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RIMS JOURNAL OF

MANAGEMENT

M S RAMAIAH FOUNDATION

RAMAIAH INSTITUTE OF MANAGEMENT STUDIES

RAMAIAH INSTITUTE OF MANAGEMENT SCIENCES

ISSN 2455 – 1449

Vol.4(I), Jan – June 2019

TRADING PERFORMANCE OF IRON ORE IN WORLDWIDE

Dr. G. Hudson Arul Vethamanikam, Dr. S. Rajamohan

CONSUMER PREFERENCE ON PAYMENT OPTIONS IN ONLINE

SHOPPING

Dr. D.Joel Jebadurai,

DISTINGUISHING THE FACTORS INFLUENCING BRAND

PREFERENCE OF SELECTED MOBILE PHONE IN RURAL AND

SEMI-URBAN AREAS.

Prof. Honey Gupta, Prof. Jawahar Kumar

METRICS OF ORGANIZATIONAL PRACTICES IN HUMAN

RESOURCE MANAGEMENT: SELECTED PERSPECTIVES FROM HR

ANALYTICS

Dr. Indranil Bose

TRANSFORMATIONAL LEADERSHIP – THE NEED OF THE HOUR? Mr. Prasad L , Dr. Noor Firdoos Jahan

MENTORING FOR PROFESSIONALISM

Dr. Radha.R

RIMS Journal of Management Vol.4 (I), Jan-June 2019

Chief Patrons

Dr.M.R.Pattabiram

Founder Trustee

Mrs. Anitha Pattabhiram

Founder Trustee

Editorial Advisory Board

Dr. Radha R, Dr. Y Rajaram

Dean Ex-Dean

RIMS, Bangalore RIMS, Bangalore.

Editor

Dr. M. Swapna,

Associate Professor, RIMS,

Bangalore

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1 RIMS Journal of Management, Vol.4(I),Jan-July 2019

Trading performance of iron ore in worldwide

Introduction

The Indian Commodity Market has

grown tremendously since the operation

of Commodity Futures Exchanges, both

in terms of volume and value of trade.

Currently, there are five national

exchanges (Multi Commodity Exchange

of India Limited, National Commodity

& Derivatives Exchange Limited,

National Multi-Commodity Exchange of

Dr. G. Hudson Arul Vethamanikam

Assistant Professor, School of Management, CMR University,

Bangalore - 560 043, Cell No: +91 9787969692,

Email Id: [email protected]

Dr. S. Rajamohan

Director cum Senior Professor, Alagappa Institute of Management,

Alagappa University, Karaikudi - 630 004, Cell No: +91 9994590559,

Email: [email protected]

Abstract

The financial markets are involved in the financial instruments such as currency,

bonds, shares, commodity and so on. The investors have been fondness to make their

investment in derivative instruments, especially the commodities are performing well

in the global market. It is owned the high volatility than other markets such as the

share market. The commodity investment depends upon the risk taken in the futures

market and the huge volatility of the market. The risk and volatility are assisting to

earn high returns. There are four national and 21 regional exchanges, which are

trading commodities in India. There are 80 commodities allowed by the Indian

government to trade in the markets. The MCX has merged with SEBI for improving

the protection towards the investors and avoiding the fraud than easily invest the

money in the commodity market without fear. The precious metals of gold, silver and

iron ore has been making an enormous impact on the commodity market. These three

investments have been covered more than fifty percent of the nonagricultural

commodities segment. The investors, mostly preferred and focused to make an

investment in gold, silver and iron ore. Hence it is creating the more vibrant in the

commodity market. The commodity market cannot compete with other market without

precious metals participation. This research article is discussing only overviews of

entire activities in iron ore commodity.

Keywords: Commodity Market, Nonagricultural Commodity, Iron Ore, Trading

Performance, Import & Export activities.

JEL Code: G1, G15, G10.

mailto:[email protected]



Trading performance of iron ore in worldwide India Limited, Indian Commodity

Exchange Limited and ACE Derivatives

and Commodity Exchange Limited) and

sixteen commodity specific regional

exchanges. The Indian Commodity

Market allows trading of futures and

spot contracts on commodities. Option

contracts are not available in the Indian

Commodity Market. Multi Commodity

Exchange is the largest national

commodity exchange in India; it began

its operations in November 2003[1]. The

exchange offers many commodities in

the categories of bullion, ferrous metals,

non-ferrous metals, energy, and

agriculture

The commodity derivatives

markets are poised to take a new

trajectory with the revolutionary

changes brought by the regulators and

policy makers through a slew of

measures with an aim to bring liquidity

and depth to the markets thereby

enhancing their efficient functioning in

terms of transparent price discovery

and risk management. Liquidity in

Indian commodity derivatives markets,

after declining steadily during the last

three years, has started recovering in

the first half of 2018-19 consequent to

anumber of initiatives, including the

introduction of options, permitting

participation of the bank-subsidiary

broking firms and category III alternate

investment funds etc.,

As the global economy growth

slows, commodities have come into

sharp spotlight. After rising for the

major part of the previous decade,

commodity prices were in a slacker for

the last four years. Iron is the world's

most commonly used metal - steel, of

which iron ore is the key ingredient,

representing almost 95 percent of all

metal used per year. It is used primarily

in structural engineering applications

and in maritime purposes, automobiles,

and general industrial applications

(machinery)[2].

The total recoverable reserves of

iron ore in India are about 9,602 million

tonnes of hematite and 3,408 million

tonnes of magnetite. Chhattisgarh,

Madhya Pradesh, Karnataka,

Jharkhand, Odisha, Goa, Maharashtra,

Andhra Pradesh, Kerala, Rajasthan and

Tamil Nadu are the principal Indian

producers of iron ore. World

consumption of iron ore grows 10 per

annum on average with the main

consumers being China, Japan, Korea,

the United States and the European

Union[3].

Review of Literature

There are a number of studies

which have been undertaken previously

relating to a commodity market. Some

of the studies are highly useful to

identify the areas already investigated

and formulate insight into the present

study. The researcher has included the

review of literature in order to identify

the gap in the research.

Wilson (2012)[4]in practice, there

are often conventions which simplify the


Trading performance of iron ore in worldwide procedure of price determination, and

help avoiding blatant deviations from

some average price level. In manganese,

where most trades is transacted

through annual bilateral contracts, a

commercial practice has developed

where a major supplier enters into

preliminary discussions with a major

customer, while the rest of the industry

defers its contract negotiations. As soon

as this pair reaches an agreement, all

other suppliers and users adopt the

agreed price as a guideline for their own

price setting. Very similar practices

applied to the annual contracts under

which a large proportion of

international iron ore trade was

transacted, but this system has been

undergoing significant change in the

recent past.

S. Rajamohan, G. Hudson Arul

Vethamanikam and C. Vijayakumar

(2014)[5]the markets are classified based

on the financial instruments such as

shares, bonds, commodity, currency and

so on. The investors have been fondness

to make their investment in derivative

instruments, especially the commodities

are performed well in the global market,

and it is owned the high volatility than

other markets. By investing in

commodities, an investor gains exposure

to changes in commodity prices, which

are ultimately determined by global

supply and demand. Return of the

commodity investment depends upon

the risk taken in the futures market

and the huge volatility of the market

assist to earn high returns. There are

four national and 21 regional

exchanges, which are trading

commodities in India. There are 80

commodities allowed by the Indian

government to trade in the markets.

The commodity performance has been

evaluated through the turnover of the

exchanges. The result of the commodity

may induce the investors to make

investment and create the awareness of

industry hence the active

commodities has been considered by the

researcher to analyze the performance.

The selected commodity has been

considered to conclude the result based

on market participation in the MCX

index. The precious metals of gold and

silver has been made enormous impact

on the commodity market and both

investment has been covered more than

fifty percent of the nonagricultural

commodities segment. The investors

mostly preferred and focused to make

investment on gold and silver hence it is

created the vibrant in the commodity

market. The commodity market cannot

compete with other market without

precious metals participation.

The research article on “Trading

trends in Indian commodity exchanges

with special reference to non-

agricultural commodities” by Anand

Bansal and Satinder Kaur

(2017)[6]denoted that global commodity

markets have gone through a long

journey. In India, the emergence and

augmentation of the organized


Trading performance of iron ore in worldwide commodity derivative market is

relatively a recent phenomenon. Since

its inception in June 2000, derivative

exchanges have exhibited exponential

growth in terms of volume and value of

trade. The setting up of the three

exchanges was the turning point in the

history of commodity market of India.

Hence, the study is undertaken to

analyse the trends and progress of the

national commodity exchanges of India

and comparing the value of the trading

activities of the selected nonagricultural

commodities. The data for the

commodities under study covers period

from the year 2004-2005 till the year

2014-2015.Thestudy is based on the

secondary data related to exchanges

such as MCX, NCDEX and NMCE.

Objectives of the Study

1. To understand the theoretical

background of Iron ore

Commodity.

2. To measure the Usages of Iron

Ore in Worldwide.

3. To assess the trading activities of

iron ore towards the Import and

Export.

The usages of iron ore in

worldwide

Multi Commodity Exchange (MCX)

of India received permission from the

commodity markets regulator namely

the Forward Markets Commission

(FMC), to launch iron ore futures

contract[7]. Iron ore is one of the most

important commodities in the world.

The MCX iron ore futures contract will

give all market participants an

opportunity to hedge their price risks

against the volatility of the physical

market. The Table.1 brings out the

usages of Iron Ore in worldwide.

Table - 1: The usages of Iron ore in

worldwide

(in Million MT)

Country 2007 2008 2009 2010 2011 2012 2013

Brazil 355

(17.75)

355

(15.99)

300

(13.39)

370

(14.29)

373

(12.69)

375

(12.5)

398

(13.49)

Australia 299

(14.95)

342

(15.41)

394

(17.59)

433

(16.72)

488

(16.60)

525

(17.5)

530

(17.97)

India 180

(9.0)

220

(9.91)

245

(10.94)

230

(8.88)

240

(8.16)

140

(4.67)

150

(5.08)

China 707

(35.35)

824

(37.12)

880

(39.29)

1070

(41.31)

1330

(45.24)

1310

(43.67)

1320

(44.75)

Russian

Federation

105

(5.25)

100

(4.50)

92

(4.11)

101

(3.90)

100

(3.40)

105

(3.5)

102

(3.46)

Canada 33

(1.65)

31

(1.40)

32

(1.43)

37

(1.43)

34

(1.16)

39

(1.3)

40

(1.36)

South

Africa

42

(2.1)

49

(2.21)

55

(2.46)

59

(2.28)

60

(2.04)

63

(2.1)

67

(2.27)

United

States

52

(2.6)

54

(2.43)

27

(1.21)

50

(1.93)

55

(1.87)

54

(1.8)

52

(1.76)

Ukraine 78

(3.9)

73

(3.29)

66

(2.95)

78

(3.01)

81

(2.75)

82

(2.73)

80

(2.71)

Iran 32

(1.6)

32

(1.44)

33

(1.47)

28

(1.08)

28

(0.95)

37

(1.23)

37

(1.25)

Kazakhstan 24

(1.2)

23

(1.04)

22

(0.98)

24

(0.93)

25

(0.85)

26

(0.87)

25

(0.85)

Sweden 25

(1.25)

24

(1.08)

18

(0.80)

25

(0.97)

25

(0.85)

23

(0.77)

26

(0.89)

Venezuela 23

(1.15)

21

(0.95)

15

(0.67)

14

(0.54)

17

(0.58)

27

(0.9)

30

(1.02)

Others 47

(2.35)

47

(2.12)

43

(1.91)

46

(1.78)

59

(2.01)

61

(2.03)

93

(3.15)

World 2000

(100)

2220

(100)

2240

(100)

2590

(100)

2940

(100)

3000

(100)

2950

(100)

Source: USGS(Bracket Indicate the Percentage to Total)

Table.1presents that the

performances of Iron Ore in different

countries like Brazil, Australia, India

and so on, which is measured by million

metric tonnes and contributions. In

2007, the usage of steel is high in Brazil

from 2007 to 2013 except the 2009 (300

MT). The Brazil, Australia and China

are increasing the usages of steel in

simultaneously during 2007 to 2013.

The other countries are not standard,


Trading performance of iron ore in worldwide which up and down, except the three

countries like Brazil, Australia and

China.

The contributions are measured by

percentage to total. In 2007, the

contribution values are high in China

(35.35%) followed by Brazil (17.75%).

The minimum contribution in Iron One

is Venezuela (1.15%). Out of 100, the

contribution of Iron One in differ from

year to year and countries to countries.

The China is majorly dominated in the

field of using Iron One during 2007 to

2013. The minimum contribution made

by using the Iron Ore was Venezuela

from 2007 to 2012 but 2013 were

minimum contributed by Kazakhstan.

In overall contribution value is elevated

by China at 45.24 percent in 2011. Out

of 100, the lowest contribution of Iron

Ore value at 0.54 percent in 2010.

The export of iron ore in

worldwide

The global market of iron ore

derivatives is growing in rapidly and

receiving more attention from various

sides of the mining industry. India is

the world’s third-largest iron ore

supplier and plays a significant role in

the global iron ore industry. The MCX

iron ore futures contract will go a long

way in creating a market driven

benchmark for the entire industry[8].

The Iron Ore is importing Iron ore from

India, mainly China, which is the

world’s largest importer. The export of

Iron Ore presents the Table.2.

Table -2: The export of iron ore in

worldwide

(in Million MT)

Countries 2010 2011 2012 2013

Australia 427

(40.51)

466

(42.52)

524

(45.64)

613

(48.65)

Brazil

311

(29.51)

331

(30.20)

327

(28.48)

330

(26.19)

India 71 (6.74) 39 (3.56) 28 (2.44) 28 (2.22)

South Africa 48 (4.55) 53 (4.84) 54 (4.70) 63 (5.00)

Ukraine 33 (3.13) 34 (3.10) 35 (3.05) 35 (2.78)

Canada 31 (2.94) 34 (3.10) 34 (2.96) 38 (3.02)

Sweden 21 (1.99) 21 (1.92) 23 (2.00) 23 (1.83)

Russia 20 (1.90) 27 (2.46) 25 (2.18) 26 (2.06)

Netherlands 25 (2.37) 19 (1.73) 21 (1.83) 21 (1.67)

Iran 15 (1.42) 17 (1.55) 18 (1.57) 22 (1.75)

Others 52 (4.93) 55 (5.02) 59 (5.14) 61 (4.84)

Total 1054

(100)

1096

(100)

1148

(100)

1260

(100)

Source: USGS (Bracket Indicate the Percentage to Total)

Table.2 gives the export of Iron

Ore calculated by Million Metric Tonnes

in worldwide during 2010 to 2013. In

2010, the Australia is a high performed

427 Metric Tonnein the field of export of

Iron Ore followed by Brazil 311 metric

tonne which is a second place for

exporting the Iron Ore. The minimum

export performance at 15 metric tonnes

in Iron Ore. From 2011 to 2013, the top

of the export activities is made by

Australia.

The Australia and Brazil are

highly contributed during 2010 to 2013

which is concentrate the export of Iron

Ore. Iron is the lowest contribution of

Exporting Iron Ore from 2010 to 2013,

except the 2013. The contribution was a

small increase of 1.75 percent when


Trading performance of iron ore in worldwide compared with the previous year and

have a slide change made by

Netherlands 1.67 percent.

The import of iron ore in

worldwide

The Export and Import are

necessary to measure the Iron Ore

Performance in worldwide. The

agricultural and Non-Agricultural

commodity are traded in the online

commodity market such as MCX,

NCDEX and so on[9]. The non-

agricultural commodity are majorly

traded on Multi-Commodity Exchanges.

Table.3 clarified that the import of Iron

Ore in worldwide.

Table - 3: the import of iron ore in

worldwide

(in Million MT)

Countries 2012 2013 2014 2015 2016

European

Union (28)

121

(11.38)

128

(11.06)

125

(10.43)

124

(9.86)

126

(9.71)

Japan 131

(12.32)

136

(11.86)

135

(11.27)

136

(10.82)

137

(10.55)

China 745

(70.08)

820

(71.49)

875

(73.04)

933

(74.22)

970

(74.73)

Korea 66

(6.21)

63

(5.49)

63

(5.26)

64

(5.09)

65

(5.01)

Total 1063

(100)

1147

(100)

1198

(100)

1257

(100)

1298

(100)

Source: BREE

(www.bree.gove.au)

(Bracket Indicate the

Percentage to Total)

Table.3 demonstrates that the

import of Iron Ore has been measured

by the millions of metric tonne during

2012 to 2016. The each and every

countries have unwritten low which has

Import of Iron always lower than the

Export of Iron Ore. Because of the

display the unavailability of the

particular commodity or else they may

use in our purpose of manufacturing

and so on. The Iron commodity was

majorly imported from various countries

like the European Union, Japan, China

and Korea.

The European Union has a high

import of Iron Ore in the year of 2013

(128 MT). In 2016, they have strongly

mentioned the import of Iron Ore at 137

MT in Japan when compare to other

years. China has a predominant role of

importing the Iron Ore during 2012 to

2016 when comparing other countries of

importing the Iron Ore. The Korea have

large importing of Iron Ore in 2012 (66

MT).

The importing the Iron Commodity

have higher contribution of 2016

(74.73%) in China. Out of 100, the

lowest contribution made by the Korea

at 5.01 percent in 2016. The Japan and

other countries are contributing in

medium level from 2012 to 2016.

Conclusion

The volatility of commodity

markets is higher than volatility in

equity markets. The price volatility of

Iron ore metals have been significantly

affected by the volatility of the

commodity market in the

worldwide.The total recoverable

reserves of iron ore in India are about

9,602 million tonnes of hematite and

3,408 million tonnes of magnetite.

Chhattisgarh, Madhya Pradesh,

Karnataka, Jharkhand, Odisha, Goa,

Maharashtra, Andhra Pradesh, Kerala,


Trading performance of iron ore in worldwide Rajasthan and Tamil Nadu are the

principal Indian producers of iron ore.

World consumption of iron ore grows 10

per annum on average with the main

consumers being China, Japan, Korea,

the United States and the European

Union. The Iron ore is a good

commodity for investment money

without fear in competitive life. The

investors easily to get profit compared

to other commodities like silver, gold

and so on. The performance and usage

of Iron one is well in the worldwide.

Since the pricing of futures contract

does not consider the volatility of the

underlying asset, therefore, to mitigate

the risk of price volatility in the base

metals of Iron Ore. Thus the

introduction of option contracts would

benefit the producers and consumers of

the metals in the commodity market. It

will provide them an opportunity to

construct a hedge to reduce

theparticular risk they face in the

underlying assets.

8. References

1. Hudson Arul Vethamanikam.G, Mary

KirubaRani.VandJoel Jebadurai.D,

“Neural Learning: Price Prediction for

non-agricultural Commodities Using

Back Propagation Network”,

International Journal of Engineering &

Technology, Vol.7, Issue.4, 2018,

pp.2058-2062.

2. Iron ore pricing emerges from Stone

Age, Financial Times, October 26, 2009,

Retrieved

from:http://www.ft.com/cms/s/0/b0580bf

6-c220-11de-be3a-

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NavaidShabir, “Natural resource

Conservation and Environment

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2008.Retrievedfrom:https://books.google

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Policies and the Restructuring of the

AsiaPacific Iron Ore Market”. Resources

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Vethamanikam and C. Vijayakumar,

“Market Performance of the Non-

Agricultural Commodities in India”,

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Consumer preference on payment options in online shopping


Introduction

Online shopping is growing in

India day by day with the use of

internet. Retailer expands their

market with that customer who may

not otherwise visit the physical store.

The main significance of online

shopping is to get attention of that

customer who use internet most the

time. Online shopping is a major

part of the overall electronic

commerce, or e-commerce, industry

which consists of all the buying and

selling of goods and services over

electronic systems such as the

internet and other computer

networks by households, businesses

and other agencies. With the spread

of the internet, the amount or trade

that is conducted electronically has

seen extraordinary growth; and has

led to innovations and development

in areas such as electronic funds

transfer, electronic data interchange

and internet marketing. The online

marketers used the opportunities

and introduced lot of products in the

market. And the other benefit of

online shopping is their unique

online payment methods which

attracts customer for purchase

online. If there is so many benefit in

online shopping on other side online

shopping also come with potential

risk and dangers that customer

wants to be aware.

Dr. D.Joel Jebadurai,

Assistant Professor, Department of Commerce

and Management, Acharya Institute of Graduate

Studies, Soldevanahalli, Bangalore.

Email.id: [email protected],

Mobile : 9943172016

Abstract

Online marketing is the popular mode of business in recent days. It is mainly for

the consumers are having the all facilities like offline marketing in the online

shopping. While purchasing the goods in the online portal, consumers are spent

their valuable time in the payment process. It is mainly for the reason of the lack

of trust and perceived risk of the consumers towards the online marketers. In order

to solve payment issues, online marketer also offering the number of payment

options to the customers. In this research is focused with the objective of find out

the payment method preferred by the consumers in the online shopping. 297

respondents are interviewed by the researcher separately in the Tirunelveli city. In

order to assess the preference of payment options of the consumers’ garret ranking

method was applied. The researcher has found that Cash on Delivery (COD) is the

payment option preferred by the consumers in the online shopping compared with

the other options.




Online marketers of amazon,

flipkart , snapdeal and so on are the

popularised online marketers in

India they have introduced all the

products in the market for the

purpose of attracting the consumers.

But consumers are get the

satisfaction only when they are

receive the goods as per the value

paid by them. In order to cover all

types of consumers in India, online

marketers also introduced the

payment methods of cash on

delivery, EMI options, credit card

and so on.

Review of literature

Chung‐Hoon Park, Young‐Gul Kim,

(2003) wrote a research article

entitled "Identifying key factors

affecting consumer purchase

behavior in an online shopping

context”. They explained that while

interactions in the real world

shopping are mainly based on

face‐to‐face activities between

consumers and service personnels,

interactions in electronic commerce

take place mainly through the

retailer’s Web site. This study

investigated the relationship

between various characteristics of

online shopping and consumer

purchase behavior. They found that

information quality, user interface

quality, and security perceptions

affect information satisfaction and

relational benefit that, in turn, are

significantly related to each

consumer’s site commitment and

actual purchase behavior.

Mohammad Hossein Moshrefjavadi

et.al, (2012) made a study with the

objective of analyze the factors

affecting on online shopping behavior

of consumers that might be one of

the most important issues of e-

commerce and marketing field. In

order to examine the model the

impact of perceived risks,

infrastructural variables and return

policy on attitude toward online

shopping behavior and subjective

norms, perceived behavioral control,

domain specific innovativeness and

attitude on online shopping behavior

as considered as the hypotheses of

study. Respondents to the

questionnaire were consumers of

online stores in Iran which randomly

selected. Finally regression analysis

was used on data in order to test

hypothesizes of study. The study

identified that financial risks and

non-delivery risk negatively affected

the consumer attitude toward online

shopping. Results also indicated that

domain specific innovativeness and

subjective norms positively affect

online shopping behavior.

Furthermore, attitude toward online

shopping positively affected online

shopping behavior of consumers.

Dipti Jain, Sonia Goswami, Shipra

Bhutani (2014) come out with the

objective of to study the impact of

Perceived Risk, Perceived enjoyment,

Perceived usefulness and Perceived



ease of use factors on online

shopping behavior of consumers in

Delhi. The sample of the study

comprised of 160 online shoppers.

Respondents belonged to different

age groups, income groups and

occupations and have a prior

experience in online shopping. The

results of the study revealed that

only one factor, namely Perceived

Risk significantly affected online

shopping behavior of consumers in

Delhi while Perceived enjoyment,

Perceived ease of use and Perceived

enjoyment hinders the consumers to

shop online. The research findings

revealed that perceived risk

negatively impact consumers

attitude towards online shopping

while perceived usefulness, perceived

ease of use and perceived enjoyment

has no impact on consumers’ attitude

towards online shopping. So the

researchers suggested that the

companies must focus on Perceived

risks to develop consumers trust

towards online shopping.

Chirag Parmar (2015) conducted the

study with the objective of find out

the preferred option for payments in

online shopping. There is several

option of payment in online

purchasing such as credit card, debit

card, cash on delivery, EMI option,

gift voucher or wallet Rs. of

particular site. In order to assess the

preference of the consumers, a

survey was conducted and the 120

questionnaires were distributed

among the people of different

markets and the general public in

Bikaner. He found that on-line

shoppers prefer the cash on delivery

method while buying the goods in the

online.

Statement of the problem

The entire process of the

market is designed based on the

needs and wants of the customers.

Online marketing is also not

exception too. In today world,

customers are king in the market.

Customers are update themselves

about the products introduced in the

market through various

technological gadgets. Customers are

considered numerous factors before

finalise their purchase decision in

the online market. Online markets

also identify the needs of the

consumers and introduce the

changes accordingly. But a

sometimes online market doesn’t

have the opportunity to find out the

actual factor consideration of the

customers in the online market. This

gap leads to lot of problems in the

online market. In order to find out

the actual factors considered by the

consumers during the purchase and

find out payment option of the

customers this study has been

undertaken.

Objectives of the study

1. To study the demographic profile

of the respondents



2. To analyse the preferred payment

option of the consumers in the

online market

Methodology

The study mainly deals with

the primary data only. The data that

have been collected from the online

buyers in the Tirunelveli city with

the help of the online marketers

delivery employees. Convenience

sampling method was used to collect

the responses from the consumers

those who are ready to provide the

details. Sample size 297 respondents

are considered for the analysis of the

study. Interview schedule method is

used to collect the responses from the

respondents.

Findings

Demographic profile of the

respondents


respondents is very much important

in the social science research. In this

research the researcher has

considered the gender, age,

educational qualification and income

of the respondents.

Table.1


respondents

Variables Attributes No. of

respondents

Percentage

Gender Male

Female

256

41

86.20

13.80

Age Below 20 46 15.49

years

21 to 40

years

40 to 60

years

233

18

78.45

6.06

Educational

Qualification

Upto HSC

Under

graduate

Post

graduate

17

92

188

5.72

30.98

63.30

Income Below

15000

15000 to

30000

31000 to

45000

Above

45000

58

167

37

35

19.53

56.23

12.46

11.78

Source: Primary data

From the table.1, it is found

that 86.20 percent of the respondents

are male, 78.45 percent of the

respondents are belong to the age

group of 21 to 40 years, 63.30 percent

of the respondents completed their

educational qualification as the post

graduate and 56.23 percent of the

respondent earned the monthly

income of Rs.15,000 to 30,000.

Payment options in the online

shopping

Payment is the crucial part in

the online market. In the online

purchase, consumers are very

cautious in the payment system. But

it is mainly based on the financial

capacity and trust of the consumers

towards the online market. Online

marketers also identify the needs of

the consumers and offer a numerous

payment methods in the payment

gateway. But the researcher has

identified five methods namely credit

card, debit card, internet Banking



Cash on Delivery (COD) and

Equated Monthly Instalment (EMI)

for made the payment in the online

market. After that in order to assess

the customers’ priority level in the

payment methods, it was ranked by

the respondents. With a view to find

out the payment method which one

is the mostly preference method of

payment for the customers the garret

ranking has been used. Table 2

explains the payment methods

adopted the customers while buying

the goods in the online market.

Table 2

Payment Options in the Online

Shopping

Payment

Methods

Rank Total

1 2 3 4 5

Credit

card

Cash on

Delivery

Internet

Banking

Debit

Card

EMI

Options

20

92

18

104

63

16

155

13

87

26

121

28

97

27

24

52

21

135

43

46

88

1

34

36

138

297

297

297

297

297

Total 297 297 297 297 297


Table 2 highlights the

payment method preference in the

online market. There are five types

of payment methods that have been

identified by the researcher and the

respondents were asked to rank the

payment methods on the basis of

their interest. Based on the ranks

awarded by the respondents, the

researcher found out the correct

number of respondents placed in

each rank. Further, to identify the

most preferred payment method in

the online market, the researcher

has used the garret ranking.

Preference of payment methods

in online shopping- calculation

of garret score

Garrett’s ranking technique

was used to found the preference of

rank indicated by the respondents on

payment methods. As per this

method, respondents have been

asked to assign the rank for all the

payment methods and the outcomes

of such ranking have been converted

into score value with the help of the

following formula:

Percent position = 100 (Rij– 0.5)/Nj

Rij = Rank given for the ith variable

by jth respondents

Nj = Number of variable ranked by

jth respondents

With the help of Garrett’s Table, the

percent position estimated is

converted into scores.

Table .2

Preference of Payment

Options in Online Shopping-

Calculation of Garret score

Sl.No Calculation Calculated

Value

Garret

Table

Value

1 100(1-0.5)/5 =

50/5

10 75

2 100(2-0.5)/5 =

150/5

30 60

3 100(3-0.5)/5 =

250/5

50 50

4 100(4-0.5)/5 =

350/5

70 52

5 100(5-0.5)/5 =

450/5

90 24




Table.2 shows the Garret

scores. Initially the Garret ranks

are calculated by using suitable

Garret ranking formula. Based on

the Garret ranks, the Garret Table

value has been ascertained. The

Garret Table scores of each factor in

Table 1 have been multiplied to

record scores in the Table.2 after

adding each row, the total Garret

scores have been obtained.

Preference of payment options

in online shopping- garret

ranks

In order to identify the payment

method which one is mostly

preferred while buying the goods in

the online market the respondents

were requested to express their

opinion by giving ranks and it was

processed through the garret scores

and Table 3 displays the garret

scores and its ranks.

Table .3

Preference of Payment Options

in Online Shopping- Garret

Ranks

Payment

Methods

Rank Garret

Score

Garret

Rank 1 2 3 4 5

Credit

card

Cash on

Delivery

Internet

Banking

Debit

Card

EMI

Options

1500

6900

1350

7800

4725

960

9300

780

5220

1560

6050

1400

4850

1350

1200

2704

1092

7020

2236

2392

2112

24

816

864

3312

13326

18716

14816

17470

13189

4

1

3

2

5


Table 3 portrays the rank

assigned by the respondents towards

the payment methods in online

shopping. Based on the garret score

value, the researcher has found that

the highest score is awarded to the

factor “Cash on Delivery” ranked as

factor first, followed by “debit card”.

The least score is awarded to EMI

options.

Conclusion

From the study the researcher

found that the cash on delivery is the

payment options preferred by the

consumers in the online shopping. It

is mainly for the reason of the lack of

trust of the consumers in the online

shopping. So the online marketers

create the trust in the mind of the

consumers by means of adopting the

proper return policy, quality goods

and so on. This research is very

useful to the stakeholders those who

are focus on the online markers in

their research and also online

marketers for their policy decisions.

References

1. Chung‐Hoon Park, Young‐Gul

Kim, (2003) "Identifying key

factors affecting consumer

purchase behavior in an online

shopping context",

International Journal of Retail

and Distribution

Management, Vol. 31, No.1,

pp.16-29.

2. Mohammad Hossein

Moshrefjavadi, Hossein Rezaie



Dolatabadi, Mojtaba

Nourbakhsh, Amir

Poursaeedi, Ahmadreza

Asadollahi (2012), “An

Analysis of Factors Affecting

on Online Shopping Behavior

of Consumers”, International

Journal of Marketing Studies,

Vol.4, No.5, pp. 35-43.

3. Dipti Jain, Sonia Goswami,

Shipra Bhutani (2014),

“Consumer Behavior towards

Online Shopping: An

Empirical Study from Delhi”,

IOSR Journal of Business and

Management, Volume 16,

Issue 9, pp.65-72

4. Chirag Parmar (2015) “A

Comparative Study on Various

Payment Options in Online

Shopping” International

Journal on Recent and

Innovation Trends in

Computing and

Communication, Vol.3, No.4,

pp. 2433-2436.

5. http://www.seoexpertsindia.co

m/internet-marketing-

services.php

6. https://economictimes.indiatim

es.com/industry/services/retail/

online-retail-consumers-to-

cross-100-million-by-2017-

assocham-resurgent-india-

study/articleshow/56417797.c

ms

7. http://www.livemint.com/Indu

stry/9iUxlQZ4iHwPiXRKscx3

LK/Indias-ecommerce-market-

to-grow-30-to-200-billion-by-

202.html

8. https://www.thebalance.com/sa

fe-online-payment-methods-

315821

9. https://blog.kissmetrics.com/ea

sy-payment-process/

10. https://www.ecommercewiki.or

g/Online_Payments/Online_Pa

yments_Basic/What_are_onlin

e_payment_methods

Distinguishing the factors influencing brand preference of selected

Mobile Phone in rural and semi-urban areas.


Introduction

India has got a huge population which

provides a lot of opportunities to

various marketers. India has proved to

be one of the fastest growing markets

in the world. According to the

National Council of Applied Economic

Research (NCAER), almost 70% of the

total population of India lives in the

rural areas and semi-urban. The

consumer durable segment of the

market is focusing on the rural and

semi-urban markets as urban markets

are becoming saturated. Therefore,

urban markets have touched its

maximum level for various types of

consumer goods and since the rural

income is growing, various marketers

are trying to bring strength for large

rural and semi-urban segments of the

Prof. Honey Gupta

Research Scholar (University of Delhi, Delhi)

Email Id: [email protected],

Mobile: 9971020028

Prof. Jawahar Kumar

Assistant Professor, International Institute of Business Studies, Bengaluru

Email Id: [email protected],

Mobile: 9620748701

Abstract

India has a huge population which provides a lot of opportunities to various

market. Almost 70% of the accumulated population of India lives in the rural and

semi-urban areas. The consumer durable segment of the market is concentrating on

the rural and semi-urban markets as the urban markets have reached its

saturation. This study aims on the reasons for the preference of a selected brand of

mobile among the consumers of rural and semi-urban areas. The known variables

like price, product and reference group have been assessed by using Spearman rank

correlation. A total sample of 400 respondents was taken from semi-urban and

rural areas of Baddi, Himachal Pradesh. It was found that both semi-urban and

rural areas displays a somewhat same preference when it comes to different brands

of Mobile. The findings revealed that durability, price,popularity and reference

group have been the major factors that affect brand preference for mobile in semi-

urban areas, whereas, factors such as brand name, colour variety, quality and

reference group affect brand preference in rural areas.

Keywords: Brand preference, mobile phone,






market, hence the concept rural

marketing has got more

importance.The right strategy for the

marketer is to focus on the rural and

semi-urban market to get a major

share of the consumer from these

areas. According to a Tata Strategic

Management Group report, it is

observed that 66% of consumer

durables are bought by the consumers

from the rural segments. Mobile &

electronic products are likely to grow

in coming future in semi-urban and

rural areas.

The rural and semi-urban markets are

tapped partially and urban areas have

reached its saturation point. This can

be the valid point for marketers to

emphasize on the need to explore rural

and semi-urban markets. Rural and

semi-urban consumers are found to be

interested in branded products these

days, therefore, the market for goods

and service seem to have started to

flourish in these sectors. The

consumer durables sector in India is

going to witness some very interesting

times in rural and semi-urban

markets.

Mobiles can be used to present the

consumer durable markets. Mobiles

have earned an essential durable

commodity status in the world. Mobile

market has got a great potential to

grow. There are various reputed

brands available in the durable

market. When it comes to mobiles, the

consumers have got numerous brand

alternatives to choose from.

Consumers brand preferences helps in

understanding consumer behaviour. A

deeper understanding of such

preference can help marketers‟ design

better marketing program and build a

long-term relationship with consumers

In Himachal Pradesh, the urban

markets are becoming saturated.

Therefore, the rural and semi-urban

markets have got a bright future .90%

of the population of Himachal Pradesh

lives in rural areas and the semi-

urban population is also rising in

Himachal Pradesh according to census

2011.

Marketers have focused on urban and

rural areas only and could not

distinguish between semi-urban and

rural areas. Semi-urban can‟t be

considered as urban areas because

they are different in demographic-wise

in terms of income, education, lifestyle

and infrastructure. Therefore, the

behaviour of consumers of semi-urban

and rural areas are also different.

Semi-urban areas can be defined as

areas which have recorded population

between 10k-1 lakh, and have better

access to the market, more disposable

income, better infrastructure than

rural areas and Rural areas refers to

the areas which have got a population

less than 10,000 and the most

important factors for rural areas is




that more than 75% of the population

is completely dependent on

agriculture for their survival stated

by RBI.

Review of literature

(Rajeswari R.,Pirakatheeswari P.,

2014)aimed to study the socio-

economic profile of the selected

consumers and the factors influencing

the consumers in the selection and use

of particular products. Features that

influence the respondents while they

purchase the consumer durable goods,

the factor Price ranked first. It was

followed by Quality. The factor Brand

Image got third rank and the factor

Model/Design got fourth rank.

(Rastogia R., Chaudhary S.,

2012)examined the purchase

motivators like Item of necessity,

symbol of social status, marketing

influence, brand reputation for

television, washing machine and

refrigerator in the rural areas. A large

no. of rural consumers prefers the

brands and their products because of

the quality of the product and then the

price of the product respectively. The

responses also show that the brands

most preferred by the consumers

regarding television, washing machine

and refrigerator are Samsung, LG and

LG respectively.

(Deepa I. R., 2013)focused on the

assessment of the impact of

advertisement on purchase of youth

with reference to consumer goods. The

study concluded that the youth get the

information about the different

products mainly from television and

newspaper advertisement. From the

research study it was concluded that

advertisements influence on the

purchase decision of youth for

consumer goods.

(Dharmaraj C., M. Sivasubramania

M., 2011) refined the factors that

influence the brand preference of

passenger cars in India. It is indeed

obvious from the study that the

performance factors of the passenger

car brands have dominated the

preference of customers, based on

their economic status. Overall, it is the

all-round ability of the car brands

reliability, safety, technology, value

for money, high resale value, high

mileage, maintenance cost, quality,

comforts, durability, etc. that prove to

be decisive factors.

(Chakraborty S., 2015)aimedto know

the factors affecting brand preference

of consumer durables.LG is the most

preferred brand for refrigerator and

TV, Usha is the most preferred for

ceiling fan, mixer grinder and iron.

Cost effectiveness is the most

important reason behind brand

preference of select consumer durables

followed by product appearance and

brand status.




(Pradhan J., Misra D.P., 2014)

explored the rural consumer buying

behavior through brand awareness

and influence of demographic factors

on brand preference. The results

indicated that there were statistical

relationships between age, gender,

family type and education with brand

preference. However, there was no

statistical relationship between

occupation and annual income with

the brand preference.

(Anand V. et al., 2016)studied the

association between demographic

factors and brand preference of the

respondents of DTH users in rural

areas; to study the variation between

demographic factors and brand

preference; to understand the effect of

study variables such as cost, features,

convenient services and support

facilities on brand preference, to

examine the relationship between

brand preference and purchase

decisions and to find out the effect of

brand preference on purchase

decisions. It was found that there is

association between the demographic

factors viz., age, area, monthly income

of the respondents with the Consumer

Brand Preference. The research

results also revealed that there is no

association between the gender of the

respondents and the Consumer Brand

Preference. From the regression

results, the researcher found that the

Brand preferences do not vary with

the demographic factors namely

gender, age and area of the

respondents. The results also revealed

that the Brand preference do vary

with the income of the respondents.

The results revealed that there is a

significant relationship between

Consumer Brand Preference and

Purchase Decision. There is a

significant effect of Consumer Brand

Preference on Purchase Decision.

All the above studies revolve around

the rural and urban areas, but not

much has been done on the semi-

urban areas, which are actually

different from rural and urban areas.

Thus, this study will focus on semi-

urban and rural areas with respect to

brand preference of mobile.

Objective:

• To rank the brands preferred by

the consumers of mobile.

• To compare the factors affecting

brand preferences of mobile in

semi-urban and rural areas.

Research methods

In this study semi-urban and rural

areas of Baddi, Himachal Pradesh

with a sample size of 400 were taken.

According to Krejcie and Morgan

Table, the sample size should be

384 www.surveysystem.com.

400 samples were collected and all

400 were taken for the study as all

http://www.surveysystem.com/




the samples were considered

reliable.

Primary and Secondary sources

were used for data collection.

The samples were collected

through questionnaires from

the semi-urban and rural

consumers.

The sampling technique was

probabilistic.

Baddi is recognized as an

industrial town & Nagar

panchayat. It is situated in

Southwestern Solan district of

Himachal Pradesh. This area

was chosen for the study as it is

a mix of both semi-urban and

rural areas which is important

for the study.

Variables like Quality, Brand

name, Reliability, Popularity,

Colour-variety, and Durability,

Price and Reference group were

taken for the study apart from

variables like age, gender,

income.

Spearman Rank correlation was

used for analysis.

Data analysis and interpretation

Ranking brands of mobile according to

the preference

Table 2: Ranking different brands of

mobile according to the preference

Brand preferred of Mobile

Semi-urban Rural

Frequency Percent Frequency Per

cent

Valid

HTC 28 14.0 19 9.5

Samsu

ng

66 33.0 83 41.5

Apple 65 32.5 38 19.0

LYF 4 2.0 16 8.0

Micro

max

14 7.0 14 7.0

Intex 10 5.0 4 2.0

Oppo 5 2.5 7 3.5

Gionee 2 1.0 5 2.5

Others 6 3.0 14 7.0

Total 200 100.0 200 100.

0

Interpretation: The mobile brands-

HTC, Samsung, Apple, LYF,

Micromax, Intex, Oppo, Gionee are

ranked as per the frequencies shown

in the Table above.

From the Table, it is seen that both

semi-urban and rural areas show a

somewhat same preference when it

comes to different brands of Mobile. In

both the areas, the most preferred

brand of mobile is Samsung followed

by Apple and then HTC. The least

preferred brand in both the areas are

Intex, Oppo and LYF.

Classification of respondents

according to the brands preferred of

mobile

Table 3: Classification of respondents

according to the brands preferred of

mobile (in Nos.)

Location

HT

C

Sam

sun

g

Ap

ple

LY

F

Mic

rom

ax

Inte

x

Op

po

Gio

nee

Oth

ers

Tota

l

Semi-

urban

28 66 65 4 14 10 5 2 6 200

Rural 19 83 38 16 14 4 7 5 14 200




Interpretation: In semi-urban areas,

28 respondents preferred HTC, 66

preferred Samsung, 65 preferred

Apple, 4 preferred LYF, 14 preferred

Micromax, 10 preferred Intex, 5

preferred Oppo, 2 preferred Gionee

and 6 respondents preferred other

brands.

In rural areas, 19 respondents

preferred HTC, 83 preferred Samsung,

38 preferred Apple, 16 preferred LYF,

14 preferred Micromax, 4 preferred

Intex, 7 preferred Oppo, 5 preferred

Gionee and 14 respondents preferred

other brands.

Factors Affecting Preference for

Different Brands of Mobile

The extent of relationship of various

factors among rural and semi-urban

consumers‟ brand preference was

studied with respect to consumer

durable mobile. Brands that were

taken in the study are HTC, Samsung,

Apple, LYF, Micromax, Intex, Oppo,

Gionee.

Table 4: Factors Affecting Preference

for Apple

Brand

preference

(General)

Factors

affecting brand

preference

(Specific to

brand)

Correlation

Coefficient

(„r‟)

(Semi-

urban)

Correlation

Coefficient

(„r‟)

(Rural)

Quality Quality affecting

brand preference

of mobile

-.097 .305

Brand-

name

Brand-name

affecting brand

preference of

mobile

.037 -.242

Reliability Reliability

affecting brand

preference of

mobile

.155 .218

Durability Durability

affecting brand

preference of

mobile

.496** .243

Colour

variety

Colour variety

affecting brand

preference of

mobile

.377** .392*

Popularity Popularity

affecting brand

preference of

mobile

.390** .210

Price Price affecting

brand preference

of mobile

.382** .019

Reference

group

Reference group

affecting brand

preference of

mobile

.653** .393*

*.Correlation significant at 0.05 (2 tailed) **.Correlation

significant at 0.01 (2 tailed)

N(Semi-urban)=65 N(rural)=38

.00-.19 “very weak” .20-.39 “weak” .40-.59 “moderate” .60-

.79 “strong” .80-1.0 “very strong”

Interpretation: We find from the table

above that the factors Durability,

Colour variety, Popularity, Price,

Reference group are statistically

significant at p≤.05with „r‟ values .496,

.377, .390, .382, .653 respectively in

semi-urban areas. In rural areas, the

factors Colour variety, Reference

group are statistically significant at

p≤.05with r values .392, .393

respectively.




It is observed that the factors which

have the highest effect on preference

for Apple in semi-urban areas are

popularity, durability and reference

group as these factors have a

moderate to strong correlation which

is evident from the „r‟ values that lie

between 0.40-0.79, whereas, in rural

areas the factors that affect preference

for Apple are reference group and

colour variety where the correlations

are weak lying between 0.20-0.39.

Even with weak correlations, these are

the factors with the highest

correlations in the rural areas.

The sample size for brands LYF,

Micromax, Intex, Oppo, Gionee are

very small as N<20.Hence, no

conclusions are drawn.


for Samsung

Brand

preference

(General)

Factors

affecting

brand

preference

(Specific to

brand)

Correlation

Coefficient

(„r‟)

(Semi-

urban)

Correla

tion

Coeffici

ent („r‟)

(Rural)

Quality Quality

affecting

brand

preference of

mobile

.260* .220*

Brand-

name

Brand-name

affecting brand

preference of

mobile

.341** .235*


affecting brand

preference of

mobile

.335** .083


affecting brand

preference of

mobile

.246* .004

Colour

variety

Colour variety

affecting brand

preference of

mobile

.198 .146


affecting brand

preference of

mobile

.380** .244*

Price Price affecting

brand

preference of

mobile

.465** .191

Reference

group

Reference

group affecting

brand

preference of

mobile

.526** .026

*.Correlation significant at 0.05 (2 tailed)

**.Correlation significant at 0.01 (2 tailed)


.00-.19 “very weak” .20-.39 “weak” .40-.59 “moderate”

.60-.79 “strong” .80-1.0 “very strong”


above that the factors Quality, Brand-

name, Reliability, Durability,

Popularity, Price, Reference group are

statistically significant at p≤.05 with

„r‟ values .260, .341, .335, .246, .380,

.465, .526 respectively in semi-urban

areas. In rural areas, the factors

Quality, Brand-name, Popularity, are


„r‟ values .220, .235, .244 respectively.



for Samsung in semi-urban areas are

popularity, price and reference group,

whereas, as these factors have a weak

to moderate correlation which is

evident from the „r‟ values that lie




between 0.40-0.59 whereas in rural

areas the factors that affect preference

for Samsung are quality, Brand-name

and popularity where the correlations

are weak lying between 0.20-0.39.

Even with weak and moderate

correlations, these are the factors with

the highest correlations in the

respective areas.


for HTC

Brand

preference

(General)

Factors

affecting

brand

preference

(Specific to

brand)

Correlation

Coefficient

(„r‟)

(Semi-

urban)

Correlation

Coefficient

(„r‟)

(Rural)

Quality Quality

affecting

brand

preference of

mobile

.209

-.351

Brand-

name

Brand-name

affecting

brand

preference of

mobile

.278 -.182


affecting

brand

preference of

mobile

.220 .313


affecting

brand

preference of

mobile

.816** .087

Colour

variety

Colour

variety

affecting

brand

preference of

mobile

.189 -.141


affecting

brand

preference of

mobile

.504** .313

Price Price

affecting

brand

preference of

mobile

.640** .178

Reference

group

Reference

group

affecting

brand

preference of

mobile

.393* .156

*.Correlation significant at 0.05 (2 tailed) **.Correlation

significant at 0.01 (2 tailed)


.00-.19 “very weak” .20-.39 “weak” .40-.59 “moderate”

.60-.79 “strong” .80-1.0 “very strong”


above that the factors Durability,

Popularity, Price, Reference group are


„r‟ values .816, .504, .640, .393

respectively in semi-urban areas. In

rural areas, data is statistically

insignificant.



for HTC in semi-urban areas are

durability, price and popularity

durability as these factors have a

moderate to very strong correlation

which is evident from the „r‟ values

that lie between 0.40-1.0

.

Findings and conclusions

It was found that both semi-urban and

rural areas show a somewhat same

preference when it comes to different

brands of Mobile. In both the areas,

the most preferred brand of mobile

was Samsung followed by Apple and




then HTC. The least preferred brand

in both the areas were Intex, Oppo

and LYF.

The research findings showed that

popularity, durability, price and

reference group have been the major

factors that affect brand preference for

mobile in semi-urban areas, whereas,

factors such as quality, brand name,

colour variety and reference group

affect brand preference in rural areas.

From the above analysis it is seen that

factors that affect brand preferences in

both regions are different except

reference group. Reference group

affects brand preference for mobile in

both regions.

Research implication

Rural and semi-urban population

comprises of 70% of the entire

population of India. Therefore, it is

very important for the marketers to

understand thebehaviour of the

consumers who lives in these areas.

This study will help the marketers to

design marketing strategies for this

area and the areas which have similar

demographics as that of the area

taken for the study.This study will

also help companies to position their

products in these areas.

Limitation of the studyand scope

for further research

This research is restricted to only

one area i.e. Baddi, which is

situated in Himachal Pradesh,

Therefore, this study might not be

applicable in other areas.

Moreover, this study take into

consideration only one consumer

durable i.e. Mobile phone. Similar

studies can be taken up for other

consumer durables as well.

The sample size taken for this

study is 400 which is very small

and results of the study cannot be

generalized for the entire

population.

There can be different results if

different sample size and sample

population is taken.

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Metrics of Organizational Practices in Human Resource Management:

Selected perspectives from HR analytics


Dr. Indranil Bose

Dean-School of Business

University of Bolton, Academic Centre-Ras Al Khaimah

Al HudaibaBareraat, Ras Al Khaimah

United Arab Emirates

Email: [email protected]

Mobile: (+971)559860258

Abstract

Workforce analytics is presently considered as an important component of HR

analytics in business and industry. Many researches have been conducted on the

contribution of effective workforce analytics to broader achievements of HR

analytics in many industries. Workforce analytics have been found to be the key

indicators of different facets of the contemporary organizations such as

organizational hierarchy, number of functions or departments, understanding

organizational complexity, size of the organizations etc. Traditional measures of

organization structure such as span of control and tooth-to-tail ratio have also been

found to be widely used and many strategic decisions related to HR and

organizational strategies are related to it. Workforce analytics, has however, come

out of traditional measurement roles. New developments and models are now found

to be in great popularity, such as organizational shaping through pyramid ratios,

and predictive analysis etc. The other developments in the field, those have

significantly contributed in recent times are ensuring organization shaping through

employee growth analysis, developing and using analytical techniques to measure

softer aspects of the organization structure and collaborating organization

demographics and succession planning through several pyramids and ratio models.

All these developments in the field of workforce analytics have offered the

opportunities to the organizations to quantify many present and future

developments and possibilities of framing other relevant decisions pertaining to HR

in more accurate and scientific manner. The present paper presents conceptual

reflections on all these developments and an attempt has been made to explore

their relevance to make HR more competitive and strategically equipped in the

present business scenario.

Key words: Workforce analytics, span of control, tooth-to-tail ratio, pyramid ratios,

predictive analysis, employee growth analysis, softer aspects, organization

structure, measurements, HR analytics, conceptual study.




Introduction:

Organization structure is unique to

every organization. Unlike HR

processes, it does not easily allow

itself to be measured for efficacy.

However, improving a process

produces benefits that are much

localized. On the other hand, any

improvement using analytics in the

organization structure has greater

leverage across the organization.

However, different factors inherent of

the organization structure such as the

number of levels, the number of

functions or departments,

organization complexity and size of

the organization play significant role

in effective use of analytics.

Traditional measures of

organizational structure:

Traditionally, organizations have been

using two measures for assessing the

health of their organization. These are

management of span of control and

tooth-tail-ratio in

staffing.Management of span of

control can be simply put as the

average number of employees

managed by a manager. It can be

arrived at this by simply dividing the

total headcount by the number of

people designated as managers. For

example, if a company has 100

employees and 10 managers, the

management span of control is

100/10=10. Companies arrive at this

ratio and set goals to improve it on an

ongoing basis. For example, if the

ratio is 1:6.4 today, it should become

1.7 tomorrow. This is based on the

underlying assumption that there is a

good range for the ratio and one

should strive to be within that range.

In the 1990s, V.A. Graicunas created a

formula to identify a desirable span of

control. He estimated the span of

control based on relationships. As per

his opinion, every manager not only

has to manage the direct relationship

with each team member, but also the

relationships between themselves and

the group. The study finally shown

that when all these are added up, the

manager would find it difficult to

handle more than six reports in any

situation (Soundararajan& Singh,

2017).With time, attempts have been

made to recalibrate this approach,

such as 1:20 ratio in the situation of

assembly line production, where

management supervision is minimal

or 1:4/1:5 ratio in research and

development set up, where close

supervision is necessary. Neilson and

Wolf (2012), in their research have

shown that in the same industry, the

ideal management span of control may

vary based on different situations such

as nature of responsibilities,

characteristics of the subordinates etc.

The same study has given examples

from service industries managerial

levels. The examples have shown that




CEO span of control in the US has

increased from five direct reports in

1986 to 10 in 2006. Richard and

Nickson (2016)have however identified

1:7/1:8 as the magic ratio for optimal

reports.

Tooth-to-tail ratio, though is widely

used in armed forces to determine the

staffing levels (such as combat

personnel or tooth to non-combat

personnel or tail) for long time,

corporates have also started to use the

concept on practical grounds. In

corporates, such classification has

been generally done between typical

business functions (sales,

manufacturing, customer support etc.)

and typical enabler functions (finance,

legal, HR, quality assurance etc.).

According to Richard and Nickson

(2016),such classification matters

significantly for maintaining healthy

organization as the decisions related

to workloads, organization structures,

business strategies and finally the

financial health are directly related to

it. A study on the banking industry in

Europe has shown that in most of the

organizations 8%-12% range of head

counts were employed in enabler

functions, whereas 85%-90%

headcounts fell in the business

functions category (Smith and Rao,

2014).The study further described the

tendency of reducing the headcounts

in both categories to manage costs and

in the process many enabler as well as

business functions got outsourced.

Soundararajan& Singh (2017)have

highlighted the importance of tooth-to-

tail ratio in an organization not only

for head counts, but also for pay-roll

purposes. According to their opinion,

an optimum organization needs to be

decided on the basis of business

requirements, without providing a

buffer.

Emerging structural

measurements and organizational

competitiveness:

Different structural measurements for

organizational competitiveness have

become common phenomena in

present business scenario. It has been

found that organizations are

emphasizing on different pyramid

ratios and predictive analysis has

emerged as a major tool in this regard.

Organization shaping through

pyramid ratios is now widely used as

every organization has the inherent

preference towards attaining pyramid

structure. As per Soundararajan&

Singh (2017),every organization talks

numbers and in the process two

dimensions suffice. Thus a triangular

structure emerges and the reference of

pyramid structure becomes relevant.

According to them, this logic seems to

be simple, though it might be difficult

to arrive at an exact proportion of each

level of employment. Following

example can depict the picture of a




pyramid, with length of the lines

equivalent to percentage headcount

(refer table 1).

Table 1: Percent headcount in each

role

Role Role ratio Role as a

percentage

of lower role

Role as a

percentage

of lowest

role

Engineer 48% NA -

Sr.

Engineer

27% 1.1.8 1: 1.8

Lead 13% 1: 2.1 1:3.7

Project

Manager

6% 1:2.2 1: 8

Manager 3% 1:2 1:16

Senior

Manager

2% 1:1.5 1:24

Director 1% 1:2 1:48

Source: self prepared.

In the above table, the percentages

indicate the percent headcount in each

role.

Role as a percentage of lower role=

Percentage headcount in a role (Senior

Engineer)

Percentage headcount in the target

role (Lead)

The above formula shows 27/13= 2.1,

which indicates there are 2.1 senior

engineers for every lead. This

validates the fact that the

organization has a tapering pyramid.

Likewise, for every project manager,

the number of engineers can be found

as follows:

Role of percentage of lowest role=

Percentage headcount in entry level

(engineer)

Percentage headcount in the target

role (project manager)

The above formula shows 48/6=8,

which indicates for every project

manager, 8 engineers can be found.

This definitely shows a healthy

organization trend. If it were 2, then

the company has far too many project

managers.

It can be found from the above

examples that the ratios nearly double

at each level. It can be equated to a

progression of 2,4,8,16,32 and 64.

According to Richard and Nickson

(2016), each organization has very

different ratios based on their stage of

growth and internal mobility. They

further added that most of the

manufacturing organizations apply

workforce ratios and that too

primarily in their white colour staffs.

In their observations every company,

after a point of time, sets up internal

universities (learning system) to

recruit fresh graduates from college to

maintain their pyramid ratios and as

far as possible have talent grown from




within. They further added that there

was a stage in the IT industry, where

more than 60% of the workforce was

composed of entry-level engineers.

This led to a structure that looked like

a triangle with its bottom stretched,

which was not a ideal structure.

As per Soundararajan& Singh (2017),

in a healthy organization, it is natural

that the role ratios between a level

and the one above it are usually more

than1, which denotes that in the

organization, not everyone gets

promoted automatically.

Predictive analysis is found to be

another important and growingly

popular method to shape the

organization and that in turn are

ensuring better measurability of the

organization. Better measurement of

the organizations is also contributing

towards growing organizational

competitiveness. Organization shaping

through predictive analysis is the

technique, by which organizations’

shapes are defined through prediction

of future manpower needs and their

supplies. According to Kelvin and

Rutledge (2017), there are two main

predictive analysis, those found

responsible for shaping the structure

of the organizations. These are (1)

determining the way/ways by which

an organization stays on the pyramid

ratios and (2) measuring the role of

replacement ratios. One obvious

example of determining the way/ways

by which an organization stays on the

pyramid ratios is growing talent

internally and restricting hiring

strictly to entry levels. This way, there

are always people coming in through

the ranks. The example of measuring

the role of replacement ratios can be

given in the following manner.

Assume that a company has an

attrition of 10%. Then, it needs to

replace that extent of headcount.

Where there are internal successors

identified, people are moved into these

roles. Otherwise, external hiring

remains the second big source for

replacement hiring. Soundararajan&

Singh (2017) have divided

replacement hiring into the following

categories: replacement hired at a

higher level, replacement hired at a

same level and replacement hired at a

lower level. According to them, one

organization needs to review each

position and to make sure that at least

a quarter of the positions annually are

replaced at a level less than the

person leaving the job. They have

further recommended that a review on

how many % of positions are backfilled

at the same level, should be the part of

the practice. The comment by Richard

(2009) can be taken into consideration,

where he observed that in an effective

and competitive organization should

encourage to backfill at least 25%




positions at the lower level. Based on

such observations, two types of

organizational shapes have been

shown. The most common one is of

pyramid shape, where each level has

lesser people than the level below

that. The other common type of the

shape is the combination pattern,

where at most of the levels, there are

lesser people than the level below and

in some levels the opposite trend is

also possible. The second type of

organizational shape has been linked

to certain developments. For example,

in a multi-national organization with

operations in a country

The HR might not have the liberty to

hire trainees from campus at each

levels due to practical constraints.

Though, many of the new hires tend to

grow towards above positions within

short time. In such cases, the company

shifts from a ‘default lateral hire’ to

‘default grow from within’. The shape

of the company then becomes a mixed

structure (Refer table 1).

Table 1: Organizational structure

based on mixed/combined hiring

approaches

Year 1

Level Numbers Internal

growth

External

hire

IC 30 30

Lead 50 10 40

Manager 20 05 15

Year 2

IC 60 60

Lead 70 40 30

Manager 30 15 15

Year 3

IC 100 100

Lead 80 60 20

Manager 40 32 8

Source: self made

The above table shows that the

company has grown from a head count

of 100 to 220 over a 3-year period.

However, it has consciously changed

the pyramid shape from the shape

that was bulged in the middle.

According to Richard (2009), such a

strategy also provides for a conscious

and optimal mix of internal

promotions versus lateral hiring. He

further said that coming out of

traditional conservative approach and

adopting such mixed and combined

approach clearly indicates greater

competitiveness of the workforce in

many industries.

Organization shaping and

employee growth:

Employees prefer their organizations

to provide considerable career growth.

However, the situation becomes

challenging, when, an organization is

in a growth industry and is growing as

well as it’s competitors. Here in such

as situation, even the company has

the ideal pyramid, it still needs to

have a good distribution of employees

within the level. Guy and Thomas

(2010) in their study have identified

the challenges of HR of shaping the

organizations and ensuring employee

growth. They further added that in the




situation of employees demand for a

career move, every 2-3 years, HR

should share not just the career path

but also the time expected for each

progression for average performance

and company growth rate. Then, for

satisfying employee aspirations, the

HR should review the population

distribution within each level. They

have described an ideal situation in

the book (Refer table 2).

Table-2: Career move model 1 Level Tenure in level Numbers

Engineer 0-2 50

2-3 25

Lead 0-2 50

2-3 20

3-4 10

Manager 0-3 30

3-4 10

4+ 10

Source: Guy and Thomas (2010)

It can be found from the above table

that how subsequent positions become

vacant and the career move goes on.

Here, the structure remains the

pyramid one and employee growth can

be cascaded down the path.

Guy and Thomas (2010) have also

given examples of top heavy

organizations and their impact on

employee growth in the organizations

(Refer table 3)

Table 3: Career move model 2 Level Tenure in level Numbers

Engineer 0-2 40

2-3 25

Lead 0-2 20

2-3 30

3-4 10

Manager 0-3 15

3-4 30

4+ 20

Source: Guy and Thomas (2010)

The organization, shown above in the

study of Guy and Thomas(2010) can be

considered as relatively top heavy. It

is found that of the 50 manager

aspirants, only 15 are promoted. For

the 15 vacancies, there are 40

aspirants at the lead level and then

there are 25 aspirants for 15 positions

in the lead level.

Given that this shape has been

created based on ad-hoc hiring, the

company will tend to loose more

employees at the lower levels as they

have gained competencies of a higher

level in their role and they could easily

move to the next level in other

companies. According to Stuart and

Johnson (2012), organization shaping

then drives employee growth, when we

do not analytically review the staffing

plans holistically and attrition

becomes an issue in the future.

Ensuring competitiveness by

measuring the softer aspects of

organization structure:

Though the organization structures

look neat on the computer display, but

in reality, they are filled by people

who interact with each other.

According to Soundararajan& Singh

(2017),perception of the organization




structure plays an important role in

enabling the success of the structure

in specific and of the employees in

general. They have further opined

that, it is possible to measure some of

these as a one-off exercise and identify

focus areas. For example, in a

company with lots of matrix reporting

relationships, one can identify the

number of employees with matrix

relationships and employees who are

matrixed to more than two managers.

Both are indicators of organizational

complexity and need to be observed.

Here, employee surveys are found to

be most commonly used methods to

capture all perception feedbacks in

companies. Most of the scholars have

opined that by using all these

workforce related analytics, the

organizations can become more

competitive over the years. According

to Stuart and Johnson (2012), such

enhanced competitiveness have been

found in cost aspects, in enhanced

employee motivation and reduced

attrition and in the development of

future proof staffing plans.

Organization demographics and

succession planning:

Often countries are analyzed on their

population distribution. For example,

Europe and Japan have aging

populations, while India and China

still have relatively younger

population. India has the world’s

youngest population which will

remain so for the next 10-15 years.

Analysis refer to this as the

demographic dividend. Same is the

trend in the countries like China,

Taiwan etc. In these countries, most of

the organizations, specially in

technology based industries,

organizations are investing money and

making long term plans to retain their

young employees. Succession planning

has become more important tool here.

Japan has a different distribution of

population. 40-44 and 65-69 are the

biggest age groups there. Just looking

at the demographics, the situation

tells us that the nature of people

problems in Japan and India are

totally different. While coming across

some manufacturing organizations,

where average age is in the high 40s,

low attrition is the main feature of the

workforce and HR priorities are

changed. Therefore, succession

planning needs to become a

phenomenon, where both the

incumbents as well as successors are

found to be of same age group and are

likely to retire at the same time.

Therefore succession planning

remains a major area of concern,

which has derived from age

distribution. Gender distribution has

also been identified as major factor for

determining succession planning

(Mary and Rehan, 2014).They have

observed that even in studies of




gender diversity, same issues come up.

Soundararajan& Singh (2017) in their

studies have therefore related the

issues of measuring softer aspects,

measuring demographics etc. as some

of the preconditions of effective

workforce analytics. According to the,

any such effective analytics can result

in forecasting of appropriate

organizational structures,

organizational shapes and sizes

leading to more competitive

organizations.

Some recent observations on

effectiveness of competitive

analytics:

Different techniques and intricacies

have been attempted to be discussed

in the above deliberations. However,

the level of effectiveness and the scale

of application of such applications for

work-force analytics in industry has

remained a subject of discussion and

academic review. One school of

researchers have opined that

workforce analytics has not only

changed the perspectives of strategic

decision thinking, but also influenced

the overall practices of HR discipline

(Singh and Rozario, 2014; Freeman et.

al, 2015; Welinker and Raman,

2016;Johnson and Douglas,

2016).Another group of scholars have

adopted more cautious approach.

According to Mary and Rehan

(2014),Sebastian and Monroe

(2015),Rubaini (2015),as a part of HR

analytics, workforce analytics has

remained a major supporting

instrument but not the strategic tool

itself. Many of them have further

observed that the practice of workforce

analytics is still at a very nascent

state and lot of interventions are yet

to come.

Conclusion:

The above discussions have remained

limited to conceptual deliberations

related to different aspects of work-

force analytics and its applications

through measuring organizational

shapes and structures through the

numbers of levels and layers, number

of functions or departments, through

organizational complexities, size of the

organizations etc. The practice of

workforce analytics to determine the

organizational effectiveness and

competitiveness has been found to

emerge an area of robust

experimentation. More and more

studies are expected on the domain in

future. The present study can also be

improved by adding more advanced

applications and priorities of the

workforce analytics in future. An

element of empiricality can be a more

practical approach in that context.




References:

Freeman A., Robert. K.L. & Smith,

J. (2015), Structural determinants

of organizational competitiveness,

International Business Strategy

Review, Vol. X Issue 1, pp. 23-29

Guy, F. and Thomas, D. (2010),

The theory of the growth and

competitiveness in farm

management, International

Journal of Sustainability, Vol. 34

No.2, pp. 654-677

Johnson, T. and Douglas, C.(2016).

Kelvin, J. and Rutledge, S.T.

(2017), Derivatives and analytics:

the strategic perspectives, Journal

of IT and Management, Vol. 10

No.6, pp. 56-78

Mary, J. and Rehan, C. (2014), War

for talent and HR analytics,

Journal for Human Capital, Vol. 8

No. 1, pp. 451-463

Neilson, G. & Wolf, J (2012), How

many direct reports? , Harvard

Business Review

Richard, J. (2009), How an

organization is shaped with HR

policy? Human Resource

Management and Strategic

Review, Vol. 6 No. 1, pp. 190-214

Richard, G. and Nickson, K. (2016),

How analytical the decision may

be: an HR experience, Journal of

Business and Entrepreneurship,

Vol.30 No.4, pp. 341-357.

Rubaini, A. (2015),The art of

human capital management,

Boston, MA: Aberdeen Press LLC.

Sebastian, v. and Monroe, R.

(2015), Structure is not

organization, Business Horizons,

Vol 29 No. 2, pp 19-29.

Singh, J. and Rozario, D. (2014),

HRD: using analytics to plan and

optimize the organizational

competitiveness, Journal of Human

Resource Management and

Business Strategy, Vol. 10 No. 1,

pp. 510-532

Smith, A. and Rao, R (2014), HR

analytics and business

competitiveness, International

Journal of Strategy and Systems,

Vol. 30 No.1, pp. 230-243

Soundararajan, R & Singh, K

(2017), Winning on HR Analytics:

Leveraging data for competitive

advantage, 1st edition, Sage

Stuart, R. and Johnson, A. (2012),

Trends in workforce analytics,

Journal of Kenan-Flagler Business

School, Vol. 6 No.1, pp. 67-74

Welinker, E. and Raman, R.(2016),

Trends of HR analytics, Journal of

Strategy, Vol. 52 No. 4, pp. 700-716

Transformational Leadership – The Need of the Hour?


Mr. Prasad L,(Ph.D), MBA, B.E.

Research Scholar& Assistant Professor

Ramaiah Institute of Management Studies/Sciences

No. 15, New BEL Road,MSRIT Post, M S Ramaiah Nagar,Bangalore 560054

Email.id: [email protected]

Mobile : +91 98441 28846

Dr. Noor Firdoos Jahan, Ph.D

Professor

R. V. Institute of Management

CA 17, 26th Main, 36th Cross, 4th T Block, Jayanagar, Bangalore 560041

Abstract

What is Leadership, and who is a Leader? How important is Leadership in steering a company

towards success? Which type of Leadership style is most suitable for leading a company to

success? Are Leaders born or made?

The above are just a few of the questions that but naturally come up in the minds of students

and practitioners of management. The simplest definition of a Leader is that“A leader is one

who has followers”. Without followers, there is no leader – a simple yet practical truth. But, if

the Leader does not possess certain qualities that inspire and motivate the followers, they will

not follow him. From this perspective, a Leader has to treat the initial followers as equals, and

once he has sufficient followers, nurture them. Another notion attached to Leaders and

Leadership is that Leaders need to have a Vision. Henry Kissinger has famously said that “the

task of the leader is to get his people from where they are to where they have not been”.

Leadership as a subject has been studied over the last 100 years or more. From the initial

theories of leadership such as the “Trait Approach” to “Transformational Leadership”, various

theories have thrown light on the subject of leadership and have contributed to a better

understanding of leadership. Some of the popular leadership theories are: Trait Approach,

Skills Approach, Style Approach, Situational Approach, Contingency Theory, Path-Goal

Theory, Leader-Member Exchange Theory, Transformational Leadership, Servant Leadership,

Authentic Leadership, Team Leadership, and Psychodynamic Approach.

This conceptual research paper focuses on “Transformational Leadership” – a theory which is

fast gaining acceptance the world over as one of the most effective theories in leadership.

Whilst discussing Transformational Leadership, this paper also throws light on related types of

Leadership – Transactional Leadership, and Laissez-Faire Leadership (Passive Avoidant

Leadership). Transformational Leadership is all about changing and transforming followers.

Key words:leader, leadership, leadership theories, transformational leadership, leadership

styles



Introduction

The 21st century has thrown various

challenges to the business world,

including the threat of disruptive

technologies such as Artificial

Intelligence, Machine Learning,

Robotics, Blockchain, Analytics,

Internet of Things, Design Thinking,

etc. As a result, businesses are being

forced to adopt these technologies

and skill/re-skill their workforce in

order to be able to compete in the

market place and sustain themselves

in the long run. Moreover, of late, we

are seeing a shift from Globalization

to Nationalism, thereby impacting

businesses which are heavily

dependent on global markets for

their revenues and survival. In such

a complex and dynamically changing

business environment, the role and

importance of the leader has come

under scrutiny. On the one hand,

technology is making certain

categories of jobs obsolete (especially

low level jobs which are repetitive in

nature and don’t require too much of

human intelligence), and on the

other hand, leaders are expected to

deliver more from less. How does the

leader inspire/motivate his followers

to deliver more than what they were

expected to? Adapting a

Transformational Leadership style

could be the answer and the need of

the hour.

Transformational Leadership is a

relatively new approach to

leadership and has been one of the

current and most popular

approaches to leadership since the

1980s. The Multifactor Leadership

Questionnaire (MLQ), also known as

Form 5X-Short, evaluates three

different leadership styles:

Transformational, Transactional,

and Passive-Avoidant.

Leaders can measure how they

perceive themselves with respect to

specific leadership behaviours using

the Leader/Self form. But, the crux of

the Multifactor Leadership

Questionnaire is in the Rater form

where subordinates rate the leader

on specific leadership behaviours.

The Multifactor Leadership

Questionnaire is based on the 360

degree feedback method and has 45

items which are rated on a 5-point

behavioural scale.

The instrument has been extensively

researched and validated. It has

been used in thousands of research

papers, doctoral dissertations, and

master’s theses.

3.0: Literature Review

3.1: Leadership

The reference to various theories on

Leadership in this section have been

taken from a book titled “Leadership:

Theory and Practice” by Peter G.

Northouse (2012).

Across the world, business

corporations are always on the

lookout for people with leadership

ability due to the belief that such



people have special assets that

improve the bottom line of the

corporations.

Northouse puts forth in his book that

the various research findings on the

topic of Leadership provide insight

that is vastly different (more

sophisticated and complex) from the

simple views of Leadership found in

popular books on Leadership.

The definition of Leadership has

evolved greatly over the last 100

years and more. At the beginning of

the twentieth century (1900-1929),

Leadership was looked upon as

control and centralization of power,

with domination over followers being

a common theme.

During 1930-1940, researchers

focused on the traits of a leader and

looked at leadership as being able to

influence followers rather than

dominate them. The 1940s saw a

shift in the focus of research on

Leadership – from traits of leaders to

how leaders behave while leading

and directing group activities.

In the 1950 and 1960s, we saw

researchers continuing to support

the group approach, and added a few

more dimensions - like leaders

developing a relationship with

followers while developing shared

goals of the organization and the

effectiveness of the leader.

The 1970s were influenced by the

Organizational Behaviour approach,

wherein the ability of leaders in

initiating and maintaining groups or

organizations towards achieving the

group or organization’s goals were

taken into account.

Towards the end of the twentieth

century (1980-2000), the focus

shifted back to dominating the

followers (do as the leader wishes),

having an influence over them and

on the traits of the leader. For the

first time, researchers started

looking at transformational

leadership (the ability of leaders to

charge and transform people).

Northouse argues in his book that

even after a century of research on

Leadership, in the twenty first

century, there is still no agreement

on a common definition of

Leadership. But, for the sake of

convenience he defines leadership as

“Leadership is a process whereby an

individual influences a group of

individuals to achieve a common

goal”

In the last sixty years, there have

been sixty five different classification

systems to define the dimensions of

leadership.

A few components that are at the

core of the phenomenon of leadership

are that leadership is a process that

involves leaders having an influence

over a group of followers in achieving

common goals.



Though there are sixty five different

classification systems to define

leadership, only twelve leadership

theories have been reviewed in this

study. The selection of these twelve

leadership theories was based on the

extent of research done on these

theories, their popularity and

practical applicability in the real

world. The leadership theories that

have been reviewed in this study are:

Trait Approach, Skills Approach,

Style Approach, Situational

Approach, Contingency Theory,

Path-Goal Theory, Leader-Member

Exchange Theory, Transformational

Leadership, Servant Leadership,

Authentic Leadership, Team

Leadership, and Psychodynamic

Approach.

Comparison of Leadership

Theories

Having reviewed the various theories

on leadership, it is important to

compare the various theories from a

standpoint of which leadership

theory would be used for the purpose

of research in this study. Table 3.1

compares the various theories of

leadership.

Table 3.1: Comparison of Leadership

Theories Sl.

No Theory

Central

Theme

Strengt

hs

Weakness

es

1 Trait

Theory

Leaders

are born

with

leadership

traits

Backed

by

extensi

ve

researc

h

Does not

link traits

with

leadership

outcomes

2 Skills

Approach

Leadership

skills and

abilities

can be

learned

Include

s a

wide

variety

of

compon

ents of

leaders

hip

Too broad.

Beyond

the

dimension

s of

leadership

skills

3 Style

Approach

Focuses on

the

behaviour

of leaders

Has

great

validity

and

credibil

ity

Does not

link

leadership

styles with

leadership

outcomes

4 Situationa

l Approach

Adaptabilit

y of leaders

based on

situation

Very

practic

al

approa

ch and

has

stood

the test

of time

Not

backed by

extensive

research

5 Contingen

cy Theory

Matching

leadership

skills with

the right

setting

Is

support

ed by

extensi

ve

empiric

al

researc

h

Does not

address

the

mismatch

between

leaders

and

situations

6 Path-Goal

Theory

Motivating

followers

to achieve

goals

Is very

practic

al in its

approa

ch

Is complex

and

confusing.

Has

received

partial

support in

empirical

research

7 LMX

Theory

Interaction

between

leader and

follower

Is a

very

strong

descrip

tive

theory

Measurem

ent of

Leader-

Member

Exchange

is

questiona

ble

8 Transform

ational

Leadershi

p

Changing

and

transformi

ng

followers

Widely

researc

hed

and

has

proven

effectiv

eness

Poor

validity

for

measurem

ent of

Transform

ational

Leadershi

p

9 Servant

Leadershi

p

Putting

followers

before self

Only

theory

that

focuses

No

common

definition

or



on

followe

rs

framework

for

Servant

Leadershi

p

10 Authentic

Leadershi

p

Focuses on

whether

leadership

is genuine

and real

Meets

the

need

for

trustwo

rthy

leaders

hip

Is still in a

formative

stage

11 Team

Leadershi

p

Focus on

working in

teams and

shared/dist

ributed

leadership

Is in

tune

with

today's

reality

Is complex

and does

not have

an

exhaustive

list of

Team

Leadershi

p skills

12 Psychodyn

amic

Approach

Focuses on

the

personality

types of

leaders

Is

univers

al in its

approa

ch

Has

limited

use in

practice

3.2: Transformational

Leadership

Transformational Leadership is a

relatively new approach to

leadership and has been one of the

current and most popular

approaches to leadership since the

1980s. This approach is an integral

part of the New Leadership

paradigm, which includes gives more

attention to the charismatic and

affective elements of leadership.

Transformational Leadership aims to

change and transform people and

deals with emotions, values, ethics,

standards, and long term goals. This

leadership approach includes making

an assessment of the follower’s

motives, satisfying their needs, and

treating them as full human beings.

Transformational Leadership is all

about the leader influencing the

follower to achieve more than what is

expected from them by making use of

charismatic and visionary

leadership.

When a leader focuses on his

interests rather than on the interests

of his followers, it is termed as

pseudo-transformationalleadership.

When leaders put the interest of

others over their interests, such

leadership is termed as socialized

leadership.

Transformational Leadership is

different from Transactional

Leadership. Transactional

Leadership focuses on the exchange

that happens between leaders and

followers, whereas Transformational

Leadership is all about the leader

engaging with a follower and

influencing him to achieve more than

what he is capable of.

Transformational Leadership has

often been compared to Charismatic

Leadership, in terms of similarities

between the two approaches.

Some researchers have viewed

Transformational and Transactional

Leadership as being part of the same

continuum, as depicted in Figure 3.1.

Figure 3.1: Leadership

Continuum from Transformation to

Laissez-Faire Leadership



Transformational Leadership and

Transactional Leadership are best

described by the Model of

Transformational and Transactional

Leadership (Table 3.2).

Table 3.2: Model of Transformational

and Transactional Leadership

The seven factors that are

incorporated in Transformational

and Transactional Leadership are

also depicted in the Full Range of

Leadership Model (Figure 3.2).

There have been other perspectives

on characteristics of

Transformational Leadership:

visionary, social architect, creating

trust, and creative deployment of self

(Bennis and Nanus) and model the

way, inspire a shared vision,

challenge the process, enable others

to act, and encourage the heart

(Kouzes and Posner)

Figure 3.2: Full Range of Leadership

Model

Legends used in Figure 3.2

LF Laissez-Faire

MBE Management by Exception

CR Contingent Reward

IC Individualized Consideration

IS Intellectual Simulation

IM Inspirational Motivation

II Idealized Influence

Strengths of Transformational

Leadership

The Transformational Leadership

approach has an intuitive appeal and

has been widely researched from

many different perspectives. The

approach gives a lot of importance to

the follower’s needs, values, and

morals. Based on research, it can be



said that there is enough evidence to

prove that Transformational

Leadership is an effective form of

leadership.

Criticisms of Transformational

Leadership

Some critics feel that this approach

lacks conceptual clarity and that the

measurement of leadership has very

poor validity.

The approach looks at leadership

from a personality trait point of view

rather than from a behaviour point

of view. The approach does not

establish a causal link between

transformational leaders and how

they are able to bring about change

in the followers.

Leadership Instrument


Questionnaire (MLQ), also known as

Form 5X-Short, evaluates three

different leadership styles:

Transformational, Transactional,

and Passive-Avoidant. Leaders can

measure how they perceive

themselves with respect to specific

leadership behaviours using the

Leader/Self form. But, the crux of the

Multifactor Leadership

Questionnaire is in the Rater form

where subordinates rate the leader

on specific leadership behaviours.


Questionnaire is based on the 360

degree feedback method and has 45

items which are rated on a 5-point

behavioural scale. The instrument

has been extensively researched and

validated. It has been used in

thousands of research papers,

doctoral dissertations, and master’s

theses.

Famous personalities with

Transformational Leadership

styles

Some of the transformational leaders

the world has seen are: Alexander

the Great, Michael Bloomberg,

Richard Branson, Buddha, Andrew

Carnegie, Fidel Castro, Coco Chanel,

Jesus Christ, Winston Churchill,

John Deere, Walt Disney, Henry

Ford, Benjamin Franklin, Sigmund

Freud, Bill Gates, Samuel Goldwyn,

Adolf Hitler, Lee Iaccoca, Steve Jobs,

Herb Kelleher, Martin Luther King,

Dalai Lama, Vince Lombardi, Nelson

Mandela, Douglas McArthur, Elon

Musk, J. Pierpont Morgan, David

Ogilvy, David Packard, J. C. Penney,

Howard Schultz, Charles Schwab,

Alfred Sloan, Sun Tzu, Sam Walton,

and Muhammad Yunus (Murray

Johnson, March 2014)

Review of Empirical Studies

The doctoral thesis titled

“Anexamination of the relationship

between emotional intelligence,

leadership styles and leadership

effectiveness”, submitted by Mr.

BadriNath to Jaypee Institute of



Information Technology, Noida

(India) on 25-10-2013 was reviewed

as it was found to be closely related

to the research topic.

The objectives of the study was to

study the relationship between

emotional intelligence of leaders and

their leadership effectiveness,

transformational leadership style,

transactional leadership style, and

passive avoidant leadership style.

The research design used in the

study was descriptive research. The

researcher chose a quantitative

method as he wanted to establish a

measurable relationship between the

variables. The survey data was

analyzed using a two-step structural

equation model (SEM).

The researcher conducted the study

using a sample of 156 managers and

312 subordinates, working for

software companies in the National

Capital Region (NCR), India. The

Emotional and Social Competency

Inventory (ESCI) rating version was

used for measuring the manager’s

emotional intelligence and the


Questionnaire (MLQ) 5x (Rater

Form) was used to measure the

manager’s leadership style and

leadership effectiveness.

The researcher has tested the

hypotheses using SPSS, and AMOS

was used to develop development

and structural models.

According the results of the study,

the researcher has concluded that a

statistically strong positive

relationship exists between

emotional intelligence of a leader

and his effectiveness,

transformational leadership style,

and transactional leadership style.

The study also establishes a

significant negative relationship

between a leader’s emotional

intelligence and his passive avoidant

leadership style.

Objectives of the study

The objectives of this study are to:

Understand Transformational

Leadership

Make recommendations for

further research on this topic

Research Methodology

This research paper is qualitative

and exploratory in nature. Data has

been collected from secondary

sources, by doing extensive literature

review on the topics leadership. The

secondary data has been collected

from published sources such as the

Internet, and articles published in

journals.

Data analysis and interpretation

Some of the key learning, analysis,

and interpretation from the review of

literature can be summarised as

follows:



The review of literature has

revealed views of leadership

ranging from simple to

sophisticated and complex

Leadership has evolved, from the

initial days of having control and

domination over followers, to

changing and transforming

followers

There is no common definition of

leadership


an integral part of the New

Leadership Paradigm, which

focuses on the charismatic and

affective elements of leadership


being compared and equated to

Charismatic Leadership due to

the similarities in notions and

approaches of the two types of

leadership styles

There is sufficient evidence to


Leadership is a highly effective

form of leadership, based on the

thousands of instances where

researchers have used the


Questionnaire to study the

leadership styles of the

respondents

Conclusion

The research paper has made an

attempt to present an overview of

Transformational Leadership and

highlighting its importance in the

world of business. However, since

this is a paper which is qualitative

and explorative in nature, it does

not offer empirical evidences to


Leadership is indeed an effective

form of leadership, thus paving

the way for future researchers to

delve more in detail into this topic.

References

1. Peter G. Northouse, “Leadership:

theory and practice”, Sage

Publications, 2012

2. BadriNath, “An examination of

the relationship between

emotional intelligence, leadership

styles and leadership

effectiveness”, 2013

3. Murray Johannsen, “125

transformational leaders: list of

famous ones from many

countries”,

https://www.legacee.com, 2014

https://www.legacee.com/

Mentoring for Professionalism



Professionalism, the buzz word in

today’s Business and Social

environment is defined as “The

combination of all the qualities that

are connected with trained and skilled

people that can apply their thoughts

and actions with great sense of

equanimity and purposeful tactic”. It

provides a guideline and underlines an

approach that can help others easily

understand and accept a person’s

matured behaviour with great

appreciation even amidst chaos and

difficult situations. In the business

world, it can be seen as an approach

that enables an employee to achieve

his fullest potential and maximise the

results, while being fair in a justifiable

manner as may be relevant for that

situation. This, when practiced with a

sense of purpose, ensures profound

clarity for everyone who is connected

with that person or the process or the

situation thus making it easy to adopt

and gives no room for doubts or

suspicion in terms of the means as

well as the outcome. Professionalism

is also a “Test of Character and

Dr. Radha.R, M.Com., M.Phil. ACS., Ph.D

Professor,

Ramaiah Institute of Management Studies, (RIMS)

# 193 , New BEL Road, MSRIT Post, MS Ramaiah Nagar,

Bangalore 560054

Phone: 98802 10716

E-mail:[email protected]

Abstract

In this era of stiff global competition all the companies look forward to having

professionals onboard. They insist on professional qualification, professional power

dressing, etiquettes, behavior and everything that states “Professional”. The

organizations also understand and appreciate the importance of mentoring. But, both

the concepts, being very important should be linked together right from the student

days so that this can be displayed when the students join the organizations. The B

Schools should ensure that the students are groomed to be thorough professionals and

use “Mentoring” as an effective tool towards achieving this objective. This is a

conceptual paper which relates professionalism and the use of mnyoring to achieve this.

Key Words : Professionalism, B Schools, Mentoring

https://dictionary.cambridge.org/dictionary/english/combination

https://dictionary.cambridge.org/dictionary/english/quality

https://dictionary.cambridge.org/dictionary/english/connected

https://dictionary.cambridge.org/dictionary/english/trained

https://dictionary.cambridge.org/dictionary/english/skill



Belief”. While it gets constantly tested

and evaluated under various

situations and conditions its measured

not only on the basis of outcome and

purpose but also hinges on the degree

of consistency and commitment to

maintain even under pressure.

In this fast paced and ever changing

world we have to consistently match

up with others and yet look different

from the crowd and this can be done

only by doing things differently. That

is exactly what Mr. ShivKera, the

motivational guru has said. “Leaders

do not do different things; they do

things differently”. Professionalism

enables us to do all that in a

structured and organised manner and

also exhibit a sense of unbiased

evaluation of all the possibilities and

yet doing the right thing at the right

time.

Going by dictionary Professionalism

refers to being Competent, Proficient,

Resourceful, Capable, Expert, Skilled,

Qualified and the list is endless as all

professionals would know.

Professionalism is attributed to being

able to tackle and manage anticipated

as well as unanticipated issues on the

fly without losing focus on the overall

purpose or growth of the individual as

well as the organisation should the

environment and underlying situation

conflict amidst themselves too.

The gamut of issues to be tackled

combined with the need to reinvent

have taught the higher education

institutes and especially B Schools to

create top notch professionals who will

be a hybrid of “Smart Brains” and

“Smart Personalities” giving the most

required edge to the students of the B

Schools.

When we dive deeper into

Professionalism we understand that it

is not a mere acquisition of

professional degrees nor is it a

training certificate as quite often

misunderstood… It is about

roundedness (360) of thinking, acting,

involving and performing while

raising the level of achievement and

the benchmark for success without

leaving behind even iota of fairness

and integrity. Appearance,

demeanour, reliability, competence,

ethics, poise, etiquettes,

communication and accountability can

be listed as the essential qualities for

a thorough professional. But a

teaching professional additionally

requires knowledge and awareness

about diversity of his/her students to

make teaching and learning a more

rewarding experience. Therefore, for a

teacher to be a thorough professional

he/she requires that extra zing to

connect with his/her students and

make teaching a rewarding experience

both for the teacher and for the



taught. This can be achieved through

“Mentoring” and therefore, this paper

is an attempt to associate

professionalism with mentoring.

What are the focus areas to make a

professional out of a teacher with the

added element of effective mentoring?

Planning is all about preparation

that will help meet the challenges of

tomorrow or any time in the

foreseeable future. Professional

behaviour demands a certain amount

of planning so that overruns are

avoided, risk is reduced, cost and time

is reduced and the work proceeds

smoothly and efficiently. “Mentoring”

should encompass the tenets of

effective planning which enables the

students to firm on both short term

plans as well as long term ones. It

should also create awareness in the

minds of the students that if a given

plan fails, what should be the other

options and how it should be invoked

when needed. Planning is not only

about what to do as it pans out, but

also about anticipating possible fall-

outs and avoiding or circumventing

them. While professionalism teaches

them to take calculated risks ( a

variation of being aggressive to

achieve business goals in today’s

competitive environment) and might

push the individual to go for the kill (

in certain situations, achievement

becomes paramount and there may be

no easier options) it would call for

being dispassionate and

unemotionally strong to act

aggressively to meet the gaols. But

even so, in the face of such a

demanding situation –

Professionalism expects more

maturity and justifiable reasoning and

hence mentoring students to be able to

meet their goals without

compromising on any of the

fundamentals is critical and

necessary. Mentoring actually trains

their mind and the method of thinking

to attune themselves to do the right

thing and even be ready to face

failures without losing sight of the

goals as well as the edifice of

behaviour and character that becomes

visible in such situations. Therefore

the need to counsel them on how

failures can be handled without

becoming emotionally bankrupt is also

an added lesson that adds a jewel to

the art of Mentoring towards

Professionalism as the life line.

Communication is the unwritten

script for making professionalism

work. Some examples will make it

easy to appreciate why communication

plays a key role… Do we take care to

explain things to our students,

colleagues or to our management? A

doctor who explains a point to a

worried patient is more professional



than a doctor who does not bother to

assuage the feelings even if it’s a

simple injury. Should the doctor be

more concerned about writing

prescription to quickly dispatch the

patient and then invite the next or

ensure the patient feels comfortable

even under distress?. While both the

doctors intend to achieve the same

goal (the end result) here-in, one

reduces worry while the other causes

unnecessary tension in the minds of

the patient. It’s the element of caring

that gets depicted when the

communication is correct and

meaningful to the end recipient who

has to absorb and act – which

incidentally is the true measure of

meaningful communication.

“Mentoring” should enable or enlist

the mechanisms to help connect easily

and purposefully. Communication is

one of the means to demonstrate

professionalism as it reflects both the

purpose and the means to achieve it.

As all leaders purport -

Communication should be complete - –

more because it’s understood and

absorbed by a different person (the

Recipient) – who alone can tell

whether it was useful or not. Hence

the emphasis should be on “impressive

and effective communication skills” –

which will be the invisible guide to go

up the ladder of a professional.

Decision making is another

evaluation criteria to determine the

degree of professionalism. The way we

make our decisions shows us to the

whole world and/or to the Team that

we are associated with; depicting as to

how we approach a problem and also

as to how we derive a solution, all the

while leveraging on the means that

will help us reach our set goals. The

methods may be many, but, what is

critical is for the veracity of the basis

and the consistency of the decisions

along with the approach mechanism

that will stand us in good stead. Many

are used to decisions made on whims

and fancies and sometimes exposed to

partisan or biased views or decisions.

This is where professionalism gets

compromised and the leader falls very

badly. It must also be pertinent to

note that people still use different

techniques to analyse and evaluate a

situation on their own merits and

hence may be inclined to use

intuitions to make or justify a

decision. However, what drives

Professional Decision-making is the

combined factorization (effect) of

consistency, purposefulness, integrity,

unbiased valuation, risk mitigated

options, better-outcome-value all

which define and highlight the degree

of Professionalism when it comes to

Decision-Making. Therefore, effective

mentoring should always harp on the

ethical decision making and guide the



protégés to go through the various

steps in decision making without

losing sight of the end.

Doing the job and doing it right

without being just “yes men” is key.

Doing the right things both from an

individual perspective as well as

organisational perspective is a true

exhibition of a Professional approach.

Therefore, it is the job of the teacher to

not only be a professional in their

dealings, but also make the students

to feel the urge to imbibe the quality of

professionalism. Again to drive home

this about being FOCUSED and doing

it RIGHT – teachers have to rely on

“Mentoring” to ensure that the tenets

of professionalism is well understood

and internalized by the student

forever.

Mentoring provides a framework

where the students pursuing

professional education develop skills

and knowledge and enhance their

personal and professional skills to be

successful in their ventures.

Mentoring program in B Schools is a

structured formal process that aims at

enriching the protégé’s abilities and

overall skills that an able mentor can

easily elicit from or train an individual

on. Mentoring also helps in

understanding the protégé’s overall

potential, career aspirations and also

their personal expectations that need

to be tended to (given direction and

focus). Mentoring programs should

educate, nurture, teach, orient,

invigorate, guide, naturalize and

reinforce the protégés capabilities

(hidden or apparent) and empower

them to reach the set target or goals.

This is like a tap that has to be opened

for it to flow and the mentor only

shows the tap and the method to do so

– not just opens the tap (which is often

the case); Hence the focus here is to

help the students evaluate and

understand their inner self and

capabilities, with deep internal focus

and allow them to apply their

thoughts in the right manner for

deriving the right steps to achieve the

right goals without compromising on

any of the filters of professionalism

that have been described in the

previous pages as the essentials. This

part of Mentoring helps the student

graduate from being TAUGHT to

being AWARE and FOCUSED.

Deploying Mentoring is the finishing

touch to the structure of

professionalism-Training. It would

therefore be appropriate to point out

that institutes desirous of embarking

on “Mentoring program” should

necessarily have qualified teachers as

mentors with commitment, empathy,

flexibility, appreciation of diversity.

Being a good listener and a person



with integrity is utmost for the Mentor

to be successful. They should be

capable of holding hands when needed

and let loose as appropriate to help

the students learn the art & science

behind professionalism that now is the

basis of all engagements in life. It’s

also the only mantra that seems to

have no arguments against it in

almost all walks of life. Enabling the

budding professionals and guiding

them in the right direction is a service

that will be considered as deeper

human service than many. More so in

a world filled with tensions and

conflicts…

So, “Mentoring” to achieve high degree

of Professionals is a yeo-man service

for mankind as a whole.

Another key aspect of “Mentoring”

that must not be ignored or

forgotten… It is not merely a rapport

building exercise but it has to be

structured with well defined objectives

and a clear path to achieve the end

result. It has been said that we learn

best by teaching and teach best what

we most need to learn. “Mentoring”

allows for Bi-directional learning

during Teaching, which is

unparalleled.

Conclusion - When B Schools

embark upon the task of moulding

their students; it is imperative that

they do it through effective mentoring

sessions and groom them as

professionals.

References :

Allen TD. Mentoring others: A

dispositional and motivational

approach. Journal of Vocational

Behavior. 2003;62:134–154.

Austin AE. Preparing the next

generation of faculty. The Journal

of Higher Education. 2002;73:94–

122.

Baumeister RF, Leary MR. The

need to belong: Desire for

interpersonal attachments as a

fundamental human emotion.

Psychological Bulletin.

1995;117:497–529.

Bhatta G, Washington S. “Hands

up”: Mentoring in the New Zealand

Public Service. Public Personnel

Management. 2003;32:211–227.

Miller A. Best practices in formal

youth mentoring. In: Allen TD, Eby

LT, editors. Blackwell handbook of

mentoring. Oxford: Blackwell; (in

press)

Mullen CA. Naturally occurring

student-faculty mentoring

relationships: A literature review.

In: Allen TD, Eby LT, editors.

Blackwell handbook of mentoring.

Oxford: Blackwell; (in press)

“ PROFESSIONAL EDUCATION

is changing;

WE ARE CHANGING

professional education ”

-Dr. M R Pattabiram Director

RAMAIAH INSTITUTE OF MANAGEMENT STUDIES

RAMAIAH INSTITUTE OF MANAGEMENT SCIENCES

No. 15, New B.E.L. Road, M S Ramaiah Nagar, MSRIT Post, Bangalore- 560054

Ph: + 91-80-23607640/41, 080 – 2308 1000/002/003 Fax: +91-80-23607642

E-mail: [email protected],[email protected]

Website : www.msramaiahfoundation.in

mailto:[email protected],[email protected]

http://www.msramaiahfoundation.in/

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