for various reasons are due to unavailability of sufficient information. MIS makes it possible to tap business opportunities as it can supply required and reliable data.

6. Provides Marketing Intelligence: -Marketing intelligence refers to information of the events that are happening in the external environment, i.e., changes in customer tastes, expectations, competitors’ strategies, government policies, international environment, etc. with the help of MIS specialists, it is possible to collect marketing intelligence which is vital to make effective marketing decisions.

7. Help managers to Recognize Change: -a business firm may be handling or marketing a wrong line of products. As such the company will not be able to make profits. And if it is does, profits may not be adequate. A firm which is well equipped with MIS will be able to realize the need to change the line of business.

8. Integration of Information: -firms, which are largely decentralized can gather information which is scattered at many centers or departments and integrate it for effective decision making. Such integration is possible if there is a centralized MIS.

OMTEX Chapter 2: CONSUMER BEHAVIOR AND MARKET SEGMENTATION

1. NATURE OF CONSUMER BEHAVIOR?

Meaning: -Peter Drucker, a leading management expert, once stated that the aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available.

Definition: -“Consumer behavior is the action and decisions process or people who purchase goods and services for personal consumption.” Defined by………… (Engel, Blackwell and Mansard)

THE NATURE OF CONSUMER BEHAVIOR IS BRIEFLY STATED AS FOLLOWS:-

1. Process: -Consumer behavior is a systematic process relating to buying decisions of the customers. The buying process consists of the following steps;

1. Need identification to buy the product 2. Information search relating to the product. 3. Listing of alternative brands.

4. Evaluating the alternative (cost-benefit analysis) 5. Purchase decision. 6. Post-purchase evaluation by the marketer.

2. Influenced by various factors: -Consumer behavior is influenced by a number of factors. The factors that influenced consumer are as follow; marketing, personal, psychological, situational, social, cultural etc.

3. Different for different customers: -All consumers do not behave in the same manner. Different consumers behave differently. The difference in consumer behavior is due to individual factors such as nature of the consumer’s life style, culture, etc.

4. Different for different products: -Consumer behavior is different for different products. There are some consumers who may buy more quantity of certain items and very low/no quantity of some other items.

5. Various across regions: -The consumer behavior very across states, regions and countries. For instance, the behavior of urban consumers is different from that of rural consumers. Normally, rural consumers are conservative (traditional) in their buying behavior.

6. Vital for marketers: -Marketers need to have a good knowledge of consumer behavior. They need to study the various factors that influence consumer behavior of their target customers. The knowledge of consumer behavior enables marketers to take appropriate marketing decisions.

7. Reflects Status: -Consumers buying behavior is not only influenced by status of a consumer, but it also reflects it. Those consumers who own luxury cars, watches and other items are considered by others as persons of higher status.

8. Result in spread-effect: -Consumer behavior has a spread effect. The buying behavior of one person may influence the buying behavior of another person. For instance, a customer may always prefer to buy premium brands of clothing, watches and other items etc. this may influence some of his friends, neighbors, colleagues. This is one of the reasons why marketers use celebrities like sharuk khan, sachin to endorse their brands.

9. Improves Standard of Living: -Consumer buying behavior may lead to higher standard of living. The more a person buys the goods and services, the higher is the standard of living.

10. Undergoes a change: - The consumer’s behavior undergoes a change over a period of time depending upon changes in age, education and income level. Etc, for instance,, kids may prefer colorful dresses, but as they grow up as teenagers and young adults, they may prefer trendy clothes.

OMTEX Chapter 6: HUMAN RESOURCE MANAGEMENT

1. NATURE OF HUMAN RESOURCE MANAGEMENT?

Meaning: -HRM is concerned with managing manpower to improve individual, group and organizational effectiveness. HRM consists of various elements such as; human resources planning, recruitment and selection, training, motivation, performance appraisal, career development, promotion and transfer of human resources.

Definition: -“Planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organizational and social objectives are accomplished.”

Defined by………. (Edwin Flippo)

The nature of HRM can be briefly described as follows;

1. Process: -HRM is a process of managing human resources. HRM process is undertaken to achieve organizational objectives. The process of HRM includes;

· Acquiring the services of people (selection)

· Developing the skills of human resources (training)

· Motivating the manpower.

· Ensuring the commitment of manpower towards organizational activities.

2. Multidisciplinary approach: - HRM is dynamic and multidisciplinary approach. HR managers make use of various disciplines to manage the workforce effectively. The various disciplines include; Management Science, Psychology, Sociology, Communication, Economics, Organization Behavior, Philosophy, etc.

3. Universal Applications: - HRM is all pervasive. It is applicable to business and non business organizations. For instance, a non-business organization, such as a college or university has to select, train and motivate human resources to achieve its objectives.

4. Continuous in Nature: - HRM is continuous activity. Organizations need to manage human resources on a continuous basis. Organizations need to adapt to changing environment, i.e., changes in employees expectations, changes in consumer behavior, changes in competitors strategies, etc.

5. Objective Oriented: - HRM places emphasis on the accomplishment of objectives. Te objectives can be broadly listed under to four categories;

· Individual objectives employees such as career development, promotion, etc.

· Group objectives such as team work.

· Organizational objectives such as an increase in market share, profits, etc.

· Social Objectives.

6. Long-term Benefits: - HRM brings long-term benefits to the individuals, organizations and the society as well. Employees gain long-term benefits by the way of better monetary and non-monetary incentives. The organization can gain by the way of higher returns on investment and better corporate image.

7. Development of Team Spirit: HRM aims at developing and maintaining team spirit in every organizational unit, i.e., groups and departments. Such team spirit is required so that the people work effectively together and contribute to the success of the organization.

8. Key Element in Coping with problems: -Economic, technological and social trends have created acute problems for business and industry. As a result, management has focused attention on HRM as key elements in coping with these problems.\

9. Integrated use of subsystems: - HRM involves the integrated use of subsystems such as training and development, career development, organizational development, performance appraisal, potential appraisal, etc.

10. Development of Employee’s Potentialities: - HRM aims at development of employees’ potentialities to the maximum possible extent, so that they gain maximum satisfaction from their job.

2. IMPORTANCE OF HUMAN RESOURCE MANAGEMENT?

Defined by………. (Edwin Flippo)

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

1. Availability of Competent Manpower: - The Primary objectives of HRM are to ensure the availability of competent and dedicated manpower. The success of any organization depends upon quality of its people. The quality of people can be improved through proper placement, training, career development and motivation.

2. Effective use of manpower: - HRM facilitates not only the availability of competent manpower, but it also ensures effective use of manpower. After selecting employees, they are placed at the right place of work. Proper placement helps to make effective use of manpower.

3. Motivation of Manpower: - HRM facilitates motivation of manpower. There is a constant need to motivate manpower by providing rewards and recognition. HR managers make attempt to devise the best possible compensation packages to the employees.

4. Morale of Employees: -Morale is a group phenomenon. In any organization, employees need to work in a group. Therefore, HR managers constantly make efforts to improve employees’ morale by; inviting suggestions from group members, providing group incentives. Etc.

5. Career Development of Employees: - HRM facilitates career development of employees. The HR managers make efforts to create the right environment to develop careers of managers within the organization.

6. Competitive Advantage: - HRM generates competitive advantages to the organizations. Effective HRM policies and practices make the manpower competent and dedicated. The performance of the organization improves due to competent workforce.

7. Working Relationships: - HRM establishes and maintains desirable working relationship among all the members of the organization. Authority and responsibility of each job is clearly defined by HRM managers.

8. Corporate Image: - Effective HRM is required to develop and improve corporate image in the minds of various stakeholders-customers, employees, shareholders and other members of society. The practices adopted by HR managers have a direct impact on the corporate image of the organization.

9. Social Objectives: -Nowadays, business firms fulfill their corporate social responsibility. HRM plays an important role in fulfillment of CSR of the organization. Through effective training and development, employees are motivated to produce quality goods and services and to take appropriate measures towards social development including environmental conservations.

10. National Significance: - HRM is also significant from the nation’s point of view. Dr. W.E Deming once remarked –“abundance of natural resources is not a requirement for prosperity. The wealth of a nations depends on its people.” Therefore effective management of human resources is required to speed up the process of economic development of a nation, which in turn would bring peace and prosperity to the nation.

3. FUNCTIONS /SCOPE OF HRM?

Defined by………. (Edwin Flippo)

The various functions of HRM are as follows:

1. Human Resource Planning: - HRM facilitates human resource planning (HRP). HRP is a process of identifying manpower requirements in terms of quality and quantity, to undertake various activities of the organization. The HRP, the HR manager undertakes;

· Review of organizational goals.

· Forecast of human resource requirements.

· Forecast of human resource supply.

· Comparison of HR requirements and supply.

· Corrective action, if there is shortage or surplus of manpower.

2. Acquisition functions/Selections: -the acquisition functions begin with human resource planning. For acquiring the right type of manpower, the HR manager should undertake necessary arrangements for recruitment and selection of human resources. For instance, systematic procedure needs to be followed to select the right person for the right job.

3. Placement Function: -the HR manager is also responsible for proper placement of employees in the organization. Placement refers to fitting the right person at the right place of work. Proper placement brings job satisfaction to the employees and results in higher efficiency to the organization.

4. Performance Appraisal: - The HR manager may be involved in designing and/or undertaking performance appraisal programmes. Performance appraisal is a systematic description of employees’ job relevant strengths and weakness. Systematic performance feedback to the employees helps to correct their weaknesses through training and motivation.

5. Training and Development: -one of the major activities of HRM is to provide training and development to the employees of the organization. Training and development programs enables the employees to; 1. Acquire additional knowledge. 2. Develop attitude. 3. Improve skills, and 4. Develop social behavior.

6. Career Development: - HRM facilitates career development of the employees in the organization. Career development refers to the continuous effort to match long-term individual need with that of the organsation. Career development can take place through assigning challenging tasks

7. Employees’ Welfare: - HRM is responsible for employees’ welfare. Welfare measures include crèche (nursery school) facilities, holidays with pay, medical insurance, canteen facilities, recreation facilities, rest rooms, transport facilities and so on.

8. Compensation Function: - Employees must be rewarded and recognized for their performance. HRM is responsible to design proper compensation package to the employees. Appropriate rewards motivate employees to perform effectively.

9. Labour Relations: - HRM is also concerned with the industrial relations. It includes union-management relations, joint consultations, negotiating, collective bargaining, grievance handling, disciplinary actions, settlements of industrial disputes, etc.

10. Employees’ Health and Safety: -HRM is concerned with the maintenance function. It involves protecting and promoting health and safety of the employees. For this purpose, the organization may adopt health and safety measures and provide other fringe be such as medical aid. Etc.

4. ROLE OF HR MANAGERS IN CHANGING ENVIRONMENT?

Meaning: -Business environment has undergone changes in the post reform period (since 1991). The process of LPG-liberalization, Privatization and globalization of Indian economy has made the role of HR more challenging than ever before. The challenging role of HR managers in the changing environment is stated as follow: -

1. Aligning HRM with Corporate Strategy: - HR managers need to align (bring into line) the HR function with the corporate strategy. HR managers can contribute to the development of corporate policy by indicating how corporate strategy can be implemented with the effective use of human resources. if the corporate strategy cannot be implemented by the current level of human resources, the HR manager needs to train and develop human resources to acquire additional competencies.

2. Bargaining for higher allocation of funds: - Nowadays, HR departments needs lot of funds for implementing its programmes such as training and development. Therefore, HR manager needs to have good negotiating skills to bargain for more funds with the top management.

3. Counseling and Stress Management: - The HR managers may play an important role in counseling and stress management. The HR managers may provide counseling to the employees. Counseling is a discussion with an employee of a problem that usually has an emotional content, in order to help the employee to cope (handle) with it better.

4. Developing Integrated HR System: - In HR system, there are several variables. The variables include programmes and policies. The policies are in respect of recruitment and selection, induction, training and development, transfer and promotion, career development and compensation.

5. Human Resource Research: - Nowadays, Professional organizations undertake research on various management issues including HRM. The purpose is to solve problems facing the organizations.

6. Management of Workforce Diversity: - Nowadays, the workforce in large organizations is richly diverse. The workforce comes from different educational and cultural backgrounds, different age groups and even from different regions or countries. HR manager must consider that diversify of workforce is an asset. Therefore, managing diverse workforce is a challenge before managers. HR managers need to design effective programmes to get the best out of diverse workforce.

7. Training and Development: - Organizations are facing growing challenges due to changes in the environment, such as changes customer expectations, changes in competitor’s strategies, and changes in employee expectations and so on. Therefore, HR managers play an important role in training and development of manpower.

8. Potential Appraisal: - Nowadays, there is a need to undertake potential appraisal and development of employees. It is not enough to conduct only performance appraisal, but it is equally important to conduct potential appraisal. Talented employees would appreciate HR manager’s efforts to undertake potential appraisal, which would give them an opportunity to achieve their career development goals.

9. Proactive Actions: - In the today’s challenging environment, HR managers need to take proactive actions rather than reactive actions. Proactive actions help to handle activities or issues effectively before any issue becomes a problem for the organization.

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5. IMPORTANCE HUMAN RESOURCE PLANNING?

Meaning: -HRP is a process of identifying manpower requirements in terms of quality and quantity to undertake organizational activities. There is a growing importance of HRP, due to the following reasons:

1. Personnel Requirements: - HRP helps to identify human resource required to undertake organizational activities. HR managers review the organizational activities and then forecasts human resource requirements. The HR managers also forecasts HR supply. Comparison is done between HR requirements and HR supply.

2. Recruitment and Selection: -Systematic forecasting of HR requirements enables the organization to determine proper sources of recruitment. The organization can also adopt systematic selection procedure. Proper tests and interview can be designed to select the right person for the right job.

3. Placement of Personnel: - HRP facilitates proper placement of the employees in the organization. Placement refers to fitting the right person at the right place of work. Proper placement brings job satisfaction to the employees and enhances efficiency. Job satisfaction generates greater commitment of the employees.

4. Performance Feedback: -HRP ensures timely performance feedback to the employees. The employees come to know of their strengths and weaknesses. The weakness can be corrected through training, motivation and so on. Timely performance feedback also helps to consolidate the strengths

5. Promotions: - HRP ensures right promotion of the employees in the organization. It refers to upward movement of employee in the organization’s hierarchy (pecking order). Promotion involves; higher position, higher powers and higher pay.

6. Training: -HRP ensures training of the employees in the organization. Training helps to improve knowledge, attitude, skills and social behavior of the employees. HRP identifies the training needs of the personnel.

7. Transfers: - HRP facilitates proper transfer of the employees in the organization. Transfer refers to horizontal movement of the employees in respect of job position. Transfers must be undertaken in the interest of the organization and not to harass (worry) the employees.

8. Career Development: -HRP facilitates career development of the employees in the organization. Career development helps to match the goals of the employees with that of the organization. Career development can take place through counseling, training, etc.

9. Organizational Development: - HRP assists in organizational development. Organizational development takes place when there are better results in the form of higher productivity. The organizations with qualified and competent personnel can easily solve the problems of low productivity, absenteeism, inter-departmental conflicts, resistance to change, etc.

10. Motivation of Personnel: - HRP ensures motivation of the employees. Professional organizations make every possible effort to have dedicated and committed personnel at all levels. Therefore, there is a need to motivate employees by providing monetary and non-monetary incentives.

6. WHAT ARE THE STEPS IN THE HRP PROCESS?

The following are the steps in the HRP process:

HUMAN RESOURCE PLANNING

HR Requirement Forecast make comparison HR Supply Forecast

No Differences Requirement= supply

DIFFERENCES

HR Surplus Take Action HR Shortage

1. Review of organizational objectives: -The first step in HRP is to review the objectives of the organization. Proper review of the objectives enables the organization to list various activities that are required to achieve the objectives. To undertake the activities, HR managers determines the required workforce in terms of quantity and quality. A proper job analysis needs to be conducted at this stage.

2. HR Requirements Forecast: -The HRD manager forecasts human resource requirements to undertake the various activities. The human requirements forecast must be both in terms of quantity (number of employees)and quality (knowledge, attitude and skills)

3. HR Supply Forecast: -The HRD manager forecasts the availability of manpower. The required manpower may be available within the company, or the required manpower may be available within the company, or they may be required to be hired from the labour market.

4. Comparison: -The HRD manager makes a comparison between HR requirement and HR supply, to find out whether the required personnel is available or not.

5. No Difference: -The comparison between HR requirements and HR supply may indicate differences between HR requirements and HR supply. If human resource requirements are equal to human resource supply, then there are no differences. Therefore, there is no need to take any action.

6. Differences: -The comparison may reveal differences between the human resource requirements and human resource supply. There may be HR surplus, or shortage. Action needs to be taken to deal with the problem of HR shortage or surplus. For instance, if there is shortage, management may hire, provide overtime, etc. if there is surplus, management may terminate, lay off (arrange) etc.

7. Motivating the Manpower: -An important aspect of human resource planning is to motivate the personnel by providing monetary and non-monetary incentives.

8. Monitoring HR Requirements: -The organization needs to monitor the requirement of HR on periodic basis. If required, necessary action is taken.

7. WHAT IS MEANT BY JOB ANALYSIS? CONCEPT AND USES OF JOB ANALYSIS?

Meaning: -A job may be defined as a sum total of tasks, duties and responsibilities which is assigned to individual employees. After definition of job, HR manager needs to undertake job analysis. Job analysis is the starting point of recruitment and selection. It is a systematic process of collecting and studying information about the various jobs in the organization.

Definition: -“Job analysis is the process of studying and collecting information relating to the operations and responsibilities of a specific job.” Defined by ………………… (Edwin Flippo)

Job analysis consists of two areas:-

(a) Job Description (b) Job Specification

· Job Description gives details of the job in respect of duties, responsibilities and other aspects. It is an overall written summary of task requirements.

· Job Specification gives details relating to the candidate who is supposed to do the job, such as qualifications, skills, experiences, etc. it is an overall written summary of employee requirements.

USES OF JOB ANALYSIS

Job analysis is the foundation of many human resource management programs. Job analysis is important due to the following:

1. Organizational structure and design: -By clarifying requirements and the interrelationship among jobs, responsibilities at all levels can be specified. This helps to promote organizational efficiency and effectiveness. It also minimizes overlapping (go beyond) or duplication of work.

2. Human Resource Planning: -Job analysis is the foundation for forecasting human resource requirements. It also helps to plan for activities such as training, transfer, or promotion. HR requirements’ forecast is done in terms of quality and quantity. Job analysis provides information on quality of manpower in terms of qualities, qualifications, experience, etc.

3. Recruitment and Selection: - Job Analysis is the starting point of recruitment and selection. Properly analyzed jobs can be advertised effectively. Only the suitable candidates apply for the job. This facilitates proper selection.

4. Placement: - Job Analysis facilitates proper placement. The selected candidates can be placed at the right job depending upon their qualities, qualifications and experience.

5. Performance appraisal: -The Performance of the employees can be compared to the duties and responsibilities as stated in the job description. Accordingly, the company can find out the strengths and weaknesses of its employees.

6. Training: - Job Analysis is useful for providing effective training. Those employees whose performance is weak can be identified and accordingly training can be provided to correct their weaknesses.

7. Job Evaluation: -Job Analysis acts as a base for job evolution. The relative worth of each job can be found out by comparing the details provided by job description and job specification. Thus the company can fix proper salary and wage structure for different jobs.

8. Promotion and Transfers: -Job Analysis facilitates promotion and transfer of employees. The performance of employee is compared against the job duties and responsibilities. The employees may be transferred from one department to another depending upon their performance, abilities and skills.

9. Career path Planning: -Job Analysis help in thorough understanding of the requirements of available jobs and how at succeeding

10. Health and Safety: -Job analysis helps to discover unhealthy and hazardous environments and operational conditions in various jobs. Heat, noise, dust etc. are examples of such conditions.

11. Job Design: -With the help of job analysis information, improvements can be made in work design and work method to improve productivity and job satisfaction. This takes two forms:

· Human Engineering: -it is concerned with redesigning of jobs to match the physical and psychological capabilities of employees.

· Industrial Engineering: - it is concerned with measurement, simplification and improvement of work so as to improve efficiency and reduce costs.

12. Acceptance of Job Offer: - Job analysis is useful to the candidate for the acceptance of the job offer. The candidate can get clear and correct information about the duties, salary, working conditions, promotion opportunities, etc. this facilitates the candidate’s decision to accept or reject the job offer.

8. WHAT IS RECRUITMENT? DISCUSS THE STEPS//PROCEDURE IN THE PROCESS OF SELECTION?

Selection is a process of choosing right person for the right job. The selection process consists of a series of steps as follows:

1. Job Analysis: - The first steps in selection process are analyzing the job. Jon analysis consists of two parts; -

(a) Job Description

(b) Job Specification.

Proper job analysis helps to advertise the job properly. Accordingly, the right candidates may apply for the job, thus saving time and effort of the selectors.

2. Advertising the Job: - The next step is to advertise the job. The job can be advertised through various media such as newspapers, internet, etc. the right details about the job and the candidate requirements must be given in the advertisement.

3. Initial Screening: - The initial screening can be done of the applications and of the applicant. Usually, a junior executive does the screening work. The executive may check on the general personality, age, qualifications, family background of the candidate. The candidate may be informed of salary, working conditions, etc.

4. Application Blank: -It is a standard format to obtain information about every candidate in respect of biographic, academic, references, work experience, etc, the application blank helps to-

· Provide inputs for the interview

· Provide the basis to reject candidates if they do not meet eligibility criteria.

5. Tests: -Various tests are conducted to judge the ability and efficiency of the candidates. The type of tests depends upon the nature of job. An important advantage of tests large group of candidates can be tested at a time. The various tests are;

· Personality test

· Performance Test

· Intelligence test

· Stress test etc.

6. Interview: -Is is face to face exchange of views, ideas and opinions between the candidates and interviewer(s). there are various types of interviews such as;

· Panel (board) Interview

· Individual Interview

· Group Interview

· Exit Interview, etc.

7. Reference Check: -Candidates may be asked to provide references to confirm about the applicant’s past life, character and experience. Reference check helps to;

· Know the character and other details of the candidates.

· Cross check false information supplied by candidates, if any.

8. Medical Check: -Medical Check of the candidates is undertaken to;

· Physical fitness to undertake the job responsibilities.

· Ensure the health and safety of other employees.

9. Final Interview: -Before making a job offer, the candidates may be subjected to one more oral interview to find out their interest in the job and their expectations. At this stage, salary and other perks may be negotiated.(talk)

10. Job Offer: - This is the most crucial and final step in selection process. A wrong selection of a candidate may make the company to suffer for a good number of years. Company should make a very important decision to offer right job to the right person.

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9. WHAT ARE THE TYPES OF EMPLOYMENT TEST? Pg no 170

Meaning: -Use of Employment tests is fairly widespread in manpower selection. Employment tests provide a systematic basis for selection. The various tests are:

1. Performance Test: -This test tries to measure the performance of candidates in respect of a certain job. It is specially designed to measure specific skills and knowledge required for a job. For example, an accountant may be asked to prepare balance sheet from the details.

2. Personality Test: -It is conducted to judge the personality of the candidate. Personality is the sum total of physical, mental and social qualities. This test is very much essential in case of selection of sales force, public relations staff, etc., where personality plays an important role.

3. Aptitude Test: -It helps to judge specific talent or skill to handle a particular type of job. For instance, some persons may have good aptitude for selling, other for accounting and so on. This type of test helps the company to select the right candidate who is best suited for the job.

4. Interest Test: - This test is conducted to find out likes and dislikes of candidates towards occupations, hobbies, etc. it indicates the occupation which is more in line with a person’s interest.

5. Projective Test: -This test requires interpretation of problems or situations. For example, a photograph or a picture can be shown to the candidates and they are asked to give their views and opinions about the picture.

6. Intelligence Test: - These tests help to evaluate taints of intelligence. Mental ability, presence of mind (alertness), numerical ability, memory and such other aspects can be measured; such tests are used for admission to MBA courses, recruitment for executive positions in banks and other organizations.

7. General Knowledge Test: - Now-a-days, G.K. Tests are very common to find general awareness of the candidates in the field of sports, politics, world affairs, current affairs, etc. it is assumed that candidates who are good in G.K. do keep in touch with latest developments.

8. Perception Test: - At times, perception test can be conducted to find out beliefs, attitudes, etc., of the candidates towards certain objects, issues, situations, etc.

10. ROLE OF EMPLOYMENT TEST? Pg no 171

1. Selection: - Employment tests help to select the right candidate for the right job. For example, performance test enables to select the right candidate depending on their performance.

2. Training: - Employment tests facilitate training to the selected candidates. For instance, employment tests may indicate certain weaknesses of selected candidates. Training can be provided to overcome such weaknesses.

3. Placement: - Employment tests facilitate proper placement of selected candidates. For example, aptitude test enables to place the right candidate depending on the candidate’s talents or skills. For instance, a person good at finance may be placed in the finance department.

4. Promotion; - Employment tests are conducted not only for selection but also for promotion of existing employees at higher levels. For example, banks conduct tests to promote clerks at office level.

5. Time saving: - Employment tests require less time as compared to interview. Large number of candidates appears for employment tests at the same time. However, interviews are normally conducted on individual basis.

6. Reduces work of interviewers: -Employment tests reduce the workload of interviewers. For instance, the performance of some candidates may be very good at tests and therefore, few questions may be asked to such candidates during the interview.

7. Uniformity: - Employment tests provide information of candidates regarding knowledge, attitudes, skills and experience on uniform basis. All candidates appearing at the tests have to provide answers to the same questions. But in interviews different questions are asked to different candidates and therefore, there may be no uniformity at interviews.

8. Economical: - Employment tests are more economical as compared to interviews. Large number of candidates can be tested at a time and at one place.

11. DEFINE an INTERVIEW? ALSO EXPLAIN ITS ROLE/ADVANTAGES OF INTERVIEW?

Meaning: -Interview is a face to face communication between the candidates and the interviewers. It is two-way communications where the interviewers can obtain required information from the candidate and the candidate can ask for information about the company and the job.

ROLE AND ADVANTAGES OF INTERVIEWS: -

Interview is beneficial not only to the company but also to the candidates, the role is explained as follows:

1. Selection Decision: - Based on the information of the candidates and the performance of the candidates at the interview, the company can make selection decision. The selection decision is made on the basis of qualities, qualification, skills and experience of the candidate.

2. Training: - Interview facilitates training to the selected candidates. For instance, interview may indicate certain weaknesses of selected candidates. Therefore, training can be provided to overcome such weaknesses.

3. Placement: - Interview facilitates proper placement of candidates at the right place of work. Depending on the knowledge, aptitude and skills, the selected candidates can be placed at the right place. Proper placement generates job satisfaction, which in turn improves efficiency.

4. Promotion: - Interview are conducted not only for selection but also for promotion of existing employees at higher levels. For example, panel interview may be conducted to promote a professor to the post of the principal in a college.

5. Cross-checks Application Blank: - Interview helps to cross check the information supplied on the application blank. If the information provided by the candidate on the application blank. If the information supplied on the application blank is faulty, the candidate is rejected.

6. Retention (preservation) of competent Employees: - Interview helps to retain competent employees. For example, the exit interview may indicate shortcoming in respect of the company’s policies and practices. The organization may make changes in the policies and practices to retain competent employees.

7. Acceptance of Job Offer: - Candidates can decide about the job offer. During the interview, the candidate can get information about the company and the job in respect of;

· Working conditions

· Salary and other incentives

· Job Security

· Promotion, transfer, etc.

Based on the above information, the candidates can make a decision whether or not to accept the job offered to him.

8. New Insights: - The interviewers can gain new insights in certain areas of business. Due to discussion with the experienced candidates, the interviewers can come to know about certain techniques which they were not familiar with. Such techniques may be introduced in the company as well to gain competitive advantage.

OMTEX Chapter 7: HUMAN RESOURCE DEVELOPMENT

Meaning: - Development of human resources is needed by any organization to succeed in the fast-changing business environment. Organization can progress only through the competencies of their human resources.

Definition: -American society for Training and Development (ASTD), defines “HRD is the integrated use of-

(a) Training and Development,

(b) Organizational development, and

(c) Career development, - to improve individual, group and organizational effectiveness.”

NATURE OF HRD

1. Process: - HRD is a process of development of human resources in the organization. The processes consists of:

§ Training and development

§ Career development

§ Organizational development

5. Objective Oriented: - HRM places emphasis on the accomplishment of objectives. Te objectives can be broadly listed under to four categories;

· Individual objectives employees such as career development, promotion, etc.

· Group objectives such as team work.

· Organizational objectives such as an increase in market share, profits, etc.

· Social Objectives.

2. SCOPE OF HUMAN RESOURCE DEVELOPMENT?

Meaning: -HRD is broader than human resource management; it consists of several sub-systems such as training and development, employee appraisal, counseling, rewards and welfare, quality of work life, etc. these are the areas within its scope. The following topics are included within the scope of HRD.

1. Training: - Training is an essential element of HRD. This develops skills and capacity to work at higher levels and positions. Training is possible by different methods. It is useful for self-development and career development.

2. Performance appraisal: - Performance appraisal is an important area of HRD. The purpose of performance appraisal is to study critically the performance of an employee and to guide him to improve his performance. This technique is useful for building a team of capable employees and is also used for their self-development.

3. Potential appraisal: - It relates to the study of capabilities of employees. It is useful for proper placement and career development of employees. Potential appraisal of employees is useful for developing their special qualities, which can be used fruitfully along with the expansion and diversification of activities of the company.

4. Career planning and development: - Under HRD employees should be given guidance for their self-development and career development. The opportunities likely to develop in the organization should be brought to their notice. They should be motivated for self-development, which is useful to the organization in the long run.

5. Employees’ welfare: - Employees welfare is within the scope of HRD. Welfare facilities are useful for creating efficient and satisfied labour force. Such facilities raise the morale of employees. Employee welfare include the provision of medical and recreation facilities, subsidized canteen, free raining and other measures introduced for HRD.

6. Rewards and incentives: - HRD includes provision of rewards and incentives to employees to encourage them to learn, to grow and to develop new qualities, skills and experiences which will be useful in the near future. Reward is an appreciation of good work. It may be in the form of promotion, higher pay etc.

7. Organizational development: - HRD aims at providing conflict-free operations throughout the organization. It also keeps plans ready to deal with problems like absenteeism, turnover, low productivity or industrial disputes.

8. Quality of work life: - Quality of work life depends on sound relations between employer (owner) and employees. A forward looking policy on employee benefits like job security, attractive pay, participative management and monetary and non-monetary rewards will go a long way in improving the quality of work life.

9. Human resource information system: - Such system acts as information bank and facilitates human resource planning and development in a proper manner. It facilitates quick decision-making in regard to HRD. Every organization has to introduce such system for ready reference to HRD matters.

3. IMPORTANCE OF TRAINING AND DEVELOPMENT?

Meaning: -Training is viewed as a short term learning process by which employees acquire the technical knowledge and skills necessary to perform effectively their tasks and responsibilities. Whereas, Development is viewed as a long term learning process by which managerial personnel acquire conceptual and theoretical knowledge and skills for enhancing general administrative abilities.

Definition: - “Training consists of planned programs undertaken to improve employee knowledge, skills, attitudes and social behavior so that the performance of the organization improves considerably.” Defined by……….. (Wayne Cascio)

IMPORTANCE OF TRAINING AND DEVELOMENT

Training serves various purposes. Training is important to the employees as well as to the organization.

1. Innovation: - Training facilitates innovation in the organization. Due to training, the employees come up with innovative ideas in respect of; New Plans, New Products, New Schemes, etc. innovation gives competitive advantage in the market.

2. Corporate Image: - Training enhances corporate image of the organization. Due to training, the performance of the organization improves greatly. Therefore, the image of the firm improves in the minds of various stakeholders; customers, employees, shareholders, dealers, etc.

3. Efficiency: - Training enables the organization to improve efficiency of its employees. Efficiency is the ratio of return to costs. Due to training, the company gets higher returns at lower costs. The returns are in the form of higher sales, higher profits, higher market share, etc.

4. Team Work: - Training facilitates team work in the organization. Team work brings success to the organization. Due to training, the management and the employees work as a synergetic team.

5. Optimum use of resources: - Training ensures optimum use of resources such as; Physical Resources, Capital Resources and Manpower. Optimum use of resources generates higher efficiency in the organization.

6. Motivation: - Training facilitates motivation of the employees in the organization. Due to training, there is higher performance in terms of sales and profits. Therefore, employees are motivated by giving incentives; monetary incentives (salary, bonus, incentives) and non monetary incentives (working condition, welfare facilities).

7. Competitive Advantage: - Training generates competitive advantage to the organization. Due to training there can be; improvement in quality and reduction in Costs. Therefore, the organization can gain competitive advantage in the market.

8. Customer Satisfaction: - Training may results in customer satisfaction. Customer satisfaction takes place when the product performance matches with customer expectation. Due to training, the overall performance of the employees improves in terms of product quality, delivery of product, service performance, etc.

9. Absenteeism Reduction: - Training helps to reduce absenteeism. It takes place when employees remain absent without prior permission. Absenteeism creates problems to organization as well as the co-workers. Training helps to develop positive attitude in workers and therefore, the absenteeism may get reduced.

10. Employee Turnover Reduction: - Training facilitates reduction in employee turnover. Employee turnover takes place when employees leave the organization. Due to training, employees become loyal t the organization, which in turn may reduce employee turnover.

11. Benefits to employees: - Apart from benefits to the organization, the training and development programmes benefit the employees in several ways:

ü Training helps to upgrade knowledge and skills

ü Training develops positive attitude.

ü Training may result in higher rewards.

ü Training may provide an opportunity for promotion.

ü The refresher training programmes refreshed the employee.

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4. METHODS OF TRAINING AND DEVELOPMENT?

Meaning: - Every organization has to introduce systematic training and management development programmes for all its employees on regular basis. This is because trained personnel are extremely important and useful to every organization. They are responsible for the stability and progress of an organization. There are two methods of management development:

On the job methods off the job methods

On the job methods	off the job methods
1. Coaching and Counseling	1. Universities and Colleges
2. Understudy (substitute) assignment	2. Assessment Centers
3. Planned Progression	3. Business games
4. Job Rotation	4. Classroom Method
5. Membership of committees	5. Conferences
6. Project assignment	6. Seminars

A. Internal Training Methods/on the job methods:

1. Coaching and Counseling:-

· Coaching: -On the job coaching is a method by which a superior teaches job knowledge and skills to a subordinate manager. He briefs the trainee executive about what is expected of him and how it can be done. The superior also checks the performance of his subordinates and guides him to improve his shortfalls and deficiencies.

· Counseling: - Here, the subordinate wanting advice approaches his superior. Counseling is provided in matters relating to the job. However, on request from the subordinates, counseling may also be offered on matters not directly related to the job. Counseling provides emotional stability to trainee subordinate.

2. Understudy (substitute) assignment: - An understudy is a trainee manager who is to assume the full duties and responsibilities of the position currently held by his superior, when the later leaves his post due to retirement, transfer or promotion. Here, a departmental manager (head) selects one of his suitable subordinates to become his understudy.

3. Planned Progression: - It is similar to job rotation, except that every movement from one job to another involves higher pay, position and duties. In job rotation, every movement involves more or less same pay and position. Planned progression is more likely to occur at higher managerial levels, whereas, job rotation occurs mainly at lower level positions.

4. Job Rotation: - Employees are transferred from one job to another. For example; a casher in a bank may be transferred to the account departments. In job rotation, every movement involves more or less same pay and position. Planned progression is more likely to occur at higher managerial levels, whereas, job rotation occurs mainly at lower level positions.

5. Membership of committees: - Inter-departmental committees are normally created for bringing coordination in the activities of different departments. Mangers from different departments are taken on such committees. Junior managers are also given membership of such committees so as to give them a broader exposure to the viewpoints of other departmental heads.

6. Project assignment: - In the project assignment method, a trainee manager is given a project that is closely related to the work of his department. The project relates to specific problem faced by the department. Here, the executive has to study the project on his own and make recommendations for the consideration of the departmental head. Such assignment provides valuable experience to the trainee and develops problem-solving attitude.

B. External Training Methods/off the job methods:

1. Universities and Colleges: - The universities and colleges now, provide facilities of management education. Mumbai University has its Bajaj Institute of management for various management development courses. Colleges affiliated with Mumbai Universities also conduct DMB, MBA and other management development programmes.

2. Assessment Centers: - Executives can be trained in assessment centers. The trainees are given a problem or situation to make decisions. For instance, the executives may be asked to make decision relating to launching of a new product in the market. The decisions to be made are in respect of product design, pricing, promotion, distribution, etc. if poor decisions are made, training is given to improve the decision-making abilities of the executives.

3. Business games: - Executives can be trained with the help of business games. Participants can learn by analyzing problems and by making trial-and-error decisions. Business games help to develop;

· Communication skills,

· Problem Solving Skills,

· Decision Making Skills.

4. Classroom Method: - Classroom methods for training managerial personnel include lectures, discussion, role playing and case study.

Advantages: -

· Training can be given to a large group at a time, especially in the case of lecture method.

· Theoretical concepts can be made clearer.

· Interaction can take place among executives belonging to various departments and ranks.

5. Conferences: -It is a large gathering representing various sections or divisions of the organization. At time, the participants may be from different organizations. Experts may present their views on certain topics or latest developments. For instance, a conference can be called to discuss latest implications of new foreign trade policy. Participants can gain insight based on the expert views.

6. Seminars: - Management employees can be trained with the help of seminars and workshops. In seminars, trainees present their papers on work related developments. The paper presentations are reviewed by experts. The experts may give their insights on the topic presented by the trainee.

Meaning

Disinvestment, sometimes referred to as divestment, refers to the use of a concerted economic boycott, with specific emphasis on liquidating stock, to pressure a government, industry, or company towards a change in policy, or in the case of governments, even regime change. The term was first used in the 1980s, most commonly in the United States, to refer to the use of a concerted economic boycott designed to pressure the government of South Africa into abolishing its policy of apartheid. The term has also been applied to actions targeting Iran, Sudan, Northern Ireland, Myanmar, and Israel

Method of divestment

Some firms are using technology to facilitate the process of divesting some divisions. They post the information about any division that they wish to sell on their website so that it is available to any firm that may be interested in buying the division. For example, Alcoa has established an online showroom of the divisions that are for sale. By communicating the information online, Alcoa has reduced its hotel, travel, and meeting expenses.

Criticism

Some hold that divestment campaigns are based on a fundamental misunderstanding of how equity markets work. John Silber, former president of Boston University, observed that while boycotting a company's products would actually affect their business, "once a stock issue has been made, the corporation doesn't care whether you sell it, burn it, or anything else, because they've already got all the money they're ever going to get from that stock. So they don't care." ^[2]

Regarding the more specific case of South Africa, John Silber recalled:

...when the students were protesting the South African situation, I met with them, and they said BU must divest in General Motors and IBM. And I said, "Why should we do that? Is it immoral to own that stock?" Absolutely immoral to own it. And I said, "So then, we're supposed to sell it to somebody? We can't divest unless we sell it to somebody. And if we burn the stock, that just helps General Motors, because it reduces the amount of stock outstanding, so that can't be right. If we sell it to somebody, we have just gotten rid of our guilt in order to impose guilt on somebody else." ^[2]

The common perception about the effectiveness of divestment lies in the belief that institutional selling of a certain stock lowers its market value. Therefore, the company's net worth becomes devalued and the owners of the company may lose substantial paper assets. In addition, institutional divestment may encourage other investors to sell their stocks for fear of lower prices, which in turn lowers prices even further. Finally, lower stock prices limits a corporation's ability to sell a portion of their stocks in order to raise funds to expand the business.

Strategies of Disinvestment

The basic idea behind disinvestment is to sell the shares of the government in the public sector enterprises to external players. As mentioned earlier, the earliest shares were sold to financial institutions coming under the government itself. An interesting example is that of the Bonagigaon, Kochi and Madras refineries, wherein the shares were sold to another Central Public Sector Unit, the Indian Oil Corporation. The most common method adopted is, however, strategic sale. A strategic partner is identified by the government under this strategy and management control is transferred to this partner along with a bundle of shares. A bundle of shares will contain shares of both performing as well as non-performing enterprises; the idea was adopted waking up to the situation where no private player came up to buy the shares of sick enterprises.

A typical tactic adopted towards privatization is the incremental method where shares are sold in steps. On the other hand token privatization is adopted in circumstances of acute budget deficit wherein a lump of shares is sold off.
Following the path of the Central Government, the state government have also set up their own disinvestment commissions and identified public sector units for disinvestment or complete closure.

Rationale behind Disinvestment

The Government’s current revenue expenditure (wages and salaries of government employee and various other expenses) is so high that the government is left with hardly any surplus for capital expenditure on social and physical infrastructure. Hotels, trading companies, consultancy companies, textile companies, chemical and pharmaceuticals companies, consumer goods companies etc took up chunk of expenditures. Modern Foods India Limited (MFIL), Corporation of India Ltd (CONCOR), VSNL (Videsh Sanchar Nigam Limited) and MNTL (Mahanagar Telephones Nigam Limited),, Container ,Indian Drugs and Pharmaceuticals Limited, Hindustan Antibiotics Limited, Gas Authority of India Limited were also making huge financial losses.

The Government wanted to increase the efficiency of utilization of the resources employed by the PSUs. .For this the best option possible was to have profit motive, which can be done through privatization and disinvestment.
If the Government frees itself of the managerial, operational and financial burdens on this account, it will be able to do greater justice to its legitimate domain: Poverty elimination, social and physical infrastructural development, reaching basic amenities and services to people, and looking after security and law and order. One of the other main objectives was to cover the fiscal deficit of the Central Government. For this purpose even healthy and highly profitable PSUs were offered for disinvestment.

Drawbacks of Disinvestment

The Government has been undertaking disinvestment of enterprises which have been earning profits- mostly they are those which belong to the category of Nirvanas or Mini Navratnas. The Government in the initial stages followed the scheme of bundling of shares-each bundle combining equity from poor and good performers. This scheme of bundling fetched very low price for the sale of Government equity. For instance the average price the Government offered more than 87 crore shares in 1991-92 at Rs34.83 crores was deemed to be extremely low because a price of Rs109.61 was realized later. This scheme therefore was sharply criticised .Even the CAG castigated the Government for this. The Government after this disastrous experience of the scheme of bundling shares abandoned it and soon started talking in terms of privatization of PSU’s as opposed to disinvestment though in a sense the Government has been offloading its profit making enterprises in favour of the private sector. This has been widely criticized as privatisation of the profits of the profit making enterprises and the nationalization of losses of the loss making enterprises. The Government approach has been illogical.

The Government has devised its scheme of “Strategic Investor” who will be permitted to exercise majority control even when the concerned investor does not hold a majority of shares. The Government rejected the offer of IOC to buy the shares of IPCL, and ended up choosing between DOW Chemicals, Mitsubishi and Reliance as partner. There is no need for privatisation of the Nirvanas which is a pioneer in a frontier technology industry. Initially, this company was to be handed over to the strategic partner for merely purchasing 25% of holdings. Since all three companies are competitors of IPCL would they promote or demote IPCL interests? .IOC’s interest lies in IPCL’s expansion so that its own Naphtha market expands (Since IOC is the seller of Naphtha to IPCL) yet IOC bid was rejected.

The Government also practiced a dubious process of cross – holding the shareholdings of National Hydro Electric Power Corporation (which survived on budgetary support of Rupees 450 crores every year) to National Thermal Power Corporation. Subsequently NTPC hived off a few of its units into a new subsidiary and in the process 51% of NTPC‘s holdings were offloaded to the private sector. Through the process of cross-holdings, the government intended to privatise the Nirvanas to meet its budgetary deficit.

The inflow of FDI’s through disinvestment was not as huge as expected. In the Latin and South American countries, FDI’s got through disinvestment was huge. In India this could be due to the slow nature of the disinvestment process itself. For example, in 2001, the process of disinvestment in VSNL began. But it took more than a year to complete the process. Not only is the disinvestment process slow, it is also plagued by bureaucracy and red tapism. It was felt that the continued existence of the PSEs was forcing the Government to commit further resources for the sustenance of many non-viable PSEs.

Evaluation of the Disinvestment Strategy

The public enterprises survey had divided the industries into 21 segments. But only 17 of these, 10 in manufacturing and 7 in services were referred to by the Disinvestment Commission throwing up an attitude of gross neglect towards some sectors of the economy. Only fertilizers, mineral and metal enterprises focused on. Several inefficient and loss making ones, e.g. textiles and financial services, were ignored. In the engineering sector, only five enterprises were considered (out of 38), chemicals and pharma-6 out of 21, consumer goods- 7 out of 18. Thus distributional objective was not met.

Conclusion

If disinvestment policy is to be in wider public interests, it is necessity to examine systematically issues such as correct valuation of shares and appropriate use of disinvestment proceeds. The disinvestment of public sector units which is, in fact, the public’s money is done without even due amount of debate in the parliament. This, therefore, calls for utmost care and meticulous planning.

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Strategies of Disinvestment

Conclusion