Course Book - OC Integrated Course On IT and Soft Skills

978-81-8441-884-2
Sahitya Bhawan Publications,

Hospital Road, Agra - 282 003
March | 2020 | P2666 (Reprint)
PREFACE
Organisations are undergoing unparalleled and radical change. From the speed of decision making, to
technological and global competitive pressures, to mergers and acquisitions, to the need to rethink business
processes and alliances – organisations are constantly faced with shifting demands. Creativity and innovation
are the most important elements required by the corporate houses. Regardless of the size and purpose of the
organisation and the technology involved, human resource is the biggest element facing immense challenges.
The outside world is full of challenges. To cope up with the challenges, existing and ahead, The Institute of
Chartered Accountants of India has developed the Integrated Course on Information Technology & Soft Skills
ICITSS (Orientation Course) for students pursuing Chartered Accountancy Course which deals in shaping
Chartered Accountants as complete Business Managers with an all-round personality. The Course is designed
with an idea that at the end of this course, each and every student is well equipped with what management is,
its functions, different management styles and understands the roles of managers at different levels. The
Orientation Course aims to impart training to translate the challenges into rewarding opportunities. This book
has been thoroughly prepared in terms to make CAs complete Business Managers with an all-round personality
encompassing Managerial Skills, Soft Skills, Time Management Skills and Interpersonal & Negotiation Skills.
The book has been divided into a 15 days programme. Each day is further divided into various sessions. Kindly
refer the Detailed Lesson Plan for more information.
Day-1 & 2 focus on three aspects. The first aspect deals with a brief history of the ICAI, its organisational
structure, roles and responsibilities, information about Board of Studies. The second aspect concentrates on
the Academic and Technical Guidance which covers the relevance of articled training and its rules & regulations.
The third aspect draws attention to the General Management aspect.
Day-3 & 4 highlight on developing the personal traits of an individual. Personal traits include attitude and
values, motivation, time management, self analysis, planning, prioritizing, goal setting, accountability, critical
and independent thinking.
Day-5 & 6 emphasize on Business Communication which covers effective communication, listening skills,
conversational skills, interpersonal skills, writing skills and articulation skills. Attention has also been paid on
reading & comprehension skills, book review, data analysis etc.
Presentation is one of the first managerial skills which every manager should acquire. In today’s fast growing
and complex environment, one needs to have effective presentation skills. Day-7 & 8 deal with presentation
skills which include making PowerPoint presentations and public speaking skills.
Negotiation is something that we do all the time and it is not only used for business purposes. It is done in our
day to day dealings also. To enhance this skill, Day-9 focuses on questioning skills, group discussion, team
work, relationship management and managing ambiguity.
Day-10 stresses on Office Procedures which covers various aspects which are fundamental on the professional
front. Special attention has been given to office organisation, office etiquettes and grooming the personality of
an individual by focusing on good personal habits & manners, dress code, attire, etiquettes etc.
Today is the era of globalization and in this fast growing economy and cut throat competition, it is very
important to understand the environment in which the business has to grow and operate. The internal and
external factors have a direct and indirect impact on the business. An individual needs to understand the
complexities of the business and its environment to succeed in today’s world. Day-11 deals with Business
JSNR_51600261_ICAI_Orientation Course Study Manual (Revised June 2016)_Text.pdf 6 6/22/2016 9:59:33 AM

COMMERCIAL AND CORPORATE LAWS IN INDIA
Environment where insight is given on Indian & Global business environment. The session further highlights
the significance of varied sectors such as banking, financial and manufacturing which have a direct impact on
running the business unit successfully. The topic also covers a part of the corporate and commercial laws.
Day-12 focuses on generating data/information using technology and comparison between inter and intra
firm. Day-13 consists of extempore by all the students on their experiences and knowledge gained in the
course. Day-14 & 15 are the practical sessions covering seminars on recent topics, submission of project
report and evaluation of writing skills.
Diagrams have been incorporated to make the content easier to understand. Point wise explanation is given
for making the concepts clearer. At the end, each chapter contains key points and suggested readings.
Besides this, assessment tests have been given at the end of the manual which will help the students in
assessing themselves.
Participants are requested to make the sessions interactive by taking keen interest during the course of the
training so that maximum benefits can be reaped out of it.
We wish all the participants Happy Reading!

CONTENTS
CONTENTS
PREFACE (iii)
SYLLABUS (vi)
DETAILED LESSON PLAN (viii)
1. ABOUT THE INSTITUTE 1
2. ACADEMIC AND TECHNICAL GUIDANCE 13
3. GENERAL MANAGEMENT 37
4. ATTITUDE, VALUES & ETHICS 44
5. MOTIVATION - SELF & OTHERS 50
6. TIME MANAGEMENT 54
7. SELF ANALYSIS, PLANNING & PRIORITIZING 60
8. GOAL SETTING & ACCOUNTABILITY 67
9. CRITICAL AND INDEPENDENT THINKING 71
10. EFFECTIVE COMMMUNICATION 76
11. BUSINESS COMMUNICATION 90
12. ARTICULATION SKILLS 97
13. READING AND COMPREHENSION SKILLS 99
14. BOOK REVIEW 102
15. PREPARATION OF PROJECT REPORT 104
16. DATA ANALYSIS & RESEARCH METHODOLOGY 105
17. POWERPOINT PRESENTATIONS 107
18. REQUISITES FOR EFFECTIVE PRESENTATIONS 110
19. CASE BASED PRESENTATIONS 114
20. ART OF QUESTIONING AND CURIOUS QUESTIONING 120
21. GROUP DISCUSSION & DEBATE 124
22. WORKING IN TEAMS/ RELATIONSHIP MANAGEMENT 128
23. MANAGING AMBIGUITY 137
24. OFFICE ORGANISATION 141
25. OFFICE ETIQUETTES 146
26. EXECUTIVE PRESENCE 151
27. BUSINESS ENVIRONMENT – INDIAN & GLOBAL 154
28. DIFFERENT SECTORS AND THEIR SIGNIFICANCE 170
29. INTRODUCTION TO FINANCIAL ANALYSIS 182
30. CORPORATE & COMMERCIAL LAWS 189
31. SEARCH ENGINE 201
32. INTER FIRM & INTRA FIRM 202

SYLLABUS
I. INTRODUCTION AND GENERAL MANAGEMENT (2 Days)
About the Institute Brief history of the ICAI; Role and responsibilities of the ICAI as an academic body and
as regulatory body, International tie-ups, Information about Board of Studies and its functions, Journal &
Students Newsletter
Extempore by the student Public Speaking and Tips to start with confidence
Academic and Technical Guidance The Chartered Accountancy Course - Relevance of articleship; Rules
and regulations of CA articled training; Roles and responsibilities of an Article Assistant; Do’s and don’ts for an
Article Assistant- as a student, as in CA’s Office, as in Client’s Office; Different Areas of Services rendered by
a CA; Emerging areas for Articleship experience
General Management Introduction to General Management- Planning, Organizing, Staffing, Directing, Control;
Role and responsibilities of Managers at different levels
II. DEVELOPING PERSONAL TRAITS (2 Days)
a. Attitude, Values and Ethics
b. Motivation-self & others
c. Time Management
d. Self Analysis, Planning & Prioritizing
e. Goal Setting & Accountability
f. Critical and Independent Thinking
III. BUSINESS COMMUNICATION (2 Days)
a. Introduction to Effective Communication and Listening Skills, Conversational Skills & Interpersonal Skills
b. Business Communication
c. Articulation Skills
d. Reading and Comprehension Skills
e. Book Review
f. Preparation of Project Report
g. Data Analysis & Research Methodology
IV. PRESENTATION (2 Days)
a. Making PowerPoint Presentations

b. Requisites for Effective Presentations
c. Case based presentations related to Industries with key messages for Effective Decision Making
V. TEAM MANAGEMENT / RELATIONSHIP MANAGEMENT (1 Day)
a. Art of Questioning and Curious Questioning
b. Group Discussion & Debate
c. Working in Teams/ Relationship Management
d. Managing Ambiguity
VI. OFFICE PROCEDURES (1 Day)
a. Office Organisation
b. Office Etiquettes
c. Executive Presence
VII. BUSINESS ENVIRONMENT (1 Day)
a. Business Environment - Indian & Global
b. Different Sectors (Banking, Financial Service, Manufacturing) and their significance
c. Introduction to Financial Analysis
d. Corporate & Commercial Laws
VIII. SEARCH ENGINE (2 Days)
a. Search Engine:- Getting Data/ Information using technology/ alternate sources
b. Comparison between Inter firm & Intra firm
c. Extempore by the student (Extempore by the student about his/ her experience and knowledge gained in
the training and how it can be used in his future profession)
IX. PRACTICAL (2 Days)
a. Seminars (to be evaluated)
b. Submission of Project Report (to be evaluated)
c. Evaluation of Writing skills

CONTENTS
COMMERCIAL AND CORPORATE LAWS IN INDIA COMMERCIAL AND CORPORA
TE LAWS IN INDIA
DETAILED LESSON PLAN
ICITSS (ORIENTATION COURSE) (15 DAYS)

Overall Objective of ICITSS (Orientation Course): Make CAs Complete Business Managers (versus just
accountants) with an all-round personality encompassing Managerial Skills, Soft Skills, Time
Management Skills and Interpersonal & Negotiation Skills.
As a professional whether in practice or in employment, students will be dealing with complex situations,
issues, needs, goals, styles and cultures characterized by the ambiguity and complexities due to the ever
changing socio-economic environment and human interactions at a global level; definitely more difficult to
predict and counter compared to the technical certainties of a professional. Communication skill is of paramount
importance. Credibility as a leader or facilitator depends to a large extent on how clearly and forcefully one is
able to express his/her views. A report, presentation or even a telephonic talk is an emissary of one’s personality
and if not done well, could cause considerable damage to one’s image and career aspirations.
The ICITSS (Orientation Course) aims to impart training to translate such challenges into rewarding
opportunities.
Pedagogy: Interactive sessions (6 hours daily and spread over 15 working days).
Each session shall include:

• Pre-Read/ Pre-Work (Study Material)
• Discussion (PowerPoint led) on Theory/ Insights
• Activity/ Case Study
• Movie Clips
Day Session Topic Objective Time
Allotted
1&2 1 Introduction Brief History and Organizational Structure of 2 Hours
(12 Hr) ICAI
2 Extempore by the student • Learn about Public Speaking and fears 4 Hours
associated with it
• Tips to start with confidence
• Speaking in the class on a given topic -
about the student, family background or any
other topic given by the trainer (as a
Psychometric Test)
3 Academic and Technical • Articled Training in CA Course 3 Hours
Guidance • Different Areas of Services rendered by a
CA
• Emerging areas for articleship
experience – GST, Internal audits, IND
AS, Project Finance etc.
4 General Management Planning, Organizing, Staffing, Directing, 3 Hours

Control; Role and Responsibilities of
Managers at different levels

3&4 1 Attitude, Values & Ethics • Learn about Attitude and Values 2 Hours
(12 Hr) • Learn to develop positive attitude
• Learn how the values are formulated
• Influence of culture on values
• Learn how to work ethically
2 Motivation – self and others • Learn about motivation and its significance 3 Hours
• Learn different motivational theories
• Learn what keeps people motivated in an
organization
3 Time Management • Learn about Time Management and time 1 Hours
wasters
• Learn various tools of time management
• Learn time management process and ways
to overcome procrastination
Self Analysis, Planning & • Learn about different techniques of Self 3 Hours
4
Prioritizing Analysis
• Learn about Planning and its importance
• Learn about Prioritizing, benefits and tools
for Prioritizing
5 Goal Setting & • Understand the importance of personal goal 1 Hour
Accountability in one’s life and the process of Goal Setting 30 Minutes
• Understand the importance of
Accountability and Ownership
6 Critical and Independent • Learn to think critically 1 Hour
Thinking • Learn to think without any influence 30 Minutes
5&6 1 Introduction to Effective • Understand what is effective 3 Hours
(12 Hr) Communication & Listening communication, know & overcome the
Skills, Conversational Skills barriers in communication, importance of
& Interpersonal Skills listening, tips to improve listening etc.
• Learn about Conversational Skills
• Learn and demonstrate good Interpersonal
Skills
• Understand the benefits of effective 1 Hour
2 Business Communication
Business Communication 30 Minutes
• Learn how to excel in all areas of written
Business Communication
• Understand the need of Articulation Skills 1 Hour
3 Articulation Skills
in verbal communication 30 Minutes
• Identify and learn various articulation
techniques used in communication
4 Reading and • Understand the importance of reading skills 1 Hour
Comprehension Skills in business communication 30 Minutes
• Identify and learn reading techniques
• Learn comprehension reading strategies
5 Book Review • Understand the basic concept of critical 1 Hour
review 30 Minutes

• Identify and learn steps to write critical review
of a text
6 Preparation of Project • Understand the content and importance of 1 Hour
Report Project Report 30 Minutes
7 Data Analysis & • Understand the Data Analysis Research 1 Hour
Research Methodology methodologies 30 Minutes
7&8 1 Making PowerPoint • Understand the elements of presentation 3 Hours
(12 Hr) Presentations • Learn to structure your presentation
• Learn to make PowerPoint presentation
effective
• Giving presentation in the class on a given topic
2 Requisites for • Understand the content for effective 3 Hours
Effective presentations
Presentations • Importance of effective presentations
3 Case based • Understanding of the Industry cases and 6 Hours
presentations related drawing inferences for Effective Decision
to Industries with Key Making
Messages for Effective
Decision Making
9 1 Art of Questioning and • Learn to ask fruitful questions 1 Hour
(6 Hr) Curious Questioning • Understand the importance of curious 30 Minutes
questioning
2 Group Discussion & • Understand Group Discussion and the key skills 1 Hour
Debate required 30 Minutes
• Understand why we form groups and group
dynamics
• Understand roles to be played and avoided in
Group Discussion
3 Working in Teams/ • Learn about Team Work and its importance 1 Hour
Relationship • Understand stages in team development 30 Minutes
Management • Learn characteristics of high performing team
and ineffective team
4 Managing Ambiguity • Understand problem solving process and the 1 Hour

skills required 30 Minutes
• Learn to handle ambiguous situations
10 1 Office Organization • Understand Organization and its components 1 Hours
(6 Hr)
2 Office Etiquettes • Understand what Etiquette is and what all 2 Hours
Etiquettes to be followed in the Office
3 Executive Presence • Understand the practical benefits of Personal 3 Hours
Grooming
• Learn some tips on Personal Grooming
11 1 Business Environment • Understand the business scenarios 1 Hour
(6 Hr) – Indian & Global • Feel confident 30 Minutes
• Understand various factors affecting business

2 Different Sectors • Know various sectors 1 Hour
(Banking, Financial • Growth rate and significance of each sector 30 Minutes
Service,
Manufacturing) and
their significance
3 Introduction to Financial • Understand the need of Financial Statement 1 Hour
Analysis • Key indicators 30 Minutes
• Users of Financial Statement
4 Corporate & • Know the importance of Corporate Law 1 Hour

Commercial Laws • Know about various Commercial Laws 30 Minutes
• Understand various compliance requirements
12& 1 Search Engine • Understand the need of Search Engines 3 Hours
13 • Tips for better results
(12 Hr) 2 Comparison between • Understand the Inter firm and Intra firm 3 Hours
Inter firm and Intra firm comparison
• Need for both the techniques
3 Extempore by the • Extempore by the student about his/ her 6 Hours
student experience and knowledge gained in the
training and how it can be used in his future
profession (as a Psychometric Test)
14& 1 Practical/ Testing of • Seminars on Recent Topics (to be evaluated) 6 Hours
15 Verbal Skills • Submission of Project Report (to be evaluated)
(12 Hr) 2 Practical/ Testing of • Evaluation of Writing Skills on the topic given 6 Hours
Writing Skills by the trainer

ABOUT THE
ABOUT THE INSTITUTE
INSTITUTE
The Institute of Chartered Accountants of India (ICAI) The Mission 2030 of ICAI lays focus on following key
is a statutory body established in July, 1949 under elements:
the Chartered Accountants Act, 1949 enacted by the
Parliament to regulate the profession of Chartered (a) Global Professionals
Accountancy in India. (b) Independent and Transparent Regulatory
Mechanism
The Institute is governed by a Council in accordance (c) Highest ethical standards
with the provisions of the Chartered Accountants Act,
(d) Cutting-edge research and development
1949 as amended by the Chartered Accountants
(e) Multi-national Service Providers.
(Amendment) Act, 2006 (No.9 of 2006) and the
Chartered Accountants Regulations, 1988. The
Council has 40 members of which 32 members are ICAI Vision-2030
elected by the Members of the Institute and 8 ICAI set outs its Vision for 2030, which focuses on
members are nominated by the Government of India. Mission, Strategic Priorities and Action Plan for the
coming years to achieve its Vision. ICAI aims at
The Council is completely an autonomous body free
harnessing the opportunities and addressing the
from control of Central Government except in certain
challenges presented by the rapidly changing
specified matters. The Council is assisted in its work
environment so that, by 2030, ICAI becomes-
by Regional Councils which are generally advisory in
character. The Council is headed by the President, “World’s leading accounting body, a regulator and
who is elected by the Council for one year. The Council developer of trusted and independent professionals
has the power to recognize foreign qualifications in with world class competencies in accounting,
the interests of the country. assurance, taxation, finance and business advisory
services.”
The Institute is the second largest and prominent
accounting body worldwide. The Institute has The six strategic priorities in line with Vision 2030
achieved recognition as a premier accounting body are:
not only in the country but also globally, for its
contribution in the fields of education, professional ● Create enabling framework for and facilitate
development, maintenance of high accounting, Indian firms and professionals to leverage global
auditing and ethical standards. opportunities
● Leverage national leadership position to assume
The major function of the Institute is professional
leadership in regional and international
development, regulatory and advisory.
accounting fraternity
The Institute has its headquarters at New Delhi. In ● Revitalize education and training systems and
addition, it has 5 Regional Councils and 163 Branches. establish an enabling ecosystem to produce
The Institute has also 30 Chapters outside India. globally competitive accounting professionals
● Adapt regulatory mechanism to the changing
times
ICAI Mission-2030 ● Undertake branding and awareness campaign
The Indian Chartered Accountancy Profession to enhance public perception of ICAI and
will be the valued trustees of world class professionals affiliated to ICAI
financial competencies, good governance and ● Strengthen organizational infrastructure and
competitiveness. technological capabilities to improve
engagement with all stakeholders.
2 ABOUT THE INSTITUTE
Role and Responsibilities of ICAI

As an Academic Body of the Chartered Accountants Act, 1949 as amended
The academic wing of the ICAI is Board of Studies. It by The Chartered Accountants (Amendment) Act,
has been the constant endeavour of the Board of 2006, “Chartered Accountant” means a person who
Studies to improve the quality, content and delivery is a member of the Institute. A person in order to
mechanism of Chartered Accountancy Course. The become a member of the Institute should pass CA
publications of Board of Studies enhance the skills, Final Examination, complete Articled Training. There
improve the knowledge and contribute to the courses are two classes of members: Associate and Fellow.
of the students enrolling for Chartered Accountancy On becoming a member of the Institute after fulfilling
Course. The practical training is a vital part of the the conditions mentioned above, a person becomes
Chartered Accountancy Course. Under the existing an Associate Member of the Institute and can write
and revised scheme of education, a student is required ACA after his/her name. An ACA after having been in
to undergo practical training known as Articleship practice for a continuous period of five years or more
Training for 3 years. The Examination department of and fulfilling certain conditions may become Fellow
the ICAI conducts CA examinations. In order to qualify of the Institute and may write FCA after his/her name.
as a member of the Institute, a CA student should The regulatory role of the Institute also manifests itself
pass theoretical examination conducted by the in another area: Certificate of Practice. No member
Examination department and complete Articleship of the Institute shall be entitled to practice in India or
Training. In addition, a student should also attend elsewhere unless he obtains from the Institute a
Integrated Course on Information Technology & Soft Certificate of Practice.
Skills (ICITSS) and Advanced Integrated Course on
Information Technology & Soft Skills (AICITSS). Disciplinary Function
In order to play effectively its regulatory role, the Institute
As a Regulatory Body has set up an elaborate disciplinary mechanism to
The role of the Institute as a regulatory body covers deal with complaints of misconduct against its
both its members and students. As per Section 2(b) member(s). If a member is proved to be guilty of
professional or other misconduct, he will face
reprimand and/or removal of name from Register of
Members and/or a fine.
Organizational Structure of ICAI

The organizational structure of ICAI is shown below:
ABOUT THE INSTITUTE 3
Standing and Non-Standing Committees Other functions of the BoS include :

The Council, in terms of Section 17 of the Chartered ■ Preparation and continuous revision of
Accountants Act, 1949, constituted four standing and comprehensive study material including practice
various Non-Standing Committees/Boards to deal with manual of all subjects prescribed for students
of the Chartered Accountancy courses viz.,
matters concerning the profession. The Standing
Foundation, Intermediate Course and Final
Committees of the Institute are Disciplinary,
Course. Other educational inputs like Suggested
Examination, Executive and Finance Committee. The Answers, Revision Test Papers, Periodical
important Non-Standing Committees are Accounting Supplements etc. are also prepared for the
Standards Board, Audit Committee, Auditing & students on a regular basis.
Assurance Standards Board, Board of Studies, ■ Distribution of study materials and other
Committee for Capacity Building of Members in educational aid to registered students through
Pratice, Committee on Information Technology, Centralized Dispatch System.
Corporate Laws & Corporate Governance Committee, ■ Organizing Oral Coaching Classes, Crash
Committee for Members in Entrepreneurship and Course with the assistance of Regional Councils
and Branches.
Public Service, Continuing Professional Education
■ Video lectures and Virtual Classes on subjects
Committee, Direct Taxes Committee, Ind AS (IFRS)
to improve problem solving skills through ICAI
Implementation Committee, Peer Review Board, cloud campus.
Indirect Taxes Committee, etc. ■ Publication of booklets on Personality
Development, Public Speaking, Communication
About Board of Studies Skills, How to prepare for CA Examinations, Time
The Board of Studies (BoS), the premier educational and Stress Management etc.
■ Preparation of E-learning, Video Lectures, Online
wing of the Institute, proactively works to ensure that
Mentoring and Web-based learning marterials
students achieve the desired level of professional
on selected topics of the CA Curriculum.
competence through provision of multitude of ■ Publication of the Students’ Monthly Journal- `The
educational inputs in the form of Study Materials, Chartered Accountant Student’.
Practice Manuals, Revision Test Papers, Suggested ■ Providing guidance to the Regional Councils and
Answers, Supplementary Study Materials, Mock Test their Branches in organizing ICITSS and
Papers, etc., with an objective to enable students to AICITSS.
prepare well for the examinations. The mission of ■ Organizing Seminars, Conferences, Quiz
Board of Studies is to provide a strong foundation of Contests and National Talent Hunt for the
students of CA Course.
knowledge, skills and professional values that enables
■ Providing technical support to various
students to grow as wholesome professionals and Committees, maintains liaison with the Students’
adapt to change throughout their professional career. Associations and Branches and motivated them
The Board of Studies’ academic function mainly to organize various educational activities for the
relates to undertaking all the work relating to preparing, students.
revising and updating the course material and other
relevant literature. Apart from this, BoS undertakes all ICAI Cloud Campus
other functions like students’ counselling, answering The Board of Studies has made available a Campus
students’ queries, taking lectures, preparing mock on the Cloud - ICAI Cloud Campus (http://
tests and quizzes etc. cloudcampus.icai.org/). The ICAI Cloud Campus is
The BoS also brings out monthly Students’ Journal in the One-Stop-Window for information, enrolment,
the name of “The Chartered Accountant Student” educational, administrative, examination, and other
which is another form of disseminating important requirements of Students for the CA Course. Moving
information for the benefit of the students. It provides ahead from the brick-n-mortar campus system, the
quality articles and academic updates that help in the ICAI Cloud Campus provides distance education for
the CA Course at the doorsteps of Students at the
learning process of the students.
click of a button. It is a learning system designed to
be pursued along-with articled/ practical training that
enables students to learn at any time, any place and relevant for the work of a professional accountant
any pace at their convenience. It provides education including Auditing in ERP. Enterprise Resource
in the form of Video Lectures for practical problem Planning (ERP), MS-Excel as and Audit tool, and
solving subjects, e-Lectures for all subjects, web advanced features of Electronic Spreadsheet, DBMS
casts & recorded, online mentoring sessions for all etc.
three levels – CPT, Intermediate and Final. Access to
all these resources is FREE of charge. Students are Practical Training
advised to make good use of this online learning facility The unique requirement of practical training is
to succeed in the CA Course. instrumental in shaping a well-rounded professional
to ensure that students have an opportunity to acquire
Orientation Course on-the-job work experience of a professional nature.
With a view to groom and motivate the entrants to be Such a practical training inculcates a disciplined
a good professional, the Orientation Course has been attitude for hard work; develops necessary skills in
made an integral part of the CA Course curriculum. applying theoretical knowledge to practical situations;
Students are required to undergo Orientation Course provides exposure to overall socio-economic
before registering for articleship training. The duration environment in which organizations operate; and
of Orientation Course is 15 days (i.e. 90 hours). develops ethical values. Under the present scheme
of education (Foundation, CPT, Intermediate, Final),
a student is required to undergo articled training for
Management & Communication Skills Course three years. The student becomes eligible to join the
(MCS) training only after passing the either Group or both
Management & Communication Skills (MCS) Course Groups of Intermediate (Integrated Professional
equips the entrants to the profession with Competence) Course and also has completed
interpersonal and management skills. As per the Integrated Course on Information Technology & Soft
guidelines, an articled assistant shall complete a Skills. The articled assistant should undergo practical
course on Management and Communication Skills training in accordance with provisions of the Chartered
during the last two years of Practice Training but before Accountants Regulations and Guidelines as framed
appearing for the final examination. Alternatively, by the Council of the Institute from time to time.
students can undergo the four weeks Residential
Programme on Professional Skills Development in Design of Practical Training Programme
lieu of MCS Course by paying the required fee. The training programme is designed to identify the
areas in which the firm should provide training and
Information Technology Training (ITT) the contribution which the firm can expect from the
The Course on Information Technology Training is an trainees. Such assessment ensures that the training
integral part of the CA Course Curriculum that the programme is relevant to the needs of the trainees
Students are required to complete before joining as well as also for the firms. The following factors
Articled/ Practical Training. The course provides may be considered in this context :
training focused on application software relevant for (i) Review of the timing, type and total amount of
Accounting, Auditing and allied areas that inter alia work generated by the firm
includes training on Electronic Spreadsheet, Data (ii) Assessment of the partners and staff with the
Base Management, Computer Assisted Audit experience, skills and qualifications needed to
Techniques (CAATs) and Accounting Packages etc. undertake the work and to provide supervision
to trainees
Advanced Information Technology Training (iii) Availability or otherwise of senior trainees for
The Advanced Course on Information Technology supervising the work done by junior trainees
Training is an integral part of the CA Course that (iv) Review of the arrangements for instructions,
Students undergoing Practical Training shall be particularly experience needs to be
required to Advanced ITT during the less 2 years of supplemented by theoretical training
Practical Training but to complete the same before (v) The period for which trainees will be available
being eligible to appear in final examination. This for work. (The effect of releasing trainees from
assignments for courses or study leave must
course provides training on application software
be taken into account)
(vi) Whether there are any deficiencies in the work conceived the concept of industrial training. The
experience available to trainees and how these concept, inter alia, envisages the preparation of
might be overcome eg. by secondment, trainees, who intend to build their careers in industries,
exchange etc. after becoming chartered accountants, in a manner
mutually beneficial.
Components of Training Programme Training in an industrial/commercial/financial
In designing the training programme, the following environment provides the trainees with the opportunity
components are to be considered simultaneously so to develop a problem-solving attitude and to have an
as to make it meaningful: insight into the functioning of the accounts department.
a. Categories of Work Experience It also diversifies their practical experience and helps
b. In-House Theoretical Training them in developing the attributes of team work and
c. Development of Professional Attitude correlate with members of other professions and
disciplines. It is intended to provide the trainees with
d. Phasing of Training Programme.
a new dimension to their experience. This would
The training programme must be planned properly to necessarily involve exposure of trainees to the entire
ensure that the above components are included gamut of activities of industrial establishments in a
therein. The components which are integrated into a phased and systematic manner. An exposure to the
logical sequence should provide trainees with the skills working environment of a large commercial
expected of them. organisation will give them an integrated view of its
Categories of Work Experience operations. It is essential that the member imparting
training in industries including commercial and
The categories of work experience are generally
financial enterprises recognizes that perception of the
grouped as under:
overall business environment is the prime objective
■ Accounting of such training.
■ Auditing (including internal audit)
■ Taxation (Direct and Indirect) Secondment/Exchange
■ Corporate and Allied Laws In order to expose the trainees at large to multi-
disciplinary work and variety of business situations,
■ Management Services (including services in the
the arrangement of secondment has been provided.
field of Financial Management like business
The procedure relating to secondment enables an
valuation, mergers and acquisition, portfolio
articled trainee to gain practical experience, in areas
managements, equity research etc.)
where the Principal may not be in a position to provide
■ Information Technology the same, in the office of another member in practice
■ Other areas, if any on the basis of a mutually agreed arrangement.
The categorization of work experience as above
Secondment is allowed with the consent of the articled
should not be considered exhaustive or rigid as it is
trainee from one employer to a member who is entitled
quite likely that working in a particular field may also
to train articled trainees in his own right or to a member
overlap with other areas. For instance, work
in industry who is entitled to train industrial trainees.
experience in the areas of accounting and auditing
The member to whom the trainee is seconded is not
may not be distinguishable in actual practice as both
entitled to train more than two such trainees on
areas are quite inseparable from each other. Further,
secondment at a time. The aggregate period of
application of knowledge of information technology is
secondment cannot exceed one year which may be
inseparable from training in accounting and auditing.
served with a single eligible member. The Council may
permit secondment with more than one such member
Industrial Training
provided the minimum period of secondment with any
The Institute, in furtherance of its objectives of
member may be four months and the aggregate period
providing to the industries, members with adequate
knowledge and background of industrial functioning, served on secondment with such member does not
exceed one year. Where an articled trainee is
seconded to a member in industry, the total period Interpretations: In this Code of Conduct, unless
spent in industry including the period of industrial otherwise stated,
training should not exceed one year. During (i) “Act” means The Chartered Accountants Act,
secondment, the member with whom the articled 1949 (XXXVIII of 1949) as amended from time to
trainee is seconded is required to pay the stipend. time.
The member with whom the articled trainee is
(ii) “Regulations” means regulations made under the
seconded is responsible for imparting training during Chartered Accountants Act. 1949.
the secondment and has to maintain records of
practical training undergone by the articled trainee (iii) “Institute” means the Institute of Chartered
during the secondment and required to forward the Accountants of India (ICAI) constituted under the
Chartered Accountants Act, 1949.
same to the Principal on completion of period of
secondment and the Principal has to include its (iv) “Council” means the Council of the Institute.
particulars in the report to the Council under Regulation
(v) “Board/Board of Studies (BoS)” is a non-standing
64. A statement in the approved form be sent to the Committee of the Council under Section 17 (2)
Secretary for records within 30 days from the date of of the Chartered Accountants Act, 1949,
commencement of training on secondment.
(vi) “Executive Committee” is the standing
Apart from the secondment of a trainee from one firm Committee of the Council formed under Section
to another firm or to an industry, firms may exchange 17(1) of the Act.
trainees on mutual basis for a limited period to the
(vii) “Examination Committee” is the standing
advantage of firms and trainees. Such an Committee formed under Section 17(1) of the
arrangement is also quite flexible like the scheme of Act.
secondment and enables the firms to overcome
(viii) “Principal” or “Employer” means a member
deficiency, if any, in practical training imparted to
entitled to train Articled Assistants and Audit
trainees.
Assistants under the Chartered Accountants
Regulations 1988.
Code of Conduct
(ix) “Articled Assistant” means an articled assistant
Preamble as referred to in clause (j) of sub-section (2) of
The Council of the Institute of Chartered Accountants Section 30 of the Act engaged under articles by
of India hereby lays down the Code of Conduct to a member entitled to train articled assistants
maintain decorum and discipline amongst the students under the Regulations.
of the Chartered Accountancy Course. While dealing
(x) “Audit assistant” means an assistant engaged
with the members of the Institute and other public in
in audit service by a member entitled to train audit
general, it is expedient to ensure the Code of Conduct
assistants under the Regulations.
for students undergoing practical training under the
Chartered Accountancy Course including students (xi) “Accredited Institution” means institution
registered for Foundation, Common Proficiency authorised by the Board of Studies for the
Course (CPC), Intermediate Course/Final Course and purpose of organising classes for Chartered
even those students who have already completed Accountancy students as per guidelines issued
practical training. from time to time.
Regulation 66 of the Chartered Accountants
Regulations, 1988 makes an explicit mention that the 1. GENERAL
Code of Conduct is applicable to the Students 1.1 Students who are registered as articled/audit
undergoing practical training under the Chartered assistants under the provisions of the Chartered
Accountancy Course and deals with relevant Accountants Act. 1949/Regulations framed thereunder
procedure to be followed in case of breach of the (hereinafter referred to as “trainees” or “articled/audit
same. trainees”) should conduct themselves in accordance
with the guidelines provided hereunder whilst regulations set out by his/her employer and not act in
undergoing practical training under the Chartered any manner that will bring disrepute to his/her
Accountants Regulations, 1988. employer or the profession in General.
1.2 The Code of Conduct shall be applicable to all 2.6 The articled/audit assistant shall obey and follow
students including Foundation, CPC, Intermediate all lawful and reasonable instructions of his/her
Course and also students pursuing the Final course Employer and shall not depart or absent himself/
who have/have not completed their articled training herself from the training of the Employer at any time
and, thus, shall be held liable in case they mis-handle/ during the said term without the prior consent of his/
damage any assets/property/ infrastructure of ICAI or her employer or partners but shall at all times during
at its authorized Centre(s)/Venue(s) also shall be the said term conduct himself/herself with honesty
bound by various provisions under the proposed Code and propriety.
of Conduct. Further such person(s) shall also be
required to maintain decency and decorum while 2.7 The articled/audit assistant shall behave in a
attending programmes like seminars, conferences, responsible manner as a prospective member of the
mock tests, ICITSS, Advanced ICITSS or any other profession, with his colleagues, staff members in his
course/programme etc. organized by the Institute or Employer’s office, Employer’s clients and their
its regional councils/branches. representatives, Institute’s officials & employees and
judicial, quasi-judicial and other authorities, wherever
2. CONDUCT OF ARTICLED/AUDIT ASSISTANT
he/she represents his/her employer,
An Articled/Audit Assistant shall comply with the
following principles of the code of conduct: 2.8 The articled/audit assistant shall conduct himself/
herself in a manner which shall show that he/she is
2.1 The articled/audit assistant shall, at all times, endowed with impeccable character and help him/
diligently and faithfully serve the Principal in the her to uphold ethical principles and professional Code
practice of profession of Accountancy. of Ethics.
2.2 The articled/audit assistant shall follow the 2.9 The articled/audit assistant shall not obtain any
covenants contained in the Deed of Articles and the monetary help or assistance or any form of
provisions of the Act and Regulations as may be gratification directly or indirectly from the clients of
applicable, from time to time. the Principal, their officials or representatives.
2.3 The articled/audit assistant shall be responsible 2.10 Students, while undergoing Articled Training shall
for the quality and correctness of the work done by adhere to the formal Dress Code as per the local
him in the course of practical training, either in the culture and tradition. Students while undergoing
office of the Principal or in the offices of any of the ICITSS and AICITSS Course should maintain
clients of the Principal. discipline and decorum apart from adhering to dress
code.(Advisory Dress Code: Male Students: Full
2.4 The articled/audit assistant shall not, at any time, Sleeves Shirts and Trousers: Female Students:
during the continuation of his articleship - destroy, Sarees/Salvar Kurta/Suit. While appearing before the
cancel, obliterate, spoil, embezzle, spend, take away appellate authority, they may also wear a suit and a
with him/her copies of books, papers, plans, tie).
documents, monies, stamps, hardware, software or
chattels whether belonging to the Employer or his
3. CONFIDENTIALITY
personal representative(s)/assignees/partner(s)/
client(s) which came into his/her hands or. custody 3.1 A Student shall keep all the information acquired
or possession, or allow any other person to use the during the course of his/her articleship about his
same without the prior approval of his employer. Principal and his partners and clients confidential and
shall not divulge any information acquired during the
2.5 The articled/audit assistant should at all times course of his/her training, to anybody without formal
observe discipline and follow guidelines, rules and authorisation from his/her employer.
4. OFFICE TIMINGS articleship does not exceed one-sixth of the total

4.1 The articled/audit assistant shall always period of actual service, together with leave due under
scrupulously attend the office of the employer or its Regulation 59(2)/Regulation 74(2).
clients as per the prescribed timings of his/her
employer. 5.5 The articled/audit assistant shall apply to the
employer for such leave for the-purpose of tests or
4.2 The articled/audit assistant shall ensure that he/ examinations or any other purpose as may be
she works for a minimum of 35 working hours in a required. However, the entitlement of leave shall not
week and follows strictly the normal working hours exceed the leave to his/her credit as per the Chartered
applicable to him/her as decided by the Employer. This Accountants Regulations, 1988. The employer may
period does not include lunch break and time spent grant leave not earned subject to the provisions of
on travelling to and from place of work. Students are Regulation 59(5)/Regulation 74(5) at the rate of one
required to adhere to the directions issued by the seventh of the total period of his actual service.
Council from time to time regarding the working hours
while undergoing the practical training. 5.6. A student who has taken leave in excess of the
period of the leave to which he/she is entitled under
4.3 The articled/audit assistants are hereby advised Regulation 59 shall be required to serve for a further
to undergo practical training very seriously in a period equivalent to the excess leave taken by him/
conscientious manner and ensure that they do not her, in accordance with Regulation 58.
involve themselves in any other activity including
attending classes so that the quality of practical 6. MAINTENANCE OF RECORDS
training is not compromised under any 6.1 The articled/audit assistant shall maintain such
circumstances. records, documents and papers as may be prescribed
by the Institute and his/her employer from time to time.
5. LEAVE
5.1 The articled/audit assistant will not remain absent 6.2 Diaries and Time Sheets: The articled/audit
from office without taking leave of absence from the assistant shall maintain diaries up to date in
Employer. The student will make sure that he takes connection with the work done, in the form prescribed
leave only after prior sanction by the Employer except by the Institute/employer, from time to time.
in case of emergency which should be duly supported
by reasonable explanation/ documentary evidence. 7. THEORETICAL EDUCATION AND OTHER
PROGRAMMES
5.2 The articled/audit assistant shall always give 7.1 Students shall abide by all the rules of the Board
reasonable notice to his/her Employer of his/her of Studies, as may be in force from time to time during
intention to take leave and the leave will be governed the period they undergo for theoretical education.
by the provisions of Regulation 59 or Regulation 74
as the case may be. 7.2 Students attending classes organized by
accredited institutions should satisfactorily comply
5.3 Whenever the articled/audit assistant asks for with the requirements governing such classes and
leave for the purpose of preparing for examination of the tests conducted thereunder.
the Institute, he/she shall be granted leave for three
months or to the extent of leave due, whichever is 7.3 Students shall behave in an orderly manner in
less, provided an application for leave has been made the examination hall and shall not resort to or attempt
at least 15 days in advance. to resort to unfair or illegal means for the purpose of
passing an examination. They should scrupulously
5.4 The articled/audit assistant shall make sure that follow instructions issued by the Examination
the total leave taken by him/her during the period of Department of the Institute in this regard.
8. SEMINARS/CONFERENCES, ETC. 11.2 Should there be any dispute between the

8.1 Students are advised to attend seminars/ Principal and the articled/audit assistant, the matter
meetings/workshops/conferences. CPE Seminars, shall be settled amicably between articled/audit
meetings of study groups, organised by the Institute assistant and the Principal concerned. The Institute
directly or through the Regional Councils/Branches, shall not interfere in such cases.
whenever they get an opportunity to do so, and record
the details of the same in the diary maintained by them. 12. MISCONDUCT
12.1 Non-adherence to any of the above guidelines
8.2 Whenever an articled/audit assistant wants to issued herein and in the Act or Regulations, would be
attend a conference, course or seminar organised by construed as Misconduct and lead to action against
the Institute/Regional Council/ Branch of Regional the articled/audit assistant in accordance with
Council or a Students’ Association and desires that Regulation 66/79 of the Regulations.
the period of such attendance be treated as period
actually served under articles/audit service, he/she 12.2 Where a complaint or information of any
will get prior consent of his/her Employer for the same. misconduct or breach of any of the guidelines
contained in this Code of Conduct or provisions of
9. PERMISSION FOR OTHER the Regulations, Act or any of the covenants of the
ENGAGEMENTS Deed of articles is received against any student from
9.1 The articled/audit trainee shall not undertake any his/her Employer or any other person, the same shall
other course of study or training, whether academic be investigated as per Regulation 66/ Regulation 79
or professional, or engage in any business or of the Chartered Accountants Regulations, 1988 and
occupation without obtaining the prior permission of suitable action(s) shall be taken.
the Council on an application made in the prescribed
form (Form No. 112) as specified in Regulation 65/ 13. CONSEQUENCES OF MISCONDUCT
Regulation 78. Such permitted engagements or 13.1 The Executive Committee, may, on a
occupation may include teaching for the specified consideration of the report of the investigation and
hours, directorship in a company incorporated under after giving the articled/audit assistant an opportunity
the Companies Act, partnership in a family business, to be heard, may: -
subject to the Regulations and Guidelines as may be
prescribed by the Council/Board of Studies from time i. if the Executive Committee finds that the articled /
to time. audit assistant is not guilty of any misconduct or
breach of Regulation or breach of any of the covenants
10. STIPEND contained in the articles, direct that the papers be filed
and the complaint dismissed, or
10.1 A student is entitled to receive a minimum
monthly stipend as per the rates specified under the ii. if the articled/audit assistant is found guilty,
Chartered Accountants Regulations, 1988, from time reprimand the articled/audit assistant or cancel the
to time. The student shall, therefore, open an account registration of articles/audit service, or direct that any
with any bank for facilitating receipt of such stipend period already served under such articles/audit
from his Employer. service, shall not be reckoned as service for the
purpose of the period of practical training as specified
11. TRANSFER OF ARTICLESHIP in Regulation 50/Regulation 71, or take such other
11.1 Transfer of Articleship should be as per the appropriate action as it may deem fit, pending the
Regulations and Guidelines prescribed by the Council consideration of the investigation report and the final
from time to time. decision.
Provided, in appropriate cases, the Executive Fee Exemption

Committee, after giving an opportunity of being heard Fee exemptions/concessions are also given to
to the articled/audit assistant, may pass an interim different categories of CA students like differently abled
order including suspension of the articleship training students, children of military and paramilitary forces
or cancellation of the audit service or such action as who have lost either of their parents in action and
it may deem fit, pending the consideration of the meritorious students.
investigation report and final decision.
13.2 The articled/audit assistant, the registration of Memorandum of Understanding

whose articled or audit service has been cancelled with IGNOU
under the regulations, shall not, except with the The Institute and Indira Gandhi National Open
permission of the Executive Committee, be retained University (IGNOU) entered into a Memorandum of
or taken as an articled/ audit assistant by any member Understanding to offer B.Com with major in
of the Institute. The necessary information shall be Accountancy and Finance and M.Com with
uploaded on the website of the Institute for information specialization in Finance and Taxation.
to all the stakeholders.
1. Bachelor of Commerce with Major in
13.3 The Executive Committee may, on a Accountancy and Finance (B.Com A&F)
consideration of the matter involving misconduct of
Bachelor of Commerce with Major in Accountancy and
students pursuing the Chartered Accountancy Course,
Finance is designed with an objective to develop skills
take appropriate action, if found guilty, reprimand or
and competencies of the students in the field of
cancel the registration, as deemed fit under the
Accountancy and Finance. Students can
circumstances.
simultaneously study this B.Com with major in
Accountancy and Finance programme with Chartered
Four Weeks Residential Programme at Centre
Accountancy First Stage offered by ICAI.
of Excellence, Hyderabad
This programme offers a unique opportunity and (a) Eligibility for Admission:
focuses on development of communication skills,
Candidates who fulfill the following conditions are
leadership skills, personal traits as well as technical eligible for admission to this programme:
skills for effective functioning in business
organizations and profession. All students who have i. 10+2 or its equivalent
passed Chartered Accountancy Final or Intermediate ii. Passed Common Proficiency Test/ PE-I/
(IPC) examination and are pursuing third year of Foundation from ICAI
articled training or have completed Articled training, iii. Registration in Professional Competence
may join the course. Course/ PE-II/ Intermediate/ IPCC (Chartered
Accountancy First Stage) of ICAI or already
Scholarship passed Professional Competence Course/ PE-
The Institute grants various scholarships to students II/ Intermediate.
namely, Merit, Merit-cum-Need based and Need based
and Weaker-sections scholarships out of the funds Similarly, all those students who have passed
of the Institute and Endowment Schemes created by Chartered Accountancy are also eligible for admission
individual donors/trustees/societies. subject to successful completion of condition (i) and
(ii) above.
(b) Fee Structure: MOU/MRA with International Accounting

Organisations
The total fee for this programme is Rs.6,000/-.
The Institute has entered into Memorandum of
understanding (MOU) and Mutual Recognition
2. Master of Commerce in Finance and
Agreement (MRA) with various International
Taxation (M.Com F&T)
Accounting bodies and Institutions on how ICAI
Master of Commerce in Finance and Taxation is members can get reciprocal membership and other
designed with an objective to develop skills and professional advantages :
competencies of the students in the field of
Accountancy, Finance and Taxation. Students can (i) The Institute of Chartered Accountants of
simultaneously study M.Com in Finance and Taxation England and Wales (ICAEW).
programme along with Chartered Accountancy Final (ii) Certified Practicing Accountants, Australia
Course offered by ICAI. (CPA Australia).
ICAI has entered into technical co-operation
(a) Eligibility for Admission: agreements with :
Candidates who fulfill the following two conditions are (i) The Accounting and Auditing Standards
eligible for admission to this programme:
Board of Bhutan.
i. Graduate in any discipline or equivalent from a (ii) The College of Banking & Financial Studies
recognized University/ Institute (CBFS), Oman.
ii. Admitted in the Chartered Accountancy Final Details of the MOUs are available on the
Course Institute’s website www.icai.org
OR
Who has already passed Chartered Members’ and Students’ Journal
Accountancy.
The Institute brings out a monthly journal The
As per the eligibility, students who are currently Chartered Accountant with a MISSION to convey
pursuing Chartered Accountancy Final Course as well regularly to the members, matter relating to profession
as those who have already completed Chartered and professional development, and the Institute and
Accountancy are eligible to seek admission to this its activities and such other matters as deemed to be
programme. of educational and professional value in a structured
manner. One important section of the Journal is
(b) Fee Structure: communication from the President of the Institute. The
The fee for this programme is a consolidated amount journal is available online in PDF as will as in e-
of Rs. 7,000/-. Magazine format, which is compatible on iOS (IPad/
IPhone etc.) and Android devices. Reach and impact
International Tie-Ups of the Journal can be gauged by its circulation that
stands at more than 2,80,000 today, and its global
ICAI is playing an increasingly proactive role in readers include chartered accountants, allied
International Affairs. It is aware of and alive to the need
professionals, CA students and academics from
of keeping in time with educational and training bodies
renowned national and international institutions. As an
around the world. For, that would generate synergetic
add-on service, highlights of every issue of the Journal
effect much to the advantage of Chartered
Accountancy professionals and students in India in capsule form and the President’s message (i.e.
and abroad. Towards that end, ICAI has inked MOUs From the President) in the journal are mass-emailed
and MRAs with international bodies. to all the members.
A brand ambassador of ICAI and the most visible Similarly, Students’ Journal. “The Chartered
indicator of its profile for the members, students and Accountant Student” deals with a wide variety of
external audiences, The Chartered Accountant today issues, which are of immediate and permanent
is at par with the international professional Journals, importance to the students. The Articles and Write-
ups are primarily from the students and also from
be it in content quality, in-depth topical coverage,
members and faculty. Academic updates on different
interactive features, layout/design, paper quality,
topics like Income tax, Indirect tax, Business,
overall look and feel, or greater reach. It is increasingly Corporate and other laws etc. are also there, which
being recognised as one of the most reliable and help in enriching the knowledge of the students. The
reader-friendly tools of professional update, not only communication from the President, Vice President of
for the members but also for allied professionals, the Institute and Chairman of Board of Studies has a
institutions and a cross-section of the economic world singular objective – to help students acquire knowledge
in India and abroad, if the readers’ feedback is any and apply the same in practical fields. The journal offers
indication. a good forum wherein the students, who are indeed
budding professionals of tomorrow, can express
themselves.
ACADEMIC AND TECHNICAL GUIDANCE
THE CHARTERED The articled assistant should undergo practical

training in accordance with provisions of the Chartered
ACCOUNTANCY COURSE Accountants Regulations and Guidelines as framed
Rules and Regulations of CA Articled Training by the Council of the Institute from time to time. Breach
of aforesaid regulations/guidelines may lead to
Practical training is an integral part of Chartered
serious disciplinary action against the articled
Accountancy Course. This helps a student to
assistant. Some of the salient features of the aforesaid
understand the intricacies involved in various fields.
provisions/guidelines are given below:
Neither stand-alone theoretical education nor
exclusive practical training would produce a Chartered 1. The working hours of the articled assistants shall
Accountant capable of discharging professional roles. be 35 hours in a week excluding the lunch break.
Blending theories with practical training is the The working hours of the articled assistants shall
uniqueness of this course. not generally start before 9 am or after 11 am
and end before 5 pm or after 7 pm. The working
The students joining the CA Course through
hours of all the articled assistants serving under
Foundation/CPT route, on qualifying Foundation/CPT
a practicing chartered accountant must be
have to register themselves for the Intermediate
uniform.
Course. These students can commence their
Practical training only on passing either Group or Both 2. Prior permission of the Council to pursue any
Groups of Intermediate Examination and successfully other approved course of study either through
completing the Four Weeks Integrated Course on correspondence private or regular is to be
Information Technology and Soft Skills (ICITSS). obtained by submitting application in the
However, ICITSS can be pursued even before prescribed form.
qualifying the Intermediate Examination. A Commerce
Graduate/Post Graduate with 55% of marks, other 3. During the working hours, the articled assistant
Graduate/Post Graduate with 60% Marks can join the is not permitted to attend college/other
course through Direct Entry Scheme, by registering institutions for pursuing any course including
for the Intermediate Course directly. These students graduation and coaching classes. Accordingly,
can commence their Practical training immediately the timings of such classes should not be such
after successfully completing the Four Weeks (after taking into account the time required to
Integrated Course on Information Technology and Soft commute) which clashes with the normal
Skills (ICITSS). They can appear in the Intermediate working hours of the articled training.
Examination after completion of nine months of 4. An articled assistant is also not allowed to
practical training. Provisional registration for students engage in any other business/occupation/
pursuing final year graduation is allowed. Intermediate employment excepting sleeping partner/nominal
level qualified candidates from the Institute of Cost director in family business concern which was
Accountants of India or the Institute of Company in existence before his joining the CA Course.
Secretaries of India are also exempted from the Prior permission for such engagement is to be
Foundation/CPT, but these set of students have to obtained by submitting application in the
follow the same route as regards to Practical Training prescribed form with relevant documents.
as of students through Foundation/CPT Route.
The entire period of practical training can be served
Students registered through Foundation or DES are with a practicing chartered accountant or it can be
required to undergo Four Weeks Advanced Integrated served partly with a practicing chartered accountant
Course on Information Technology and Soft Skills
and partly in an approved industrial establishment as
(AICITSS) during the last two years of practical training
an Industrial Trainee. The period of such industrial
but before appearing in the final exam.
training may range between 9 and 12 month during
the last year of the prescribed period of practical
training. Only students at the final level of Chartered
14 ACADEMIC AND TECHNICAL GUIDANCE
training may range between 9 and 12 month during its staff may put principal organisation’s reputation on
the last year of the prescribed period of practical stake. Thus, one must be very careful while informally
training. Only students at the final level of Chartered communicating with the client/client’s staff.
Accountancy course are eligible for industrial training.
Don’t say anything negative about principal
Do’s and Don’ts for an Articled Assistant: organization: Sometimes an article assistant may
Here’s a list of do’s and don’ts that may help you not be satisfied with some of the policies of principal
understand the parameters within which you must organisation or the people who are working there.
work. But he/she should not discuss these with any third
person or client because the image or market value
of the firm in mind of others will definitely affect with
As in CA’s office
his/her words. The more he/she will work towards
Do give regular update of the progress of work
better image creation of the firm, the benefits out of it
allotted: The first rule of effective communication is
will turn to him/her also in long term.
to keep your immediate senior updated with the
progress of the work allocated to you. Not only the Don’t communicate directly without principal
work completed should be communicated but also authorization: Communication with the client at your
any problem faced in implementation should be individual level shall be restricted to the extent
immediately communicated so that appropriate action authorized by your principal. Direct communication
can be taken in order to avoid unnecessary delay in with the client should be strictly avoided without prior
final delivery to the client. permission of the principal.
Don’t argue with your senior: An article assistant
What you must do
should never enter into an argument with your senior.
It is looked upon as offensive and disrespectful. ■ Do reply to office mails and try to use lower cases
Where you want to put across your suggestion/idea/ while typing as bold letters signify a scream.
opinion, same should be done with utmost ■ Do keep you voice low while talking.
humbleness and politeness. ■ If you have a problem that may force you to stay
away from work, keep your boss in the loop.
Don’t wait until the last minute: Any major ■ Do congratulate a colleague on his/her
development/observation, whether good or bad, shall achievements even if you do not approve of his/
be communicated as soon as possible. her ways.
■ Do not forget to shut your mobile phone during
As in Client’s Office: meetings.
Do maintain good cordial communication with
clients staff: As an articled assistant, you may have Maintenance of Daily Diary
to spend adequate time working at clients place.
Students’ Training Records
Support of client’s staff is necessary to know about
the client and obtain relevant information. There is a The purpose of maintaining training records is as
natural reluctance on part of the clients staff to support under:
trainees and attending to their requirements. The only
■ To record students’ progress to membership as
way to seek their support and extract required
information is to maintain healthy cordial communi- reflected in terms of both progression of work
cation with client’s staff. Informal communication to experience and personal development during the
an extent is also useful in such situations. training period.
■ To provide the means for regular reviews of that
Don’t make lose statements: An article assistant is progress.
an ambassador and represent the principal
organisation in front of its clients. Any impulsive/ Training Records may comprise the attendance
unthoughtful/lose statements in front of the client or register including leave record. For this purpose, no
ACADEMIC AND TECHNICAL GUIDANCE 15
specific format is being prescribed as any standard Similarly, there are a few ethical pre-requisites for CA
register may be used and a separate record of leave professionals. We discuss below some fundamental
applications may be maintained. In any case, it should pre-requisites relating to ethics:
correspond with monthly practical training record.
1. The Principle of Integrity: The principle of integrity
An article assistant should maintain a diary of his/her imposes an obligation on all finance and accounting
work on daily basis. In the diary personal details like professionals to be straightforward and honest in
Name, Registration No. of the student, Membership professional and business relationships. They should
No. of the principal should be incorporated. The diary ensure fair dealing and truthfulness in their actions
should also incorporate detail of work undertaken by and behaviours. Their advice and work must be
the students and training received. Suggested uncorrupted by self-interest. Also their advice must
headings under training are Accounting, Audit- not be influenced by the interests of other parties.
Statutory/Internal/Concurrent, Taxation, Information
Technology, Company Law etc. Under each head Moreover, they should not be associated with reports,
relevant sub heads may be incorporated. The diary returns, communications or other information where
should be maintained regularly, preferably on a weekly they believe that the information:
basis.
(a) Contains a materially false or misleading
Cultural and Ethical pre-requisites for CA statement
professional: (b) Contains statements or information furnished
Thanks to Globalization, the world today is much recklessly
smaller than before. More often than not, CA (c) Omits or obscures information required to be
professionals work in cross cultural environment.
included where such omission or - obscurity
One pre-requisite to work in this environment is to be would be misleading.
adept in cross-cultural communication. Cross cultural
In addition, they should follow the following guidelines
communication refers to communication between
with a view to comply with the principle of integrity:
interactants having diverse cultural background e.g.
communication between an Indian and a German, (i) A void involvement in activities which would
between an Italian and a Japanese. The way of
impair the goodwill of your organization and
extending greetings, the body language, the way of
yourself
shaking hands, the time to take decisions, the practice
(ii) Communicate adverse as well as favourable
of accepting or not accepting gifts—all these differ
from one culture to another. The pre-requisite for a information to all the concerned parties
CA professional would be to update himself/herself (iii) Refuse gifts or favour or other gratification which
on intercultural communication. One should not only could influence your judgment and actions
be aware of the differences—Americans are generally (iv) Do not get involved in any activity which would
assertive and extrovert in communication while adversely affect the achievement of an
Japanese are absolutely polite even when saying organization’s goal
“No”—one should always be respectful of another (v) A void conflicts and advises related parties on
culture. Otherwise, even the best of professional potential conflicts of interests that may harm to
competence would not be of any help.
them.
One important pitfall in intercultural communication
2. The Principle of Transparency: The principle of
is the possibility of conflict and misunderstanding.
transparency imposes an obligation in all finance and
Such conflict and misunderstanding can be brought
accounting professionals not to compromise their
to minimum if one is respectful of another person’s
professional or business judgments. They must be
culture.
free from bias, conflict of interest or the undue they would be entering a profession which give them
influence of others. They must act transparently having money and honor, they will not be able to hold their
regard to all considerations relevant to the task in hand own, unless by way of integrity, transparency and
but no other. Sometimes they may be exposed to honesty they stand apart. It is the responsibility of the
situations that may impair transparency. It is principal to inculcate this early in the article students.
impracticable to define and prescribe all such It is for the students to leave up to the expectation to
situations. Even in such situations they need to behave country and society.
and act transparently.
Forms related to Articles Training
3. The Principle of Confidentiality: The principle of
confidentiality imposes an obligation on finance and Deed of Articles and Registration Form 102 & 103
accounting professionals to maintain confidentiality
Service Certificate for Articleship 108
of information acquired as a result of professional and
business relationships. The principle of confidentiality Termination of Articled Service 109
does not only require to keep information confidential,
but also to take all reasonable steps to preserve i. by mutual consent
confidentiality. They should not use or disclose any
ii. in the case of death of Employer/Principal
such information without proper and specific authority
or unless there is a legal or professional right or duty (a) to be issued by the legal
to disclose the confidential information.
representative 110
4. The Principle of Excellence: The principle of
(b) by a surviving partner 111
excellence imposes an obligation on finance and
accounting professionals that the work should be Application for permission to study other
performed and the report should be prepared with due
professional care by persons who have adequate course/engagement in business 112
training, experience and competence.
Form for request by the Articled Assistant
The auditor requires specialized skills and to his Principal for issuance of Service
competence which are acquired through a Certificate in event of Completion of articles 119
combination of general education, technical knowledge
Certificate in event of Termination of articles 120
obtained through study and formal courses concluded
by a qualifying examination recognized for this Industrial Training
purpose and practical experience under proper Apprenticeship Deed for Industrial Training 104
supervision. In addition, the auditor requires a
Service Certificate for Industrial Training 105
continuing awareness of developments including
pronouncements of ICAI on accounting and auditing BOS Online Articles Placement Portal
matters, and relevant regulations and statutory
requirements. The Board of Studies of the ICAI has been providing
Online Articles Placement Scheme for selection of
5. The Principle of Commitment to the Society: Articled Assistants by CA Firms/ Individual Chartered
No profession, no professional can act in a vacuum. Accountants in practice through its Articles Placement
The efficiency and efficacy of any profession has to Portal free of charge for both CA Firms/ Individual
be judged in the light of its contribution to the society Chartered Accountants in practice and students. It
as a whole. At the end of the day, if the society’s will provides a platform to the firms of Chartered
being is not taken well care of, no profession can hold Accountants/ Individual Chartered Accountants in
its own. Article students must keep in mind that though practice having vacancies for Articled Assistants to
shortlist eligible students for selection of Articled Standards. Since its inception, ASB has been working
Assistants, and call them for interview at their offices, in this direction by formulating new Accounting
as per date and time convenient to them. Standards as well as revising the existing Accounting
Standards from time to time.
The eligible candidates who have passed Group-I or
both Groups of the Intermediate (Integrated
Functions/Objectives of ASB
Professional Competence) Course or have been
admitted under the Direct Entry Scheme, and are ■ To conceive of and suggest areas in which
willing to join articled training can register themselves Accounting Standards need to be developed.
on the portal. Candidates who are willing to avail this ■ To formulate Accounting Standards with a view
facility shall have to register themselves online at to assisting the Council of the ICAI in evolving
http://bosapp.icai.org. and establishing Accounting Standards in India.
■ To examine how far the relevant International
Technical and Professional Accounting Standards/International Financial
Reporting Standards can be adapted while
Guidance
formulating the Accounting Standard and to adapt
Educational Inputs the same.
The Board of Studies is responsible for the ■ To review, at regular intervals, the Accounting
administration of the Chartered Accountancy Standards from the point of view of acceptance
curriculum and imparting theoretical education to or changed conditions, and, if necessary, revise
students undergoing Chartered Accountancy Course. the same.
With the adoption of distance-education mode by the ■ To provide, from time to time, interpretations and
Institute and with the successful implementation of guidance on Accounting Standards.
the same, the institute has emerged as a pioneer in ■ To carry out such other functions relating to
this filed. By undertaking this responsibility, it has Accounting Standards.
ensured the highest quality and consistency by
providing education material and other academic
Auditing and Assurance Standards Board
inputs from time to time at the most affordable prices.
(AASB)
The BoS knowledge portal is designed for the students
Audit plays an important role in serving and protecting
which comprises of study material, question papers,
the public interest by strengthening accountability and
revision test papers, Suggested Answers, Compilation
reinforcing trust and confidence in financial reporting.
of Suggested Answers, Supplementary Study
Audit helps in enhancing the economic prosperity,
Material, Additional Reading Material, Model/Mock Test
expanding the variety, number and value of
Papers, Select Cases, List of Publications, E-learning
transactions that people enter into. Due to the growing
mode and Students Journal.
complexity of the business environment and business
models and their geographical spread, the auditing
Accounting Standard Board (ASB)
profession is witnessing a quantum leap in the
The ICAI has been continuously working to provide a expectations from the profession. The ICAI too
sound, reliable and high-quality accounting and recognizes the pressing need to respond to these
financial reporting system in the country. For expectations proactively. The ICAI through its AASB
harmonizing the diverse accounting policies and develops high quality standards on auditing, review,
practices in India, the ICAI had set up the Accounting other assurance, quality control and related services.
Standards Board (ASB) for formulating the Accounting The Board also develops Guidance Notes on generic
as well as industry specific issues in auditing.
Functions/Objectives of AASB ■ To develop Guidance Notes on issues arising

■ To review the existing and emerging auditing out of any Standard, auditing issues pertaining
practices worldwide and identify areas in which to any specific industry or on generic issues, so
Standards on Quality Control, Engagement that those may be issued under the authority of
Standards and Statements on Auditing need to the Council of the Institute.
be developed. ■ To review the existing Guidance Notes to assess
■ To formulate Engagement Standards, Standards their relevance in the changed circumstances
and to undertake their revision, if necessary.
on Quality Control and Statements on Auditing
so that these may be issued under the authority ■ To formulate General Clarifications, where
of the Council of the Institute. necessary, on issues arising from Standards.
■ To review the existing Standards and Statements ■ To formulate and issue Technical Guides,
Practice Manuals, Studies and other papers
on Auditing to assess their relevance in the
under its own authority for guidance of
changed conditions and to undertake their
professional accountants in the cases felt
revision, if necessary.
appropriate by the Board.
DIFFERENT AREAS OF SERVICES RENDERED BY CA

I. Introduction II. Demand for CAs
The world economy essentially runs on finance. ICAI is the second largest professional accounting
Finance touches virtually every sphere of human body in the world in terms of membership. The
endeavour – from individuals and households to profession has grown leaps and bounds in terms of
corporations and governments. Financial accounting membership and studentbase. The strength of
is the process of recording, summarizing and CharteredAccountant fraternity is over 2.50 lakh
reporting the myriad of transactions of a business, members and there are more than 8.75 lakh active
so as to provide an accurate picture of its financial students. Despite this growth in numbers, there is still
position and performance. Hence, financial a large shortage of qualified CAs in India. Some
accounting is the language of business.The ability to estimates put the shortage at 40,000-50,000 CAs per
read financial numbers and get a feel for how well a year.
business is doing, is a highly regarded skill.
Chartered Accountants (CAs) are the core finance III. Drivers for Demand Growth
professionals who specialise in financial accounting
A. Economic Growth
and at the same time have in-depth knowledge of
laws and regulations governing businesses. What is contributing to this strong demand for CAs is
Hence,CAs can operate in virtually any area of finance the growing, liberalizing and globalizing Indian
and regulatory compliance. Becoming a CA can open economy. With economic growth accelerating,
doors to a large range of exciting career opportunities financial transactions in the economy have also
in every sector of business and finance, both in India multiplied. Coupled with this, the jump in fund raising
and internationally. CAs are leading business activities and mergers and acquisitions and cross
professionals, providing essential strategic support, border investments have all contributed to the growing
guidance, and consulting in business, government, demand for talented CAs.
public practice and education. Indian CAs are in
demand for their financial acumen, regulatory
knowledge and commercial thinking.
B. Globalisation ● Building a client base to sustain the practice

The rules of accounting are becoming globalised. The
● Fees not keeping in tandem with increasing
worldwide acceptance of the IFRS hasestablished a
compliance requirements
common platform globally forthis profession.This
provides an added opportunity of working not just in ● Sub-optimal communication and presentation
India but globally. ICAI is positioning the brand of Indian skills
CA at the global level byestablishing Qualification ● Inadequate use of informal networking forums
Recognition Arrangementswith accounting bodies of such as CA clubs that aim to facilitate interaction
countries like UK, Australia, Ireland, Canada and New with professional colleagues and help build
Zealand. Such arrangements contribute towards networks
making the Indian CA talent pool a global asset. It also
● Limited access to senior members for advice
opens up the possibility of exporting professional
especially for CAs from smaller towns
services in a bigway and becoming an outsourcing
hub for accounting services. ● Limited access to affordable software tools to
run a technology-advanced practice.
C. Technological Advancement
Information technology has become an inextricable V. Areas of Service
part of financial accounting and has made it possible In a challenging and ever evolving business
to record, store and analyse data much more environment, Chartered Accountants are viewed as
efficiently.The XBRL reporting system has complete business solution providers. They are
transformedfinancial reporting and the use of these extensively trained in all avenues of Finance and
reports byvarious stakeholders. Accounting as also the regulatory scenario. They can
undertake responsibilities ranging from carrying out
D. Evolving Regulatory Scenario audits, accounting, tax compliances, feasibility study,
In a constantly evolving regulatory and economic raising financial resources, compliance with regulatory
environment, there is increasing demand for framework, capital structure and planning,
dependable and skillful professionals withspecialised organizational development, installation of efficient
knowledge in the intricacies of corporate and taxation accounting, budgetary control, information system
laws. apart from giving advice on complex issues such as
joint ventures, foreign collaborations, amalgamation,
Given the above backdrop, the opportunities for CAs
merger, diversification, modernization, product
are tremendous.
pricing, BPO, restructuring etc.
IV. Challenges faced by CAs While there are whole host of areas where services
can be rendered by CAs, for the ease of understanding,
While the opportunities for CAs are immense, there
the areas can be categorized in four broad buckets
are many challenges as well given the nature of work
as follows :
and the competition from other finance and
management profiles in the market. Some of the key
challenges faced by young members are as follows:
● Setting up one’s own practice involves high

infrastructure cost and ongoing expenses in
running the office.
We will now look at each broad area of service and the users of financial statements that the accounts
the various possible sub-areas of service below: presented to them are drawn up on correct accounting
principles and that they represent a true and fair view
A. Assurance Services of the state of affairs of the organisation. Statutory
Assurance services provide independent and audits are the core business of most chartered
professional opinions that reduce information risk. A accountancy firms.
typical assurance service requires five components -
a three party relationship, agreed subject matter, A. 2 Fraud Investigation
suitable criteria, sufficient appropriate evidence and Chartered Accountants are often called upon to carry
a conclusion expressed in a written report. out investigation to ascertain the financial position of
business in connection with matters such as a new
issue of share capital, the purchase or sale or
financing of a business, reconstruction and
Independent
Practitioner amalgamations. Their services are also sought for
undertaking investigations with a view to achieving
greater efficiency in management or administration,
finding out reasons for increases or decreases in
profits, etc.
Responsible Intended
Party User
A. 3 Opinion on Accounting Matters
Chartered Accountants can offer independent opinion
on accounting matters and compliance with laws and
A. 1 Auditing regulations.
Possibly one of the most important functions of a
Chartered Accountant, it is here that his/her A. 4 Restatement of Accounts
specialised training, skill and judgment are most often Chartered Accountants can offer services related to
called into play. The purpose of auditing is to satisfy restatement of accounts.

A. 5 GAAP & IFRS Consulting ● Use of corporate tax incentives in proposed

Chartered Accountants can offer services related to business activities
translation of accounts under other generally accepted ● Resolution of uncertain tax positions
accounting principles (GAAP) viz. US GAAP, IFRS,
etc., including quick impact assessment and B.I. 2 Tax Compliance
implementation support. Chartered Accountants can help clients in compliance
by offering assistance with the following:
A. 6 Contract Compliance / Agreed Upon
Procedures ● Assisting in filing various tax returns
Chartered Accountants can offer services to ● Obtaining no-objection certificates
Government agencies and other project contracting ● Helping during tax audit by revenue authorities
agencies in terms of determining the enforcement of
● Advising on withholding tax obligations on
policies related to how services are procured and
payments
regulated.
● TDS compliance
B. Tax Services ● Obtaining advance rulings
The tax environment has become complex over the ● Providing corporate tax litigation assistance,
years with the increasingly cross-jurisdictional including representation services
business models and a constantly evolving regulatory ● Enhancing ERP systems to meet tax
framework. Managing tax complexity to maximize management requirements
value is a key consideration of every major business
decision while at the same time ensure that all B.II. Indirect Tax
compliance requirements are met.The assessment B.II.1 Indirect Tax Retainership / Compliance
and reporting requirement of taxes are very closely Chartered Accountants can help clients on indirect
linked with financial accounts. Tax compliance in a taxes by offering assistance with compliance,
complex regulatory scenario is also a major outsourcing processes and litigation support.
requirement of businesses. The Chartered Accountant
with his experience in accounts is in an advantageous B.II.2 Transactional Consulting for Indirect Tax
position for preparing the returns for tax purposes,
Transactions are often not part of the day-to-day
representing assessees before the tax authorities and
operations of the finance department or in-house
rendering general advice on taxes to his clients.
Indirect Tax experts. Chartered Accountants who
specialize in Indirect Tax and are immersed in it every
B.I. Direct Tax
day can provide transactional advisory services to
B.I. 1 Corporate Tax Advisory organisations to ensure that the indirect tax advice
Chartered Accountants can provide advisory services delivered is within the context of the transaction as a
to clients to help develop tax-efficient strategies and whole.
manage tax exposures considering their individual
business needs. They can keep their clients abreast B.II.3 Business Model Optimization for Indirect
of new developments in the Indian corporate taxation Tax
arena that affect their business. They can provide From the Indirect Tax perspective, Business Model
services such as: Optimization (BMO) involves designing
andimplementing an approach for goods or services
● Choice of an appropriate form of entity to set up that manages overall tax efficiency and decreases
Indian business activities the levels of strategic risk while embracing the latest
● Entry strategy from a tax and regulatory technology. The potential benefits of BMO include
perspective lower overall tax rate for the business, improved cash
● Tax-planning strategies for profit and dividend flow and reduced complexity. Chartered Accountants
repatriation specializing in Indirect Tax and with a good

understanding of business operations can help clients hence offers an opportunity to Chartered Accountants
with optimizing their business model for indirect taxes. to provide advisory and compliance services.
B.II.4 Transfer Pricing B.III. International Tax

TP is becoming increasingly complex with an growing As global organisationslook to invest or establish
number of countries embracing Transfer Pricing (“TP”) themselves in India, it is important that India’s tax and
regulations including mandatory documentation. regulatory policies are well understood for enhancing
Domestic transfer pricing has opened up many their chances of success. Similarly, the Indian
avenues for small and mid-sized CA firms as well. In organisationsinterested in or aiming to go global or
India, the ongoing enforcement of TP regulations in get listed on the overseas bourses need to understand
the country and adjustments being made focusing and manage a host of cross-border taxes and
on new and more complicated issues have brought regulations.
to the fore the reality that TP controversies are
expensive and time-consuming to deal with and B.III.1 Corporate Tax Advisory
frequently result in double taxation of income and lead Taxes may be a significant cost for doing business
to considerable uncertainty. and hence, upfront advice can help in attaining tax
efficiency. Chartered Accountants well versed in
Further, with the advent of Base Erosion and Profit taxation laws of major countries can provide advisory
Shifting (“BEPS”), TP is expected to become a focus support to clients in various areas such as:
area for India and other jurisdictions as well. Chartered
Accountants can help clients ● Advice on various international tax matters
including cross-border transactions
● build transfer pricing practices aligned with their
● Advice from a tax perspective in respect of
business strategy
agreements to be entered into by various parties
● strategic documentation to support their transfer
● Advice on withholding tax obligations on
pricing practices
payments to residents/non-residents
● review and defend their transfer pricing policies
● Advice on permanent establishment exposure
and processes
and its tax impact
● Analyse and identify differences between the
B.II.5 GST
current tax computation and requirements of
Goods and Services Tax (GST) is one of the most
Income Computation and Disclosure Standards
significant reforms introduced in the history of the
(ICDS)
Indian fiscal evolution. Globally, GST is acknowledged
● Analyse the impact of Place of Effective
as a progressive tax regime, with inbuilt efficiencies
Management (POEM) rule for determining tax
to broaden the tax base, decrease cascading effect
residential status of a foreign company/overseas
and reduce revenue leakages. India is expected to
group entity in India having regard to global
adopt a dual GST model where the central and state
management structure
governments will levy GST simultaneously, on a
common taxable value, on the supply of goods and ● Analyse and advise on the tax treaty eligibility
services. However, in the case of imports and and provisions including Limitation on Benefits
interstate supplies, an IGST (Integrated GST) shall (LOB) provisions etc.
be levied by central government. The proposed GST ● Review of operations and analyse the impact of
will subsume most of the existing central and state Base Erosion and Profit Shifting (BEPS)
taxes on the supply of goods and services including measures
central excise, service tax, state level Value Added ● Analyse the impact of General Anti Avoidance
Tax (VAT) and other local levies on goods. Rules (GAAR) on domestic and cross-border
transactions/structuring
GST has the potential to impact cash flow, pricing, ● Advise on availing foreign tax credits in India or
working capital, supply chain and IT systems and in overseas jurisdictions

● Advise on repatriation strategies. ownership/jurisdiction for investment including

setting up an international holding company,
B.III.2 Advice on Foreign Exchange global sales company, etc.
Regulations ■ Advise on the entity structuring for selecting an
FEMA is not only applicable to all parts of India but is optimal entry vehicle such as a branch,
also applicable to all branches, offices and set-ups subsidiary, LLP, joint venture, etc.
outside India which are owned or controlled by a ■ Advise on capital structuring in the backdrop of
person resident in India. It also applies to all branches, foreign exchange policies keeping repatriation
offices and set-ups in India which are controlled or needs in mind
owned by person resident outside India. FEMA ■ Assistance in filing/obtaining necessary
regulates all aspects of foreign exchange and has regulatory approvals
direct implications on external trade and
■ Assistance in finalising/review of shareholders,
payments.FEMA also impacts foreign nationals who
joint venture and other relevant business
are working in India or outside. In this respect,
agreements from a tax perspective
Chartered Accounts can offer services to their clients
around: ■ Repatriation strategies
■ Advise on tax treaty implications
■ Assistance in setting up a branch office, liaison ■ Target due diligence
office and project office of the foreign company ■ Identifying and enhancing tax and fiscal
in India and advising on the approaches required incentives, including obtaining tax rulings in the
in that matter selected jurisdiction.
■ Help with representations before regulatory
authorities such as the Reserve Bank of India, B.IV. Global Employee Mobility
Foreign Investment Promotion Board, etc. As organisations grow and become more global in
■ Carry out compliance health check/regulatory scope, employment issues become more complex.
risk analysis of past compliances/filings from Among the most serious challenges businesses face
foreign exchange regulations perspective today is compliance with multifaceted tax laws and
■ Carry out regulatory due diligence labor regulations. Chartered Accountants can offer a
■ Advise on transactions which have a foreign range of services related to employee compensation
exchange aspect and structuring in a tax efficient manner. Some of the
■ Assistance in FEMA compliances areas where services can be offered are as follows:
■ Assistance in representation for the purpose of
■ Advise on monthly tax withholding and net take
compounding matters
home pay of employees
■ Assistance in obtaining approval for external
■ Assist with meeting monthly, quarterly and
commercial borrowing.
annual compliance requirements
■ Conceptualise and design the equity linked
B.III.3 Inbound and Outbound Investment
incentive and compensation schemes
Structuring
■ Review existing plans vis-à-vis industry
India has become an attractive investment destination
practices, regulatory norms, etc.
and with the Make in India campaign in place, the
investments are expected to grow substantially. At ■ Design/review global mobility policies
the same time, Indian companies are looking to ■ Assist in setting up a liaison office
expand their business to other countries in search of ■ Advise on cross-border tax issues and the tax
natural resources and new markets. Chartered relief mechanism
Accountants can advise their clients on cross-border ■ Assist with the compliance requirements
transactions in the following areas: ■ Review of secondment contracts and other
compliance requirements
■ Advise on entry into a country in terms of optimal

■ Advise on documentation in regard to obtaining Business Process Management to their clients by

Indian work permit and residential permit taking ownership of processes like accounts payable,
■ Advise on exchange control requirements for accounts receivable, payroll and other business
foreign nationals coming to India or leaving India transactions. This would help clients in not just getting
■ Support while applying for such work /residential these transactions handled efficiently but also reduce
permits or their extensions processing costs and save time. Another area of
business process management is Expense Claims.
■ Advise on exchange control regulations in
The service can ensure that employees are
respect of various investment opportunities in
reimbursed for expenses incurred during the course
India for individuals.
of their work within the set time period and also help
mitigate any potential compliance risks by keeping
C. Accounting Services
track of various tax laws.
C. 1 Financial Accounting & Book Keeping
Services C. 3 Management Reporting & Analytics
In today’s challenging business environment, an This is another field in which Chartered Accountants
increasing number of organisations are outsourcing can offer their servicessuch that it enables the
their accounting services requirements to experts. management in formulation of policies, day to day
Chartered Accountants can offer services to both control, performance evaluation, etc. The Chartered
domestic and international organisations. Some of Accountant can help design, build and implement
the services that can be offered in this area are as management reporting framework in line with their
follows: business goals. Besides generating the reports, the
CA can also help interpret the results, providing
■ Preparation and maintenance of day-to-day
management with insightful and actionable
bookkeeping and monthly or quarterly accounts
information that will help them manage their
■ Preparation of annual accounts for the statutory operations better.
annual audit
■ Preparation of periodic tax, sales tax, and other ■ Identify and define key performance indicators
returns in terms of financial, operational and other
■ Preparation of salary statements of employees, metrics
calculation of bonus payments, and ■ Identify and establish data sources for the
administering of commissions metrics
■ Analysis of the cash requirements of the ■ Design and implement processes to generate
business and forecasting cash requirements data
■ Assistance for the recovery of debts and taking ■ Data validation and cleansing
necessary legal action ■ Implement and monitor business intelligence
■ Assistance with making payments to creditors tools to produce dashboards for decision makers
while leaving ultimate control with the ■ Implement the solution and train users.
management
■ Assistance with treasury functions like operation C. 4 Cost Accountancy
and monitoring of high-interest deposits and A Chartered Accountant is trained to ascertain the
current accounts costs of production and of processes at different levels
■ E-accounting services of operations in the manufacture of a product and in
■ Accounting Setup Services. the rendering of a service. Hence Chartered
Accountants can offer services to clients in terms of:
C. 2 Business Process Management
■ Providing costing information for the guidance
Besides offering basic financial accounting and book
of management
keeping services, Chartered Accountants can offer

■ Introducing cost control methods companies. Registration work and the duties of a
■ Assisting the management in establishing Receiver are also undertaken by them, in addition to
appropriate selling prices other company work.
■ Monitoring expenditure,
■ Minimizing costs D.I. 2 Company Secretarial Services
■ Forecasting future needs Efficient secretarial services are essential for handling
the numerous management tasks such as organising
■ Providing reports for management accounting.
documents, gathering information, keeping track of
deadlines, analysing reports, etc. Chartered
C. 5 GAAP Transformation
Accountants can offer services to small organisations,
Chartered Accountants can offer acomprehensive many of which are being virtually run by a few
suite of services to assistorganisations in individuals who are unable to afford a full-time
understanding and implementing GAAP conversions secretary. The services that can be offered to clients
(from local GAAP to Ind AS, IFRS or US GAAP, and in this regard can be in terms of the following:
vice versa). These services can be in many forms as
outlined below: ■ Keeping clients updated on the latest
amendments
■ Impact Analysis – provide assistance in
■ Organising member meetings from sending
understanding the impact of Ind AS / IFRS / US
meeting notices to the minutes
GAAP conversion on their client organisation
■ Organising board meetings
■ Training - Finance staff, management and Board
■ Arranging for Director Identification Numbers
Members need to learn and understand a new
(DIN)
language of accounting. Hence training can be
offered as a service. This training can be tailored ■ Arranging for Digital Signature Certificates
to the organisation’s specific needs. (DSC)
■ Project management - The transition to Ind AS / ■ Maintaining statutory books and registers
IFRS / US GAAP can be a major project for many ■ Arranging share allotments and transfers
organisations. Chartered Accountants can ■ Managing amendments to the Memorandum
provide strong project management skills and and Articles of Association
advice to help organisation ensure that such ■ Filing statutory forms and annual returns
projects are asefficient and effective as possible. ■ Ensuring a smooth change in company names/
■ Technical Advice – Chartered Accountants who directors
are deep technical specialists in all aspects of ■ Organising the certification and attestation of
Ind AS / IFRS accounting can advise forms and documents.
organisations on the complex new standards that
they will have to face. Some changes could D.I. 3 Executors and Trustees
create significant differences in the way that
A Chartered Accountant is also often appointed
some items are accounted for. CAs can provide
executor under a will or trust in order to carry on the
specialised technical advice and illustrate the
administration of the estate or settlements.
impact of differentaccounting treatments.
Appointment of this nature require the Chartered
Accountant to work in Co-operation will solicitors or
D. Consulting Services
Lawyers. Conversely, Solicitors or lawyers carrying
D.I. Corporate Services out work of this kind usually call in Chartered
D.I. 1 Business Registration & Compliance Accountants to assist them in the accounting aspects
Services of their work.
The services of Chartered Accountants are frequently
sought in connection with matters such as the D.I. 4 Directorship
formation, financial structure and liquidation of limited Senior Chartered Accountants have the experience

of being directors in their own organisations. At the o Streamline and accelerate collections
same time, they are sought out as independent processes
directors on the boards of companies for their o Develop and help implement insightful
expertise and wealth of experience and insights. The customer analytics to understand and
advantages of having a Chartered Accountant on the anticipate customer needs
Board of Directors are well recognised and most ■ Supply Chain
companies have at least one CA on their board who o Provide insight into the health of supply
plays an active role on audit and risk management chains by using a robust set of data
committees. analytics
o Transform global supply chains through a
D.II. Business Consulting Services
cross-disciplinary approach spanning
D.II. 1 Market Research and Entry Strategy operations, tax and risk
Chartered Accountants can provide detailed research o Review, improve and assess risk of
reports to clients on market entry in terms of business procurement functions to realize long-term,
and regulatory scenario and modes of entry. They sustainable benefits
can also help internationalclients devise a marketentry
D.II. 3 Business Plan Services
strategy andexecute on that strategythrough
partnerships orjoint ventures. Chartered Accountants can help clients in creating a
strategicbusiness plan forinvestments in newmarkets
and segments. Companies seeking to approach
D.II. 2 Business Process Consulting
Private Equity funds often express the need to have
For clients who already have a clear strategic vision,
a professional business plan prepared for them,
Chartered Accountants can design targetoperating
incorporating suitable sanity checks and robust
modelsand implementation plans to help achieve the
financial modeling. Chartered Accountants can assist
strategic vision. To reach their potential, organisations
companies in developing and validating their business
must continuously improve their performance and
plans. They can also assist in the preparation of
sustain that improvement. Chartered Accountants can
feasibility studies of new project and expansion
help organisations in meeting these challenges by
schemes.
providing advice on measurable and sustainable
improvement in areas of Finance, Customer, and
D.II. 4 Optimisation of Cash Flows
Supply Chain.
An efficient working capital management programme
■ Finance includes; robust systems, streamlined processes and
o Transforming finance operating model management rigour with respect to costs and controls
resulting in release of cash. Chartered Accountants
o Designing and managing outsourcing,
can help their clients to achieve an efficient working
offshoring and shared service center
capital position and facilitate release of cash to fund
arrangements
additional growth initiatives.
o Sharpening performance management
framework ■ Optimisation of the company’s cash
o Designing and implementing financial ■ Facilitate additional growth with existing working
systems capital
o Conceiving and implementing enterprise ■ Procurement, accounts payable, inventory, and
cost management systems collection process improvement
■ Customer ■ Reduce debt exposure and manage cost of
o Develop pricing, promotion, channel and capital
product strategies that improve margin and ■ Improved visibility and reliability of information
increase profits and establishment of continuous control

D.II. 5 Project Finance accounts.A specific valuation exercise is mandatory

Judicious financial structuring is an important part of in the case of corporate restructuring and also to draft
business planning. Locating cost effective and best employee governance schemes (ESOPs).
suited sources of finance for projects is essential for
the success of the projects. Options for finance range Basically, a valuation report is demanded by investors,
from equipment finance, short or long term funds, lenders, stakeholders, transferors and transferees in
trade finance, structured finance or other products. the case of transfer of tangible and intangible assets
Chartered Accountants can help organisations in and other diverse purposes. Chartered Accountants
deciding the most optimum structure for project can offer valuation services to their clients for any of
finance and then assist in raising funds from banks, these purposes.
financial institutions, and private funds. Project finance
services would include the following: D.III. 2 Due Diligence
Due Diligence is commonly used as a pre-investment
■ Preparation of Project Report intelligence tool for obtaining an independent and
■ Assistance in Opening Bank Accounts sophisticated report concerning the investee’s
■ Loan arrangement- Cash Credit Limit, Term credentials.
Loan & Project Loan
Due Diligence as a standard of care, is conventionally
■ Working Capital Proposals (Cash Credit /Letter
relied upon by
of Credit /Bank Guarantee)
■ Loan Against Property ■ Investors
■ Home Loans ■ bankers
■ Term Loans ■ acquirers in transactions of Mergers &
■ OD limits Acquisitions (M&A)
■ Machinery Loan ■ investing partners in a joint venture
A large number of Chartered Accountants in practice On the other hand, promoters, who seek investments
are involved in project financing consultancy to their or who are negotiating with investors or joint venture
clients and liasioning with different financial Partners, also mandate a mock Due Diligence to
institutions. prepare themselves for the actual process i.e. initiated
by the investor.
D.III. Transaction Advisory Services
The Due Diligence process also establishes the risk
D.III. 1 Valuation
profile for an investment and supplements the
The number of transactions involving sale and
validation of business assumptions and valuation
purchase of shares, businesses, etc. and leveraging
benchmarks that are being used. Chartered
for such purposes, is on the increase. Hence, a
Accountants can carry out an agreed upon procedure
reliable valuation report on the various aspects of
review on the basis of verification of records and
businesses becomes imperative. In the course of
meetings conducted with key persons. At times, the
transactions, valuation of businesses, future cash
verification process merits a visit to the plant and/or
flows and intangibles such as know-how brand,
location of operations to conduct an extensive analysis
software, etc. become important drivers of such
of data and information. CAs can also provide key
transactions.Traditionally, Valuation reports are
inputs for structuring the transaction/investment and
required for regulatory purposes and also for
identifies potential risks that need to be documented
borrowing from institutions. Valuation Report of an
through Representations, Warrantees and
expert is required for transaction of assets, for
Indemnities. As part of the process, overhang of
valuation of security for the purpose of bank funding,
compliance and transaction costs such as stamp duty,
for tax purposes in the case of Transfer Pricing and
taxes etc can also be identified.
for impairment testing for drawing up true and fair

D.III. 3 Capital Market & Fund Raising D.IV. 1 Internal Audit

Chartered Accountants can support their clients in ■ Setting up of Internal Audit function
their capital market strategy and fund raising initiatives ■ Undertaking internal audit risk assessments
by providing all-round support and handhold the entire
■ Developing risk-based assurance plans
process. The ways in which they can support the fund
■ Identifying and monitoring key risk indicators and
raising initiatives are as follows:
continuous monitoring
■ Prepare relevant financial model ■ Implementing IT systems to support internal
■ Prepare Information Memorandum audit delivery.
■ Engage in negotiations with prospective
stakeholders D.IV. 2 Internal controls over financial reporting
■ Enhance governance framework
■ Help to obtain optimal funding from the best
possible source ■ Streamline/standardise controls
■ Define clear accountability and transparency
To comply with the public issuedisclosure norms, SEBI ■ Control automation
specifies that the issuer company must restate ■ Reduce the number of surprises
financial statements for the last five years of
■ Plug leakages/potential frauds.
thecompany going public and that a Chartered
Accountant must certify allfigures and give a comfort
D.IV. 3 Corporate governance
letter to the Lead Manager.
■ Improve board effectiveness
D.III. 4 Transaction Structuring ■ Set the right tone and make effective decisions
A typical M &A transaction focuses on several factors ■ Assess and implement ethics programs, training,
such as business validation, economic rationale, change management, anti-fraud programs and
growth potential, valuation, etc. However, there are monitoring/reporting.
processes related to such transactions which are
regulations-oriented such as schemes of Mergers, D.IV. 4 Enterprise Risk Management
Demergers, etc. In every M&A transaction, minimizing ■ Strategic risk management: creating and
overall risk and optimizing benefit out of the protecting value from strategic risks
transaction, balancing diverse legislations and ■ Design, implement and maintain a common risk
regulations remains most critical challenge. Chartered infrastructure by leveraging people, process and
Accountants can advise their clients on not just the technology transformation opportunities
valuation and due diligence but also in structuring the ■ Establish organization-wide consistency while
transaction in a manner that is compliant with simultaneously addressing different and unique
regulations and efficient. They can also help by functional needs
providing inputs in the drafting of the documents ■ Identify, measure, manage, monitor, review and
related to the transaction. report on risks
■ Integrate activities to effectively manage risk and
D. IV. Risk Advisory Services
compliance-related activities
Risk Advisory Services arerelated to conducting
functional reviews and improving and strengthening D.IV. 5 Legal Compliance Framework
internal controls within organisations. Such services
■ Compliance program design and control testing
provide a valuable perspective of the business that
the clients are engaged in by disseminating quality ■ Compliance monitoring, assessment, and
effectiveness
information that is critical for sound decision making
and feedback in the form of detailed reports. The ■ Regulatory consulting
services that can be provided to clients are as follows: ■ Specialized compliance services: FCPA, Anti-
Money Laundering, Food and Product Safety,

FDA Compliance, Direct and Indirect Tax ■ Review of IT Organisational Structure

Compliance, etc. ■ Disaster Recovery Planning.
D.IV. 6 Forensic services
■ Financial reporting and securities fraud VI. Summary
■ Bribery and corruption As is clear from the above, there are a whole range
of services that can be offered by Chartered
■ Money laundering
Accountants given their knowledge of finance and the
■ Employee fraud
regulatory scenario. Aftercompleting the CA course,
■ Misappropriation and embezzlement a member has to take decision whether togo in for
■ Regulatory investigations. practice or service in industry. There are many
avenues for CAs to get into service. These are:
D. V. IT Advisory Services
Amid an evolving regulatory environment and ■ Private Sector
increased oversight pressures, organizations face ■ Public Sector
ongoing challenges to manage and comply with ever- ■ Government Departments
mounting regulations that are coming their way.In the ■ Cooperative Sector
face of these challenges, managing IT risk and ■ Non-Profit Organisation
compliance has become even more critical, as IT
■ Multilateral Agencies like World Bank, ADB, IMF,
failures can lead to reputational damage, customer
etc.
and market valuation loss, and an increase in privacy
issues and high-profile legal exposure. In this ■ Accounting Firms – large and mid-sized
environment, enhancing IT controls is crucial to help
While setting up one’s own practice is definitely an
ensure businesses are managed and controlled
option, it is essential to focus on a few areas and
appropriately, and functioning reliably. Chartered
become a specialist in them in order to compete with
Accountants can support their clients in the following
other medium and large size firms. Working with
areas:
established firms in the beginning of one’s career
■ Developing an appropriate IT strategy could help one develop the skill and know how to
later set up an independent practice. In the end, it is
■ IT Budgeting
very important to establish one’s credentials in order
■ IT risk management and controls to establish a practice.
■ Selection of Software Tools
AREAS OF SERVICES
I. Introduction professionals have to keep themselves updated and
be able to ensure that businesses are compliant. As
Globalisation is driving cross-border investments and the focus of corporate accounting shifts to risk
creating mammoth organisations operating across management and greater transparency, so doesthe
many countries. With globalisation comes the need career landscape of Chartered Accountants.
for having financial statements and information at par Technological advancements have also contributed
with international standards.Given this scenario, the to the changing work environment, making vast
role of corporate accounting and finance professionals amounts of information being available and
continues to evolve. To render world class service, analyzable. Hence, Chartered Accountants need to
the Chartered Accountants mustshift their priorities keep pace with the developments in this front as well.
from merely analyzing pastevents to proactively acting
as strategic partners, advisors and information While the core competency of a professional
providers for businesses. With the constantly evolving accountant is inthe area of financial accounting,
regulatory scenario, accounting and finance corporate reporting, and in-depth awareness of laws

and regulations related to businesses, their on the supply of goods and services including central
qualification, education and experience provides a excise, service tax, state level Value Added Tax (VAT)
foundation of knowledge, skills andprofessional ethics and other local levies.
that enables them to continue to learn andadapt to
emerging changes in their field. Given the expertise of Chartered Accountants in
understanding manufacturing, costing and pricing,
they will get to play an important role once GST is
II. Importance of Articleship implemented.
Experience
Some of the opportunities for practicing Chartered
Articleship experience is a critical building block in Accountants will be in the form oftax compliance, filing
the career of Chartered Accountants. Articleship years of returns, interpretation of law, advising dealers about
are very important to get on the ground experience. the correct procedure for availing input tax credit,
Doing articleship from a reputed firm can make a huge annual audit, etc.Chartered Accountants working in
difference to the professional experience of the industry will have an important role in ensuring that
articled trainee. At the same time taking articleship all the complexity in GST is understood and
lightly would have an adverse impact on training and implemented in the industry where they are employed.
learning experience. Articleship experience also plays
a vital role during the recruitment process. Several The understanding of GST implications, especially
large and reputed organization look for candidates prior to and in the transition period would be
with exceptional Articleship experience. imperative.
Given the vast nature of the field, it is not feasible to As the likely implementation of GST becomes
ensure that every articled trainee is exposed to all imminent, CA firms and industry have started
areas of work experience during the training period. preparing for the impending changes. Hence there
Some areas like accounting and auditing constitute would be opportunities around the following:
the core of accounting services. On the other hand
certain areas such as transfer pricing, project finance, ■ Preliminary Study – once the bill is passed, the
etc. are emerging areas as a part of the consulting larger companies may start getting preliminary
practice of chartered accountants. Effort should be studies done. The mid- and smaller-sized
made to get exposure to the emerging areas for companies may start preparing once the states
Chartered Accountants so that the trainee is prepared pass the bill or once the implementation timelines
for better opportunities in the future. are made know.
■ Impact Analysis – Once the rates are in place,
analysis of the structural changes required in
III. Emerging Areas for marketing and procurement, including the effect
Articleship Experience on the cash flow, would need to be done.
■ IT systems / Standard Operating Procedures
A. GST
modification –This would start several months
Goods and Services Tax (GST) is one of the most
before the implementation date.
significant reforms introduced in the history of the
■ Reconciliation of books and returns filed under
Indian tax system. Globally, GST is acknowledged
central excise, VAT and service tax and claim
as a progressive tax regime. It has inbuilt efficiencies
of credit on stocks in hand
to broaden the tax base and decrease cascading
effect. It also helps in reducing revenue leakages. ■ Training the personnel in marketing, purchase,
India is expected to adopt a dual GST model where finance and accounts – This would also start
the central and state governments will levy GST several months before the implementation date.
simultaneously, on a common taxable value, on the ■ Hand holding in first 3 months in terms of record
supply of goods and services. The proposed GST maintenance, uploading returns and
will obviate most of the existing central and state taxes representing.

■ Internal audit of GST – Monthly or quarterly ■ Internal Audit of compliance with FEMA laws
compliance checks and correction of errors on ■ Internal Audit of compliance with Labour Law
ongoing basis. ■ Internal audit in Banks
Given the huge opportunity that GST implementation ■ Internal audit of Mutual Funds
offers, articled trainees would benefit tremendously
■ Internal Audit of NBFCs
from being fully clued in to the developments and
■ Internal audit of compliance with KYC
explore opportunities with CA firms that have already
requirements/Anti-Money Laundering policy
started preparing for the impending opportunity.
■ Internal audit in Infrastructure Enterprises
B. Internal Audit ■ Internal audit of a Not –for- Profit Organisation
Internal audit is a strategic tool in the hands of ■ Risk based Internal Audit
management which supports decision making and ■ Internal Audit of Intellectual property
contributes towards achieving the objectives of the ■ Internal audit of Stock and Inventories
organisation. With a changing and competitive ■ Internal audit of adherence to Competition Law
environment, expectations from internal auditors are ■ Internal Audit - Controls due Diligence Reviews
growing rapidly. Internal audit has become much
■ Internal Audit of ESOP Transactions
moreimportant within large organizations as a tool
for control and risk management. Internal auditors ■ Internal Audit of Financial Instruments
have to keep evolving the systems and processes to
Chartered accountants can also assist in improving
keep pace with the emerging business realities.
thequality and effectiveness of internal audit process
The Companies (Auditor’s Report) Order, 2003 issued by advising and assisting in the development of
by theCentral Government requiresthat the auditor’s internal auditand risk management methodologies.
report on the account of a company to which thisorder They can assess whether the internal audit function
applies shall include a statement on various matters is deliveringeffectively to stakeholders. They can
one ofwhich is “in the case of listed companies and/ provide training to the staff of the internal audit
or other companieshaving a paid-up capital and department. They can also help with the selection of
reserves exceeding Rs.50 lakhs as atthe software to support the internal audit functions.
commencement of the financial year concerned, or
Given the growing importance and immense
having anaverage annual turnover exceeding five
opportunity in this area, experience of articled trainee
crore rupees for a periodof three consecutive financial
in Internal Audit will stand them in good stead for a
years immediately preceding thefinancial year
job in the future.
concerned, whether the company has an internalaudit
system commensurate with its size and nature of
C. Ind AS
itsbusiness.”This requirement has also created a
greater awareness of theneed for having proper As businesses have become complex and global,
internal audit systems. India needs a comprehensive accounting standards
on par with the rest of the world. The move towards
Specific Internal audit activities include: IFRS is an attempt to bridge this gap. This move is
not just an accounting move as it will impact business
■ Internal audit requirements under Companies in many ways. Businesses will have to examine the
(Auditor’s Report) Order, 2003 (CARO, 2003) implication of this move on their performance, credit
■ Internal audit of Enterprise Risk Management rating, debt covenants, dividend distribution,
process employee KPI and bonuses, managerial
■ Internal audit of Corporate Governance remunerations, taxes, etc.
■ Internal audit of Transactions of Depository
On 2 January 2015, the Press Information Bureau,
Participants
Government of India, Ministry of Corporate Affairs
■ Internal audit of Treasury Operations (MCA) issued a note outlining the various phases in

which Indian Accounting Standards converged with from April 1, 2018 onwards with comparatives for the
IFRS (Ind AS) is proposed to be implemented in India, periods ending March 31, 2018 or thereafter.
for Companies other than Banking Companies,
Insurance Companies and NBFCs. In Phase II Ind AS based financial statements for
accounting periods beginning from April 1, 2019
The application of Ind AS is based on the listing status onwards would need to be prepared by NBFCs whose
and net worth of a company. Ind AS will first apply to equity and/or debt securities are listed or are in the
companies with a net worth equal to or exceeding process of listing on any stock exchange in India or
500 crore INR beginning 1 April 2016. Listed outside India and having net worth less than Rs.500
companies as well as others having a net worth equal crores and NBFCs that are unlisted companies,
to or exceeding 250 crore INR will follow 1 April 2017 having net worth of Rs.250 crores or more but less
onwards. Companies impacted in the first phase will than Rs.500 crores and their holding, subsidiary, joint
have to take a closer look at the details of the 39 new venture or associate companies, other than those
Ind AS currently notified. Ind AS will also apply to companies already covered under the corporate
subsidiaries, joint ventures, associates as well as roadmap announced by the Ministry of Corporate
holding companies of the entities covered by the Affairs.
roadmap.
It was clearly stated that scheduled commercial banks
On 18 January 2016, the Press Information Bureau, (excluding RRBs)/NBFCs/insurance companies/
Government of India, Ministry of Corporate Affairs insurers shall apply Indian Accounting Standards (Ind
(MCA) issued a note outlining the roadmap for AS) only if they meet the specified criteria. They shall
implementation of Indian Accounting Standards (Ind not be allowed to voluntarily adopt Indian Accounting
AS) converged with International Financial Reporting Standards (Ind AS). This, however, does not preclude
Standards (IFRS) for Scheduled commercial banks an insurer/insurance company/NBFC from providing
(excluding RRBs), insurers/insurance companies and Ind AS compliant financial statement data for the
Non-Banking Financial Companies (NBFC’s). purposes of preparation of consolidated financial
statements by its parent/investor, as required by the
Scheduled commercial banks (excluding Regional parent/investor to comply with the existing
Rural Banks (RRBs), All-India Term-lending requirements of law.
Refinancing Institutions (i.e. Exim Bank, NABARD,
NHB and SIDBI) and Insurers/Insurance companies This is huge opportunity for Chartered Accountants
would be required to prepare Ind AS based financial in terms of providing services to Indian organisations.
statements for accounting periods beginning from At the same time convergence with IFRSs would
April 1, 2018 onwards, with comparatives for the benefit the CharteredAccountants, as now they would
periods ending March 31, 2018 or thereafter. Ind AS get global recognition. With convergence with IFRSs,
would be applicable to both consolidated and mobility to work in different parts ofthe world would
individual financial statements. This would be increase for members in industry as well as inpractice.
applicable to the holding, subsidiary, joint venture or Also the members in practice would have
associate companies of Scheduled commercial banks theprofessional opportunities to advise their clients
(excluding RRBs) as well, irrespective of the roadmap with regard tochanges required in accounting
for companies. Urban Cooperative Banks (UCBs) and systems, procedures, practicesand policies in
Regional Rural Banks (RRBs) have been keptout of accordance with the requirements of IFRSs issuedas
the purview of Ind AS for the present. Indian Accounting Standards.
NBFCs will be required to prepare Ind AS based Keeping these opportunities in mind, an opportunity
financial statements in two phases. In Phase I, NBFCs to get experience of this transition to Ind AS would
having net worth of Rs.500 crores or more and their benefit articled trainees tremendously.
holding, subsidiary, joint venture or associate
companies shall be required to prepare Ind AS based D. Project Finance
financial statements for accounting periods beginning Project finance is the long-term financing of

infrastructure and industrial projects based upon the E. Knowledge Process Outsourcing (KPO)
projected cash flows of the project rather than the KnowledgeProcess Outsourcing (KPO) involves
balance sheets of its sponsors.Project finance offshoring of knowledgeintensive business processes
structures usually involve a number of equity investors that require specialised domainexpertise.
as well as a syndicate of banks who will provide loans Theseprocesses demand advanced analytical abilities
to the project. and specialized knowledge of the domain that the
KPO operates in.
A Chartered Accountant can play an important role in
helping the entrepreneur raise project finance from For Chartered Accountants there are opportunities
banks and financial institutions. Chartered on both fronts – as employees of KPOs and also as
Accountants have sound knowledge about service providers to KPOs. Given India’s established
preparation of financial statements. Banks needs presence in Business Process Outsourcing (BPO), it
actual, provisional and projected financials and also is a natural corollary that the country can emerge as
the basic ratios to decide about funding. Thesecan a large player in KPO as well. What is required in
be prepared well with the support of a Chartered highly skilled workers, maintenance of high quality,
Accountant. investment in world class infrastructure and higher
level ofcontrol, confidentiality and enhanced risk
Project Finance is one of the key focus areas in management.
today’s world because of continuous growth and
expansion of infrastructure and industries at a rapid Given the large talent pool, friendly government
rate.In the 12th Five-Year Plan, the Planning policies, quality ITtraining and low labour costs, Indian
Commission of India has identified an infrastructure KPOs are emerging as competitive players in the
investment requirement of $1 trillion. The government global market. Many large financial organisations now
of India alone cannot fund this requirement and it has have KPOs based in the India supporting their
to depend on the private sector either directly or international operations.
through public-private partnership (PPP) initiatives to
help finance nearly half of the investment needed. Indian KPO are rendering services to international
While government policies support the PPP model to clients in the following areas:
meet the funding deficit, the bulk of private-sector
funding for the PPP projects are through project 1. Finance and accounts covering areas such as
financing by scheduled commercial banks, which on accounting and data preparation, maintenance
an average varies from 70-85% of their debt of books and records, accounts receivables and
requirement. payable, debtor management, fixed asset
accounting, reconciliations, payroll
Many Chartered Accountants in practice are management, internal financial report, expense
involvedin project financing consultancy. They help analysis, and so on.
their clients in planning, preparing the required 2. Research & Development based on secondary
documentation and liasioning withdifferent financial market research and analytical support. These
institutions. To be successful in this field, Chartered typically include data search and collation,
Accountants need to be not just good in their financial managing data, business analysis, market
modeling and reporting but also have a strong research, equity research, Intellectual Property
relationship with financial institutions so that they can (IP) Research, legal research and market
pitch the projects to them. analysis.
3. Financial Analysis which includes forecasting,
Gaining experience in Project Finance during budgetary and decision support, consolidation
articleship can provide trainees with the relevant and analysis, MIS reporting, credit rating
experience to get opportunities in this area at a later analysis, risk management, treasury and
stage. investment management, financial research and
investigations, investment analysis, etc.

4. Consulting services which include financial financial system of businesses.

modeling, remote diligence, preparing
information memorandums, assistance and In many cases these reviews are performed in
guidance in transfer of operations, valuations, conjunctionwith a financial statement audit, internal
mergers & acquisition support, preparation of audit, or other forms ofattestation engagement. This
company profiles/reports etc. involves collectingand evaluating evidence of the
effectiveness of the organization’s information
Working in a KPO environment with high quality systems,practices, and operations. The report
standards can be a great learning experience for generated provides evidence of whether the
articled trainees. It can also provide an opportunity to information systems are safeguarding
understand the nuances of other markets and open assets,maintaining data integrity, and operating
the possibility of working with global organisations. effectively and efficientlyto achieve the organization’s
objectives.
F. Fraud Investigation and Forensic Accounting
Investopedia defines forensic audit as an examination Certified Information Systems Auditor (CISA)
and evaluation of a firm’s or individual’s financial certificationis considered the world-standard for those
information for use as evidence in court. A forensic who audit, control, monitor and assess an
audit can be conducted in order to prosecute a party organization’s information technology and business
for fraud, embezzlement or other financial claims. systems. For those planning to pursue this field, this
Forensic Accounting and Fraud Detection certification can add a lot of credibility and enhance
specialisation has come into the forefront given the earning potential.
large scale scams and frauds that have been
witnessed in the economy. Forensic accounting is the H. Private Equity Funding
application of a specialized knowledgeand specific Private equity investments in India have been strong
skills to analyse economic transactions to get to the despite the global economic slowdown over the past
bottom of such misrepresentations and frauds. few years. India was the top destination for private
Chartered Accountants are in huge demand for such equity (PE) and venture capital (VC) investors in
forensic investigations. The clients could range from 2015.The country received a record $22.4 billion in
regulators to shareholders to investors and companies investments last year, 31.8% more than the previous
themselves. highest of $17 billion in 2007, according to a report
by Bain & Co. India Pvt. Ltd. The 2015 deal value
Chartered Accountants can be called upon to conduct grew 47% over the $15.2 billion investment India
in-depth investigations as also background checks. received in 2014.
They can also be hired for conducting fraud risk
assessments and conducting fraud awareness With the strong focus on Startup India from the
workshops for authorities. Government, it is likely that investments will continue
to grow in the coming years. This offers a strong
Given the specialised nature of this work and the opportunity to Chartered Accountants.
growing importance of this areas, it is an appealing
area to get some exposure to during articleship. There Traditionally, Chartered Accountants tend to share a
is a lot of scope to learn the ground realities and closer and long term relationship with promoters than
loopholes exploited by fraudsters. investment bankers. They also have deep insights
about the business performance and challenges.
G. Information Systems Audit They are also good a financial modeling and
An information technology audit, or information awareness about the regulatory scenario.
systems audit, isan examination of the controls within
Hence, there is a huge scope for Chartered
an Information technology(IT) infrastructure. The
Accountants to play an active role in private equity
reason why this field has grown is the increasing
funding. They can work for the business owners in
penetration of technology in the operations and

terms of helping them prepare for investment, due operation. However, given the strong demand for
diligence by investors, financial projections and energy, limited resources and economic benefits
preparing information memorandums. They can also related to energy saving, this is definitely and
help in capital and regulatory structuring of the deals. emerging area for getting experience.
On the other hand, they can also work for private J. Environmental Audit
equity investors in terms of doing a due diligence, Indiawas the first country in the world to make
helping in transaction structuring, advising on exit environmental audits compulsory in 1992-93. The
routes and doing independent reviews on the investee government made it mandatory for all industries to
companies for their reporting requirements. provide annual environmental audit reports of their
operations. This required industries to provide details
Opportunities in private equity funding are there for
of resources used such as water, raw materials and
Chartered Accountants to leverage with their
energy resources and the products and wastes
knowledge and relationships.
generated by them. The basic aim of the audit is to
facilitate management control on environmental
I. Energy Audit
impact and to enable the company to assess
The function of an energy auditor is comparable tothat compliance with its own policies and regulatory
of a financial auditor. While energy auditor isnot yet a requirements.
mandatory requirement on an all-India basis, it is an
emerging area as efficiencyimprovements can lead However, in 1993 the government revised its
to monetary benefits. Chartered Accountants as notification to replace the term Audit Report with
energyauditor can Environmental Statement. This change toned down
the impact of the regulation. Absence of specialised
■ quantify energy costs and quantities, environmental auditors is another reason which
■ correlate trends of production or activity to hampers environmental audits in India.
energy costs,
■ devise energy database formats to ensure they Industries in developed countries conduct audits as
depict the correct picture-by production, part of their overall drive for quality assurance. It is
department, consumer etc., inevitable that Indian industries will also be compelled
■ advise and check the compliance of the to take up environment audits more seriously going
organisation for policy and regulation aspects, forward.
■ highlight areas that need attention for detailed
Chartered Accountants can play an important role in
investigations, and
■ conduct preliminary and detailed energy audits ■ Assisting organisations to formulate
environmental policies and monitor adherence
An energy audit typically includes data collection and to such policies
analysis, measurements, mass and energy balances,
■ Ensuring compliance with the regulatory
reviewing energy procurement practices, identification
requirements both present and future
of energy efficiency projects and techno-economic
■ Conducting other types of environmental audits
evaluation, establishing action plan including energy
such as waste audits, sites audits, activity audits,
saving targets, staffing requirements, implementation
etc.
time requirements,procurement issues, details and
cost estimates. It also includes recommendations on ■ Provide transparent information to stakeholders
target for energy saving, record keeping, reporting about the environmentalimpacts of the
and energy accounting, organisation requirements, operations,protective measures being taken by
and corporate communication. those organisationsand also the possible
strategic impact of suchimpacts and protective
This can become a rather specialised area of measures.

This area will emerge as India integrates with the rest Globally, the GRI (Global Reporting Initiative)
of the world in environmental norms and Chartered Framework is well accepted as a format for preparing
Accountants specialising in this field can carve a niche sustainability reports. The GRI guidelines recommend
for themselves. the following to be included insustainability reports:
K. Assurance on Sustainability Reporting ■ Brief profile of an organization

Sustainability reporting by companies aims at ■ Vision and Strategy
providing information on the economic, environmental, ■ A statement from CEO of an organisation
and socialimpact caused by their business activities. ■ An executive summary and key indicators
It also presents the organization’s values and ■ Policies, structure and management systems
demonstrates the link between its strategy and its ■ Performance
commitment to a sustainable globaleconomy.
While Indian companies are gradually adopting
The years 2012 and 2013 were milestone years for sustainability reporting regulations and voluntary
Indian sustainability reporting, due to the introduction frameworks both at a local level and global level, they
ofvarious regulatory requirements such as Business are still largely focused on disclosure rather than in-
Responsibility Reporting (BRR) arising out of the depth analysis of impact and building strategies for a
National Voluntary Guidelines for Social and more environmentally and socially sustainable
Environmental business. The lack of credible data is a major
handicap. Presence of third party independent
Responsibility (NVGs) and the Corporate Social
auditors can help improve the quality of data
Responsibility (CSR) provisionsunder the Companies
collection, analysis and reporting.
Bill. For the top 100 organizations in India, publishing
a basic sustainability report outlining policies,
incremental progress and goals has almost become IV. Summary
thenorm.
To summarize, articleship experience is very important
Independent external assurances tend to add in terms of building a solid base for Chartered
credibility and enhance the trustworthiness of Accountants. While the normal opportunities in terms
Sustainability Reports. Hence, there is an opportunity of audit and tax exist, there are many new emerging
for Chartered Accountants to expand their presence areas also which can be explored such as GST, Ind
in this area. AS, Project Financing, Private Equity Funding,
Environmental Audits and Sustainability Reporting
Assurance.

GENERAL MANAGEMENT
DEFINITION ■ From the experience of managers principles or

guidelines can be derived
■ Management is an act of getting people together
to accomplish desired goals and objectives using ■ Managers can be developed through formal
available resources efficiently and effectively. education and training
■ People are motivated mainly be incentives and
■ Management comprises planning, organizing, penalties
staffing, leading or directing, and controlling an
■ There should be no conflict between individuals
organization (a group of one or more people or
and organization. In case of conflict interests of
entities) or effort for the purpose of accomplishing
the organization should prevail.
a goal.
2. Behavioural Theory
Evolution of Management ■ An organization is a socio-technical system
There are differing opinions on the history of ■ Money is not the only motivator, people respond
management. Most people agree that modern to total work situation
management has been influenced by theories and ■ Individual differs in terms of their attitudes,
books from very ancient history. Sun Tzu’s The Art of perceptions and value systems. Therefore, they
War is one such book that is used by management react differently to the same situation
leadership even today. Written by a Chinese general
in the 6th century BC, The Art of War is a military ■ People working in an organization have their
strategy book that in the managerial context needs and goals which may differ from the
recommends being aware of the strengths and organization’s needs and goals. Management
weaknesses of the organization as well as that of the should achieve fusion between Organizational
competition. Chanakya wrote the Arthashastra around goals and human needs.
300BC in which various strategies, techniques and 3. Systems Theory
management theories were written on the Systems theory has had a significant effect on
management of empires, economy and family. Adam management science and understanding
Smith’s The Wealth of Nations, written in 1776 is organizations. A system is a collection of parts unified
another such book, whose ideas on efficient to accomplish an overall goal. If one part of the system
organization of work through Specialization of Labor, is removed, the nature of the system is changed as
have influenced modern organizations. well. A system can be looked at as having inputs,
processes, outputs and outcomes. For example in
Modern Management Theories an organization inputs would include resources such
as raw materials, money, technologies and people.
In the field of management, the role of theory is to These inputs go through a process where they’re
provide a means of classifying significant and planned, organized, motivated or controlled, ultimately
pertinent management knowledge. Contemporary to meet the organization’s goals. Outputs would be
theories of management tend to account for and help products or services to a market. Outcomes would
interpret the rapidly changing nature of today’s be enhanced quality of life or productivity for
organizational environments. customers/clients.
1. Classical Theory Systems share feedback among each of each four

■ Management is a process consisting of aspects. Feedback would be information from human
interrelated functions performed to achieve the resources carrying out the process, customers/clients
desired goals using the products, etc. Feedback also comes from
the larger environment of the organization, e.g.,

38 GENERAL MANAGEMENT
influences from government. This overall system ■ Better communication and Coordination –
framework applies to any system, including Frequent reviews and interactions between
subsystems (departments, programs, etc.) in the superiors and subordinates help to maintain
overall organization. harmonious relationships within the organization
and also to solve many problems.
4. Contingency Theory ■ Clarity of goals
Contingency theory asserts that when managers ■ Subordinates tend to have a higher commitment
make a decision, they must take into account all to objectives they set for themselves than those
aspects of the current situation and act on those imposed on them by another person.
aspects that are key to the situation at hand. Basically, ■ Managers can ensure that objectives of the
it’s the approach that “it depends.” Example a subordinates are linked to the organization’s
government following a free market economic policy objectives.
may have to change to a more regulated policy under
the current fiscal crisis. Art and Science
■ Management is both an art and science. It is
5. Management by Objectives the art of making people more effective than they
Management by objectives (MBO) is a process of would have been without you.
defining objectives within an organization so that ■ The science is in how you make people more
management and employees agree to the objectives effective. There are four basic pillars: plan,
and understand what they need to do in the organize, direct, and monitor.
organization. The term “management by objectives”
was first popularized by Peter Drucker in his 1954
book ‘The Practice of Management’. Basic Functions of Management
The essence of MBO is participative goal setting, ■ Planning
choosing course of actions and decision making. An ■ Organizing
important part of the MBO is the measurement and ■ Staffing
the comparison of the employee’s actual performance ■ Directing
with the standards set. Ideally, when employees ■ Controlling/Evaluating.
themselves have been involved with the goal setting
and choosing the course of action to be followed by Planning:
them, they are more likely to fulfil their responsibilities. Planning is the management of the organization’s
future in an uncertain environment; deciding what
Unique features and advantages of the MBO
needs to happen in the future (today, next week, next
process - The principle behind Management by
month, next year, over the next 5 years, etc.) and
Objectives (MBO) is for employees to have a clear
generating plans for action.
understanding of the roles and responsibilities
expected of them. They can then understand how Management starts with planning. Good management
their activities relate to the achievement of the starts with good planning. The first step is to determine
organization’s goal. MBO also places importance on what the goals of the organization are, and then figure
fulfilling the personal goals of each employee. out what is the best way to get there. This will involve
determining what resources are available, what
Some of the important features and advantages of
resources can be obtained, and allocating
MBO are:
responsibilities according to the strengths and
■ Motivation – Involving employees in the whole weaknesses of the employees. Will putting four
process of goal setting and increasing employee workers on a task that takes 14 hours cost less than
empowerment. This increases employee job renting a machine that can do the same task with
satisfaction and commitment. one worker in 6 hours? If the first shift is changed

GENERAL MANAGEMENT 39
from an 8 AM start to a 10 AM start, can they handle (interviewing, testing, etc.) c) Selecting candidates
the early evening rush an extra person does not need (via job offers) d) Equipping new hires (via orienting,
to be hired for the second shift? training, facilities, assignments, etc.).
All probable scenarios need to be determined and Directing

planned for. Then an evaluation of the plans needs Directing is the process of exhibiting leadership and
to be done and the plan with the highest probability motivational skills in order to encourage others to play
of achieving the organizational goals should be an effective part in achieving plans and ensure willing
selected. participation in the organization.
Types of Plans Controlling/Evaluating

■ Strategic: Strategic plans are organization wide, Monitoring, checking progress against plans, which
establish overall objectives, and position the may need modification based on feedback. Because
organization with relation to its environment. now when you have everything moving, you have to
■ Operational Plans: Operational plans specify keep an eye on things. Make sure everything is going
details on how individual objectives are to be according to the plan. When it isn’t going according
achieved. to the plan, you need to step in and adjust the plan.
Plans may be long-term or short-term, directional or

Management Styles
specific.
■ Autocratic
Organizing ● An Autocratic style means that the manager
makes decisions unilaterally, without much
Organizing is making optimum use of the resources
regard for subordinates.
required to enable the successful carrying out of plan.
Once you have a plan, you have to make it happen. ● Decisions reflect the opinions and
Is everything ready ahead of your group so the right personality of the manager; this in turn can
stuff will get to your group at the right time? Is your project an image of a confident, well
group prepared to do its part of the plan? Is the managed business
downstream organization ready for what your group ● Disadvantage strong and competent
will deliver and when it will arrive? Are the workers subordinates may feel annoyed because
trained? Are they motivated? Do they have the of limits on decision-making freedom, the
equipment they need? Has purchasing ordered the organization will get limited initiatives from
material? Is it the right stuff? Will it get here on the those “on the front lines”, and turnover
appropriate schedule? among the best subordinates will be higher.
Legwork is required to make sure everything needed ■ Paternalistic

to execute the plan is ready to go. Check back to ● Decisions take into account the best
make sure that everyone understands their roles and interests of the employees as well as the
the importance of their roles to the overall success. business
● Communication is downward, but feedback
Staffing to the management is encouraged to
Staffing is the process of a) Deciding what human maintain morale
resources are needed, ideally in terms of knowledge, ● This style can be advantageous when it
skills and abilities regarding specified roles, jobs and gives rise to loyalty from the employees,
tasks (ideally these roles are determined on the basis leading to a lower labor turnover
of strategic planning and are defined in terms of ● The lack of worker motivation can be typical
competencies and/or on job descriptions) b) if no loyal connection is established
Recruiting the necessary human resources (sourcing, between the manager and the people who
placing ads, etc.) and screening job candidates are managed

● Disadvantage - Similar to an autocratic Importance of Management

style, which is employees becoming
dependent on the leader. Management affects everyone because it is present
in every aspect of the world. It applies to managing
■ Democratic oneself – focusing our abilities towards our goals. It
applies to our working relationships with others
● The manager allows the employees to take
because it affects our choices about them.
part in decision-making: therefore
Management is about putting together organizations
everything is agreed upon by the majority
that work to accomplish a mission. Managing people
● The communication is extensive in both is not easy task. However, when done successfully, it
directions (from employees to leaders and can be a rewarding experience. Remember that
vice-versa) management is something that you can improve at
● This style can be particularly useful when with study and practice.
complex decisions need to be made that
require a range of specialist skills Managerial Levels and Hierarchy
● From the overall business’s point of view, The management of a large organization may have
job satisfaction and quality of work will three levels:
improve, and participatory contributions
from subordinates will be much higher 1. Senior management (or “top management” or
“upper management”)
● Disadvantage - The decision-making
process could be severely slowed if 2. Middle management
decision processes are not streamlined. 3. Low-level management, such as supervisors or
team-leaders.
■ Laissez-faire
● In a Laissez-faire leadership style, the Management Decisions can be classified as:
leader’s role is as a mentor and stimulator,
and staff manages their own areas of the ■ Strategic decisions involve long-term
business. It is only successful with commitment on the future of organization.
inspirational leadership that understands Responsibility of such decision lies with top-
the different areas of initiative being taken management. These decisions define the
by subordinates, and strong and creative relationship between the organization and its
subordinates who share the same vision environment. Eg: Launching a new product,
throughout the organization acquiring another firm etc.
■ Tactical decisions involve the establishment of
● It is a style that is best for strong, entre-
preneurial subordinates in an organization key initiatives to achieve the overall strategy.
with dynamic growth in multiple directions Primarily middle management oriented. This
layer of decision-making is the glue that creates
● This style brings out the best in highly
a strong connection between your long-term
professional and creative groups of
vision and your day-to-day activities.
employees
■ Routine or Operational concerned with routine
● Disadvantage – In cases where the leader or repetitive problems. They involve short term
does not have broad expertise and ability commitment. Usually concerned with maximizing
to communicate a strong vision, it can the performance of current operations. These
degenerate into conflicting activities.
decisions exercise minor influence on the future
Lacking a strong maestro as leader is a
of organization. Authority for such decision is
risk in both focus and direction.
delegated to lower level executives.

Top Level Management demanding that organizations be more socially

■ Require an extensive knowledge of responsible. Many of the third-world countries have
management roles and skills joined the global marketplace, creating a wider arena
for sales and services. Organizations became
■ They have to be very aware of external factors
responsible not only to stockholders (those who
such as markets
owned stock) but to a wider community of
■ Their decisions are generally of a long-term “stakeholders.”
nature
■ Their decisions are made using analytic, As a result of the above driving forces, organizations
directive, conceptual and/or behavioral/ were required to be more sensitive, flexible and
participative processes adaptable to the demands and expectations of
stakeholder demands. Many organizations have
■ They are responsible for strategic decisions
abandoned the traditional top-down, rigid and
■ They have to chalk out the plan and see that hierarchical structures to more fluid forms.
plan may be effective in the future
■ They are executive in nature. Today’s leaders and/or managers must deal with
continual, rapid change. Managers faced with a major
Middle Level Management decision can no longer refer back to an earlier
■ Mid-level managers have specialized developed plan for direction. Management techniques
understanding of certain managerial tasks must continually notice changes in the environment
and organization, assess this change and manage it.
■ Responsible for carrying out the decisions made
Managing change does not mean controlling it, rather
by top-level management
understanding it, adapting to it where necessary and
■ Link between Front Line staff and senior guiding it when possible. Managers must count on
management. and listen more to their employees.
Lower Level Management In recent times of course, we have seen many books
■ Ensures that the decisions and plans taken by and theories on management. Some of the more
the other two are carried out recent developments include TQM (Total Quality
Management), management by objectives, re-
■ Lower-level managers’ decisions are generally
engineering etc. A new trend of management fads
short-term ones or operational in nature.
has also emerged, where certain concepts gain
currency very quickly, and fade just as fast.
New Paradigm in Management Unfortunately though, there is no formula for
Around the 1960s and on to today, the environment determining whether a concept is a fad or will establish
of today’s organizations has changed a great deal. A itself in management theory –only time can tell. What
variety of driving forces provoke this change. is clear though is that the business environment is
Increasing telecommunications has “shrunk” the world changing at a rate that has not been experienced
substantially. Increasing diversity of workers has before in the history of business organizations. The
brought in a wide array of differing values, emerging theories and concepts are a response to
perspectives and expectations among workers. Public these forces of change.
consciousness has become much more sensitive and

Traits of the New Paradigm

Old Paradigm New Paradigm
Promote consumption at all costs Appropriate consumption
People to fit jobs Jobs to fit people
Imposed goals, top-down decision making Autonomy, worker participation
Fragmentation in work and roles Cross-fertilization by specialists
Identification with job Identity transcends job description
Clock model of company Recognition of uncertainty
Aggression, competition Cooperation
Work and play separate Blurring of work and play
Manipulation and dominance Cooperation with nature
Struggle for stability Sense of change, of becoming
Quantitative Qualitative as well as quantitative
Strictly economic motives Spiritual values transcend material gain
Polarized Transcends polarities
Short-sighted Ecologically sensitive
Rational Rational and intuitive
Emphasis on short-term solutions Emphasis on harmony with environment
Centralized operations Decentralized operations when possible
Runaway, unbridled technology Appropriate technology
Allopathic treatment of symptoms Attempt to understand the whole
Top 10 Tips on Managing People 2. Give your staff enough information so they can
1. Don’t hide behind email. E-mail is a convenient see ‘the big picture.’ When employees don’t have
and quick way to disseminate information, but, it is enough information to understand why certain things
impersonal. Spend more time managing by walking are happening a certain way, they will fill in the gaps
around and knowing employees. Find out what - usually with wrong information. Let your employees
they’re involved in, what is their aspiration, what know what matters most to you and the organization
motivates them. Let them know that you appreciate (vision and mission of the organization should be clear
their efforts. to employees) and what you’re trying to accomplish.

3. Take steps to help employees during times of 8. Don’t interrogate employees - investigate. When
need. Remember that Employees are people, not you need to deal with a problem situation, ask your
machines. Machines don’t have emotions, but people employee to tell you what happened from his or her
definitely do. If your employee is in crisis, take the perspective. Then, address any problem issues
time needed to help in any way possible. Not only is directly with your employee.
this the right thing to do, but it will engender their
loyalty for years to come. 9. Be family friendly. Employees’ families should be
their first priority and they need time to live their lives.
4. Treat employees fairly and respectfully. This has If you recognize this and validate your employee’s
everything to do with trust. If your employees know concerns, you can then work together to find creative
they can trust you, they will move ‘heaven and earth’
ways to provide needed work life balance.
to get the job done. Also, take sufficient time to
assimilate new hires into the company culture, which 10. Be source of Inspiration.
will increase retention.
5. Challenge and develop your employees. Invest Key-points

in your employees. Get to know what their vocational
goals are. A bored employee will eventually move on ■ Management is the act of getting people together
to a more challenging job. Employee retention isn’t to accomplish desired goals and objectives using
really all about the money, but it is your responsibility available resources efficiently and effectively
to make sure your employees are motivated and ■ Planning, organizing, staffing, directing and
satisfied. controlling are functions of Management
■ In planning we establish objectives, and plans
6. Be question-friendly. Don’t think of employees’
questions as an interruption. Questions signal interest. ■ In Organizing, activities are grouped
An employee who has stopped asking questions is ■ In staffing we recruit, select and train personnel
on the way to becoming a disengaged employee. required by the organization
■ In directing the manager leads, motivates and
7. Don’t tell employees what to do - listen to what appraise personnel
they want to do. If you spend more time listening and
■ Controlling is concerned with how well the
less time talking, your employees will tell you what
organization is faring
they need. In addition, if they feel heard by you, they
will be more open to listening when you do tell them
to do something.
Further Reading
1. Essentials of Management by Koontz Harold and Weihrich Heinz
2. The Practice of management by Peter Drucker
3. The Effective Executive by Peter Drucker
4. Management: Tasks, Responsibilities and Practices by Peter Drucker
5. Competing for the future by C. K. Prahalad

ATTITUDE, VALUES AND ETHICS
DEFINITION Positive Attitude

■ Attitude is a mental position relative to a way of Attitude drives behavior. Our body language reflects
thinking or being. our mental attitude. By choosing our attitude
(positive or negative) we get in that mood and send
■ Attitude is a hypothetical construct that out a message that everyone understands.
represents an individual’s like or dislike for an
item. Attitudes are positive, negative or neutral “We always have a choice as to what attitude to
adopt. There is nothing in any situation that tells we
views of an “attitude object”: i.e. a person,
must react one way or another. It is our choice. And
behavior or event. People can also be
since we have a choice, it will be better if we choose
“ambivalent” towards a target, meaning that they
to respond instead of reacting.
simultaneously possess a positive and a
negative bias towards the object in question. Studies have suggested that people who maintain a
Attitudes are composed from various forms of positive attitude are significantly less likely to show
judgements. signs of aging; they are less likely to become trail
and are more likely to be stronger and healthier than
those who possess a negative attitude.
Reactive
Stimulus Response
Responsive
Freedom
Stimulus To Response
Choose
Tips to develop Positive Attitude Stephen Covey’s Theory of

Associate yourself with happy people
■
Circle of Concern and Circle of
■ Choose to be happy
■ Choose to be and stay optimistic
Influence
■ Find reasons to smile more often The right attitude for long term success requires
■ Learn to master your thoughts focussing energy and effort on where we can
realistically make a difference, versus getting bogged
■ Learn concentration and meditation
down and frustrated over things where we have little
■ Look at the bright side of life
control (even if we are concerned about them). In his
■ Read inspiring stories/quotes international best-seller, The Seven Habits Of Highly
■ Repeat affirmations that inspire and motivate Effective People, Stephen Covey made a distinction
you between proactive people and reactive people.
■ Visualize only what you want to happen. Proactive and reactive people often have the same

ATTITUDE, VALUES AND ETHICS 45
concerns, but those who are proactive focus on what energy in the form of worry, frustration, irritation and
they can do, on what they can influence. By contrast, complaining) on those things in life that most concern
reactive people focus their mental, emotional and us. But if we have no influence over them, that energy
physical energy on things beyond their control. They is lost forever and cannot be used to change areas of
maintain an attitude of victimization and blame. concern over which we do have influence. It can also
make us blind to those areas of influence, as they
Circle of Influence: Covey uses a model to illustrate are in the shadows of the larger concerns. This
the difference between what concerns us and what approach leads to ineffectiveness.
we have influence over. He describes two circles. The
first is your circle of concern. Concerns may be minor, Circle of concern
major or anywhere in between.
The second smaller circle is your circle of influence.

It is narrower than your circle of concern and many of Circle of
your concerns fall outside your circle of influence. influence
Circle of concern
But if you focus your energy on concerns that are

within your circle of influence, you will increase your
Circle of
influence
capacity for influence: the more influence you
effectively exercise, the more influence you will have.
This is the core of personal effectiveness.
The circles offer a guide to where to focus your energy Circle of concern
when you would like to bring about a change in
something that concerns you. If you focus your energy
outside your circle of influence, your capacity for
influence will diminish, because you are wasting your Circle of
time and energy on a concern over which you have influence
no influence. Thus, your circle of influence shrinks. It
is tempting to focus our energy (particularly our mental
8 Steps to Developing the Right Attitudes

Choose
Make
your Set goal Journalize Visualize Self-talk Affirm Act as if
time
attitude
(Extracted From the Book: Change Your Attitude by Tom Bay and David Macpherson)
1. Choosing the Attitude You Want to Develop 2. Goal Setting
Decide which attitudes you want to develop. For Goal Setting is essential to making a change.
example, you may desire to be more affectionate to Consider where you are and where you want to be.
your children or to be less critical. Although your By deciding on a specific attitude, you are establishing
attitude determines to what extent you develop your a place where you want to be. So begin by reviewing
potential, nothing happens until you mix attitude and who you are right now and identifying any problem
action. feeling or thoughts. Then develop appropriate goals
to change your attitude.

46 ATTITUDE, VALUES AND ETHICS
3. Journaling attitude changes throughout your life. Removing

Journaling involves making notes about where you wrong attitude on a regular basis makes room for the
have been and where you are going. As you journal, right attitude to flourish.
you reinforce your determination to change; you also
record for yourself how things have gone so far. Later, 6. Self-Talking
when you are working on a different facet of your Learn to compliment yourself. People need positive
overall attitude, you can review your earlier journal strokes to equip themselves to repeatedly do their
entries to learn what pitfalls to avoid. best work. It is not conceit, but a balanced self
appraisal.
4. Visualizing
Visual image stimulates growth; that’s why visualizing 7. Affirming
is key to changing your attitude. The Stanford Post your attitude affirmation on your bathroom
Research Institute found that “89 percent of what we mirrors. For example: I am healthy, I am patient, I am
learn is visual, ten percent of what we learn is auditory, successful etc. The marvelous part of affirming is that
and one percent of what we learn is through other your unconscious believes what you tell it and works
senses”. Relax and visualize yourself doing some to make that come true. Therefore, you do not have
thing that illustrates your new attitude. For example, to believe what you say; you only need to really want
if you want to stop slouching and look more confident, it to become true.
see yourself standing tall and looking others in the
eye. 8. Acting as If
Act like the person you want to be and that is what
5. Making Time you will become. Acting as if may seem difficult the
Change requires a commitment of time - plan to spend first time you do it, but like anything else, the more
at least 21 days working on a specific attitude you act as if, the better you become.
characteristic. Also, resolve now to spend time on
VALUES
Definition what is good and bad, acceptable and unacceptable
and important and unimportant. Values are also taught
Values represent ideals or goals upon which we base and reinforced in schools, religious organizations and
decisions affecting our lives. Values provide criteria social groups. As we grow and develop, each source
for making choices based on our ideas of right and of influence contributes to our definition of what is
wrong. We give expression to our values by the important of life. Cultural mores have influence of the
choices we make. It is through life and gained formation of values. Basic convictions of what is good
experiences that we develop our values. Some core or bad are derived from one’s own culture.
values stay the same throughout our adult lives.
Others, such as personal growth and career A value system is a set of consistent values and
development values, evolve over a lifetime and are measures, which can apply to either one person or
subject to change. Thus, some choices made later in many.
life does not necessarily reflect the values held early
on. ■ A personal value system is held by and applied
to one individual only.
A communal or cultural value system is held by
Formation of Values ■
and applied to a community/group/society. Some

Values are learned and acquired primarily through communal value systems are reflected in the
experiences with people and institutions. Parents will form of legal codes or law, religion, etc.
have substantial influence on their children’s values. ■ A corporate value system is said to consist of
A parent’s reaction to everyday events demonstrates three value categories. The first value category

is Core Values, which prescribe the attitude and Wearing white/dull colour clothing and appearing
character of an organization. Then, Protected solemn are normative behaviours at a funeral. They
Values are protected through rules, standards reflect the values of respect and support of friends
and certifications. They are often concerned with and family.
areas such as health, environment and safety. The If a group member expresses a value that is in serious
third category, Created Values are the values that conflict with the group’s norms, the group’s authority
stakeholders, including the shareholders expect in may carry out various ways of encouraging conformity
return for their contributions to the firm. or stigmatizing the non-conforming behaviour of its
members. For example, imprisonment can result from
conflict with social norms that have been established
Types of Values as law.
Personal Values
Values across culture (Hofstede’s cultural
Personal values evolve from situations with the
dimensions theory, source : Wikipedia and http://
external world and can change over time.
geert-hofstede.com)
Personal values developed early in life may be
■ Power distance index (PDI): “Power distance
resistant to change. They may be derived from those
is the extent to which the less powerful members
of particular groups or systems, such as culture,
of organizations and institutions (like the family)
religion etc. However, personal values are not
accept and expect that power is distributed
universal; one’s family, nation, generation and
unequally.”
historical environment help determine one’s personal
values. This is not to say that the value concepts In Cultures that endorse low power distance
themselves are not universal, merely that each People relate to one another more as equals
individual possess a unique conception of them i.e. a regardless of formal positions.
personal knowledge of the appropriate values for their
own genes, feelings and experience. In high power distance countries, less powerful
accept power relations that are more autocratic
Cultural Values and paternalistic. Subordinates acknowledge the
Groups, societies or cultures have values that are power of others simply based on where they are
largely shared by their members. The values identify situated in certain formal, hierarchical positions.
those objects, conditions or characteristics that
members of the society consider important; that is, ■ Individualism (IDV) vs. collectivism: “The
valuable. In the United States, for example, values degree to which individuals are integrated into
might include material comfort, wealth, competition, groups”. In individualistic societies, the stress is
individualism or religiosity. put on personal achievements and individual
rights. People are expected to stand up for
The values of a society can often be identified by themselves and their immediate family, and to
noting which people receive honour or respect. For choose their own affiliations.
example, in some countries, professional athletes are
honoured (in the form of monetary payment) more In collectivist societies, individuals act
than college professors, in part because the society predominantly as members of a life-long and
respects personal values such as physical activity, cohesive group or organization. People have
fitness and competitiveness. large extended families, which are used as a
protection in exchange for unquestioning loyalty.
Values are related to the norms of a culture, but they
are more general and abstract than norms. Norms ■ Uncertainty avoidance index (UAI): “A
are rules for behaviour in specific situations, while society’s tolerance for uncertainty and
values identify what should be judged as good or bad. ambiguity”. It reflects the extent to which

48 ATTITUDE, VALUES AND ETHICS
members of a society attempt to cope with ■ Long term orientation (LTO) vs. short term
anxiety by minimizing uncertainty. orientation. Long term oriented societies attach
more importance to the future. In short term
People in cultures with high uncertainty oriented societies, values promoted are related
avoidance tend to be more emotional. They try to the past and the present, including steadiness,
to minimize the occurrence of unknown and respect for tradition, preservation of one’s face,
unusual circumstances and to proceed with reciprocation and fulfilling social obligations.
careful changes step by step by planning and
Corporate Values
by implementing rules, laws and regulations.
Corporate values are often used interchangeably with
Low uncertainty avoidance cultures accept and the concept of corporate culture. Corporate values,
feel comfortable in unstructured situations or usually chosen by senior executives, are adopted to
changeable environments and try to have as few prevailing business circumstances. To play a
rules as possible. People in these cultures tend meaningful role in creating an enduring organization,
to be more pragmatic, they are more tolerant of corporate values must be “first-order values”. Such
change. values are not mere rankings of preference couched
in operational phrases such as “getting close to the
■ Masculinity (MAS) vs. femininity: “The customer”, but are derived from the fundamental
distribution of emotional roles between the philosophy about what constitutes the good for people
genders”. Masculine cultures’ values are inside and outside the organization. Visionary
competitiveness, assertiveness, materialism, companies that succeeded for decades were guided
ambition and power. In masculine cultures, the by core ideologies that included a sense of purpose
differences between gender roles are more beyond making money.
dramatic and less fluid.
Morality and ethics are central to the issue of meaning
Feminine cultures place more value on in corporate values. Too often, corporate executives
relationships and quality of life. In feminine justify a breach of ethics and morality on the basis of
cultures men and women have the same values financial profit. While profits are the fuel that feeds
emphasizing modesty and caring. the economic engine, it is not the sole essence of the
corporation.
ETHICS
Ethics, originally a branch of philosophy, seeks to Business Ethics
address questions about morality; that is, about
concepts like good and bad, right and wrong, justice, These are moral principles which guide an individual’s
virtue etc. action while working in a professional environment
as to what is right and what is wrong. Business ethics
Business ethics (or corporate ethics) is a form of which must be adhered to by you during your training
applied ethics that examines ethical principles and period are listed below:
moral or ethical problems that arise in a business
1. Confidentiality
environment. It applies to all aspects of business
conduct and is relevant to the conduct of individuals Maintaining confidentiality of business information is
and business organizations as a whole. the first moral principal of business code of ethics.
During your work tenure as a trainee, you may be
Ethics refers to well based standards of right and exposed to the most confidential data of your client’s
wrong that prescribe what humans ought to do, usually business operations. It is your foremost responsibility
in terms of rights, obligations, benefits to society, to respect the confidentiality of your client’s business
fairness or specific virtues. Ethical standards also data and not to share it with your family and friends.
include those that enjoin virtues of honesty, Leakage of confidential business information may
compassion, and loyalty. have serious implications in future. Further, you must

also respect the confidential information about your “The productivity of a work group seems to depend
own organisation that comes to your knowledge. on how the group members see their own goals in
relation to the goals of the organization.”
2. Honesty
Always be honest to your seniors. Not disclosing any 5. Do not accept gifts/favours from clients
facts or camouflaging them to hide any mistake may In the profession, you may across situations where
have serious implications. Where any mistake has you may be offered gifts or other favours from clients.
occurred or an important fact has come to your Good professional ethics demand that you should
knowledge, you must disclose it to your senior so that never accept any personal favours from clients. As
appropriate action can be taken so as to rectify the professionals you must hold your dignity in the highest
same at the earliest. esteem.
3. Independence Scope of Ethics encompasses

Independence is the most important valued principle ■ Systematic issues include questions about the
of our profession. If you are working with a client with morality of the laws, regulations, industrial
whom you have any personal relations or with whom structures and social practices within which
you may have financial interests, it is preferable that business operates.
you may inform your senior about the same so that
you are not assigned the work of that client. In case ■ Corporate issues include questions about the
you are still deputed for such a client, you must ensure morality of the activities, policies, practices or
that your professional responsibilities shall not in any organizational structure of a company taken as
way be affected by your personal interests/relations a whole.
and you should maintain your independence and
objectivity. ■ Individual issues include questions about the
morality of the decision, action or character of
4. Subordination of individual goals to an individual.
organisational goals
When you are working for an organisation, you should
keep your individual goals subordinate to the overall Key Points
organisational goals. Prime condition for this ■ Take responsibility for your attitude and stay
subordination is to understand the goal of the positive
organization properly. You should try to understand ■ Work to increase your circle of influence
the goal of the organization first for which you can ■ Values set the direction for one’s life
take help of the senior persons or the goal makers.
■ Being clear on our core values ensures that we
For example: if your firm’s goal is “to provide best
maintain a meaningful balance in all areas of
quality service to the client” then you should always
our life
try to work in the manner so as to accomplish that
goal. ■ There is no right way to do a wrong thing
Further Reading
1. The seven habits of highly effective people by Stephan R. Covey
2. Don’t sweat the small stuff by Richard Carlson
3. Change Your Attitude by Tom Bay and David Macpherson
4. You can win by Shiv Khera
5. Business Ethics by Milton Snoeyenbos, Robert Almeder and James Humber
6. Being Good by Simon Blackbwin
7. http://geert-hofstede.com/india.html

MOTIVATION-SELF AND OTHERS
DEFINITION Motivational Triggers

■ Motivation is the word derived from the word ■ Achievement - Acheivement motivation is the
’motive’ which means needs, desires, wants or drive to pursue and attain goals to advance up
drives within the individuals. It is a set of reasons the ladder of success. Accomplishment is
that determines one to engage in a particular important and not the rewards that accompany
behavior. it.
■ Challenge - Challenge only motivates if you can
■ Motivation is something that encourages action win. People want to be involved in something
or feeling. By motivating, we mean to encourage important.
and inspire. It is the process by which a person’s
■ Affiliation - Affiliation motivation is a drive to
efforts are energized, directed, and sustained
relate people on a social basis. Group
towards attaining a goal.
belongingness motivates.
■ Competence - Competence motivation is the
What is the need of Motivation? drive to be good at something, allowing an
individual to perform high quality work.
“Motivation is a fuel in us which needs to be ignited
with sparks, without motivation the best powers of ■ Power - Power motivation is the drive to
the mind remain in a deep sleep”. influence people and change situations. Power
motivated people wish to create an impact in
Often, a person has the desire and ambition to get their organization.
something done or achieve a certain goal, but lacks ■ Growth - Just as seeing ourselves progress
the push, the initiative and the willingness to take motivates us, so it does for our subordinates.
action. This is due to lack of motivation and inner ■ Recognition - Giving people recognition
drive. generates energy within them. They will then
direct that energy towards increased productive
Motivation strengthens the ambition, increases work.
initiative and gives direction, courage, energy and the ■ Participation - Participation in a good activity
persistence to follow one’s goals. A motivated person or a project has a motivating effect on some
takes action and does whatever it needs to achieve people.
his/her goals.
■ Appreciation - Offering a few words of
Motivation is like a driving force in our lives. It comes appreciation can be a huge motivation to some
employees. They all need to be singled out from
from our desire to get success. Without success there
time to time and commended for their efforts in
is little pride in life; no enjoyment or excitement at
keeping the organization running smoothly.
work and at home. So it is very important for
everybody to get motivated in order to get the excellent ■ Respect - Treat your subordinates with dignity
and respect. When you humiliate a person, you
results, because Motivation creates the desire in the
kill his self-respect, which in turn de-motivates
person to perform better than others or to perform in
him.
the best way. As we know every person is different
■ Fear - Fear motivation and coercion are acts
so the right motivator is needed to motivate him.
against the will of a person. It is instantaneous
The greatest enemy of motivation is complacence. and gets the job done quickly, but helpful only
Complacence leads to frustration, and when people for a short time.
are frustrated they give up because they cannot ■ Incentive - Incentive motivation is where a
identify what is important. person or a team reaps an award for performing
an activity. It drives people to work a little harder
in life.

MOTIVATION-SELF AND OTHERS 51
Types of Motivation So basically the extrinsic motivation may be due to:
There are two types of motivation, Intrinsic and ■ Money

Extrinsic motivation. It is important to understand ■ Rewards
both types of motivation, because some people
■ Fame
respond best to intrinsic motivation, others may
respond better to extrinsic motivation.
Motivational Theories
Intrinsic Motivation refers to motivation that exists
within the individual rather than relying on any external Researchers have developed a number of different
pressures like money, reward, fame etc. In case of theories to explain motivation. With the help of these
intrinsic motivation a person himself wants to do the theories we can gain a better understanding of
task may be for taking pleasure in an activity, rather motivation as a whole. Basically these theories
than working for the external reward means he/she prepares the foundation for the learning how to
would not be worried about external rewards such as motivate self and others. As we know people work to
praise or awards. satisfy their needs, they work at their best when
they are achieving the greatest satisfaction from their
Managers may be interested in ways to increase work.
intrinsic motivation. The ideal employee may be one
who is self-motivated and does not require So motivational theorists focuses on
supervision. Intrinsically motivated employees may
■ Examining human needs
be more dedicated towards their work. It is possible
that managers may increase intrinsic motivation by ■ Considering how the needs are met and can be
allowing employees to have greater autonomy, better met in work
making the workplace fun, or encouraging creativity.
There some are early Motivational theories that are
So basically the intrinsic motivation may be due to: valid till now
■ Happiness ■ Maslow’s need hierarchy theory

■ Personal Goals ■ McGregor’s theory X and theory Y
■ Desire to learn ■ Herzberg’s motivation hygiene theory
■ Self-Improvement
Maslow’s need Hierarchy Theory
Extrinsic Motivation refers to the type of motivation
that is due to outside sources. In other words we can This theory is given by the American psychologist
say that the desire of the person to do work is Abraham Maslow in 1943. Maslow’s hierarchy of
controlled by the outside sources like money, reward, needs is often portrayed in the shape of a pyramid.
fame etc. This figure shows the Maslow’s model for need
hierarchy theory .
These days extrinsic motivation is the tool used almost
everywhere to increase the performance or to get the
work done efficiently by the employees, students etc.
Employees can be extrinsically motivated by bonus,

rewards, promotion because in order to get these
things they will compete with each other and will try
to perform better than others. But in extrinsic
motivation if there is no bonus, rewards, money or
fame the person is no more motivated this is the
drawback of extrinsic motivation.

52 MOTIVATION-SELF AND OTHERS
The most fundamental and basic four layers of the that they inherently dislike work. In this, management
pyramid contain what Maslow called “deficiency believes that workers need to be closely supervised.
needs” A hierarchical structure may be implemented with
control at each and every level. According to this
■ Biological and Physiological needs - air, food, theory, employees will show little ambition without an
drink, shelter, warmth, sleep, etc. extrinsic motivation and will avoid responsibility
■ Safety needs - protection from elements, whenever they can. The managers who follow theory
security, order, law, limits, stability, etc. X needs extrinsic motivators to get the work done
■ Belongingness and Love needs - work group, efficiently. A Theory X manager believes that his or
family, affection, relationships, etc. her employees do not really want to work, that they
■ Esteem needs - self-esteem, achievement, would rather avoid responsibility and that it is the
mastery, independence, status responsibility, manager’s job to structure the work and energize the
etc. employee.
■ Self-Actualization needs - realizing personal
In theory Y, management assumes employees may
potential, self-fulfilment, etc.
be ambitious and self-motivated and exercise self-
With the exception of the most fundamental control. It is believed that employees enjoy their
(physiological) needs, if these “deficiency needs” are mental and physical work duties and work can be as
not met, the body gives no physical indication but the natural as play and rest. Given the proper conditions,
individual feels anxious and tense. Maslow’s theory theory Y managers believe that employees will learn
suggests that the most basic level of needs must be to seek out and accept responsibility and to exercise
met before the individual will strongly desire the self-control and self-direction in accomplishing
secondary or higher level needs. objectives to which they are committed.
The theory can be summarized as follows: Theory Y managers assume that people will be self-
directed to meet their work objective if they are
■ Human beings have wants and desires which committed to them. So basically managers with this
influence their behavior. Only unsatisfied needs theory assumes that employees are intrinsically
influence behavior, satisfied needs do not. motivated and if provided with the work friendly
■ Since needs are many, they are arranged in environment they can produce the excellent results.
order of importance, from the basic to the
complex. Though these theories are very basic in nature, they
provide a platform for future generation to understand
■ The person advances to the next level of needs
the changing dynamics of human behaviour. Theories
only after the lower level need is at least
X and Y seem to represent unrealistic extremes. Most
minimally satisfied.
employees (including managers) fall somewhere in
■ The further the progress up the hierarchy, the between these extremes. Recent studies have
more individuality, humanness and psychological questioned the rigidity of the model, yet McGregor’s
health a person will show. X-Y Theories act as guiding principles to the
management to evolve processes which help in better
organizational development. A mix of practices which
McGregor’s Theory X and
provide a healthy environment the freedom to perform
Theory Y at the work place is likely to motivate the employees
more.
These are the theories of human motivation created
and developed by Douglas McGregor at the MIT
School of Management in the 1960s. Herzberg’s Motivation-Hygiene
In theory x, management assumes employees are Theory
inherently lazy and will avoid work if they can and States that there are certain factors in the work place

MOTIVATION-SELF AND OTHERS 53
that causes job satisfaction and some set of factors simply be treated as opposites of one another. The
that cause dissatisfaction. Because of this reason it opposite of satisfaction is not dissatisfaction and vice-
is also called a two factor theory. Herzberg reasoned versa. The figure given below shows how the Hygiene
that because the factors causing satisfaction and and Motivational factors are involved at different levels
dissatisfaction are different, the two feelings cannot in Herzberg’s two factor theory.
Motivation Factors
Hygiene Factors
Employees Employees not Employees
dissatisfied and dissatisfied but satisfied and
unmotivated. unmotivated. motivated.
There are certain factors that may lead to dissatisfaction.

dissatisfaction:
Herzberg argued that job enrichment is required for
■ Work conditions intrinsic motivation, and that it is a continuous
■ Salary management process. According to Herzberg:
■ Relationship with Boss/Manager
■ “The job should have sufficient challenge to
■ Company policy
utilize the full ability of the employee.”
There are certain factors that may lead to satisfaction: ■ “Employees who demonstrate increasing levels
of ability should be given increasing levels of
■ Growth
responsibility.”
■ Good salary
■ “If a job cannot be designed to use an
■ Advancement
employee’s full abilities, then the firm should
■ Achievements consider automating the task or replacing the
employee with one who has a lower level of skill.
Some key points in Herzberg’s Theory:
If a person cannot be fully utilized, then there
■ According to Herzberg hygiene factors are will be a motivation problem.”
necessary to maintain a reasonable level of
satisfaction among employees. Key points
■ These factors do not provide satisfaction to the ■ Motivation is the process by which a person’s
employees but their absence will dissatisfy them. efforts are energized, directed, and sustained
■ Motivational factors are intrinsic part of the job. towards attaining a goal
Any increase in these factors will satisfy the ■ Stay motivated and try to understand what
employees but a decrease will not cause motivates others
Further Reading
1. The Seven Hidden Secrets of Motivation - By Todd Beeler
2. The Power of Positive Thinking by Norman Vincent Peale
3. Think and Grow Rich by Napoleon Hill
4. Man’s Search for Meaning by Viktar Frankl83

TIME MANAGEMENT
DEFINITION Second generation: Planning and preparation

(based on calendar and appointment books) includes
■ Time management is the act or process of setting goals.
planning and exercising conscious control over
the amount of time spent on specific activities, Third generation: Planning, prioritizing, controlling
especially to increase effectiveness, efficiency (using a personal organizer, other paper-based
or productivity. objects, or computer or PDA based systems) activities
on a daily basis. This approach implies spending some
■ Personal time management skills are essential time in clarifying values and priorities.
skills for everybody. People who use these
techniques regularly are the highest achievers Fourth generation: Being efficient and proactive
in all walks of life. (using any tools above) but placing goals and roles
as the controlling element of the system and favours
importance over urgency.
Evolution of Time Management
While the traditional approach worked on being more
efficient (do things faster using tools like automation,
The 80:20 Rule
delegation etc.), the latest thinking focuses on being People spend their days doing tons of activity, but
more effective (i.e. finding what are the right things achieve very little, because they’re not concentrating
to do in the given time). In other words, move away their effort on the things that matter the most. Shift in
from time management and into self-management. focus is required to understand that we need to
“Concentrate on Results, not on Being Busy”.
Logic is: You can’t manage time, it just is. Everyone
has the same 24 hours. So “time management” is a Pareto Principle or the ’80:20 Rule’ affirms the above
mislabelled problem, which has little chance of being statement. It says that approximately 20 percent of
an effective approach. What you really manage is your efforts produce 80 percent of the results. While
your activity during the given time, and hence the ratio is not always 80:20, this broad pattern of a
choosing the activities is most important. small proportion of activity generating non-scalar
returns recurs so frequently that it is the norm in many
Dr. Stephen Covey uses the phrase “Compass, not situations.Learning to recognize and then focus on
the Clock”, i.e. focus on your life’s direction (and do that 20 percent is the key to making the most effective
activities that further that direction) versus getting use of your time.
worried about the clock or specific minutes each
activity is taking. Stephen R. Covey and his co-authors By applying the time management tips and principles,
offered a categorization scheme for the hundreds of you can optimize your effort and ensure that your time
time management approaches that they reviewed and energy is focused on high payoff tasks.
(source: Wikipedia, The seven habits of highly
effective people and First thing First by Stephan
Covey) The Time Management Matrix
(Reference: ‘Put First thing First’ by Stephan Covey)
First generation: Reminders (based on clocks and
watches, but with computer implementation possible) Good time management means being effective as
can be used to alert of the time when a task is to be well as efficient. Managing time effectively and
done. achieving the things that you want to achieve, means

TIME MANAGEMENT 55
spending your time on things that are important to someone else’s goals, or with an uncomfortable
you and not just urgent. To achieve this, and to problem or situation that needs to be resolved
minimize the stress of having too many deadlines, immediately.
you need to distinguish clearly between what is urgent
and what is important: Urgent activities are often the ones we concentrate on.
They demand attention because the consequences
Important activities have an outcome that leads to of not dealing with them are immediate.
the achievement of your goals.
Popularized by Dr. Stephen Covey, the matrix below
Urgent activities demand immediate attention, and identifies the quadrants in which various activities fall.
are usually associated with the achievement of
URGENT NOT URGENT
I (MANAGE) II (FOCUS)
Crisis Preparation/planning
IMPORTANT
Medical emergencies Prevention
Pressing problems Values clarification
Deadline-driven projects Exercise
Last-minute preparations for scheduled Relationship-building

activities
True recreation/relaxation
Quadrant of Necessity Quadrant of Personal Leadership
III (AVOID) IV (AVOID)
Interruptions, some calls Trivia, busywork
Some mail & reports Junk mail

NOT IMPORTANT
Some meetings Some phone messages/email
Many “pressing” matters Time wasters
Many popular activities Escape activities
Viewing mindless TV shows
Quadrant of Deception Quadrant of Waste
Different people in reality live in different quadrants with the following results. The recommendation is to live
in Quadrant II (Not Urgent but Important).

56 TIME MANAGEMENT
URGENT NOT URGENT
Quadrant 1 Quadrant 2
IMPORTANT
Stress Vision, perspective

Burnout Balance
Crisis management Discipline
Always putting out fires Control (Few crises)
Quadrant 3 Quadrant 3 and 4
NOT IMPORTANT
Short-term focus Total irresponsibility

Crisis management Fired from jobs
Goals and plans as worthless Dependent on others or institutions for basics
Feel victimized, out of control
Shallow/broken relationships
Time Management Process you waste!
1. Activity Logs: Find Out How You Really By analysing your activity log you will be able to identify
Spend Your Time and eliminate time-wasters. You will also know the
How long do you spend each day on things not times of day at which you are most effective, so that
important to you? Things that don’t really contribute you can carry out your most important tasks during
to your success at work. Do you KNOW how much these times.
time you’ve spent reading junk mail, talking to
colleagues, surfing web and eating lunch? “And are How to Use the Tool
you aware of when in the day you check your e-mail, Keeping an Activity Log for several days helps you to
write important articles or do your long-term planning? understand how you spend your time, and when you
How often have you thought, “I could achieve so much perform at your best. Without modifying your
more if I just had another half hour each day? behaviour any further than you have to, note down
the things you do as you do them on this template.
Activity logs help you to analyse how you actually Do this for at least one week (so you should have 7
spend your time. The first time you use an activity log tables like the below).
you may be surprised to see the amount of time that
Day: ________________________________
Serial Number Activity Time Taken Value (High, Medium, Low)

TIME MANAGEMENT 57
Every time you change activities, whether opening ■ Procrastination

mail, working, making coffee, gossiping with ■ Drop-in visitors
colleagues or whatever, note down the time of the ■ Not setting/sticking to priorities
change.
■ Crisis management.
As well as recording activities, note how you feel,
whether alert, flat, tired, energetic, etc. Do this 3. Goal Setting
periodically throughout the day. To start managing time effectively, you need to set
goals. When you know where you’re going, you can
2. Identify and Eliminate Time Wasters then figure out what exactly needs to be done, in what
order. Without proper goal setting, you’ll fritter your
Once you have logged your time for a few days,
time away on a confusion of conflicting priorities.
analyze your daily activity log. You may be alarmed
to see the amount of time you spend doing low value
People tend to neglect goal setting because it requires
jobs!
time and effort. What they fail to consider is that a
little time and effort put in now saves an enormous
You may also see that you are energetic in some parts
amount of time, effort and frustration in the future.
of the day, and flat in other parts. A lot of this can
depend on the rest breaks you take, the times and
amounts you eat, and quality of your nutrition. Your 4. Prioritization
analysis should help you to free up extra time in your Prioritizing what needs to be done is especially
day by applying one of the following actions to most important. Without it, you may work very hard, but
activities: you won’t be achieving the results you desire because
what you are working on is not of importance.
Eliminate jobs that you are not supposed to do. These
may include tasks that someone else in the Most people have a “to-do” list of some sort. The
organization should be doing, possibly at a lower pay problem with many of these lists is they are just a
rate, or personal activities such as sending non-work collection of things that need to get done and there is
e-mails. no structure. So how do you work on such To Do List
– top down, bottom up, easiest to hardest?
Schedule your most challenging tasks for the times
of day when your energy is highest. That way your To work efficiently you need to work on the most
work will be better and it should take you less time. important, highest value tasks. This way you won’t
get caught scrambling to get something critical done
Try to minimize the number of times a day you switch as the deadline approaches. One popular way to
between types of task. For example, read and reply prioritize is to use the ABC analysis: categorization
to e-mails in blocks once in the morning and once in of large amount of activities into groups. These groups
the afternoon only instead of checking them every 5- are often marked A, B, and C—hence the name.
10 minutes. Activities are ranked upon these general criteria:
Some Common time wasters are: A – Tasks that are urgent and important.
B – Tasks that are important but not urgent.
■ Telephone interruption
C – Tasks that are neither urgent nor important.
■ Inefficient delegation
■ Extended lunch/breaks Each group is then rank-ordered in priority.
■ Cluttered work space
■ Poorly run meeting 5. Specific Scheduling
■ Socializing on the job Much of time management comes down to effective
■ Misfiled information scheduling of your time. When you know what your
■ Poor planning goals and priorities are, you then need to know how

58 TIME MANAGEMENT
to go about creating a schedule that keeps you on and necessary part of life. Here, do what you sensibly
track, and protects you from stress. can to minimize it, but make sure you don’t scare
people away from interrupting you when they should.
This means understanding the factors that affect the
time you have available for work. You not only have Stop procrastination - “I’ll get to it later” has led to
to schedule priority tasks, you have to leave room for the downfall of many a good employee. After too many
interruptions, and contingency time for those “laters” the work piles up so high that any task seems
unexpected events that otherwise wreak chaos with insurmountable. Procrastination is as tempting as it
your schedule. By creating a robust schedule that is deadly. The best way to beat it is to recognize that
reflects your priorities as well as supports your you do indeed procrastinate. Once you know why you
personal goals, you have a winning combination: One procrastinate then you can plan to get out of the habit.
that will allow you to control your time and keep your
life in balance. You procrastinate when you put off things that you
should be focusing on right now, usually in favour of
doing something that is more enjoyable or that you’re
Time Management Tips more comfortable doing.
(To Eliminate Time Wasters)
Common causes of procrastination are:
Learn to say ‘NO’- Many people become overloaded
with too much work because they overcommit; they ■ Feeling overwhelmed by the task. You may not
say yes when they really should be saying NO. Learn know where to begin. Or you may doubt that
to say no to low priority requests and you will free up you have the skills or resources you think you
time to spend on things that are more important. need. So you seek comfort in doing tasks
you know you’re capable of completing.
Organize your work space - De- Clutter and file Unfortunately, the big task isn’t going to go away
things properly so that you can access things easily – truly important tasks rarely do
without wasting your time. Organize to the point that
■ Waiting for the “right” mood or the “right” time to
you can quickly lay your hands on what you need.
tackle the important task at hand
Keep a log - Set your specific goals/task/To-do list, ■ A fear of failure or success
and track them over time to see whether or not you’re ■ Underdeveloped decision making skills
accomplishing them. Commit to deadlines/ ■ Poor organizational skills
deliverables. ■ Perfectionism (“I don’t have the right resources
to do this now, so I won’t do it at all.”).
Work through Others (delegate) - Are you in the
habit of doing other people’s work because of a ‘hero’ Use your waiting time - Always take something to
mentality or of the opinion that you can do things better do (such as a report you need to read, a check book
than others? There is no need for you to be a one- that needs to be balanced or just a blank pad of paper
person show. Doing this takes up time that you may that you can use to plan your next day) with you when
not have. Instead, focus on your own projects and you are waiting for someone.
goals, learn to delegate effectively, and teach others
how to do their own work. Make a list of things to do. Reflect on things you might
have been putting off. Jot them down. You now have
Manage distractions - Minimize the interruptions you a list you can work off and put your time later to good
face during your day. There are phone calls, visitors, use.
questions from colleagues, and a whole list of events
that can come unexpectedly. Some do need to be
dealt with immediately, but others need to be Meeting Management
managed. Some jobs need you to be available for A meeting has to have: a Purpose, an Agenda, and a
people when they need help – interruption is a natural Time frame.

TIME MANAGEMENT 59
You should be able to define the purpose of the and the skill of the available note taker. The note taker
meeting in 1 or 2 sentences at most. “This meeting is can use the agenda as an outline. The minutes should
to discuss new policy on tax” or “this meeting is to record who attended, what was discussed, any
review the revenue generated for quarter 4.” That way agreements that were reached, and any action items
everyone knows why they are there, what needs to that were assigned.
be done, and how to know if they are successful.
The minutes of the meeting should be distributed to
Set an agenda. List the items you are going to review/ all who attended soon after the meeting, any invitees
discuss/inspect. Assign a time limit to each agenda who did not attend, and anyone else effected by the
item (see below) and identify the person responsible discussion. Email is a great vehicle for distributing
to speak or moderate the discussion. them. Distributing the minutes informs those not at
the meeting of the progress that was made, reminds
Set a timeframe; at the very least set a start and end everyone of their action items and keeps everyone
time. Also set duration for each item in the agenda. on the same page.
These should total to the overall meeting timeframe.
Stay Focused
Don’t Wait Stick the discussion to the items on the agenda.
Meetings need to start on time. When someone Interrupt politely whenever the discussion strays from
arrives late, don’t go back and review what has already the topic under discussion. The new topics can either
been covered. That just wastes the time of the people be tabled later or scheduled in a new meeting. The
who showed up on time for the meeting. meeting organizer can decide whether to discuss the
new topics in a separate meeting or cover them in
If the meeting organizer/sponsor doesn’t show up on existing meeting. Also, it never hurts to say “let’s take
time, consider the meeting cancelled and go back to that up off-line”.
work. How long to wait for the organizer to show up
varies among companies.
Key Points
Keep and send minutes ■ Time is irreplaceable
Someone, other than the meeting organizer, should ■ Manage our work using Time Management tool
keep minutes of the meeting. How detailed these are such as Time Management Matrix and Pareto
depends on the nature of what is being discussed (80/20) Principle
Further Reading
1. Put First Thing First By Stephen R. Covey
2. The Seven habits of highly effective people by Stephan R. Covey
3. The 15 Minute Rule: How to stop procrastinating and take charge of your life by Caroline Buchanan
4. The 80-20 Principle by Richard Koch
5. Where did time fly by John Swift

SELF ANALYSIS, PLANNING & PRIORITIZING
DEFINITION opportunities and threats you face, or in a work context

for analysing the strengths, weaknesses,
■ Self Analysis is an independent methodical opportunities and threats a business or event faces.
attempt to study and comprehend one’s own Ideally it is one step in a process which helps you to :
personality, emotions, and behaviour without
help of any other person. 1. Appreciate the strengths of a situation, and you
may then decide to build on these
Why is it required
2. Define the weaknesses, which you might choose
In order to grow to be successful, one must be able to minimise
to know oneself. Self analysis is the adventure of
knowing yourself better. Your efficiency, your 3. Make the most of the opportunities that present
potentials, strengths and weaknesses all are revealed themselves
through self analysis. Self-analysis assessment and
supervision help an individual get closer to his or her 4. Recognise the possible threats and treat them
personality and repair what needs to be amended in in a planned and organised way.
order to face success.
SWOT analysis are not ends in themselves but a step
before some action planning.
Self Analysis through SWOT
Analysis and JOHARI Window SWOT analysis usually benefit from discussions and
getting other people’s perspectives. Remember to be
SWOT analysis and JOHARI window are the tools realistic and focused on what really happens.
for self-analysis.
SWOT Analysis Strategic and Creative Use of

One should keep track of one’s strengths and SWOT Analysis
weaknesses every so often which will help realize and
guide one to work on what needs to amended or
permanently removed and develop one’s talent and
abilities.
SWOT Analysis is a strategic planning method used to

evaluate the Strengths, Weaknesses, Opportunities,
and Threats of an individual or of a business venture.
It involves specifying the objective of an individual or
a business venture and identifying the internal and
external factors that are favourable and unfavourable
to achieving that objective.The technique is credited
to Albert Humphrey, who led a research project at
Stanford University in the 1960s and 1970s. Illustrative diagram of SWOT analysis
A SWOT analysis must first start with defining a
If SWOT analysis does not start with defining a desired end state or objective.
desired end state or objective, it runs the risk of
being useless. ■ Strengths: attributes of an individual that are
helpful to achieving the objective.
SWOT analysis provides a structure for analysing ■ Weaknesses: attributes of an individual that are
either your own strengths and weaknesses, and the harmful to achieving the objective.

SELF ANALYSIS, PLANNING & PRIORITIZING 61
■ Opportunities: external conditions that are achievement of the selected objective may be derived
helpful to achieving the objective. from the SWOTs.
■ Threats: external conditions which could do
damage to achieving the objective. First, the decision makers have to determine whether
the objective is attainable, given the SWOTs. If the
Identification of SWOTs is essential because objective is NOT attainable a different objective must
subsequent steps in the process of planning for be selected and the process repeated.
SWOT Matrix
Strengths Weaknesses
Opportunities S-O strategies W-O strategies
Threats S-T strategies W-T strategies
■ S-O strategies: pursue opportunities that are a group in relation to other groups. Johari Window
good fit to your strengths. terminology refers to ‘self’ and ‘others’: ‘self’ means
■ W-O strategies: overcome weaknesses to oneself, i.e., the person subject to the Johari Window
pursue opportunities. analysis. ‘Others’ mean other people in the person’s
group or team.
■ S-T strategies: use strengths to avoid threats.
■ W-T strategies: establish a defensive plan to The four Johari Window perspectives are called
prevent your weaknesses from making it highly ‘regions’ or ‘areas’ or ‘quadrants’. Each of these
susceptible to external threats. regions contains and represents the information -
feelings, motivation etc - known about the person, in
terms of whether the information is known or unknown
JOHARI Window by the person, and whether the information is known
The Johari window technique was created by or unknown by others in the group.
Joseph Luft and Harry Ingham in 1955 in the United
States. When performing the exercise, subjects are The Johari Window’s four regions, (areas, quadrants,
given a list of 56 adjectives and pick five or six that or perspectives) are as follows, showing the quadrant
they feel describe their own personality. Peers of the numbers and commonly used names...
subject are then given the same list, and each pick
five or six adjectives that describe the subject. These JOHARI Window Four Regions
adjectives are then mapped onto a grid. 1. What is known by the person about him/herself
and is also known by others - open area, open
The Johari Window model is a simple and useful self, free area, free self, or ‘the arena’.
tool for illustrating and improving self-awareness, and 2. What is unknown by the person about him/
mutual understanding between individuals within a herself but which others know - blind area, blind
group. self or ‘blindspot’.
3. What the person knows about him/herself that
The Johari Window actually represents information
others do not know - hidden area, hidden self,
- feelings, experience, views, attitudes, skills,
avoided area, avoided self or ‘facade’.
intentions, motivation, etc - within or about a person -
4. What is unknown by the person about him/
in relation to their group, from four perspectives, which
herself and is also unknown by others - unknown
are described below. The Johari Window model can
area or unknown self.
also be used to represent the same information for a

62 SELF ANALYSIS, PLANNING & PRIORITIZING
JOHARI Window Four Regions - Model Diagram In new groups or teams the open free space for any
team member is small because shared awareness is
THE JOHARI WINDOW
The Johari Window
relatively small.
As the team member becomes better established and

known, so the size of the team member’s open free
area quadrant increases.
The Johari Window is based on a four-square grid -

the Johari Window is like a window with four ‘panes’.
Here’s how the Johari Window is normally shown,
with its four regions. Key Points
This is the standard representation of the Johari ■ Self-analysis is the tool for people to better
Window model, showing each quadrant of the same understand themselves
size. ■ SWOT analysis helps you to analyze your
strength and weakness, identifying opportunities
The Johari Window ‘panes’ can be changed in size open to you and managing the threats
to reflect the relevant proportions of each type of ■ JOHARI window analysis can be used to improve
‘knowledge’ of/about a particular person in a given the relationship between an individual and a
group or team situation. group or between groups
Further Reading
1. Self-Analysis by L Ron Hubbard
2. I am ok, you are OK by Thomas A Harris
PLANNING
Definition Planning is all about creating advantageous

circumstances for oneself later in life. Planning is an
“A process concerned with defining goals and deciding important process that helps one in developing his
on the task and resources to be used in order to goals for his future. Remember, if you are not planning
achieve the goals” for success, you are planning for failure. This means
that to achieve success, planning is must for
OR
everyone.
“Planning is the time bound utilization of limited
Planning can be both long term and short term. In
resources for meeting the needs on priority basis”
life, there are always goals that need to be

accomplished earlier than some goals that can be Goals must be personal and meaningful; otherwise
pushed back for later in life. For early goals there is you’ll have no reason to achieve them. You need to
short term planning and for later goals there is long work out what YOU really want, not what other people
term planning. think you want.
Example – Is popular Goal of “making more money”

Action Plan meaningful to you? This goal is meaningless unless
Depending on the goal, Action Plans could be a daily, you have a reason driven by your desires and needs.
weekly, monthly, quarterly, yearly or any other suitable You need to ask yourself “Why do I want to make
time frame. For example, a healthy eating and more money?” To keep up with your neighbour or
exercise plan may have daily actions if you want to friends is not a meaningful reason. To pay for better
be very specific about your activities, where as a education for your kids or to live in a safer area or to
budgeting plan may only have weekly actions, and provide security to your family and loved ones – they
career development goals may be even longer. are all meaningful reasons, because they are personal
to you.
It doesn’t matter which timeframe you adopt – chose
the one that best suits the level of control you want to 2. Being unrealistic
have over the Action Plan. Daily action plans will have Remember S.M.A.R.T. Goals! Just because you’ve
the highest level of control. written down a goal doesn’t mean it is just going to
happen. You need to put efforts to achieve your goals,
and the only way you’ll be able to get there is if the
Importance of Planning goals are reasonable and realistic. If you set
Twenty minutes of planning per day can improve your unrealistic goals, you are just setting yourself up for
productivity many times. Affording yourself time to failure.
plan now will pay off in the future. Planning daily will
ensure that you are staying on track with your goals For example we all know that you can’t lose 10 kg
and you will become more tasks oriented. By simply overnight or you can’t complete marathon if you
taking 15-20 minutes to go through what your haven’t been practicing. You need to set realistic
objectives or outcomes are, you will be more likely to deadlines if you want to achieve these goals.
achieve them and not get side tracked which is quite Remember, it takes longer to learn new skill or to quit
easy to do when you have lots to do! old habit. So set realistic deadline.
Planning provides the framework for informed
decision making -By planning what you are going 3. Not taking action
to do- you will be establishing a framework and will Having a meaningful goal in writing is only half the
be able to tick off items from your “to do” list as you story – you need an action plan to tell you how to
go along. Planning will minimize impulsive and get there. All successful missions have had a plan or
arbitrary decisions. strategy. Analogy of the map – “the goal is the
Planning reduces crisis management and destination; the map is how to get there.” Take
uncertainties – Planning provides clear sense of the time to plan the journey so you take the best
direction and when you plan effectively there is less route.
likelihood of any critical/urgent issues coming up.
Having a plan makes it much easier to deal with Having a perfect plan aimed at getting you to that
unexpected. dream destination is not worth anything if it just sits
with you – you must act on your plan! The plan will
guide you and tell you what to do, if you are ready to
Why Planning Fails
take the first step. In the words of Nike Just Do It!
1. Lack of Clarity
If goals are not clear, supporting action plans will fail.

4. Getting Distracted 5. No Follow-Through

Success at achieving your goals requires single Planning is a continuous process. This is your road
minded focus, commitment and perseverance. map, your life guide, and needs to be referred to
Sometimes your energy may be low and you can think constantly to make sure you’re continuing to go in
of quitting, but it’s important not to give up. Visualize the right direction.
the outcome of your goal and continue!
Your priorities and your goals may change from time
To help keep you focused, try taking help of a close to time (for example if you start a family) and if this is
friend or personal mentor. You can share you the case, it is important to sit down and go through
successes and failures with them to help you grow the goal setting process again to make sure your goals
from these experiences. still have that personal meaning to make you WANT
to achieve them.
PRIORITIZING
Prioritization is the essential skill to make the very Importance and Impact.
best use of your own efforts and to get organized. It
gives you control of your work responsibilities. It is ABC Analysis
particularly important when time is limited and The ABC analysis allows you to prioritize your tasks
demands are seemingly unlimited. It helps you to into three different categories:
allocate your time where it is most-needed and most
wisely spent, freeing you up from less important tasks ■ A – Tasks that are urgent and important,
that can be attended to later or dropped. ■ B – Tasks that are important but not urgent
■ C – Tasks that are neither urgent nor important.
Techniques for setting priorities
ABC analysis is frequently combined with Pareto
There are several ways to set priorities. You need to analysis.
keep in mind following when prioritizing – Deadlines,
Pareto Analysis
This is the idea that 80% of tasks can be completed How to apply the Pareto analysis?
in 20% of the disposable time. The remaining 20% of You can apply the Pareto analysis by writing down a
tasks will take up 80% of the time. This principle is list of tasks that need to be accomplished (to-do-list)
used to sort tasks into two parts. that is ranked in order of their importance, with the

slight difference that importance in regards to the All tasks are evaluated using the criteria important/
Pareto analysis means the contribution of this task to unimportant and urgent/not urgent and put in
the overall outcome of your goal/project. according quadrants. Tasks in unimportant/not urgent
are dropped, tasks in important/urgent are done
Put simple: you rank your tasks accordingly to their immediately and personally, tasks in unimportant/
outcome. If a task does not contribute towards the urgent are delegated and tasks in important/not urgent
aimed outcome it is regarded as unimportant. Once get an end date and are done personally. Eisenhower
you have finished the list with all tasks ranked is quoted as saying: What is important is seldom
accordingly of their outcome you can spot the top urgent and what is urgent is seldom important.
20% of all your activities that result in an outcome of
80%.
POSEC Method
The Eisenhower Method (Time POSEC is an acronym for Prioritize by Organizing,
Streamlining, Economizing and Contributing.
Management Matrix)
Although this method was made popular by Stephen The method dictates a template which emphasizes
Covey in his book “First Things First”, the concept is an average individual’s immediate sense of emotional
originally credited to US President Dwight D. and monetary security. It suggests that by attending
Eisenhower, pictured right. to one’s personal responsibilities first, an individual is
better positioned to shoulder collective responsibilities.
■ Urgent and Important – for example the kitchen
catching fire, a deadline to submit tax reports or POSEC method is loosely based on Maslow’s
any deadline driven projects hierarchy of needs and it entails doing your tasks in
order to fulfil all your needs.
■ Not Urgent and Important – doing exercises,
long term planning, working on a project, 1. Prioritize - Define your tasks according to your
relationship building, new opportunities goals and prioritize your allocation of time. This
■ Urgent and Not Important – various means to tackle your daily tasks in order of
interruptions- visitors, calls, some emails, some importance so as to create personal efficiency
meetings etc. and team effectiveness.
■ Not Urgent and Not Important – activities that
just waste time, procrastination, office gossip, 2. Organizing - Giving an orderly structure to the
watching T.V. etc. goals one has to accomplish regularly. By doing
so, one gains a feeling of security and freedom
by meeting the most basic needs such as food,
shelter, and clothing among others.
3. Streamlining - Things you may not like to do,

but must do. (Work and Chores)
4. Economizing - Creating economy involves

those things that you must do or would like to
do, but are not needed to be done with any
degree of urgency. Economizing would entail
such tasks as acquiring new skills, taking part
in projects that you enjoy, and engaging in
personal development, among others. (Pastimes
and Socializing)

5. Contributing - Contribution can be done by Key Points

paying attention to those tasks whose measure
of benefit may not be evident immediately, but ■ Planning is about creating advantageous
make a difference in the long run. These circumstances for oneself later in life
contributions to humanity as acts such as ■ Prioritization is important when demands are
kindness and thoughtfulness, among others unlimited and time is limited
(Social Obligations).
Further Reading
1. Put first things first by Stephan R Covey
2. Eat that Frog!:21 great ways to stop procrastinating and get more done in less time by Brian Tracy

GOAL SETTING & ACCOUNTABILITY
DEFINITION statement of who you are, and who you are becoming.
It is the framework for the process of creating your
■ Goal Setting is the process of deciding what you life. Your vision is where you are headed, how you
want to achieve and devising a plan to achieve get there is your mission statement.
the result you desire.
Your Personal Mission
Importance of Goal Setting
Writing a personal mission statement offers the
Goal setting is a process for thinking about your ideal opportunity to establish what’s important and make a
future (what you desire to be), and for motivating decision to stick to it. As per Steve Covey- “Personal
yourself to turn this vision of the future into reality. mission statement is written to inspire you-not to
When you know what you want to achieve, you know impress anyone else. It communicates to you and
where you have to concentrate your efforts. You’ll also inspires you on the most essential level.”
be able to spot the distractions. Properly set goals
can be incredibly motivating, and as you get into the
habit of setting and achieving goals, you’ll find that Your Lifetime Goals
your self-confidence builds fast. The first step in setting personal goals is to consider
what you want to achieve in your lifetime (or 20-25
By setting sharp, clearly defined i.e., specific goals,
years in the future). Setting Lifetime Goals gives you
you can measure and take pride in the achievement
the overall perspective that shapes all other aspects
of those goals. You can see forward progress in what
of your decision making.
might previously have seemed a long pointless grind.
To cover all important areas of your life, try setting
How to set Personal Goals goals in some of these categories (or add categories
of your own depending on what is important to you):
Goals are set on a number of different levels:
■ Attitude: Do you want change any habits/
1. In your mind you create “big picture” of what behaviour?
you want to do with your life, and decide what
■ Career: What level do you want to reach in your
goals you want to achieve in short and long term. career? Do you want to start your own company?
2. You break these down into the smaller and ■ Family: Do you want to be a parent? If so, how
smaller targets that you must achieve first so are you going to be a good parent?
that you reach your lifetime goals. ■ Financial: How much money you want to make?
By when you want to retire?
3. Finally you take action i.e. once you have your ■ Knowledge/Skill: Is there any knowledge you
plan, you start working to achieve it. want to acquire in particular?
■ Physical: Are there any physical goals you want
Goal setting starts with writing your personal vision
to achieve? What specific steps are you going
and mission statement.
to take to achieve this?
■ Social Service: Do you want to make the world
Your Personal Vision a better place? If so, how?
A Personal Vision is a picture of your True Self in the Spend some time thinking on these, and then select
future. An effective personal vision includes all the one goal from each category that best reflects your
important elements of your life. It guides you to reach vision. Think again and trim this list so that finally you
the destination you have set for yourself in life. It is a have a small number of really significant goals on

68 GOAL SETTING & ACCOUNTABILITY
which you can focus. Ensure that the goals that you Specific is the What, Why, and How of the SMART
have set are ones that YOU really want to achieve, model.
not ones that your parents, friends, relatives or
employers might want. WHAT are you going to do? Use action words such
as direct, organize, coordinate, lead, develop, plan
and build etc.
Breaking down your lifetime
goal WHY is this important to do at this time? What do
you want to ultimately accomplish?
Once you have set your lifetime goals, set a five year
plan of smaller goals that you should complete if you HOW are you going to do it? (By...)
are to reach your lifetime plan. Then set a one year
plan, six month plan, and one month plan of
2. Measurable
progressively smaller goals that you should reach to
achieve your lifetime goals. Each of these should be Choose a goal with measurable progress, so you can
based on the previous plan. Now create a daily to-do see the change occur. How will you see when you
list of things that you should do today to work towards reach your goal? Be specific! “I want to read 3 chapter
your lifetime goals. Finally review your plans, and of XYZ book before my birthday” shows the specific
make sure that they fit with your personal vision. target to be measure. “I want to be a good reader” is
not as measurable.
Staying on Course Establish concrete criteria for measuring progress

Once you have decided your first set of plans, keep toward the attainment of each goal you set. When
the processes going by reviewing and updating your you measure your progress, you stay on track, reach
to-do list on a daily basis. Periodically review the your target dates, and experience the exhilaration of
longer term plans, and modify them to reflect your achievement.
changing priorities and experience.
3. Attainable
If goals you set are too far out of your reach, you
SMART Goals
probably won’t commit to doing. Although you may
“A goal properly set is halfway reached,” – Abraham start with the best of intentions, the knowledge that
Lincoln it’s too much means your subconscious will keep
reminding you of this fact and will stop you from even
To make goals more powerful ensure they are SMART
giving it your best.A goal needs to stretch you slightly
i.e. -
so you feel you can do it. For instance, if you aim to
■ S - Specific lose 15Kg in one week, we all know that isn’t
achievable. But setting a goal to lose 1Kg and when
■ M - Measurable
you’ve achieved that, aiming to lose a further 1Kg,
■ A - Attainable
will keep it achievable for you.
■ R - Relevant
■ T - Time-bound The feeling of success which this brings helps you to
remain motivated.
Let us now understand each of the above in detail.
4. Relevant
1. Specific
Relevant goals means “choosing goals that matter”.
Goals should be straightforward and emphasize what
A relevant goal will receive the support of others and
you want to happen. Specifics help us to focus our
will help you achieve your bigger objective.
efforts and clearly define what we are going to do.

GOAL SETTING & ACCOUNTABILITY 69
5. Timely Key Points

Set a timeframe for the goal: for next week, in three
months, in one year. Putting an end point on your Goal setting is an important method of:
goal gives you a clear target to work towards.
■ Deciding what is important for you to achieve in
Achieving Goals your life
■ Separating what is important from what is
When you have achieved a goal, take the time to irrelevant, or a distraction
enjoy the satisfaction of having done so. Celebrate
■ Building your self-confidence, based on
your achievement and if the goal you achieved was a
successful achievement of goals
significant one, reward yourself.
Further Reading
1. The 7 habits of highly effective people by Stephan R Covey
2. Seven Steps to Successful Goal Setting (http://www.briantracy.com/blog/general/7-steps-to-successful-
goal-setting/)
ACCOUNTABILITY
Definition 3. Professional Accountability
Paying someone or getting paid by someone to get
Accountability is a concept in ethics and governance results. This type of accountability can come from an
with several meanings. It is often used synonymously employer or a customer who is paying you to achieve
with such concepts as responsibility, answerability and some result for them such as auditing , Filing taxes,
blameworthiness, liability. Financial Planning etc. and you are accountable in
that way.
Accountability can be defined as ultimate
responsibility. Although responsibility can be shared,
Accountability cannot! How to create Accountability in
an Organization
Types of Accountability ■ Establish the organizations objectives. This
1. Personal Accountability means the significant few, not the important
many. Once identified, objectives must be clear,
You are accountable for yourself. You are responsible
concise, measurable and obtainable.
for your success and failure. We have a lot of different
Organization culture should be helpful for the
layers of values and desires and our needs in the
growth and development of people.
moment can take us away from our short or long term
goals. A structure that really works for personal ■ Assign each team member his or her
accountability is to schedule something or buy respective objectives. Ensure team members
something that will force you to keep to your goal. understand exactly what they are responsible
for and their objectives. These objectives when
combined must allow the organization to achieve
2. Group Accountability
its top objectives. Ask each team member what
Everyone in the group is working on similar goals as
he or she needs to win. Also let the team
you are. This could be in the form of a mastermind
members understand that what they do affects
group, a board of directors, a support group, a club,
everyone else in the company.
a team or some other group of peers. You just don’t
want to let the group down, so you keep your word ■ Agree on what the leader will do to help.
and do your best. To help people win, leaders must remove the

70 GOAL SETTING & ACCOUNTABILITY
roadblocks that stand in the way. Meet tough decisions. Strong core values make it easier to
individually with each team member to clarify focus on the things that are important, and ignore the
the roadblocks and agree on what’s needed to things that are not. Without knowing what your core
win and who will be responsible for making it values are, it is easy to get lost in a sea of decisions,
happen. and the onslaught of the daily grind. Be mindful of
■ Follow up. Each direct report should schedule your decisions and actions and making sure that you
a 30-minute weekly/monthly update using a are not out of integrity with your core values.
standard status report. Results at or above the
plan could be green and any area behind plan Laws of irresponsibility
in red. Focus the conversation on what was done
Law 1 : I have many rights but no duties.
to achieve green and if the results will remain
green in the next update. When discussing red Law 2: I have the right to feel good, If I don’t feel
results focus on what will be done to achieve good , it’s not my fault, it is the fault of government,
green status, when it will be achieved and any the politician, society and the company I am working
help that’s needed. for.
■ Share lessons learned. Hold monthly/quarterly
meetings with all direct reports present to discuss Law 3: I have many talents and needs, It is the
lessons learned, identify critical roadblocks and responsibility of the society and the company to
make specific offers to help. Sharing lessons develop my talents and meet my needs.
learned is a great way to help save time and
help you to reduce cost (avoid the similar mistake Law 4: When my company has problems, the
and implement the success stories). responsibilities rest solely with management. I am a
back bencher.
■ Measure Performance and Reward. When
objectives are achieved, ensure team members
Law 5: It is the duty of the management to involve
are rewarded. Those who achieve the most get
me in their decisions. However, I do not need to
rewarded the most—and everyone should know
commit myself. I do not need to come up with
that. Ensure that people at the bottom are
constructive criticism or alternative suggestions. It is
improving their performance. No one with poor
sufficient for me to point out mistakes and omissions
performance gets to remain on the bottom for
in their proposal.
more than a year without action being taken.
Law 6: I have the right to feel secure – if I do not, I
Self-Accountability: The Ultimate cannot work effectively. I am under no obligation to
Leadership Tool work effectively in order to feel secure.
Having a strong sense of self-accountability is the Above laws can’t help anyone so let’s take charge
cornerstone of success and productivity. Self- and be responsible3 for our actions.
accountability simply means you are holding yourself
responsible for your successes and failures. Most of Key Points
us feel a sense of accountability towards our
managers, co-workers, clients, customers, friends, ■ As an individual hold yourself responsible for
family, and even society in general. your success and failure
■ In organization ensure objectives are assigned
Self-accountability requires a constant mindful and proper power is given to employees to
examination of your own values and motivations. achieve their objective. Reward the employees
Having strong core values makes it easier to make when they meet their objectives
Further Reading
1. Winning with Accountability by Henry J Evans

CRITICAL AND INDEPENDENT THINKING
Edward Glaser defines Critical Thinking as something is right. This is termed as “anti-conformity”
including the following THREE things: rather than non-conformity.
1. An attitude to consider in a thoughtful way the Always note, making up your own mind is not a
problems and subjects that come within the reaction, it is an action. It needs to be open minded
range of one’s experiences and willing to receive inputs/ judgments from others
2. Knowledge of the methods of logical inquiry
and reasoning, and
Few Examples of Critical
3. Some skill in applying those methods.
thinking in practice:
Critical thinking is NOT negative thinking. It fosters ■ An applicant preparing for a job interview thinking
the ability about how to explain his or her particular skills
and experiences in a way that will be relevant
■ to be creative and constructive
and of value to the prospective employer
■ to generate possible explanations for findings
■ Parents anticipating the costs of sending their
and think of implications, and
young child to college, analyzing the family’s
■ to apply new knowledge to find practicable projected income, and budgeting projected
solutions household expenses in an effort to put aside
some money for that child’s future education
to business, societal and human problems.
■ A person running a small business trying to
anticipate the possible economic and human
Independent Thinking is Owning your own
mind. consequences of various ways to increase sales
or reduce costs
■ Making sense of the world based on your own
observations and experiences rather than just
depending on the word of others.
Credible Problem Solving
■ Trusting your own ability to make judgments, Techniques
even if they contradict what others say. 1. IBPS – Issue based Problem Solving
■ Acting in accordance with these judgments, even 2. SCQ framework
if you sometimes make mistakes. (it’s better to 3. Analytical Tools
make your own mistakes than someone else’s!)
4. Deductive vs. Inductive Reasoning
Independent Thinking is a Judgment based on your
observations and experiences
What is IBPS?
Critical Thinking is application of tool or a Issue based Problem Solving (IBPS) is the
process to convert judgments into solutions mmethodology that enables definition, Analysis and
Independent Thinking does NOT mean - Being obtaining Solutions to problems in a structured and
contrary or reacting against the wishes of your Analytical manner.
parents, teachers or peers, simply because they say

72 CRITICAL AND INDEPENDENT THINKING
Step – 1: Understanding the Problem and its ■ Question: Describe the question that would
constituents through SCQ Framework: reduce/eliminate the discomfort
■ Situation: Describe the current Situation
■ Complication: Describe the tension/issue which Step – 2: Breakdown the problem to determine the
is causing discomfort root cause and determine the solution using Critical
Thinking through an Iterative process
Form Issue Use Critical

Tree Thinking to
Problem List Issues to
(determining evaluate solutions
be addressed
root cause) Analytical Tools
Step – 2: Identify the root causes of the Problem using How, then, can we develop as critical thinkers? How
Issue Tree can we help ourselves and our students to practice
better thinking in everyday life?
■ Define Problem using Issue Tree
■ Break-down issues into sub-issues First, we must understand that there are stages
■ Continue till sub-issues can be answered required for development as a critical thinker:
individually
Stage One: The Unreflective Thinker (we are unaware
■ Breaking down of issues shall be – mutually
of significant problems in our thinking)
exclusive, collectively exhaustive
Stage Two: The Challenged Thinker (we become
For effectiveness, an Issue Tree must obey the below
aware of problems in our thinking)
4 rules
Stage Three: The Beginning Thinker (we try to
■ Consistently answer a why or how question
improve but without regular practice)
■ Progresses from key question to Analysis as we
move to the right Stage Four: The Practicing Thinker (we recognize
■ Have branches that are mutually exclusive and the necessity of regular practice)
collectively exhaustive (MECE)
■ Each step is an insightful breakdown Stage Five: The Advanced Thinker (we advance in
accordance with our practice)
Step – 2: Evaluate Solutions using Critical
Stage Six: The Master Thinker (skilled & insightful
Thinking
thinking become second nature to us)
Critical Thinking is the mental process of logically
conceptualizing or hypothesizing, applying, analyzing, We develop through these stages if we:
synthesizing and evaluating information to reach
possible and plausible answers. 1. Accept the fact that there are serious problems
in our thinking (accepting the challenge to our
Development in thinking requires a gradual process thinking) and
requiring plateaus of learning and just plain hard work.
2. Begin regular practice.
It is not possible to become an excellent thinker
simply because one wills it. Changing one’s habits of
Critical Thinking applies the following
thought is a long-range project, happening over approach:
years, not weeks or months. The essential traits of a
Purpose, Information, Predisposition, Conceptuali-
critical thinker require an extended period of
zation, Drawing Inferences, Implications
development.

CRITICAL AND INDEPENDENT THINKING 73
Step – 2: Solutions - Analytical Tools
Sl No Focus Area Tool to be Used
1 What are the Issues? Fish Bone
2 What are the most important issues? Pareto
3 What Performance Areas are weak? Benchmarking
4 What are the core competencies? SWOT Analysis
5 What forces can influence the problem? Force Field Analysis
Step – 2: Solutions - Analytical Tools - Fishbone one’s own results and processes. In this way,
Analysis they learn how well the targets perform and,
more importantly, the business processes that
Fishbone 4S technique prevalent in Service Industry explain why these firms are successful.
comprises of Systems, Surroundings, Skills &
Suppliers. Step – 2: Solutions - Analytical Tools – SWOT
Analysis
The purpose of this analysis is to break down (in
successive layers of detail) root causes that potentially A SWOT analysis (alternatively SWOT matrix) is a
contribute to a particular effect structured planning method used to evaluatethe
strengths, weaknesses,opportunities, and threats
Step – 2: Solutions - Analytical Tools - Pareto Analysis involved in a project or in a business venture. A SWOT
(80:20 rule) analysis can be carried out for a product, place,
industry or person. It involves specifying the objective
Pareto analysis is a formal technique useful where of the business venture or project and identifying the
many possible courses of action are competing for internal and external factors that are favourable and
attention. In essence, the problem-solver estimates unfavourable to achieve that objective.
the benefit delivered by each action, then selects a
number of the most effective actions that deliver a Step – 2: Solutions - Analytical Tools – Force-field
total benefit reasonably close to the maximal possible Analysis
one.
1. Force-field analysis is an influential
Step – 2: Solutions - Analytical Tools - Benchmarking development in the field of social science. It
provides a framework for looking at the factors
■ Benchmarking is the process of comparing (forces) that influence a situation, originally social
one’s business processes and performance situations.
metrics to industry bests or best practices from
2. It looks at forces that are either driving
other industries.
movement toward a goal (helping forces) or
■ Dimensions typically measured are quality, time blocking movement toward a goal (hindering
and cost. forces).
■ In the process of best practice benchmarking, 3. The principle, developed by Kurt Lewin, is a
management identifies the best firms in their significant contribution to the fields of social
industry, or in another industry where similar science, psychology, social psychology,
processes exist, and compares the results and organizational development, process
processes of those studied (the “targets”) to management, and change management.

74 CRITICAL AND INDEPENDENT THINKING
Step – 3: Arriving at the answer (Deductive Step – 3: Communicating the Answer: Pyramid
versus Inductive Logic) Principle
Step – 3: Arriving at the answer (Deductive Logic)
The holistic view, construct the pyramid based on
■ Deductive reasoning is a basic form of valid outcomes from individual frameworks – SCQ, list
reasoning. Deductive reasoning, or deduction, down the broad questions that should be addressed
starts out with a general statement, or on priority, and then communicate the answer and
hypothesis, and examines the possibilities to message
reach a specific, logical conclusion. The scientific
method uses deduction to test hypotheses and The Client has an immediate grasp of the Answer,
theories. context and the logical flow.
■ In deductive reasoning, if something is true of a
■ Every document or presentation can and should
class of things in general, it is also true for all
be reduced to a single main message
members of that class. For example, “All men
are mortal. Harold is a man. Therefore, Harold ■ We should state the answer as soon as possible;
is mortal.” For deductive reasoning to be sound, immediately after a short and suitably structured
the hypothesis must be correct. It is assumed introduction
that the premises, “All men are mortal” and
Communicating the Answer: Pyramid Principle - logic
“Harold is a man” are true. Therefore, the
conclusion is logical and true. ■ The Client is interested first and foremost in what
■ It’s possible to come to a logical conclusion even the answer is. Interest is the derivation process
if the generalization is not true. If the is secondary
generalization is wrong, the conclusion may be ■ People absorb information and ideas better and
logical, but it may also be untrue. For example, draw the desired conclusions much more easily
the argument, “All bald men are grandfathers. if they know why all the inputs are being shared
Harold is bald. Therefore, Harold is a with them. In other words, detail is handled better
grandfather,” is valid logically but it is untrue in the context of the big picture.
because the original statement is false.
Step – 3: Arriving at the answer (Inductive Logic) Cultivating Independent

■ Inductive reasoning is the opposite of Thinking
deductive reasoning. Inductive reasoning makes ■ Know your worth: When you cultivate &
broad generalizations from specific blossom a sense of self-worth and polish your
observations. Even if all of the premises are true special talents, you are confident and less
in a statement, inductive reasoning allows for vulnerable to suppression or manipulative
the conclusion to be false. Here’s an example: behavior
“Harold is a grandfather. Harold is bald. ■ Know your values: Let your principles be your
Therefore, all grandfathers are bald.” The guiding light. If you know what you stand for,
conclusion does not follow logically from the others can’t exploit or pressure you as easily.
statements.
■ Nurture your critical thinking skills: Analyze
■ Inductive reasoning has its place in the scientific problems and issues, build your own arguments
method. Scientists use it to form hypotheses and based on logical reasoning. Hypothesize issues
theories. Deductive reasoning allows them to and brainstorm to derive new ideas and creative
apply the theories to specific situations. solutions.
■ Expand your knowledge: Interact with peers
Arriving at the answer - Recommended
and teachers to understand diverse opinions.
Communication logic: Inductive
Use curious questioning techniques to get your

CRITICAL AND INDEPENDENT THINKING 75
desired responses. Research & read views ■ Drop your inhibitions: Low self-confidence,
published and shared in forums. Be receptive negative self belief & attitudes, fears, or anxieties
and seek counter opinions and analyze them to make you vulnerable to pressures from your
better your understanding. This may be helpful peers or others. Read books on cognitive
in changing your opinion to a better option. therapy, seek professional counseling to
■ Analyze your bias and assumptions: Be overcome your irrational beliefs.
honest with yourself. Don’t make excuses for ■ Be yourself: Practice being different from what
assumptions that make you uncomfortable if you you “should be” or “are expected to be”. Dress
stop to analyze them. Put yourself to test and differently than you usually do or differently than
answer back why you feel or think in a particular a social group, strike conversations on topics
way? you need diversity or clarity of views. You may
■ Be assertive: When you are assertive, you find out that the consequences of being different
convey your views confidently and are received are not as painful as you imagine. Even if you
pleasantly. If you feel you are passive or timid, get flak, it’s a psychologically stretching exercise.
you should get trained on & practice
assertiveness techniques, to stand up for what
you believe in.

EFFECTIVE COMMUNICATION
INTRODUCTION The Communication Process
People in organizations typically spend over 75% of

their time in an interpersonal situation; thus it is no
surprise to find that at the root of a large number of
organizational problems is poor communication.
Effective communi-cation is an essential component
of organizational success whether it is at the
interpersonal, intergroup, intragroup, organizational,
or external level.
In any communication, at least some of the “meaning”
In a recent survey of recruiters from companies with is lost in simple transmission of a message from the
more than 50,000 employees, communication skills sender to the receiver. In many situations a lot of the
were cited as the single more important decisive factor true message is lost and the message that is heard
in choosing managers. The survey, conducted by the is often far different than the one intended. This is
University of Pittsburgh’s Katz Business School, points most obvious in cross-cultural situations where
out that communication skills, including written and language is an issue. But it is also common among
oral presentations, as well as an ability to work with people of the same culture.
others, are the main factors contributing to job
Communication is so difficult because at each step
success.
in the process there is major potential for error. By
One of the major facts for increasing interpersonal the time a message gets from a sender to a receiver,
conflicts is poor communication. A recent study of there are four basic places where transmission errors
1200 CEOs of major Corporates reported that can take place and at each place, there are a multitude
communication problems are the primary reason that of potential sources of error. Thus it is no surprise
many of the most capable business people failed or that social psychologists estimate that there is usually
floundered. a 40-60% loss of meaning in the transmission of
messages from sender to receiver.
“Communication is also the most profound way to
change brain chemistry” says Steven Paul, Chief of It is critical to understand this process, understand
Clinical Neuroscience of the National Institute of and be aware of the potential sources of errors and
Mental Health, USA. As people begin to speak, their constantly counteract these tendencies by making a
blood pressure goes up, and microscopic blood conscientious effort to make sure there is a minimal
vessels’ changes are delectable at far distant point in loss of meaning in your conversation. It is also very
the body. Conversely, when people listen attentively important to understand that a majoring of
or tune in to the external environment in a relaxed communication is non-verbal. This means that when
manner, their blood pressure falls and heart rate slow, we attribute meaning to what someone else is saying,
the verbal part of the message actually means less
often slightly below normal resting levels.
than the non-verbal part. The non-verbal part includes
such things as body language and tone.
The Communication Process
Although all of us have been communicating with The 7Cs of Effective
others since our infancy, the process of transmitting Communication
information from an individual (or group) to another
is a very complex process with many sources of The 7Cs of effective Communication, apply to both
potential error. written as well as oral communication.

EFFECTIVE COMMUNICATION 77
Completeness - The communication must be intact, giving us the confidence to communicate

complete and it should convey all facts required by without games and manipulation.
the audience. Complete Communication leaves no
questions in the mind of receiver. When we are being assertive, we work hard to create
mutually satisfying solutions. We communicate our
Conciseness - Conciseness means wordiness, i.e., needs clearly and forthrightly. We care about the
communicating what you want to convey in least relationship and strive for a win-win situation. We
possible words. know our limits and refuse to be pushed beyond them
just because someone else wants or needs something
Consideration - Effective communication must take from us. Surprisingly,assertive is the style most people
the audience into consideration, i.e, the audience’s use least.
view points, background, mind-set, education level,
etc. Ensure that the self-respect of the audience is Assertive communicators will:
maintained and their emotions are not at harm.
Emphasize on “you” approach. ■ State needs and wants clearly, appropriately, and
respectfully
Clarity - Clarity implies emphasizing on a specific ■ Express feelings clearly, appropriately, and
message or goal at a time, rather than trying to respectfully
achieve too much at once. It makes understanding ■ Use “I” statements
easier.
■ Communicate respect for others
Concreteness - Concrete communication implies ■ Listen well without interrupting
being particular and clear rather than fuzzy and ■ Feel in control of self
general. Concreteness strengthens the confidence. ■ Have good eye contact
Concrete message is supported with specific facts ■ Speak in a calm and clear tone of voice
and figures. Concrete messages cannot be ■ Have a relaxed body posture
misinterpreted.
■ Feel connected to others
Courtesy - Courtesy implies taking into consideration ■ Feel competent and in control
both viewpoints as well as feelings of the receiver of ■ Not allow others to abuse or manipulate them
the message. ■ Stand up for their rights
2. Aggressive Communication
Correctness - Correctness in communication implies
that there are no grammatical errors in Aggressive communication always involves
communication. Correct communication message is manipulation. We may attempt to make people do
exact, correct and well-timed. It checks for the what we want by inducing guilt (hurt) or by using
precision and accurateness of facts and figures used intimidation and control tactics (anger). Covert or
in the message. overt, we simply want our needs met - and right now!
Although there are a few areas where aggressive
behavior is called for (i.e., sports or war), it will never
Communication Style work in a relationship. Ironically, the more aggressive
sports rely heavily on team members and rational
Every time we speak, we choose and use one of the
coaching strategies. Even war might be avoided if
four basic communication styles: assertive,
we could learn to be more assertive and negotiate to
aggressive, passive and passive-aggressive.
solve our problems.
1. Assertive Communication Aggressive communicators will often:
The most effective and healthiest form of
communication is the assertive style. It’s how we ■ Try to dominate others
naturally express ourselves when our self-esteem is ■ Use humiliation to control others

78 EFFECTIVE COMMUNICATION
■ Criticize, blame, or attack others feel - i.e., smiling when angry

■ Be very impulsive ■ Use sarcasm
■ Have low frustration tolerance ■ Deny there is a problem
■ Speak in a loud, demanding, and overbearing ■ Appear cooperative while purposely doing things
voice to annoy and disrupt
■ Act threateningly and rudely ■ Use subtle sabotage to get even
■ Not listen well
■ Interrupt frequently Importance of Communication
■ Use “you” statements
The ability to communicate effectively is necessary
■ Have piercing eye contact and an overbearing
to carry out the thoughts and visions of an organization
posture
to the people. The importance of speech and words
3. Passive Communication whether through a paper or a voice is a
Passive communication is based on compliance and communication medium to convey directions and
hopes to avoid confrontation at all costs. In this mode provide synchronization. Without communication,
we don’t talk much, question even less, and actually there is no way to express thoughts, ideas and
do very little. We just don’t want to rock the boat. feelings.
Passives have learned that it is safer not to react and
The ability and the importance of communication
better to disappear than to stand up and be noticed.
become much more crucial when you are on a mission
Passive communicators will often: or need to fulfill a goal. Without a means to
communicate, your organization will become isolated.
■ Fail to assert for themselves The ability to effectively communicate is very
■ Allow others to deliberately or inadvertently important when it is usually underestimated and
infringe on their rights overlooked.
■ Fail to express their feelings, needs, or opinions Communication is a necessity as we use it to network,
■ Tend to speak softly or apologetically spread ideas, and promote. Communicate effectively
■ Exhibit poor eye contact and slumped body through well known mediums and convey it simply
posture and precisely. The importance of communication is
crucial to the success of your organization because
4. Passive-Aggressive Communication you need to reach out in order to fulfill your mission.
A combination of styles, passive-aggressive avoids
direct confrontation (passive), but attempts to get even
through manipulation (aggressive). If you’ve ever Barriers to Effective
thought about making that certain someone who Communication
needs to be “taught a thing or two” suffer (even just a
There are a wide number of sources of noise or
teeny bit), you’ve stepped pretty close to (if not on
interference that can enter into the communication
into) the devious and sneaky world of the passive-
process. This can occur when people know each other
aggressive. This style of communication often leads
very well and should understand the sources of error.
to office politics and rumour-mongering.
In a work setting, it is even more common since
Passive-Aggressive communicators will often: interactions involve people who not only don’t have
years of experience with each other, but
■ Mutter to themselves rather than confront the communication is complicated by the complex and
person or issue often conflicting relationships that exist at work. In a
■ Have difficulty acknowledging their anger work setting, the following suggests a number of
sources of noise:
■ Use facial expressions that don’t match how they

■ Language: The choice of words or language in signals force the receiver to choose between the
which a sender encodes a message will verbal and nonverbal parts of the message. Most
influence the quality of communication. Use often, the receiver chooses the nonverbal aspects.
simple language. Mixed messages create tension and distrust because
■ Defensiveness, distorted perceptions, guilt, the receiver senses that the communicator is hiding
transference, distortions from the past. something or is being less than candid.
■ Misreading of body language, tone and other
Nonverbal communication is made up of the following
non-verbal forms of communication (see section
parts:
below).
■ Noisy transmission (unreliable messages, 1. Visual
inconsistency).
2. Tactile
■ Receiver distortion: selective hearing, ignoring
3. Vocal
non-verbal cues.
4. Use of time, space and image
■ Power struggles.
■ Self-fulfilling assumptions. Visual:
■ Language-different levels of meaning. This is often called body language and includes facial
■ Managers hesitation to be candid. expression, eye movement, posture, and gestures.
■ Assumptions e.g. assuming others see situation The face is the biggest part of this. All of us “read”
same as you, has same feelings as you. people’s faces for ways to interpret what they say
■ Distrusted source, erroneous translation, value and feel. This fact becomes very apparent when we
judgment, state of mind of two people. deal with someone with dark sunglasses. Of course
■ Interpersonal Relationships: How we perceive we can easily misread these cues especially when
communication is affected by the past communicating across cultures where gestures can
experience with the individual. Perception is also mean something very different in another culture. For
affected by the organizational relationship two example, in American culture agreement might be
people have. For example, communication from indicated by the head going up and down whereas in
a superior may be perceived differently than that India, a side-to-side head movement might mean the
from a subordinate or peer. same thing.
■ Cultural Differences: Effective communication
We also look at posture to provide cues about the
requires deciphering the basic values, motives,
communicator; posture can indicate self-confidence,
aspirations, and assumptions that operate
aggressiveness, fear, guilt, or anxiety. Similarly, we
across geographical lines. Given some dramatic
look at gestures such as how we hold our hands, or a
differences across cultures in approaches to
handshake. Many gestures are culture bound and
such areas as time, space, and privacy, the
susceptible to misinterpretation.
opportunities for miscommunication while we are
in cross-cultural situations are plentiful.
Tactile:
This involves the use of touch to impart meaning as
Reading Nonverbal in a handshake, a pat on the back, an arm around
Communication Cues the shoulder, a kiss, or a hug.
A large percentage (studies suggest over 90%) of Vocal:

the meaning we derive from communication, we The meaning of words can be altered significantly by
derive from the non-verbal cues that the other person changing the intonation of one’s voice. Think of how
gives. Often a person says one thing but many ways you can say “no”-you could express mild
communicates something totally different through doubt, terror, amazement, anger among other
vocal intonation and body language. These mixed emotions. Vocal meanings vary across cultures.

Intonation in one culture can mean support; another time, and space can clarify or confuse the meaning
anger. of verbal communication.
Use of Time as Nonverbal Communication A “majority” of the meaning we attribute to words

Use of time can communicate how we view our own comes not from the words themselves, but from
status and power in relation to others. Think about nonverbal factors such as gestures, facial
how a subordinate and his/her boss would view expressions, tone, body language, etc. Nonverbal
arriving at a place for an agreed upon meeting. cues can play five roles:
1. Repetition: They can repeat the message the

Physical Space
person is making verbally
For most of us, someone standing very close to us
2. Contradiction: They can contradict a message
makes us uncomfortable. We feel our “space” has
the individual is trying to convey
been invaded. We tend to mark our territory either
3. Substitution: They can substitute for a verbal
with permanent walls, or in a classroom with our coat,
message. For example, a person’s eyes can
pen, paper, etc. The “personal zone” from about 2-4
often convey a far more vivid message than
feet usually is reserved for family and friends. The
words and often do
social zone (4-12 feet) is where most business
transactions take place. The “public zone” (over 12 4. Complementing: They may add to or
feet) is used for lectures. complement a verbal message. A boss who pats
a person on the back in addition to giving praise
Image can increase the impact of the message
We use clothing and other dimensions of physical 5. Accenting: Non-verbal communication may
appearance to communicate our values and accept or underline a verbal message. Pounding
expectations. Similarly, we use “things” to the table, for example, can underline a message.
communicate. This can involve expensive things, neat
Skillful communicators understand the importance of
or messy things, photographs, plants, etc.
nonverbal communication and use it to increase their
The use of gestures, movements, material things, effectiveness, as well as use it to understand more
clearly what someone else is really saying.
Effective Listening
Listening is a learnable skill. Unfortunately, it is not core skill required to succeed in corporate world and
typically taught along with other communication skills in life in general.
at home or in school. We spend more time listening
than using any other form of communication, yet as
a youngster we were never taught the skill. We spent The Basic Listening Modes
long hours learning to read and write and even had 1. Active Listening is the single most useful and
classroom training in public speaking, but we never important listening skill. In active listening we
had a lesson in listening or thought of listening as a are also genuinely interested in understanding
learnable skill. While some may have had better what the other person is thinking, feeling,
experiences during their formative years, for many, wanting or what the message means, and we
listening is often treated the same as “hearing.” We are active in checking out our understanding
do not ordinarily receive instruction in using our other before we respond with our own new message.
senses - smell, sight, touch and taste — so why give We restate or paraphrase our understanding of
lessons in hearing (sound)? their message and reflect it back to the sender
for verification. This verification or feedback
However, recent researches prove that listening is a process is what distinguishes active listening and

makes it effective. Reflective or Empathic Motivation

Listening (Sometimes called a different level) Motivation is the single most important factor. The
takes this one step further and does the need to listen and a willingness to understand others.
verification from the other person’s point of view. If motivation is absent the interest for listening declines
and consequently the ability to sustain attention
2. Competitive or Selective Listening happens diminishes.
when we are more interested in promoting our
own point of view than in understanding or Concentration
exploring someone else’s view. We either listen
Lack of concentration can also be the result of poor
for openings to take the floor, or for flaws or weak
motivation. However, another important factor is the
points we can attack. As we pretend to pay
rate of speed between the speaker and the listener.
attention we are impatiently waiting for an
Most speakers speak at about 150 to 175 words a
opening, or internally formulating our rebuttal
minute and the mind listens at a rate equivalent to
and planning our devastating comeback that will
400 to 500 words per minute. So the mind works faster
destroy their argument and make us the victor.
than the speaker can speak which means the mind
has an opportunity to wander or to get diverted. Unless
3. In Passive Listening we are interested in
the listener uses his spare listening time in reflection
hearing without reacting. We are attentive and
& interpretation of the speaker’s message, he will
passively listen. We assume that we heard and
soon be lost.
understand correctly. We stay passive and do
not verify it. Most importantly, we listen from our
frame of reference. We filter whatever is said Empathy
based on our beliefs, values and experiences. The key to effective interpersonal communication is
this: “Seek first to understand then to be understood”
4. Reflective or Empathic Listening takes says Steven R Covey, author of Seven Habits Of
Active Listening one step further and does the Highly Effective People. Empathic listening involves
verification from the other person’s point of more than understanding the words that are said. You
view. listen with your ears but also, more importantly listen
with your eyes and with your heart. You listen for
Characteristics of Active Listening Are: feeling, you listen for meaning, and you listen for
behaviour.
■ Emphasising on listening than talking.
■ Understanding personal feeling, beliefs and Knowledge
positions rather than obstruct ideas. A listener with no knowledge of speaker’s immediate
■ Following the speaker rather than leading the subject or experience misinterprets the information
area, we think we should be exploring. and unless he understands the speaker ’s
■ Clarifying the speakers’ thoughts and feelings. communication codes or language, the
■ Responding to speakers’ feelings, beliefs and communication breakdown will occur.
positions.
Emotion
There are five essential factors, which influence The listeners’ values and attitudes constitute
active listening. They are: emotional filters through which all messages pass
through to his mind. The immediate emotional state
■ Motivation
of the listener can be a major communication
■ Concentration
constraint. For example a person saddened by a
■ Empathy tragedy can be very poor listener or conversely
■ Knowledge emotionally upbeat person can be extremely
■ Emotion receptive.

During communication process, perhaps it is good to about what you want to say, you’re not listening to
remind ourselves, “We have two ears and one mouth what is being said.
so that we may listen more and talk less.”
Rule #2: Create a Space
What is Empathic Listening? Create a physical space. Focus on reacting and
The American College dictionary describes empathy responding to the speaker. Create, too, a space in
as “mentally entering into the feeling of a person..., your mind for what the speaker has to say. Create a
appreciative perception or understanding.” Typical space between your thoughts. Think of listening as a
(non-empathic) listening usually focuses passively on form of meditation. Quiet your mind and focus your
what the speaker says. attention on listening.
Empathic listening is periodically saying a summary Rule #3: Hold Your Judgments
of what you sense the speaker thinks, feels, and How often have you passionately expressed a gut
needs at the moment, without judgment. Doing this reaction only to become turned around and regret
does not mean you’re agreeing with the speaker! what we said after hearing more of the facts? Allow
Listening empathically to ensure clear understanding for a thoughtful pause between reacting, a space in
can be called a “hearing check.” which to ask yourself, “Do I have the whole story?”
Rule #4: Don’t Be Defensive

Benefits of Empathic Listening Do you ever take what another person says personally
Empathic listening (also called the next stage of active when what he or she is saying is not meant to be
listening or reflective listening) is a way of listening personal? Do you ever become angry at what another
and responding to another person that improves person says? Careful listening does not mean that
mutual understanding and trust. The response is an you will always agree with the other party’s point of
integral part of the listening process and can be critical view, but it does mean that you will try to listen to
to the success of a negotiation or mediation. Among what the other person is saying without becoming
its benefits, empathic listening : overly defensive. Too much time spent explaining,
elaborating, and defending your decision or position
1. Builds trust and respect is a sure sign that you are not listening. This is
2. Enables speakers to release their emotions because your role has changed from one of listening
to a role of convincing others they are wrong. After
3. Reduces tensions
listening to a position or suggestion with which you
4. Encourages the surfacing of information, and
disagree, simply respond with something like, “I
5. Creates a safe environment that is conducive to understand your point. We just disagree on this one.”
collaborative problem solving. Effective listeners can listen calmly to another person
even when that person is offering unjust criticism.
Among its other advantages empathic listening has
empowering qualities. Providing an opportunity for
Rule #5: Open Your Mind
people to talk through their problem may clarify their
While we may not consciously feel the need to be
thinking as well as provide a necessary emotional
right, we tend to have certain ideas about reality and
release.
feel groundless when they’re threatened. Groundless
now and then isn’t a bad thing. Without is we can’t
Rules of Good Listening break new ground or find common ground; it’s okay
to be unsure.
Rule #1:Stop Talking!
You can’t multi-task speaking and listening. If you’re Rule #6: Focus
talking, you’re not listening. This rule also applies to When someone is speaking, focus. If you’re paying
the talking inside your head. If you’re thinking intently attention, you’ll likely be showing signs of focus – such

as making eye contact – without thinking about it at you are upset about your rating. You think it was unfair
all. Below are some of the ways we show we’re for me to rate you as I did.”
listening.
Paraphrasing is a great technique for improving your
Maintain Eye Contact listening and problem-solving skills. First, you have
■ Not making eye contact has the connotation of to listen very carefully if you are going to accurately
someone untrustworthy. [Caution: steady eye paraphrase what you heard. Second, the
contact maybe considered impolite or paraphrasing response will clarify for the sender that
aggressive.] his or her message was correctly received and
encourage the sender to expand on what he or she is
■ Give non-verbal clues. Nod, lean toward the trying to communicate.
speaker, show you are interested.
Rule #8: Remember Names
■ Encourage the speaker to go on. Especially over The first step in remembering names is deciding that
the phone, hearing no response feels like no they are important to remember. Listen when you’re
one is listening. told about someone prior to introductions. Repeat the
names when you are introduced. Make associations
■ Don’t be a verbal trespasser. Do not interrupt or to remember names.
jump to finishe the speaker’s sentences.
Rule #9: Question
■ Ask open questions. Open questions encourage
the speaker. They elicit a more detailed response Going into a listening situation with questions in your
than closed questions. “What” and “Why” are mind will help you remember and, often, put
usually helpful starts. information into the framework of your existing
knowledge. Listen to body language and be quick to
■ Summarize. Summarizing is often helpful, clarify assumptions if you are unsure or are getting a
especially if you have had a misunderstanding, negative message. Observe. Listen. Ask.
are unsure of expectations, or have just reached
an agreement. Ensure that everyone is coming Rule #10: Be Aware
away with the same idea. We must be aware of the speaker, aware of verbal
and non-verbal cues, and aware of our own listening
Rule #7: Paraphrase strengths and challenges.
Paraphrasing is the art of putting into your own words
what you thought you heard and saying it back to the
sender. For example, a subordinate might say: “You
Key Points
have been unfair to rate me so low on my performance ■ Effective communication occurs when there is
appraisal. You have rated me lower than Jim. I can shared meaning. There should be mutual
do the job better than him, and I’ve been here longer.” understand between the sender and receiver
A paraphrased response might be: “I can see that ■ Actions speak louder than words
■ Listening is twice as hard as talking
Further Reading
1. How to win Friends and Influence People by Dale Carnegie

CONVERSATIONAL SKILLS
Purpose Below are ten guidelines to help you confront

challenging situations’
There are three aims and purposes of conversation.
The first is the plain enjoyment and pleasure of self- 1. Choose the right time and place
expression and interaction with other people. One of
If you are initiating the conversation, take the
the most enjoyable things we ever do is to spend time
“emotional climate” into account. Don’t hold the
with people we like and whose company we find
conversation when the other party is upset or angry.
stimulating.
Respect the other person’s privacy by minimizing the
The second aim or purpose of conversation is to get chance that you may be overheard. Whenever
to know the other person better. possible, have these conversations face-to-face.
The third aim of conversation is to build trust and 2. Anticipate that you may not be on the same
credibility between the two people. This is perhaps page
the most important thing we do as we proceed through Different perceptions of intent, interpretations of the
life and it is only possible with the kind of continuous facts, and judgment about what is right or best are
conversation that reveals us to each other. usually at the root of all sensitive conversations. When
you begin with this in mind, you will not be surprised
In our personal relationships, there is no substitute when these root issues arise. Remember, what may
for extended periods of conversation in the be logical to you make not be logical to others.
development of friendships and more intimate
relationships. People who get along very well together 3. Use a respectful tone
have almost invariably spent a lot of time just talking The tone in which you communicate is as important
about various subjects as they come up. One of the as what you say. Speak calmly with kindness and
very best ways to learn about another person is to respect. Your tone should reflect your willingness for
spend unbroken time in their company. a good outcome which increases the likelihood that
your message will be received in the manner in which
Handling Difficult Conversation you intend.
Delivering unpleasant news, correcting 4. Genuinely desire a win-win outcome

misunderstandings, confronting a friend or family If you begin the conversation with the intent to win
member, and dealing with hard-to-talk-about issues the other party to your point of view, you’ll often be
are the kinds of conversations most of us dread. disappointed. Instead, aim for a compromise or
They’re a part of life, however, and you can’t avoid resolution that satisfies your goal and the needs of
them. Although you may never be 100 percent the other person.
comfortable in these situations, there are a number
of things you can do to make these necessary talks
5. Be empathetic
as productive and painless as possible.
Try to understand the point of view as well the
When handled calmly and with respect for the other emotional state of the other person. Ask questions to
person, even the most challenging conversations can learn their perspective. Understanding the other
lead to an improved state of affairs for all involved. party’s position, helps you make better decisions on
When you practice the art of handling difficult how to address the situation. I have found that, in
conversations, you learn valuable lessons about most cases, the other person is aware of what
interpersonal communication that can be applied in happened and usually accepts responsibility to correct
many different circumstances. In addition, your ability the situation. When you show genuine interest in
to influence others grows, and so does their respect understanding the other person’s side of the story,
for you. you are more effective in resolving the matter.

6. Maintain eye contact outgoing and expressive. They must become better
As in any constructive face-to-face communication, talkers.
maintaining eye contact helps you gauge the
receptivity of the other person throughout the Nothing could be further from the truth. As you’ve
conversation and demonstrates your honesty and heard many times before, we come into this world
desire to listen to the other person. with two ears and one mouth and we should use them
in that same proportion. In conversation, this simply
7. Stay in control means that you should listen twice as much as you
talk if you want to get a reputation for being an
If you express anger, it is natural for the other person
enjoyable person with whom to converse.
to respond accordingly to match your emotional state.
Do whatever it takes to remain calm.
The major reason why most people are poor listeners
is that they are busy preparing a reply while the other
8. Write it out person is still speaking. In fact, they are not even
If time permits, it is helpful to put the details of the listening closely to what the other person is saying.
situation in writing. Include what you wish both parties They are very much like boxers waiting for the other
to achieve. Doing so gives you an opportunity to person to let their guard down so they can jump in
consider all views and nuances of the situation. Taking with a quick verbal punch and take over the
the time to properly prepare for any important conversation.
conversation yields better results.
The art of good conversation centers very much on
9. Don’t interrupt your ability to ask questions and to listen attentively
When the other person is speaking, never interrupt. to the answers. You can lace the conversation with
Show other person the respect you want to be shown your insights, ideas, and opinions, but you perfect
when you are talking. In addition, don’t appear like the art and skill of conversation by perfecting the art
you are anxious to respond. People who can’t wait to and skill of asking good, well-worded questions that
speak generally aren’t listening because they are so direct the conversation and give other people an
focused on what they want to say. opportunity to express themselves.
10. Don’t team up Ask open-ended questions that cannot be answered

with a simple yes or no. Open-ended questions
Avoid saying things like, “Everyone in the department
encourage the speaker to expand on his thoughts
feels the same way,” or “I have heard about this from
and comments. And one question will lead to another.
countless people.” When I hear these kinds of
You can ask open-ended questions almost endlessly,
statements, I immediately discount what is being said
drawing out of the other person everything that he or
because in most cases they are exaggerations. If
she has to say on a particular subject.
there is an issue that needs to be addressed, resist
the temptation to strengthen your position by including
In order to be an excellent conversationalist, you must
others. If the issue is so serious that you need to bring
resist the urge to dominate the discussion. The
others into the discussion, make sure they are
very best conversationalists seem to be low-key, easy-
present.
going, cheerful, and genuinely interested in the
other person. They seem to be quite content to listen
How to Hold a Good Conversation when other people are talking and they make their
own contributions to the dialogue rather short and to
Many people think that the art of good conversation the point.
is to speak in an interesting and arresting fashion, to
be noted for your humor, ability to tell stories and your If you feel that you have been talking for too long,
general knowledge of a variety of subjects. Many you should stop and ask a question of someone in
people feel that, if they want to be better at the group. You will be tossing the conversational ball
conversation, they must become more articulate, and giving that individual an opportunity to converse.

Listening is the most important of all skills for what the person is saying or trying to say. Instead,
successful conversation. Many people are very ask, What do you mean, exactly? This is the most
poor listeners. Since everyone enjoys talking, it takes powerful question I’ve ever learned for controlling a
a real effort to practice the fundamentals of excellent conversation. It is almost impossible not to answer.
listening and to make them a habit. When you ask, What do you mean? the other person
cannot stop himself or herself from answering more
Here are the four major rules for active listening in a extensively. You can then follow up with other open-
conversation. ended questions and keep the conversation rolling
along. The fourth key to effective listening is to
Effective listening requires that you lean slightly paraphrase the speaker’s words in your own
forward, face the other person directly, and hang on words. After you’ve nodded and smiled, you can then
every word. Listen as though there were nothing else say, “Let me see if I’ve got this right”, “What you’re
in the world more fascinating to you than what the saying is . . .”
other person is saying. The very best listeners seem
to have developed the knack of making the person By paraphrasing the speaker ’s words, you
who is speaking feel as if he or she were the only demonstrate in no uncertain terms that you are
person in the world. Good conversationalists can even genuinely paying attention and making every effort
do this in the middle of a crowded room. to understand his or her thoughts or feelings. And the
wonderful thing is, when you practice effective
In addition to listening without interrupting, you listening, other people will begin to find you
should also nod, smile and agree with what the fascinating. They will want to be around you. They
person is saying. Be active rather than passive. will feel relaxed and happy in your presence.
Indicate that you are totally engaged in the
conversation. Make eye contact as the other person The reason why listening is such a powerful tool in
talks. Relax your body and, if you are standing, allow developing the art and skill of conversation is because
your weight to roll forward onto the toes of your feet. listening builds trust. The more you listen to another
Only you will know that you have done this, but the person, the more he or she trusts you and believes in
overall impression you will give is that your whole you.
energy is now forward and focused on what the
speaker is saying. The second key to effective Listening also builds self-esteem. When you listen
listening is to pause before replying. A short pause, attentively to another person, his or her self-esteem
of three to five seconds, is a very classy thing to do in will naturally increase. Finally, listening builds self-
a conversation. When you pause, you accomplish discipline in the listener. Because your mind can
three goals simultaneously. process words at 500-600 words per minute, and we
can only talk at about 150 words per minute, it takes
First, you avoid running the risk of interrupting if the a real effort to keep your attention focused on another
other person is just catching his or her breath before person’s words. If you do not practice self-discipline
continuing. Second, you show the other person that in conversation, your mind will wander in a hundred
you are giving careful consideration to his or her words different directions. The more you work at paying close
by not jumping in with your own comments at the attention to what the other person is saying, the more
earliest opportunity. The third benefit of pausing is self-disciplined you will become. In other words, by
that you will actually hear the other person better. His learning to listen well, you actually develop your own
or her words will soak into a deeper level of your mind character and your own personality.
and you will understand what he or she is saying with
greater clarity. By pausing, you mark yourself as a The final key to becoming a great conversationalist
brilliant conversationalist. is to practice the friendship factor. It is based on the
three Cs of caring, courtesy and consideration.
The third key to effective listening is to question for
clarification. Never assume that you understand People don’t care how much you know until they know

how much you care. Caring is the catalyst in all good trigger this consideration factor. You show that you
relationships. The people you like the best and who not only value the conversation, but you value the
like you the best are the ones with whom you have speaker as well.
the most caring relationships. Whenever you show
another person that you genuinely care about him or Becoming a good conversationalist is based on
her, you come across better as a conversationalist learning and practicing the Golden Rule. This simply
and as a friend. says that you treat other people the way you would
like them to treat you. Just as you would like other
The second C in the friendship factor is courtesy. It is people to ask you questions about yourself and to
a magic quality of politeness that causes people to listen attentively to you when you talk, others would
want to be around you. All good conversationalists like the same courtesy extended to them. Remember,
make other people feel calm and comfortable in their the purpose of conversation is not to dominate,
presence. They never do or say anything that could control, or be right. The purpose of conversation is to
hurt or offend the other person in any way. They enjoy yourself and to make sure that others enjoy
always remain warm and friendly. themselves when they are with you.
The third C in the friendship factor is consideration. Key Points

One of the major sources of positive emotions is the
feeling that we are respected and considered highly ■ Be genuinely interested in other people
by other people. Whenever you treat another person ■ Listening is the most important skill for
as an important and worthwhile human being, you successful conversation
Further Reading
1. How to Win Friends and Influence People by Dale Carnegie
2. Good conversation is for everyone by Renate Zorn
INTERPERSONAL SKILLS
Definition Interpersonal skills include not only how we
communicate with others, but also our confidence,
Interpersonal skills are the skills we use every
and how we deal with others. Problem solving,
day to communicate and interact with other
decision making and personal stress management
people. A number of studies (Appleby, 2000;
are also part of interpersonal skills. People with good
Johanson & Fried, 2002; Yancey, 2001) have found
interpersonal skill are good leaders as well as they
that the most critical job skill a new employee needs
use their interpersonal skill to understand and
to possess is good interpersonal skills. Drew Appleby
asked 39 employers what job skills were most motivate others.
important in making hiring decisions. Social skills
People with strong interpersonal skills are perceived
ranked first. George Yancey asked 76 recent BA
as more calm, confident and charismatic, qualities
psychology graduates and 44 recent master’s
that are often appealing to others. They are
psychology graduates what job skills were most useful
to them in their current jobs. Interpersonal skills also usually more successful in both their professional
ranked first. John Johanson and Carrie Fried asked and personal lives. By being aware of your
144 psychology graduates what job skills were most interpersonal skills can help you improve and develop
useful to them in their current jobs. Again, them.
interpersonal skills ranked first.

Importance of Interpersonal Tips for improving your

Skills interpersonal skills
Strong positive interpersonal relationships are ■ Be genuinely interested in other people.
essential to achieving our success – whether they be Observe what’s going on in other people’s lives.
work relationships, family relationships or relationships Acknowledge their happy milestones, celebrate
with others in our communities. We’re in almost their success and express concern and
constant contact with others and we should make sympathy for difficult situations. Make eye
every contact an opportunity to strengthen our social contact and remember their names. Ask others
skills and reinforce our relationships. for their opinions.
Individuals may be accustomed to doing things on ■ Smile. Few people want to be around someone
their own, but often “two heads are better than one.” who is always depressed. Do your best to be
Considering the ideas of co-workers, even if they are friendly and happy around coworkers. Maintain
a positive, cheerful attitude about work and about
different from yours, leads to creative and effective
life. Smile often. The positive energy you radiate
approaches to solving problems and getting work
will draw others to you.
done. Employers appreciate employees who get
along with people at all levels; therefore, they seek ■ Listen. To actively listen is to demonstrate that
employees who have good interpersonal skills. you intend to hear and understand another’s
Interpersonal skills enable you to work with others point of view. If you can restate, in your own
harmoniously and efficiently. Working well with others words, what the other person has said- it means
involves understanding and appreciating individual you are LISTENING. Your coworkers will
differences. It also means using those differences to appreciate you more when they know that you
your best advantage. Of all the challenges faced by really do listen to what they have to say.
professionals today, developing Strong Interpersonal
Skills ranks as one of the biggest – and most critical. ■ Be generous with praise and cautious with
In fact, studies show their ability to work with people criticism. Find one positive thing about
can MAKE THE DIFFERENCE between project failure everyone you work with and let them hear it. Be
and success. generous with praise and kind words of
encouragement. Say thank you when someone
helps you.
Benefits of Interpersonal Skills
■ Build Trust. Trust is a major part in the
■ Helpful in relationship building foundation of interpersonal relationships,
■ Reduces conflicts whether it is between parents and children,
■ Increases the productivity friends, or in our profession. To build trust - do
■ Happiness/satisfaction what you say, never lie,if you do lie - admit to it
show openness, do not break promises,
Using good interpersonal skills is often the difference however small they may seem, demonstrate a
between effectively communicating, and building strong moral ethic.
barriers to the communication process.
■ Don’t Complain. There is nothing worse than a
Understanding the individual and creating an
chronic complainer or whiner. If you simply have
environment conducive to effective communication
to vent about something, save it for your diary.
is an efficient means to developing valuable
If you must verbalize your grievances, vent to
relationships. your personal friends and family, and keep it
short. Spare those around you, or else you’ll get
a bad reputation.
■ Talk in terms of the other person’s interest. ■ Empathy. Empathy means being able to put
In your dealings with people both in and out of yourself in someone else’s shoes and
the office, remember to talk to them in terms of understand how they feel. Try to view situations
their interests and you’ll find a lot more people and responses from another person’s
paying close attention to you. perspective. This can be accomplished through
staying in touch with your own emotions; those
■ Call people by their name. Remember that a who are cut off from their own feelings are often
person’s name is, to that person, the sweetest unable to empathize with others.
and most important sound in any language.
People feel bigger and better when called by Key Points
name because it is their most valuable
possession. It gives them a sense of individuality ■ The ability to communicate and connect with
– a feeling of being unique. So call people by others at work will make you happier
their name and also make the other person feel ■ Interpersonal skills will help you build a sense
important. Always show respect to others. Fill of community and gain the support of others
your vocabulary with phases such as “I’m sorry when you need it
to trouble you,” “Would you be so kind as to -”
“Won’t you please?” “Would you mind” and “The most important single ingredient in the formula
“Thank you.” of success is knowing how to get along with people.”
(Teddy Roosevelt)
Further Reading
1. The 5 Essential People Skills by Dale Carnegie
2. Interpersonal Skills in Organization by Suzanne de Janasz
3. Messages: Building Interpersonal Communication Skills by Joseph A. Devito
BUSINESS COMMUNICATION
DEFINITION Writing skills are specific abilities which help

writers put their thoughts into words in a meaningful
■ It is the communication between the people in form.
or out of an organization for the purpose of
carrying out the business activities. Writing skills are an important way of making effective
communication. These are essentially important in
Benefits of Effective Business business communication like emails, reports,
Communication presentations, etc.
Effective business communication is important to

create, manage and work in a productive and Rules of Effective Writing -
proficient working environment. Effective business Composition and Writing
communication in a professional set up results in
several benefits to the business. ■ Audience Analysis. Your readers may not know
anything about what you’re telling them. What
do they need to know first?
1. Builds better customer relationships
Effective business communication strengthens ■ Create an outline. If you’re writing a longer
relationships with customer, which are vital part of an document such as a report, presentation, or
organization’s success. speech creating an outline really helps. Outlines
help you identify which steps to take in which
2. Saves time – Increases productivity order, and they help you break the task up into
A right choice of method of communication can save manageable pieces of information.
a lot of organization’s time and money. Effective
communication between employees can save ■ Use AIDA. If you’re writing something that must
unnecessary time spent on clearing confusions or inspire action in the reader, follow the Attention-
multiple communications, thus increasing productivity. Interest - Desire-Action (AIDA) formula. These
four steps can help guide you through the writing
3. Maintains clarity process.
Ineffective communication breakdown causes
confusions and unclear messages are shared. Attention - Use powerful words, or a picture that
will catch the reader’s eye and make them stop
and read what you have to say next.
4. Empowers partnerships
Clear communication between employees and Interest - Gaining the reader’s interest is a
partners of an organization helps in building stronger deeper process than grabbing their attention.
relationships. Transparent communication builds trust They will give you a little more time to do it, but
and thus makes stronger partnerships with you must stay focused on their needs. This
organizations. means helping them to pick out the messages
that are relevant to them quickly. So use bullets
Business Communication – and subheadings, and break up the text to make
your points stand out.
Writing Skills
Writing is a method of representing language in visual Desire - As you’re building the reader’s interest,
or tactile form. Effective writing is writing which has a you also need to help them understand how what
logical flow of ideas. you’re offering can help them in a real way. The
main way of doing this is by appealing to their
personal needs and wants.
BUSINESS COMMUNICATION 91
Action - Be very clear about what action you want must be adopted. The tone should be confident but
your readers to take courteous. Special care must be taken when
conveying a negative message. The author must not
■ Try some empathy – Remember your make direct accusations, rather only the faults and
audience’s needs at all times. What’s the benefit issue must be discussed.
for them?
■ Rational, Emotional and Ethical Appeal – If

Key Areas of Writing Skills
you’re trying to persuade someone to do In a professional setup, writing skills are required in
something make sure that you communicate certain areas:
why people should listen to you, pitch your
message in a way that engages your audience, a. Business Letters, Emails and Reports
and present information rationally and b. Essays
coherently.
c. Minutes of Meeting
■ Identify your main theme – If you’re having
trouble defining the main theme of your 1. Business Letters, Emails and
message, pretend that you have 15 seconds to
explain your position. What do you say? This is Reports
likely to be your main theme. Business letters - Business letters are formal letters
used for business-to-business, business-to-client, or
■ Use simple language – In Business client-to-business correspondence.
Communication always use simple, direct
language. Don’t use long words just to impress Emails. Emails are method of exchanging digital
people. messages from an author to one or more recipients.
Reports. Reports are detailed account, statement or

Few other Rules information of an event or situation.
1. Getting to the point: The purpose of the writing
Steps to remember while writing business letters
must be clear and compact. The writing should always
be broken into paragraphs to give a clear message. and emails:
Sentences must be short and meaningful. Repetitive
or unnecessary words must be avoided from the a. Clear purpose of writing: The purpose of the
writing. letter must be stated clearly. The purpose must
be mentioned in the introduction of the writing.
2. Use of non-discriminatory language: A language The author’s thoughts must come across clear.
that is acceptable and unbiased must be considered
for the writing. A language that addresses and b. Follow a simple and straight tone: The tone
describes people regardless of their gender, religion, of the writing must be courteous, simple and
age, ethnicity or other characteristics must be used. straight forward. The tone should be clear and
concise and easy to understand. Positive
3. Punctuation, Grammar and Spelling : Use of sentences must be used in the writing. Even if
spell check and correct grammar are basic steps of negative messages are to be conveyed, it must
writing skills. Common punctuation errors must be be done in a non-accusing manner.
recognized and corrected in the writing. The writing
must be proofread and thoroughly revised. (see the c. Salutations; Beginning of a letter: Business
end of chapter for common errors in English) letter must be started with a date on left corner
followed by sender’s address and organisation’s
4. Tone : Tone of the writing shows what the author name. This is followed by recipient’s name and
feels about the subject. A clear and concise tone address. The recipient should be addressed by
92 BUSINESS COMMUNICATION
using “Dear” followed by their name. The c. Introduction: Introduction of the essay must
recipient can be address just by their name with contain a brief abstract of the topic of the essay.
title in order to remain formal. The subject must be explained briefly at the
beginning of the essay write up.
d. Body: Formal and courteous language must be
d. Content Body: The content section is main part
used in the body of the business letter. The
of any essay. A detailed discussion on the subject
content must be broken into paragraphs. The
must be presented here. All the arguments,
body must have a proper structure. The main
points, plans, action points must be stated and
parts of the letter must be as follows:
clearly defined in the main body. All the
i. First Part: The introduction and purpose of explanation must be well-defined and formatted.
the writing the letter. e. Conclusion: It is essential to end the essay with
a brief summary of the subject and key points of
ii. Second Part: The points must be stated and the write up. The conclusion gives the reader a
necessary information must be given and general idea on the subject of the essay.
explained.
f. Reference Page: List of any references used
iii. Last Part: The letter must summarize the must also be included at the end of the essay.
content of the letter and action points must
be clearly stated. General Techniques of Writing a Business Essay
e. Valediction and Signature: The letter must be 1. Build a structure

concluded by thanking the reader for their time 2. Have subject based relevant content
and end with signature greetings. ‘Regards’ or 3. Give an essay title
‘Thanks’ may be used. 4. Avoid one-sided essay and include evaluations
or arguments
f. Proofreading: The letter must be proofread and
5. Demonstrate subject knowledge in the essay
necessary checks must be done. The letter must
6. Analyze and evaluate the chosen subject of the
be checked for incorrect spellings or
essay
grammatical mistakes. Make sure if necessary
information is passed correctly. Check if the letter 7. Conclude
maintains a simple and clear tone.
3. Minutes of Meeting (MoM)
2. Essays Minutes are instant written record of happenings
Business Essay: A business essay shows the of a meeting. MoM describes the events of a
author’s point of view on any specific business meeting, starting with a list of attendees, a
strategies. The primary keys in writing a business statement of the issues considered by the
essay are to analyse, interpret and construct business participants and related responses or decisions
viewpoints. for the issues.
Writing Minutes of a Meeting

Format of a Business Essay
1. Before Meeting: Use pen and paper or a laptop
a. Title: The business essay should have an
or computer to take down the MoMs. To make the
appropriate heading that depicts the content’s
writing process of MoMs easy, prepare an outline
purpose in a concise manner.
based on the meeting agenda. This must be done
b. Outline: The essay should have a well-defined before the meeting to have a clear understanding of
structure so that the content can be sub-divided the points to be written during the meeting.
easily for better understanding of the reader.
2. During Meeting: List of attendees and time can For example:

be easily noted by passing an attendance sheet. Make
a list of issues addressed and their respective ■ Incorrect: Rachel is very smart, she began
resolutions. A list with action points must be prepared. reading when she was three years old.
Only the main points must be briefly noted, not the ■ Correct: Rachel is very smart. She began
entire process of meeting. reading when she was three years old.
■ Correct: Rachel is very smart; she began reading
3. After Meeting: Once all the points are in place,
when she was three years old.
type it quickly after the meeting. The name of the
organisation, type and purpose of the meeting must ■ Correct: Rachel is very smart, and she began
be mentioned. Before sharing the MoMs, proofread reading when she was three years old.
the draft. ■ Correct: Because Rachel is very smart, she
began reading when she was three years old.
Format of Minutes of Meeting:
Error #2: Pronoun Errors
Pronoun errors occur when pronouns do not agree in
number with the nouns to which they refer. If the noun
is singular, the pronoun must be singular. If the noun
is plural, however, the pronoun must be plural as well.
For example:
■ Incorrect: Everybody must bring their own lunch.

■ Correct: Everybody must bring his or her own
lunch.
Common Errors in English
Error #3: Mistakes in Apostrophe Usage
Error #1: Run-on Sentence or Comma Splice
Apostrophes are used to show possession. However,
A run-on sentence is a sentence that joins two
you do not use an apostrophe after a possessive
independent clauses without punctuation or the
pronoun such as my, mine, our, ours, his, hers, its,
appropriate conjunction. A comma splice is similar to
their, or theirs (it’s is a contraction for ‘it is’). For
a run-on sentence, but it uses a comma to join two
example:
clauses that have no appropriate conjunction.
■ Incorrect: My cat finishes it’s food fast.
Fixing this error can be accomplished in one of the
■ Correct: My cat finishes its food fast.
following five different ways:
Apostrophes are also used in contractions. A
■ Separate the clauses into two sentences.
contraction is a word (or set of numbers) in which
■ Replace the comma with a semi-colon.
one or more letters (or numbers) have been omitted.
■ Replace the comma with a coordinating The apostrophe shows this omission. Contractions
conjunction—and, but, for, yet, nor, so. are common in speaking and in informal writing. To
■ Replace the comma with a subordinating use an apostrophe to create a contraction, place an
conjunction—after, although, before, unless, as, apostrophe where the omitted letter(s) would go.
because, even though, if, since, until, when,
while. ■ Incorrect: Its a cold day in October.
■ Replace the comma with a semi-colon and ■ Correct: It’s a cold day in October.
transitional word—however, moreover, on the
other hand, nevertheless, instead, also, Error #4: Lack of Subject/Verb Agreement
therefore, consequently, otherwise, as a result. When speaking or writing in the present tense, a
sentence must have subjects and verbs that agree in
number. If the subject is singular, the verb must be Error #7: Article Errors
singular. If the subject is plural, the verb must be plural A and An are the indefinite articles. They refer to
as well. Similarly the form should be same too. For something not specifically known to the person you
example: are communicating with. A and An are used before
nouns that introduce something or someone you have
■ Incorrect: The recipes is good for beginning not mentioned before.
chefs.
■ Correct: The recipes are good for beginning Example:
chefs.
■ I saw an elephant this morning.
■ Incorrect: At the end of session, participants
■ I ate a banana for lunch.
should learn communicating effectively.
■ Correct: At the end of session, participants ‘The’ is used when the listener knows or can work
should learn to communicate effectively. out what particular person/thing is being talked about.
■ Incorrect: I look forward to seeing you next week.
■ Correct: Looking forward to seeing you next Example:
week (or I look forward to see you…) ■ The apple you ate was rotten.
■ Did you lock the car?
Error #5: Misplaced Modifiers
To communicate your ideas clearly, you must place a ‘The’ should be used when the thing being talked
modifier directly next to the word it is supposed to about has already been mentioned.
modify. The modifier should clearly refer to a specific
word in the sentence. For example: Example: She’s got two children; a girl and a boy.
The girl’s eight and the boy’s fourteen.
■ Incorrect: At eight years old, my father gave me
a pony for Christmas. Articles are not used while talking about sports or
■ Correct: When I was eight years old, my father uncountable nouns
gave me a pony for Christmas.
Example:
Error #6: Me, Myself and I ■ My son plays football

One of the most common causes of grammatical pain ■ Tennis is expensive
is the choice between “me” and “I.” Too often people
■ Coffee is bad for you.
use “I” when they should use “me,” because since “I”
sounds stilted and proper, it must be right, right? Nope. Articles are not used before the names of countries
except where they indicate multiple areas or contain
The easy way to get this one right is to simply remove
the words (state(s), kingdom, republic, union).
the other person from the sentence and then do what
Kingdom, state, republic and union are nouns, so they
sounds correct. You would never say “Give I a call,”
so you also wouldn’t say “Give Chris and I a call.” need an article.
Don’t be afraid of me.
Examples:
And whatever you do, don’t punt and say “myself”
■ No article - Italy, Mexico, Bolivia, England
because you’re not sure whether “me” or “I” is the
correct choice. “Myself” is only proper in two contexts, ■ Use the - the UK (United Kingdom), the USA
both of which are demonstrated below. (United States of America) , the Irish Republic
■ Multiple areas - the Netherlands, the Philippines,
■ Correct: Many consider Chris a punk, but I myself the British Isles
tolerate him. Which brings me to ask myself, ■ Incorrect: the Germany, United Kingdom
why?
■ Correct: Germany, the United Kingdom
Error #8: Informal/ Redundant words 3. Use commas to separate three or more words,
■ Incorrect: The company owns approximately 53 phrases, or clauses written in a series
production facilities in 26 countries and employs
■ The Constitution establishes the legislative,
approximately 320,800 people worldwide.
executive, and judicial branches of government.
■ Correct: The company owns 53 production
■ The candidate promised to lower taxes, protect
facilities in 26 countries and employs
the environment, reduce crime, and end
approximately 320,800 people worldwide.
unemployment.
■ Incorrect: The downturn also curtailed the
■ The prosecutor argued that the defendant, who
production capacity of many printing firms.
was at the scene of the crime, who had a strong
■ Correct: The downturn curtailed the production revenge motive, and who had access to the
capacity of many printing firms. murder weapon, was guilty of homicide.
Error #8: Comma Errors Examples

1. Commas are used to separate independent
clauses (a part of sentence that has a subject and a ■ Incorrect: Established in 1967, Toyota Plc is,
verb) when they are joined by any of these seven Toyota’s retail subsidiary in the UK.
coordinating conjunctions: and, but, for, or, nor, so, ■ Correct: Established in 1967, Toyota Plc is
yet. Toyota’s retail subsidiary in the UK.
■ Incorrect: Net worth decreased by 15.2% due
■ The game was over, but the crowd refused to to an increase in other losses.
leave.
■ Correct: Net worth decreased by 15.2%, due to
■ The student explained her question, yet the an increase in other losses.
instructor still didn’t seem to understand.
■ Incorrect: MAP enables the company to manage
variable costs (including sales and marketing
2. Commas are used after introductory a) clauses,
costs; food and unit costs; and overheads).
b) phrases
■ Correct: MAP enables the company to manage
a. Common starter words for introductory clauses variable costs (including sales and marketing
that should be followed by a comma include after, costs, food and unit costs, and overheads).
although, as, because, if, since, when, while. ■ Incorrect: During 06-09, the company’s revenue
grew at 7.6% while the end market grew at 5.6%.
■ While I was eating, the cat scratched at the door.
■ Correct: During 06-09, the company’s revenue
■ Because her alarm clock was broken, she was grew at 7.6%, while the end market grew at
late for class. 5.6%.
■ Incorrect: There were a lot of people in the room,
However, don’t put a comma after the main clause
teachers, students and parents.
when a dependent clause follows it (except for cases
■ Correct: There were a lot of people in the room:
of extreme contrast).
teachers, students and parents.
■ Incorrect: She was late for class, because her
alarm clock was broken. Error #9: Which versus That
■ Incorrect: The cat scratched at the door, while “That” is used to introduce a “restrictive clause.”
I was eating.
A restrictive phrase, as its name suggests, restricts
■ Correct: She was still quite upset, although she
the meaning of the person or thing that came before
had won the Oscar. (This comma use is correct
it—in other words, it specifically identifies who or what
because it is an example of extreme contrast)
you’re talking about.
“I’d like an avocado that is not too ripe.” The restrictive incorrect for two reasons. First, many cats do scratch
clause here, “that is not too ripe,” is essential to the rowdy children; the clause “which don’t scratch rowdy
sentence’s meaning. If you remove it, the meaning children” suggests otherwise. Second, the meaning
changes and loses specificity. of the sentence changes if you take out the clause: “I
love cats” implies that the speaker likes all cats, when
“Which” is used to introduce a “non restrictive clause” the truth is that she likes only those cats that do not
scratch children. A vital meaning of the sentence is at
A non restrictive clause describes the person or thing
stake here, and it’s imperative to use that/which
you’re discussing, but it is not essential to the meaning
properly.
of your sentence. You should be able to remove the
“which” clause without altering the meaning.
Error #10: Use of Ellipses
For example: “I like avocados, which have a buttery, Ellipses consist of three spaced periods, or full stops,
nutty taste.” If you take out the “which” clause, the and are used to show omission of a word or words
meaning of this sentence remains the same—the from a text or a quotation.
speaker still likes avocados just as much as she did
Put spaces before and between each full stop and
before.
after the last. When condensing text, put other
Use of punctuation before that and which: required punctuation before or after the ellipsis.
Hence, four periods end a sentence.
A comma is not used before “that” whereas a comma
is used before “which” ■ The decision . . . rests solely with the task force
. . . However, others can provide their input.
■ Correct: The dog that I loved the most was a ■ What is the answer? . . . We must work harder
poodle. to produce more . . . and move further ahead.
■ Correct: “Our poodle, which lived to be 16, was
the best pet I’ve ever had.” Or, “Our poodle lived
for 16 years, which is a long time for a small Key Points
dog.” Essential features of effective Business
Communication are:
Consider the two sentences:
■ Excelling in Business Communication skills adds
■ Correct: “I love cats that don’t scratch rowdy
advantage to businesses, its employees and
children.”
partnerships
■ Incorrect: “I love cats, which don’t scratch rowdy
■ Writing skills is one of the important
children.”
communication skill. It is primarily used in
Why? Because “that don’t scratch rowdy children” business areas like business letters, emails,
identifies the kind of cats he loves. You can’t remove essays and meeting minutes
the clause from the sentence and retain the ■ Any written letter, email or article has a proper
sentence’s meaning. The second sentence is structure, clear and concise content and a formal
language and tone is maintained
Further Reading
1. Essentials of Business Communication by Mary Ellen Guffey
2. Successful writing at work by Philip C. Kolin
3. Harvard Business Essentials – Business Communication
4. Empower Your Writing : A Manifesto by Farnoosh Brock
ARTICULATION SKILLS 97
DEFINITION 2. Eliminate verbal pauses

People often have the habit of using words such as
■ It is the ability to speak clearly and distinctly and um, a, like, etc. repeatedly in their speech. However
pronounce with clarity in a verbal this practice degrades the quality of speech and often
communication. detracts the audience. These verbal pauses hinder
the sentence flow and the meaning of the words is
Public speaking articulation is the art of expressing broken and lost. In case, the speaker needs a pause,
speech in a clear and orderly manner so that your a nonverbal pause is better option. Correctly placed
point gets across effectively. Excelling articulation nonverbal pause, gives the listener time to catch up
skill is essential for a public speaker or presenter for with the speaker’s pace and gives an impression of a
better understanding and creating right impact on thoughtful pause. It also helps the speaker maintain
audience. Articulation comes from pronunciation a control over the speech.
feature of speech that combines the articulatory
organs to shape the sounds of words in presentation
3. Use Voice Modulation
better. Listed below are some benefits of gaining
Voice Modulation is using pace, pitch, pausing,
better articulate skills and gain control over verbal
volume, and emphasis, which gives the voice/speech
communication.
mood and meaning. Keeping an even pitch throughout
the sentence will make the speech sound dull and
Importance of Articulation Skills boring. To maintain a dramatic interest of the audience
in speech, frequency of speaking tone is modulated
Articulation skills help an individual in not only a
to emphasize on certain parts or words of sentences.
professional set up but also other areas:
Example: Now you understand how important it is to
■ Improves verbal communication skills
work hard, so you can support your family.
■ Better understanding
■ Improves presentation skills In the above sentence, the marked words are the low-
■ Ability to convey the thoughts convincingly pitched words. These words give the key message
of the sentence.
How to Articulate? I was just wondering...if you would like...maybe to go

to Delhi tomorrow.
1. Know the Subject
A right choice must be made while selecting a topic In the above sentence, the marked words are the high-
or subject. Only a subject of which an individual has pitched words. These words and pitch add interest to
either thorough knowledge or expertise must be the sentence.
chosen to speak. This brings confidence in the
speaker and thus helps in attempts of speech Following techniques are used to create right
articulation. A clear thought must be given to judge modulation in a speech:
the points that are added by one’s speech. The
content or subject matter must be researched well a. Control the speech pace.
before speaking. Prepare a mental outline of the b. Use a comfortable pitch of voice.
structure of speech. c. Give regular pauses.
d. Speak with power.
a. Choose the right subject
b. Research 4. Think before you speak
c. Prepare This helps to eliminate the verbal pauses and may
prevent you from saying something that does not
98 ARTICUALTION SKILLS
make sense. A mental picture of structure of speech b. Make right choice of real words.
such as what comes next? Should this be the end?
Is this already spoken? helps in figuring out the basic 7. Command over Grammar
sentence arrangement. It is essential that the speaker Some of the basic words like I, me, him, his, he, no,
has a clear perspective of the speech. A very good not are sometimes used incorrectly. These words
idea to think while speaking is use of non-verbal must be used to correctly. Mistakes are caused on
pauses, which has more than one advantages. usage of these words especially when addressing
Following are the key points to remember to stay clear people or stating first hand or second hand
of the words: experiences.
a. Structure the speech. Example: When reiterating a fact you already stated,
b. State clear purpose. always say “as I said”, never, “like I said”.
c. Build the words accurately.
8. Be concise
5. Enhance vocabulary It is very important to stay clear of words and purpose
Sentences can be made more interesting by using of the speech to engage audience. Condensed
variety of words. This also adds colour to the content should be added and the content should be
sentences and thus entire speech. However, properly organized. Vague content should be avoided.
expanding vocabulary is not a day’s task, it requires Speaking to the point and addressing the purpose
lot of reading aids to add new words and remember helps in keeping the audience tuned. Stating the point
them. up front will help the audience to be interested in the
further elaborations. Being concise in a speech is an
Using dictionary for new and unknown words is the essential skill and requires following the below
most traditional and effective method. Writing down mentioned points:
the new learnt words helps one to memorize it and
use effectively on need. To sum up, there are two a. Frame organized thoughts.
ways of adding new words in the sentences and b. Speak to the point.
increasing its quality: c. Avoid adding vague content.
a. Expand vocabulary. Techniques for better articulation

b. Use variety of words.
■ Radio repeat
6. Use real words ■ Reading out loud
Slang or colloquial language should be completely ■ Using tongue twisters
avoided. It is a common practice to use the day-today
used regular words in public speaking forum.
Key Points
Example: Using hi instead of hello or using yeah, ■ Articulation skill is the ability of delivering clear
instead of yes is a wrong practice. and distinct speech and pronouncing certain
words strongly to create an effective impression
Real words must be used in speeches. Example:
■ Excelling articulation skill empowers one’s verbal
Never use huh, huh-ah, aa. So, to make an
communication which helps in better
appropriate speech, two points must be remembered:
understanding and putting across strong and
a. Avoid use of slang. clear viewpoints
Further Reading
1. The Articulate Executive in Action: How the Best Leaders Get Things Done by Granville N. Toogood
2. How to develop self confidence by Dale Carnegie
READING AND COMPREHENSION SKILLS
DEFINITION Example: A work can be scanned through with its

various headings and sub-headings to get its general
■ Reading and Comprehension skills are based idea. A text material has following headings:
on earlier stages of reading development,
including oral reading and reading speed/ Title - ‘Working of an engine’, Sub-headings - ‘History
fluency. of engines’, ‘Types of engine’, ‘Advantages of Petrol
engine over Diesel engine’, a quick look at these easily
gives an idea of the main concept of the material.
Importance of Reading Skills
Better reading skills provide greater understanding, 2. Predict
analyzing and learning of what is read. Reading skill Prior knowledge of a subject helps in predicting the
is the most basic and essential skill set, excelling content structure and main idea conveyed in the
which empowers an individual. There are several material. Predictions can be based on clues appearing
benefits of developing reading skills. in a text like pictures, images, illustrations, etc. Prior
knowledge is combined with these clues and the
■ Develops ability to comprehend concepts meaning is constructed.
and ideas
Example: A text has a picture of Eiffel Tower, then the
■ Develops critical thinking: The information can
reader quickly predicts that the plot could be based
be critically analyzed for its quality.
on Paris and its characters French or visiting tourists.
■ Improves communication skills: Better
reading skills leads to better understanding of 3. Quick Scan
subjects and topics. This leads to better writing, A quick scan of the text before the actual reading can
speaking and presentation skills. give the general idea of the text, and confirm the
■ Broadens interests and opportunities: Better earlier made predictions.
reading skills gives exposure to many sources
of information. This helps in identifying interests Scanning is often used before reading to:
and gives opportunity to pursue it.
■ evaluate the purpose of text;
■ Helps in mental development ■ determine the difficulty of text material;
■ Develops vocabulary and Language skills ■ review its structure;
■ Enhances knowledge ■ activate prior knowledge associated with text;
■ filter the most relevant parts of the text.
Strategies for Developing
4. Guess
Reading Skills Context clues can be used to determine the meaning
Several strategies are adopted to develop reading of difficult, new or unknown meaning. Often meaning
skills. These strategies help in quick and effective of unknown words or text is guessed from the words
reading of text content. accompanying it.
1. Preview Example: “After seeing the picture of the starving

children, we all felt compassion or pity for their
Title, headings, section-wise captions can be reviewed
suffering.”
to get a general idea of the content and structure of a
reading material. This helps in getting a first overview The meaning of word compassion can be guessed
of the reading material, which leads to faster grasping by other word appearing ‘pity’.
of the content.
100 READING AND COMPREHENSION SKILLS
5. Paraphrase 1. Quit subvocalizing

At each section end, rephrasing the read text in Reading words aloud in mind is called subvocalizing.
simpler way enables better understanding of the It is a general and natural habit to read aloud in mind.
reading material. Difficult sections of text can be But it is evident that subvocalizing slows down the
rephrased to bring better understanding. reading speed.
To break this habit, humming or counting “1, 2, 3, 4”

Building Vocabulary for Better
while reading can be tried. Practicing these techniques
Reading Skills can greatly reduce sub vocalizing.
1. Include more reading activities
The best way to expand vocabulary is to read more. 2. Read in blocks
Many reading activities can be included to learn new Reading text word-by-word is the most traditional way
words. Apart from reading books, newspapers or reading a text. However, this method is known to
informative magazines can also be read to introduce reduce reading speed. To read quickly, words can be
one to new words. grouped at a glance and the meaning of the sentence
can be interpreted. Practice viewing the words in
2. Use dictionary for new or unknown words blocks and not letter-by-letter or word-by-word.
Use of dictionary on encounter of difficult or new words
is recommended for anyone trying to expand his/her 3. Use fingers to point to text while reading
vocabulary. This is the oldest and most popular way Scanning though text using fingers helps in focusing
of learning new words. and maintaining consistent eye motion. Constant eye
motion helps in increasing the speed of reading.
3. Make a note of difficult or unknown words
Writing new learnt words with their meaning helps in
retaining it for a long time. Comprehension Reading
Comprehension Reading is defined as the act of
4. Use context clues to determine word’s understanding a text. It is the ability to understand
meaning
the meaning of a written passage of text. The
Sometimes correct meaning of an unknown word is
understanding comes from the interaction between
identified using other words in the sentence.
the words and associated information outside the text.
Example: The long travel left me exhausted and tired Comprehension reading requires combination of
and I just wanted to rest now. effective reading skills such as focus, memory,
processing speed, and visualization. However, there
The meaning of word exhausted can be guessed by are seven strategies that can be used to develop one’s
using the other words like ‘tired’, and using one’s prior comprehension reading skills.
knowledge of state like ‘wanted to rest now’. So the
roughly the word ‘exhausted’ would mean ‘out of
energy’.
Seven Strategies of
Comprehension Reading
Speed Reading for Better 1. Make Connections
Reading Skills Prior knowledge or experiences can be used to relate
a text to self or other events/facts. Earlier read books
Speed reading includes reading methods that or a piece of information is also helpful in constructing
increases rate of reading and grasping of the text meaning of a text. Good readers make connection
content. Following reading methods helps in with the read text to self –knowledge for better
developing reading skills: understanding. While reading, the readers are
READING AND COMPREHENSION SKILLS 101
reminded of similar things that they have read some supporting information. The text should be read
previously. keeping in mind the idea to identify the important
information. The relevance of information should be
Example: If one comes across reading about a village determined while reading the text.
set up, his/her prior knowledge will work to create
interpretations about lifestyle of a village, and people 5. Visualize
of village. Building mental pictures of various components of
text like characters, plot, events and actions helps in
2. Generate Questions quick understanding. The practice of creating mental
Questioning the text before, during and after reading images while reading helps in constructing meaning
helps to maintain a consistent focus. And various of text.
components of the text are addressed with help of
these basic questions. A question-answer relationship 6. Restore an Understanding
helps in grasping the text quickly. Self-questioning Paraphrasing the difficult portions of a text gives a
helps readers to seek answers while reading. better understanding. The meaning of the text must
be monitored across sections and adjust it accordingly
Example: The Taj Mahal known as “crown of palaces”,
when there is a breakdown.
is a white marble mausoleum located in Agra, India.
It was built in 1632-1653, by Mughal emperor Shah
7. Synthesize Information
Jahan in memory of his third wife, Mumtaz Mahal.
Synthesizing is to gather new information and
While reading this passage, the readers must combine it with read text to create new insights/ideas.
question like: New concepts are often generated on reviewing the
information.
What is Taj mahal?
Where is it located?
Key Points
When was it buit?
Essential features of developing reading skills are:
Who built it?
■ Reading skill is most essential skill in any
3. Draw Inference personal/professional setup
Prior subject/topic knowledge and clues from text ■ Adoption of several techniques to develop
helps in predicting conclusions and creating new reading skills can improve one’s overall skill set
interpretations of the text.
■ Excelling reading skills can act as building block
of several other primary skills like writing skills,
4. Determine Importance communication skills and presentation skills
A text always contains important key information and
Further Reading
1. Improve your Reading by Ron Fry
BOOK REVIEW
DEFINITION Structure of Book Review

■ A book review is a form of literary criticism in 1. Title and Introduction
which a book is analyzed based on content, style The title, name of the book, author and date must be
and merit. mentioned at the starting of the review. The review
must be given a suitable topic/heading. The
introduction must have a line or two stating the topic.
Critical Review The introduction must contain brief background and
A critical review is to critically analyze and evaluate importance of the work. The introduction must give a
the quality, style and merit of text content. general impression of the work (book).
It is the evaluation of a text material (book, article, Example: Title: Jack Welch, 2001, ‘Jack: Straight from
the gut’
report, or essay). The reviewer has to present an
opinion – negative or positive about the text. The
Introduction: Jack Welch’s memoir, JACK: Straight
reviewer has to decide on the strengths and weakness from the Gut, is part autobiography and part business
of the work. Review writing requires one to follow a theory text. Welch covers his fast trip from General
basic structure and guidelines. Electric employee to General Electric CEO.
2. Body
Writing a Critical Review
The body is the actual content of the review. The body
Certain steps are to be followed to write a good book must present a detailed description and critical
review: arguments about the work. The content body of a
review is sub-divided into two major parts:
■ Understand the material: Right selection of the
subject or topic is important. An attempt to a. Summary or Description: The summary
critically review the material should be made contains a brief description of key points of the
only with thorough knowledge of the subject work. Only the outline of the work must be stated
(book). here not a recount of entire work. Summarizing
in a review is to briefly introduce the highlights
■ Know how to analyze: The author must have of a piece of work.
a clear understanding of evidences and
reasoning used in the work. The author should Example: (Sample Review of Book: Jack:
be well-versed in subject to support his/her Straight from the Gut)
arguments strongly.
Summary: The book is filled to bursting with
■ Evaluate: The scales of evaluation of the work anecdotes about the men and women who work
at GE. Spreading the credit liberally, Welch tells
must be well-defined. Evaluation of a work is
stories of top–flight executives and union
done based on criteria like relevance of the
production workers with equal gusto, relishing
content, its purpose, intended audience and its
the successes at every level of the vast company
structure.
and its many divisions.
■ Follow a structure: The book review must
b. Evaluation or Arguments: This section
always have a proper outline followed by a
includes the detailed evaluation of the work from
defined structure. The pieces of the review must the reviewer’s perspective. All the arguments and
be placed in a recommended structure.
BOOK REVIEW 103
counter facts should be stated here. Example, Example: (Sample Review of Book: Jack: Straight
this section can have critical analysis like: Is the from the Gut)
work well-written and organized? How is the
subject important and do facts cater to the actual References: Rob Cline review - ‘Jack: Straight from
meaning of work? the Gut’, 2011
Bradley A. Swope Review, State
However, all the arguments must be presented with College, PA USA, 2001
supporting points from the work. The reviewer often
attempts to compare and contrast the primary source
of work. Evidences from the work must be stated to Key Questions to write a review
support reviewer’s position in the arguments. Answering some basic questions can bring out
opinions easily for a reviewer. These questions
Example: (Sample Review of Book: Jack: Straight
complete the various criteria based on which a work
from the Gut)
(book/ article) is evaluated.
Evaluation: This engaging storytelling keeps the book
■ What are author’s main points?
afloat during extended passages detailing the terms
■ What evidence does the author use?
of leveraged buyouts, contract negotiations, or how
GE increased its margins in this or that industry. ■ Is the text relevant to the topic?
However, it is not necessarily a general interest ■ What is the quality of evidence used by author?
business book. ■ What are strengths and weaknesses of text?
■ Is the aim of text clearly mentioned?
3. Conclusion ■ What are author ’s major findings and
Conclusion of a review is a short paragraph restating conclusions?
overall view of the text. This section can also include ■ Is the objective of text obtained?
any recommendations by the reviewer.
Example: (Sample Review of Book: Jack: Straight Key Points

from the Gut)
Necessary points to remember while writing a review
Conclusion: If one word could sum up Jack Welch’s are:
career at GE it might be “results”. Those readers
■ A good book review must critically present
expecting a lot of new business theory or to learn
judgements
how to repeat Jack’s performance by reading about
his secret methodology may be disappointed. ■ The review must not necessarily be negative but
it must state fair and analytical opinions
4. References
The end of review can include the sources or
references used by the reviewer.
Further Reading
1. Book Reviewing by Sylvia E. Kamerman
2. Writing Book Review by John Drewry
PREPARATION OF PROJECT REPORT
DEFINITION Following types of financing are available in market

for projects.
■ A project report is a formal, approved document
used to guide both project execution and project ■ Trade Finance
control. ■ Channel Finance (Creditor’s funding)
■ Factoring (Debtor’s Funding)
The primary uses of a project plan is to document
■ Export Finance
planning assumptions and decisions, facilitate
communication among stakeholders, and document ■ Working Capital Finance
approved scope, cost, and schedule baselines. A
Following is the checklist which must be referred to
project plan may be summarized or detailed.
while making and finalizing the project report.
Some important points that should be kept in mind
■ Clear and complete understanding of project
before preparing a project report are as follows.
■ Reliable sources of information
■ What is Project Report? ■ Precise but presentable data
■ Command over numbers
■ How to prepare a Project Report? ■ Credible client and credible investor
■ Confidentiality
■ What are all points to be covered in the Project
Report? Role of Chartered Accountants in project report
preparation.
■ Whether any consultant or auditor has to be
contracted to prepare the Project Report? ■ A Chartered Accountant is valuable coordinator
between entrepreneur and bank, in case of
■ How to present the report before prospective syndication of funds.
fund-providers and convince them about the
■ Chartered Accountants possess sound
proposed project for which financial assistance
knowledge about preparation of financials.
is required?
■ Bank needs actual, provisional and projected
Following are the steps involved in preparation of a financials and also the basic ratios to decide
Project report. about funding, the same can be easily prepared
with the help of a Chartered Accountant.
1. Study of background and business description. ■ Chartered Accountants may also help with
compliances under various laws of the land
2. Market Analysis. required for the project.
■ By virtue of their experience Chartered
3. Understanding the project i.e. vision, value being Accountant can easily convince to banker about
added, competition etc. feasibility of project as well as communicate the
correct funding requirements, whether it is Term
4. Study of sorting of project implementation
Loan (TL) , Cash Credit (CC), Bank Guarantee
activites.
(BG), letter of Credit (LC) or any other facility.
5. Project Financials.
Key Points
■ Project Costs
■ A good project report must give clear and
■ Project revenues. complete understanding of the project
■ Project Funding. ■ Confidentiality must be maintained while creating
■ Important Numbers and ratios. a project report
DATA ANALYSIS AND RESEARCH METHODOLOGY
DEFINITION Meaning of Research

■ Data Analysis is a practice in which raw data is Research in common parlance refers to a search for
ordered and organized so that useful information knowledge. One can also define research as a
can be extracted from it. scientific and systematic search for pertinent
information on a specific topic. In fact, research is an
■ Research refers to search for knowledge. art of scientific investigation. The Advanced Learner’s
Dictionary of Current English lays down the meaning
of research as “a careful investigation or inquiry
Benefits of Data Analysis specially through search for new facts in any branch
Data analysis can offer the following benefits: of knowledge.” Research is, thus, an original
contribution to the existing stock of knowledge making
■ Structuring the findings from survey research or for its advancement. It is the pursuit of truth with the
other means of data collection. help of study, observation, comparison and
experiment.
■ Break a macro picture into a micro one.
Research has following characteristics
■ Acquiring meaningful insights from the dataset.
■ Controlled
■ Basing critical decisions from the findings.
■ Rigorous
■ Ruling out human bias through proper statistical ■ Systematic
treatment. ■ Valid and verifiable
The process of Data Analysis can broadly be divided ■ Empirical

in two major categories which have further sub-
Following are the objectives of Research.
divisions in various steps.
1. To gain familiarity with a phenomenon or to
Initial Data Analysis achieve new insights into it (studies with this
object in view are termed as exploratory or
1. Quality of data formulative research studies)
2. Quality of measurements
2. To portray accurately the characteristics of a
3. Initial transformations
particular individual, situation or a group (studies
4. Did the implementation of the study fulfill the with this object in view are known as descriptive
intentions of the research design? research studies)
5. Characteristics of data sample
3. To determine the frequency with which
6. Final stage of the initial data analysis
something occurs or with which it is associated
7. Analyses with something else (studies with this object in
view are known as diagnostic research studies)
Main Data Analysis 4. To test a hypothesis of a causal relationship
1. Exploratory and confirmatory approaches between variables (such studies are known as
2. Stability of results hypothesis-testing research studies).
3. Statistical methods
106 DATA ANALYSIS AND RESEARCH METHODOLOGY
Steps in Research Process 7. Generalization and Interpretation

Following are the steps which may be listed in the 8. Preparation of the Report or Presentation of
process of research. (Research Methodology) Results-Formal write-ups of conclusions
reached.
1. Formulating the Research Problem
2. Extensive Literature Review
Key Points
3. Developing the objectives
■ Complete data must be analyzed to extract
4. Preparing the Research Design including useful information
Sample Design
■ Research is basically data analysis in a specific
5. Collecting the Data direction
6. Analysis of Data
POWERPOINT PRESENTATIONS
INTRODUCTION call using a web tool? You need to know this

because the location and way of delivery will
Presentation is a way of communicating ideas and dictate the tools that are available to you and
information to a group. Certain basic skills and the format of your delivery.
comprehensive information helps in developing
effective presentations. ■ When do you present? Are you presenting at a
conference? Will you be the first speaker or the
Presentations are an important part of corporate life. last? Who is resenting before you and which
A more work becomes teamwork, what you know is content? If you know this in advance you might
often less important than how well you communicate be able to relate to previous speeches. How are
it. you going to wake your audience up if you are
on right after lunch or at the end of the day? The
The best presentations may seem effortless, but
best speaking slots are the first and, believe it
they’re the results of well-designed techniques and
or not, the last. People retain best what is said
lots of practice.
first and last. This is valid for a whole day of
To make a great presentation on any topic, following presentations but also for each individual
elements are required: Content, Design and speech.
Delivery.
■ What do you present? Based on your audience
Content include research and organization of and your subject what exactly will form your
materials. Design is the architecture of the slides and content? If you know your audience and subject
delivery is how you voice your message. you might be able to form a effective content.
Content Using PowerPoint to DESIGN

When you plan your presentation, be sure to answer
your presentation
these five important questions: PowerPoint is an excellent resource for presenters.
If used well, it can help to organize and communicate
■ Why do you do the presentation and why does complex information, clearly and concisely.
your audience attend? This is the question that
investigates the motivation of all parties involved
and is the most important one to get things right. PowerPoint as a tool
The answers here will help deciding on the
PowerPoint is designed specifically for use during live
messages and content of your presentation.
presentations. Therefore, the design considerations
are fundamentally different to those for print or web.
■ Who is your audience? The answer here will
Colours, font size, and layout should be quite different
guide you to pick the right level of content. E.g.,
for a live presentation.
if your audience is a bunch of R&D engineers
you can have a more detailed and technical level
of content whereas if you are speaking to senior PowerPoint Structure
executives your content needs to be more high-
level and the focus needs to be on impact on 1. Outline
company strategy. 2. Slide Structure
3. Typefaces (Fonts), Colours, Background
■ Where will you present? Are you going to present
4. Bullet and Numbers
face-to-face in a boardroom or in a conference
5. Graphs
room? Maybe you are presenting in a conference
6. Proofreading
108 POWERPOINT PRESENTATION
1. Outline 3. Typefaces (Fonts), Colours and Background

Presentations are great tools for sharing information. There are at least 100 different fonts on your
The best way to make sure your presentation gets computer. Use just one or two fonts throughout your
the points across you want, and to verify you will presentation. Follow these guidelines:
properly cover all the topics is to create a presentation
outline first. Remember- the layout of the slides should Fonts
be simple and uncluttered. ■ Use large, bold type for titles and headings, plain
text for the body of your slides. Colour or making
Steps to create an outline: the text bold can be used for highlighting a point,
■ Assign a presentation topic and title to your but use restraint.
outline ■ Don’t go for funky fonts that look like very artistic
■ Determine the key point you want to cover in or hand writing. They are too hard to read on a
your presentation slide.
■ Use standard fonts, such as Arial, Calibri or
■ Include high level list of detail
Helvetica (Sans Serif) or Times New Roman
■ Plan for demonstration (Serif). As a rule, the Sans-Serif fonts are easier
■ Provide a conclusion to read.
■ Don’t make all text bold.
2. Slide Structure ■ Don’t make your text all upper case, as too much
of it is too hard to read.
■ Compose slide in thoughtful way
■ Use 1-2 slides per minute of your presentation
Colours
■ Write in point form, not complete sentences ■ Use a color of font that contrasts sharply with
■ Include 5-6 points per slide the background - black font on white background
■ Avoid wordiness: use key words and phrases or deep blue or green background colour, with
only white, yellow, orange and cyan text and lines.
Don’t use blue letters on a black background or
■ Keep the slide layout consistent throughout the
black letters on blue as our eyes are not very
presentation
sensitive to blue and there is not enough contrast
between these colours to make these
How to use Slide Master combinations easy to read.
Master slide allows you to make changes that are ■ Use color to reinforce the logic of your
reflected in every slide in your Presentation. You can structuregreen title and black text
change the font, color, background, header, footer at ■ Use color to emphasize a point. But only use
the master slide level. this occasionally
■ Don’t be tempted to create RAINBOW EFFECT.
■ With a presentation open, go to View -> Slide Just because you can use 27 different colour
Master. You will now see the slide master. combinations on a single slide doesn’t mean you
■ Any settings you make now, such as font, font have to.
size, font colour, bullet colour, text placeholder ■ If you are not sure a good starting point is to
position etc. will apply to all new slides. have a look at the templates supplied with
PowerPoint, as most of the colour schemes work
Your settings will apply to all slide layouts except the well when projected.
title slide layout, which has its own master, and called
the Title Master. Once you are happy with the way Background
you have defined your masters, you should save your ■ In a darkened room, darker backgrounds with
presentation as a template for future use. lighter text tend to be easier to read than light
backgrounds with dark or black text.
Note: To get back to a normal slide after defining your
master, go to View -> Normal. ■ Avoid using a graduation of two colours for a
POWERPOINT PRESENTATION 109
background. of a presentation by developing a great content and

■ Keep the same background throughout the design, you’ll be guaranteed to wow your audience.
presentation. But, it’s wrong! The impact of a typical presentation
is 55% visual, 38% vocal and only 7% verbal. In other
■ Stick to plain background. Simple, light textured words, you don’t deliver presentations, you perform
backgrounds works well. Complicated texture them.
makes the content hard to read.
■ Avoid unnecessary images or clip art in the The most important attribute of a good performance
background. is avoiding the pitfalls of a bad performance. You
need to work on following when delivering your
4. Bullets and Numbers presentation – Voice, Language, Movement, and
Body Language
■ Use Bullets for list without sequence, priority or
hierarchy. Voice - Try to sound natural, speak loudly and avoid
■ Use Numbers for list with sequence. speaking in monotone. Put more feeling in your voice.
5. Graphs and Charts Language - Use short sentences. Use short, simple
words. Convey confidence and show interest when
■ Graphs and charts are great way to present a
you are presenting.
great deal of information to your audience. The
use of graphs or graphics can add interest as
Movement – Move appropriately and with purpose.
well as simplify the information.
Don’t move constantly. Pause for effect. Stand still to
■ It is much easier to view a graph than digest a make an important point.
series of numbers in a table. Don’t include
complex graphs or diagrams that the audiences Body Language – Stand straight, be relaxed, and
is expected to decipher. make good eye contact.
■ The right graphic can add impact to a slide, and
And finally, practice a lot!
if it is clear, you will immediately understand its
purpose, and it will strengthen your presentation. Remember when Presenting
6. Proofreading ■ Speak loudly and clearly with voice modulation
■ Direct your words to all members of the room
Use Spell-check in PowerPoint for errors. It is under ■ Maintain eye contact with your audience
the Tools menu so it’s an easy final step to run a spell- ■ Keep audience engaged
check to find out wrong phrase or word. ■ Don’t read the slides word-for-word, use them
for reference
It may help to print out your presentation, and get
someone else to read it. Often after looking at your ■ Use PowerPoint to enhance your talk
presentation for hours on end, you may not see a
mistake that someone else will instantly pick up.
Key Points
■ PowerPoint is a tool to help you communicate
DELIVERY - Perform, Don’t and organize complex information clearly and
Present concisely
■ PowerPoint should be used to enhance your talk
It’s comforting to think that if you master the substance
Further Reading
1. Presentation Zen by Garr Reynolds
2. Slide:ology – The Art and Science of creating great presentation by Nancy Duarte
3. Cutting Edge PowerPoint for Dummies by Geetesh Bajaj
REQUISITES FOR EFFECTIVE PRESENTATIONS
Importance of Presentation presenting your ideas to others. If you want to fast

track your career - volunteer to work on projects and
Skills deliver more presentations.
Communication is a vast ocean and an ever-learning
skill. ‘Communication is Life’, is one of the first 3. Important to Business Success: Business
learnings for people while growing up to start higher leaders are often expected to present their message
education, and surely while getting ready to take up with confidence and clarity to staff, clients, partners,
a career for themselves. While there are varied investors and sometimes the public. Millions of dollars
dimensions of communication, Presentation is, in fact, can ride on these presentations.
one of the essential dimensions and is now a skill by
itself. Everyone has to focus on and learn Presentation 4. Important to Leadership: Winston Churchill
Skills in today’s connected world. was praised for his inspiring presentations that helped
England fight back against Nazi Germany. Every
‘Presentation’ is more than power point skills. In a leader needs to be able to stand up and deliver a
way, it is said that ‘you present yourself’ to others clear and inspiring message. The team and followers
when you are communicating! Presentation will often judge the leader and the cause on the
subconsciously or consciously happens all the time presentation skills of that spokesperson.
when a person is communicating with another. How
you organize your messages in such interactions 5. Important to Public Image & Opinion: Most
makes all the difference between success or often a leader, the organization, the product, or the
otherwise. executives are judged based on how a presentation
is delivered. We will tend to remember the extremes
Let’s clarify the statement “Presentation skills are - really bad or really good. Our perception is relative
important”. What we really mean is, “Effective to how everyone presented.
presentation skills are important”. “Presentation skills”
is not a black and white picture - it is a rainbow of There are two big parts for Effective Presentation
colors. Everybody has presentation skills. Some are
(a) Planning the Presentation (Building the
better than others. The primary goal is for your
Communication Model into Presentation)
presentation skills to be able to communicate clear
messages and win the hearts and minds of people (b) Delivery of the Presentations
who you are interacting with, whoever and whatever
that is. The secondary goal is for your presentations
to get better with every presentation that you deliver. (A) Planning the Presentation
The POW – Purpose, Outcome and Why
The key benefits of Presentation Skills are:
1. Important to Individual Success: For many ■ Purpose

individuals the first important presentation they deliver ● What we want to happen in the
might be to the selection committee. It might be called presentation to call it a success?
as a “job or placement interview” but it’s really a ● Who are the people we are addressing?
presentation. Success rides on their presentation ● What details are we supposed to give
outshining the remaining candidates. them?
2. Important for Team Work & Career Growth: ■ Outcome

In most organizations day-to-day business entails ● What will the outcome of this presentation
teamwork. That means presenting to your team or be used for?
on behalf of your team. Career growth necessitates
REQUISITES FOR EFFECTIVE PRESENTATIONS 111
● Is the plan of this presentation taking into 4S – Structure

account what will happen if we are not ■ Purpose for Presentation
successful with the presentation?
■ Why ● Persuasive: Goal is to convince the
audience to accept a belief/position or take
● Why are we having this presentation? The
some action
Big picture?
● Informative: Mostly to increase the
The Communication model: audience knowledge on a particular topic
This is guided by the 4S Model – Strategy, Substance, ■ Informative:
Structure, Style. Each of the elements is described
● Introduction: WIIFT( What’s In It For
below:
Them)– Get attention, Establish your
credibility, Preview your main Points
4S-Strategy
● Body: Deliver 3 Main Points
■ Questions to be addressed (How);
● Conclusion: Summarize your message,
● Presentation Objectives Close with Conviction
● Length
■ Map your structure:
● Detail
● Appetizer ( INTRODUCTION): Tell them
Answer the following Questions tobuild the knowledge what you are going to tell them
of the audience on the Communication Continuum –
● Main course (BODY) : Tell them
Awareness, Understanding, Belief, Action
● Deserts (CONCLUSION) : Tell them what
1. Where is the audience today on the Continuum? you told them.
2. Where would you like to take them?
Opening a Persuasive Presentation: Situation,
3. What do you want them to do after this Complication, Question, Answer (SCQA)
presentation? framework
4S – Substance 4S – Style:
■ Content
■ It is the brief Summary of the key points
● Preparation requires focus on Content ■ It should not be more than one slide
● Research & be sure of the information ■ It should show a compelling optimistic story (no
● Ensure that the message is coming out pessimism, no fallback strategies, no risk
clear statements, no ifs/buts)
■ Rule of Three
4S – Style Approach:
● People tend to only remember three things. ■ Form Structure
Plan out the three key takeaway messages
■ Plan the Story
and structure your presentation around
them. ■ Where words are not enough plan for charts,
pictures, etc.
● There are three parts to your presentation
– The beginning, the middle and the end. 4S – Style Guidelines
● Use lists of three - very important when you 1. Communicate one major Idea per page
want to sell your ideas (Remember the 2. Introduce the idea in one complete but short
movie dialog - Entertainment, sentence
Entertainment & Entertainment)
3. Communicate and focus on how the idea is
■ Don’t Overload the Content connected or leads to results
112 REQUISITES FOR EFFECTIVE PRESENTATIONS
4. Limit Text Support to 5 bullets ■ Visualize success. It makes the worst ordeal
5. Let one page be a complete story in Itself seem worthwhile.
6. Just by reading the headers, the story should
unfold During the Presentation
■ Increase volume (if you are feeling low).
4S - Style: Page Design ■ Use large gestures
■ Text: Can give full explanation, Hard to make ■ Don’t repeat what is written in slides
memorable, Too much makes people forget ■ Find a friendly face in the crowd (can backfire if
■ Tables: Can show a lot of information, done for long)
Relationships may not be easily communicated ■ Use notes
■ Visuals or Cues: Can make complex concepts
be assimilated quickly, A good icon can become There is a need to manage the ‘nervousness’ before
the symbol of your efforts, Often open to many and during a presentation.
interpretations
■ Charts: Conveys clearly relationships among The 5Ps of Presentation: Delivery Essentials
data points, Easy to remember, Usually need ■ Profile
explanation ● Who is your audience? Awareness is the
key to your delivery
4S – Style: Other points ● Who all are attending
1. Use Sober Colours ● Research about your presentation
2. Use detailed slides only in Appendix (for one- audience
one explanations or for fetching critical details ● Functional background of the audience
necessary for explanation when asked for. ● Know the purpose of the presentation
3. Use borders to enclose connected/related topics.
4. Use same font size where possible ■ Pitch
5. Use highlights sparingly ● How does the tone of your speech vary and
6. Use bullets to separate points carry the importance of the message with
your emotional feelings?
● Vary the tone of your Speech
(B) Delivery of the Presentations ● See that your pitch does not drop of at the
■ Basics end of your sentence
■ Managing Nervousness ● Varying Pitch more than necessary can
■ OMG moments sound patronizing
Basics% Impact – Verbal, Visual, Vocal ■ Pace

● How fast are you? Not too slow. Not too
Before the Presentation fast.
■ Know your content, audience and venue well ● Vary the Pace throughout
■ Memorize the first two minutes (SCQA and ● Avoid extreme pace
Pyramid introduction). Well begun is half done
Go through the whole presentation in your mind. ■ Pause
Focus on the sections that make you ● How are you permitting the audience to
uncomfortable. gain conviction, assimilate what you are
■ Practice with neutral friends. presenting, gauge your audience reaction
and re-strategize and repeat if necessary
■ Watch what you eat and drink
● How well you take Questions and respond?
■ Try relaxation exercises.
REQUISITES FOR EFFECTIVE PRESENTATIONS 113
● Give Chance for Audience to catch up and ● Return arms to Neutral when not gesturing
reflect
● Give chance to yourself to judge where you ■ Feet
have reached with the audience ● Stand solid when not moving
● Use pauses to eliminate filler words ● Do not lean
■ Practice ■ Avoid
● How confident are you about the substance ● Attire that distracts
of your presentation? ● Shakes
● How many times have you rehearsed your
script before the actual presentation? Dealing with Questions
● Practice makes for perfect performance. ■ If they are premature and dealing with a point
● Rehearsal is the biggest single thing that that is coming across, tell them it is a good
you can do to improve your performance. question and you will be coming to it in the next
● Perform your presentation out loud at least few minutes.
four times. One of these should be in front ■ Set rules beforehand about when the Q & A
of a real scary audience. Family, friends or session happens
colleagues. Even the dog is better than ■ Always set time for Q & A.
nothing.
● Know what slide is coming next OMG! Moments
Apply 4D (Delay, Detour, Defuse, Dismiss) strategy
■ Types of Closing : to deal with the following OMG! Moments
■ Action Oriented: ■ A heckler in the audience

■ Latecomers
● Ask audience to take a specific action
■ Interruptions
● Outline alternate actions
■ Questions you cannot answer satisfactorily OR
● Express confidence in what they will do
are not prepared for
● Express confidence that the issue will be
■ Equipment malfunction
met / solved
■ Missing materials
● Compliment the audience
■ Where was ?
■ Do’s & Don’ts ■ Expect the Unexpected
■ Words
TEN COMMANDMENTS OF GOOD
● Do not use non-words: hmmm…, aahhnn..,
PRESENTATION
ahan, etc.
■ Thou shalt not commence thy presentation with
● Do not use anchor words – like, you know,
apologies
etc.
■ Thou shalt not fill thy presentation with statistics
● Do not use hip words – LOL, blah-blah, etc.
■ Thou shalt not forget to relax
■ Eye Contact ■ Thou shalt not keep a poker face
● Go through Individual audience members ■ Thou shalt not be sarcastic or unfair
● One complete sentence/thought/3-5 ■ Thou shalt not be dull
seconds ■ Thou shalt not murder the language
■ Thou shalt not forget to be brief
■ Arms & Hands
■ Thou shalt not forget to smile
● Large gestures show calmness and control
■ Thou shalt not forget to STOP!
CASE BASED PRESENTATIONS
Effective Decision Making summarized in simple decision making steps as

below:
One of the greatest skills a leader can have is the
ability to make effective business decisions. Decision ■ Identify the Problem
making is one of the basic cognitive processes of ■ Define the Problem
human behaviors by which a preferred option or a
■ Identify Decision Criteria
course of actions is chosen from among a set of
■ Allocate Weights to Criteria
alternatives based on certain criteria. It is a thought
process of selecting a logical choice from the available ■ Determine Alternatives
options.Decision making can be hard. Almost any ■ Analyze Alternatives
decision involves some conflicts or dissatisfaction. ■ Tools for Decision Making
The difficult part is to pick one solution where the ■ Select an Alternative (Make the decision)
positive outcome can outweigh possible losses. ■ Implement Alternative (Implement Decision)
Avoiding decisions often seems easier. Yet, making
■ Evaluation (of decision effectiveness)
our own decisions and accepting the consequence is
the only way to stay in control of our time, our success, As President Theodore Roosevelt said, “In any
and our life. moment of decision, the best you can do is the right
thing, the next best thing is the wrong thing, and the
A significant part of decision making skills is in
worst thing you can do is nothing.” When it comes
knowing and practicing good decision making
down to it, the answer may not always be clear, even
techniques and also developing such a skill requires
when using a rational decision-making process. But
a combination of education, experience and intuition.
the only way forward is take a deep breath, gather
There are many things that influence how an individual
courage and make the decision.
makes decisions. They include emotions, personal
perceptions, professional risks and rewards, The decisions we make decide our destiny so it is
preparation through experience or education, important to make decisions.
deadlines, stress and a host of others. It is important
to mitigate the irrational and embrace the rational. ■ More the number of decisions we make, higher
the probability of knowing our self better.
Whether decision-makers realize it or not, myriad
■ By experimenting with our decisions, we would
factors must be taken into consideration before
know – What we like &whatwe don’t?
coming to a conclusion. Whether the decision-making
■ Our personal choices / preferences make the
skill is an innate gut feeling or one learned over the
decisions making easier.
years, the bottom line is that being an effective
decision-maker requires practice.While decision ■ Helps hone our decision making skills.
making and problem solving processes are ■ Focus changes from Short term to Long term.
systematic, problem solving requires defining a
problem and creating solutions for it. Decision making
Being Decisive, doesn’t require
is selecting a course of actions from among available
alternatives and options. Problem solving always any exact SCIENCE
involves decision making.However, not all decision Keep your eyes on the prize and “Be clear on the
making involves solving a problem. For example, a ultimate objective”. When faced with choices or
manager / supervisor may have to make decisions options, you need to choose the one that will most
about employees, resources, workload etc, without quickly achieve it, therefore we need to have
having a problem to solve on regular basis.
■ Desire: There should be a desire to make
One of the most practical decision making can be decisions. we should feel motivated to take our
CASE BASED PRESENTATIONS 115
decisions and be willing to put in the required what feels right, rather than taking a logical
effort approach to the decision making.
■ Practice Area: Determine areas of our life where ■ Spontaneous: This is where the decision maker
we can exercise our decision making skills to is impulsive and prone to making ‘snap’ or ‘ spur’
make the preliminary decisions of our life and of the moment decisions. This can be valuable
the cost of being wrong might not be too huge – trait in terms of not over planning the future, but
what we want to wear or want to eat, or to pick it is not always a good idea to leave important
up a movie to watch or where to go for vacation. decisions to be made this way.
■ Own your Decision: We should be aware of
the pros and cons of the decisions we make –
what will happen if decision goes wrong? If you
Deciding not to DECIDE, is a
are adventurous, you might feel like forgetting Decision
about the con part and tell yourself that whatever Some examples of decisions in Industry are:
happens, you are ready for it. But you should
not do so. At times, the consequences may be ■ Launch of a new product
too dark to forget. Hence, we should always ■ Closing down a factory unit
analyze our decisions.
■ Selling a Company
■ Follow the Iteration: Practice – Reflect – Learn
■ Acquisition of a Company
– Practice
■ Launching an Advertisement Campaign
Stephen Covey says “While we might not consider ■ Make or Buy Decision
certain choices because of consequences, the ■ Setting up a new Department
choices are always there. We are free to choose ■ Enhancing customer service
whatever we want to as long as we take responsibility
for the consequences of that choice”. Functions of the Mind
Let’s now look at how the mind works. There are three
Sometimes it is very easy to recognize a good
main functions:
decision and some decisions may require more
reflection to determine if it is the right decision or if
another option is better. Everybody prefers a different
way to contemplate a decision. The four styles of
Analyzing
decision making are Rational, Dependant, Intuitive Valuing
and Spontaneous. Each style is a different method
of weighing alternatives and examining solutions.
Synthesizing
■ Rational: This approach is characterised by
using a logical and structured approach to
decision making such as using ideas like SWOT
a. Analyzing: Analytical thinking is closely related
etc.
to logical or step-by-step reasoning. Analyzers
■ Dependant: This approach is characterized by
can break down anything complex in to its simple
reliance upon the advice, direction and support
parts.
of others. You will find you are more comfortable
b. Synthesizing: It is putting or placing things
making a decision when you have discussed the
together to make a whole. It is the reverse
options with others, and are uncomfortable
process of Analyzing. We can synthesis things
making decisions alone.
with our hands, which we do whenever we
■ Intuitive: This approach is characterized by
assemble anything.
reliance upon hunches, feelings and
c. Valuing: Third function comes into play in such
impressions. You will go with ‘gut instinct’ or with
mental activities as establishing success criteria,
116 CASE BASED PRESENTATIONS
evaluating, appraising performance and judging ■ Cost Benefit Analysis*

people – as, for example, in a selection interview. ● Acquisition of a Company
It moves around the perception of important,
● Launch of a New Product
value and significance.Criticism is a form of
Valuing.Decision Making Criteria
DECIDED TO DECIDE. What to do if you have
fears….?
The critical preliminary activity is to establishselection
criteria & it is worth dividing them into different levels ■ Have Courage: It is all right to be nervous but
of priority.Unless an option meets MUST requirements don’t let that stop you. Don’t let your fears
we should discard it. But after essentials have been overpower you. Hold faith in your judgment and
satisfied, list of desirables – highly desirable believe that whatever happens, you will take full
SHOULDs or pleasant addition MIGHTs – comes into ownership for it. As you get comfortable
play. embracing your failures, you will start seeing
decision making in a new light.
■ Visualize your decision outcomes: Perceive
your decision’s outcomes becoming true and the
right decisions you should take to achieve them.
Visualize yourself as a decisive person who
believes in self makes the right decisions.
■ Make your Failures, your friends: You can’t
MUST
be right all the time, no one can. Given the
limitations of time & information, to make
decisions, sometimes, we are prone to make
SHOULD
mistakes. Be friends with your mistakes and
learn from them. These mistakes are your
MIGHT
feedback. As you start seeing mistakes as
feedback and not a judgment about you, your
While there are a wide variety of decision-making fears will go down.
tools, many tend to revolve around the same key ■ Act on your Decisions: Taking action is the
principles of figuring out the decision that needs to immediate next step, after Decision. And, it is
be made, considering & researching the options & one thing which has consistently worked in
reviewing the decision once it’s been made. Some of driving fear away. The more you sit over your
the tools are mentioned below with examples: Decisions, and NOT take ACTION, the more fear
will paralyze you. As you take action, fear will
■ SWOT Analysis* disappear.
● Analyzing Market position of a Brand ■ Start a Diary: Write down your experiences with
● identifying possible areas for change decision making in a diary. Over a period of time,
your positives and negatives will jump out of the
■ Force Field Analysis* page. They will be so obvious, that you will not
● Upgrading factory with New manufacturing have to put in any effort in finding them. And
equipment once you know where you are going wrong, it’s
● Launching a Quality & Customer Service going to be easy to find a solution and grow.
initiative
*Explanation and case studies for above examples are
■ Parameter based Decision Making* mentioned in this section later
● Selecting the product variants & features
to be launched How to IMPROVE decisions
● Planning a plant architecture ■ Commit & be Pro-Active: Proactively create
opportunities to decide on something and
commit. For instance, if your friend asks you often right. Go by your instincts and hone them
whether you would be joining for a particular by providing feedback for every decision you
class, don’t say you are not sure whether you make with them. When you have to make real
will come or not. Commit to one thing. And make quick decisions, these can save you.
sure you stay true to whatever you commit.
■ Be a person with integrity: It is the essential Selecting a logical option from available options is
ingredient in becoming decisive. Do what you “Decision Making”
said you would, by the time you said you would.
AND
Honor your commitments. When you honor your
own word, you start trusting yourself and are
For EFFECTIVE DECISION MAKING, a person must
more confident. When you start trusting yourself,
be able to forecast the outcome of each option as
you will start trusting your decisions.
well, and based on all these items, determine which
■ Analyze the situation: Analyzing the situation option is the best for that particular situation.
is critically important in any decision making Therefore, an Effective Decision Process needs to
process. You have to analyze the facts, patterns ensure we are able to do so.
and trends creatively for taking better decisions.
This process will help you to improve your
confidence level. 1. Case Study - Decision Making
■ Start small and then Integrate: You might be through Lost at Sea (Source:
tempted to apply these skills at multiple areas.
If you try doing so at too many places all at once,
Grahame Knox)
you may get overwhelmed and drop the decision You have chartered a yacht with three friends, for the
making idea all together. Start by taking small holiday trip of a lifetime acrossthe Atlantic Ocean.
decisions one-at-a-time and then keep building Because none of you have any previous sailing
upon it experience, youhave hired an experienced skipper
■ Use Words of Conviction: If you are not and two-person crew.
confident of your decisions, you may end up
Unfortunately in mid Atlantic a fierce fire breaks out
saying something like ‘I guess I will go with this’.
in the ships galley and theskipper and crew have been
Pay attention to what you say, use power of
lost whilst trying to fight the blaze. Much of the yacht
Language. You should say, ‘I decide to go with
is destroyed and is slowly sinking.
this’.
■ Learn your lessons: Treat yourself, every time Your location is unclear because vital navigational and
you make a good decision. And, when they go radio equipment have beendamaged in the fire. Your
wrong, observe them closely and learn from your best estimate is that you are many hundreds of miles
mistakes. As NO one can make right decisions fromthe nearest landfall.
all the time, this should be a lifetime process.
Every decision makes us learn and grow. You and your friends have managed to save 15 items,
■ Time yourself: Improvise your timing with every undamaged and intact afterthe fire. In addition, you
decision you make. Try to make right decisions have salvaged a four man rubber life craft and a box
faster than before. The more quickly you decide, ofmatches.
the more decisive you will become. Moreover,
as your pace to decide increases, you will start Take 10 min to decide your own rankings and record
feeling comfortable with making decisions. And them infirst column of ‘lost at sea ranking chart’.
it will not turn out be a chore. Create teams of 3 or 4 and take 15 min to discuss
■ Listen to Your Instincts & Hone them: Notice individual choices and work together to agree on a
that little voice in your head giving you inputs collaborative list.Record the group rankings in the
and providing you with feedback – listen to it. second column of ‘lost at sea ranking chart’.
Gut feeling has its own logic. And that logic is
118 CASE BASED PRESENTATIONS
Lost at Sea Ranking Chart in that market with change in technology. For this
Items Step 1 Step 2 purpose, the Company is keen to leverage the SWOT
Your Your analysis tool to understand its current potential and
individual team arrive at the decision. It has appointed you as the
ranking ranking professional to advise them on this matter and
A sextant you have been shared with the following
A Shaving Mirror information for your analysis.
A quantity of mosquitonetting
A 25 liter container of water Well established leader among Indian Offshore
A case of army rations companies,GrowValue has built a solid image by
Maps of the Atlantic Ocean delivering quality services and innovation and is in a
A floating seat cushion strong financial position as its business turned over
A 10 liter can of oil/petrolmixture more than $9.5 billion as on 31st, Mar 2015. This
A small transistor radio strong financial position shows that its capital is
20 square feet of opaque plastic expanding, and it provides the base to leverage the
sheeting potential investors.GrowValue is considered big when
A can of shark repellent it is compared to Indian companies as it has 40 global
One bottle of 160 proof rum development centers in which most of them are
15 feet of nylon rope located in India.
2 boxes of chocolate bars
An ocean fishing kit & pole The Indian economy has low labor cost although its
Totals Your Team economic indicators are quite weak due to increasing
Score Score rate of inflation. With offices in developed and
developing nations & high skilled workforce in
Your task is to rank the 15 items in terms of their Information Technology, Growvaluesystem is
importance for you, as you wait to be rescued. Place becoming a global brand. It has capability to support
the number 1 by the most important item, the number global operations, which it carries out for its
2 by the second most important and so forth until you multinational clients; however it struggles in the US
have ranked all 15 items. markets on different occasions, and has particular
problems in securing United States Federal
Government contracts in North America. As these
2. Case Study - Decision Making contracts are very profitable and they can be
through SWOT Analysis continued for long periods of time, Growvalue system
Growvalue Systems Limited is global information is losing its strength in lucrative business.Emerging
Technology Company with headquartered in Pune Technology such as Cloud, Big data, mobility are
and is carrying out the business in Information going to get bigger and Growvalue system needs to
Technology Services and a provider of business adopt the latest technology to make their business
solutions. The company offers its services in Business activities innovative and unique as it caters to next -
and IT consulting, integration of system, design, generation market needs driven by global trends,
development, maintenance, infrastructure including digital consumers, emerging economies,
management services, product engineering, both as new commerce and healthcare.
package enabled and implementation. Grow value
The company has to face intense competition in the
system operates in all major countries, North America,
local markets as various local players provide their
Europe, and Asia Pacific along with its business in
services at cheap rates. Now most of the big clients
India.
want to consolidate its number of competitors such
GrowValue wants to decide on using/ as Cognizant, Accenture as they are able to offer/
implementing new emerging tools for the US showcase well differentiated offering and strategies
Market to improvise the business and compete to clients and that may result in reduced project budget
for Grow value system. Situation like instability of 3. A good working ERP system increases the
economic environment, Employee attrition rate and company’s capability to keep up with a strong
low employee utilization may increase the personnel growth of the business. This reduces the need
costs of the company and could create pressure for for extra manpower in office related jobs.
conducting business. Still, Grow value system is the 4. The system must be installed and tested
leading IT Company providing IT technology to its technically and functionally, hence installation
clients, who want to excel in their IT departments and and testing cost.
they want to develop their business.
5. An ERP system, with some built-in intelligence
Kindly perform SWOT Analysis and document can increase the reliability of the company and
Strengths, Weaknesses, Opportunities and it always costs less to retain an existing customer
Threats and based on SWOT, share your than to acquire a new one.
recommendations for GrowValue to take the 6. A just-in-time delivery policy can be realized,
decision. reducing the need for keeping stock. This will
free up capital for other use and the costs of
stock keeping will decrease.
3. Case Study - Decision Making
7. Training cost for all users for effective use of
through Cost Benefit Analysis the ERP. However, Superior intelligence and
Cooltas is an Air-conditioning company headquartered more automated processes may reduce reliance
in Bangalore. The company has annual turnover of on expensive skilled workers, reducing labor
more than 1700 Cr and has manufacturing unit in costs through the use of lower-cost workers.
cities like Gurgaon, Pune, Mumbai, and Indore. 8. The actual transition to the new system can
result in extra costs, conversion of files, phasing
In order to streamline and improve the efficiency of out the old system and the like.
their operations, which saves time and money, Cooltas
is exploring options like SAP as ERP tool. The Finance 9. Make an allowance for unforeseen costs.
manager and IT Head meet to decide on the ERP at 10. A maintenance contract is obligatory and will
optimal investment. They discussedthe Cost/ incur Annual Maintenance cost (AMC).
Investment elements involved in introducing the ERP
system and benefits associated with it as below. The finance manager has captured the above data
from interactions with the IT head. Unfortunately,
1. The acquisition price, the money the company finance manager has fallen sick and he is unable to
pay to buy a system. do cost benefit analysis.
2. ERP system can be used in different ways,
As a young well informed professional, you are
hence the customization cost. When properly
requested to perform Cost benefit analysis of above
customized an ERP can make the procedures
situation.Quantify all cost and benefits and share your
of the company much leaner and streamlined
recommendations.
by eliminating re-work and manual handling, thus
reducing labor costs.
ART OF QUESTIONING AND CURIOUS
QUESTIONING
“If I had an hour to solve a problem and my life 3. Communicates concern

depended on the solution, I would spend the first 55
4. Communicates respect for the other and for self
minutes determining the proper question to ask, for
once I know the proper question, I could solve the 5. Communicates sensitivity
problem in less than five minutes.” 6. Communicates values
— ALBERT EINSTEIN 7. Communicates robustness in its objective

8. Opens perspectives and possibilities
A question is a linguistic expression used to make a
request for information, or the request made using 9. Generates new ideas
such an expression. 10. Gives new Direction
We instinctively develop a dislike for persons who The usefulness of the knowledge we acquire and the
keep “lecturing “ us. We do however develop positive effectiveness of the actions we take depend on the
feelings for people who ask for our welfare and quality of the questions we ask. Questions open the
happiness and then their subsequent actions may door to dialogue and discovery. They are an invitation
which we approve reinforces the trust that we place to creativity and breakthrough thinking. Questions can
in them. lead to movement and action on key issues; by
generating creative insights, they can ignite change.
Or on other words, powerful questions build credibility,
relationships and trust. People use different words Consider the possibility that everything we know today
interchangeably like curious questions, powerful about our world emerged because people were
questions, good questions, insightful questions ....but curious.They formulated a question or series of
in essence they mean the same thing. questions about something that sparked their interest
or deeply concerned them, which lead them to learn
A question, in the timing and its demeanour ,
something new. Many Nobel laureates describe the
communicates and creates a lot on its own; A Powerful
“Eureka!” moment of their discovery as when the
question ;
“right” question finally revealed itself—even if it took
them considerable time to come up with the final
1. Stimulates Curiosity
answers.
2. Communicates Knowledge and depth in a
subject
Some Powerful Questions and Key Outcomes
Who Asked The Powerful Question Result
Watson & Crick What might human DNA look in Discovery of the structure of the
3Dimension gene
James Burke, CEO, Johnson & What is the ethical action we must Consumer confidence restored in
Johnson take (when their drug Tylenol was the company
found dangerous for humans)
Ray Kroc, CEO Where can I get a good hamburger Created the food chain “McDonalds”
on the road
ART OF QUESTIONING AND CURIOUS QUESTIONING 121
The SCAMPER method looks at how to ask questions Here are some questions for drawing out
to create new ideas; perspectives;
1. How could you substitute some of the 1. What’s your thinking on that?
components, people, materials or other 2. What leads you to conclude that?
resources that you are using for different ones? 3. What is the significance of that?
2. How could you combine or blend products/ 4. How do you relate to their concerns?
services in a different way? What would a hybrid
5. How do you think a CEO would view this?
look like?
6. How do you explain his decisions?
3. How could you adapt, alter, change the function
7. Give me an example of that?
or use another element?
4. How could you modify (miniaturize, magnify) Curious questioning goes hand-in-hand with good or
some aspect of your approach (e.g change the active Listening. One cannot ask curious questions
scale or approach)? without proper listening and thus connect the thread
5. How could you put something to another use? which binds the responses with the next curious
6. How could you eliminate , remove or simplify a question.
key element? How could you reduce something
to its core functionality? What would happen if Active Listening means;
you removed the extras? 1. Hearing the audience without interrupting
7. How could you reverse the order? Switch roles?
2. Attentive body Language
Or rearrange the patterns , pace etc?
3. Listening for Feelings
Curious questioning is a method which values 4. Listening for Values and Beliefs
“silences”. One should give time after curious
5. Listening for assumptions
questions for the person to think or respond. One
should also assimilate the responses in silence. The 6. Paraphrasing : Validating that you understood
intent being that we ourselves look at the responses correctly
from various perspectives without judging it. 7. Being mentally prepared
Therefore curious questions can be used to draw out So what makes questions powerful? It is the
perspectives, attitudes, feelings of people towards impact they cause.
ideas, situations, responses or people.
QUESTION TYPE CHARACTERISTICS IMPACT
POWERFUL • Short & Simple • Audience does the work

• Open-ended • Audience understands the bigger picture
• Invite reflection • Audience creates options
• Audience commits to action
NOT AS POWERFUL • Long & Complex • You do the work

• Multiple, serial • Audience gets your knowledge, Values ,
• Closed – invites yes/no fears and insecurities
response • Audience gets resistant
122 ART OF QUESTIONING AND CURIOUS QUESTIONING
Open ended questions do not have short answers. In Close ended questions on the other hand have binary
fact they create more options and perspectives. or specific answers. Do not require much introspection
Require thought. and come out quick and easy.
Yes or No Questions are the third type of questions Here are some reasons and examples of each type
where you get an exact Yes or No as an answer. There of question;
would be no need for elaboration.
Closed ended Open ended

• Did that man walk by • How do you go about
the house before? purchasing a home?
• What is it like to live in the
• Can I help you with Objective
To Conform Facts questions to
capital of Morocco?
that?
obtain facts • What is the quickest way
• May I please have a to get to the pet store in
bite of that pie? Subjective town?
questions to get • Why is it that every time
To clear confusion
• Would you like to go feelings, values
I talk with you, you seem
to the movies tonight? and perspectives
irritated?
• Is math your favorite Speculative or • In what way do you feel I
subject? Narrow focus of thought provoking should present myself?
discussion questions to
stimulate creativity
Trust increases in the people who ask powerful convey a low degree of self orientation while a lack of
questions. The Trust equation shows why this know-it-all attitude strengthens intimacy.
happens.
Powerful questions help broach difficult topics. They
Credibility + Reliability + Intimacy also can be catalytic (providing impetus for the listener
Trust = to change) if worded properly as the BISA model
Self-Orientation
suggests.
Powerful questions convey credibility. The depth and
The culmination of powerful questions is balancing
detail that they take to answer shows that you are not
the power of inquiry to advocacy : Developing
jumping at conclusions , but prefer to have robust,
credibility and reliability to ensure that when you
well thought out solutions.
suggest a solution, it has a strong possibility of being
accepted.
The multiple perspectives unearthed show that all
options are tapped before a final choice is made. This
Indeed, it is the wise man who knows how to combine
creates the impression of reliability.
the power of inquiry with advocacy.... by maintaining
the right balance.
Detailed questions and your focus on the other person
ART OF QUESTIONING AND CURIOUS QUESTIONING 123
The Performance Objectives and Rollout:
S. Slide Performance Objectives Delivery Method Minutes

no numbers
1. Describe and give examples of how For each type of question
Tone, Intonation, timing, Language, listed encourage audience to
1 1-4 10
body Language adds richness to the give examples
words used in communication
1. Describe how SCAMPER model can Ask Audience to stir their
be used to generate new ideas? memories and come up with
2 5-6 2. List a few questions that can be examples from the 10
used to generate more statements given on the
perspectives? slides
1. Describe the characteristics of Describe and roll out activity
curious questions and its impact?
3 7-10 10
2. Apply these characteristics in a
situation?
1. Describe the TRUST equation and Lecture
4 11 how curious questioning helps build 5
Trust?
1. Describe how adding Context can Describe example . Ask
make a question curious? Audience for examples
5 12-13 5
2. Describe how adding too much
context can defeat the purpose.
1. Describe what is NOT insightful Lecture. Solicit examples
questions. from Audience. Ask
6 14-15 2. Describe how active Listening helps audience what causes 5
insightful questions questions to be NOT
insightful.
1. Describe how assumptions and Describe examples. Solicit
7 16 generalizations can be challenged examples from Audience in 5
and validated by insightful questions various situations
1. Describe how difficult topics can be Solicit difficult situations from
8 17-18 5
broached by curious questions. audience and solve
1. Describe how catalytic feedback can Describe example and do a
9 19 5
be given by Questioning short role play.
1. The Keystone Activity applies all the Create teams and client
10 20-21 30
learnings listed above. team.
T O T AL TI ME 90
GROUP DISCUSSION & DEBATE
Group Discussion ■ Quotes

■ Definition
A Group Discussion can be defined as an activity
■ Questions
where group members learn through communicating
and interacting with each other. It is a meeting of peers ■ Shock statement
for discussion and exchange of views. ■ Facts and Figures
■ Short Story
It is a technique used by organizations to evaluate a ■ General Statement
candidate’s personality traits and ability to work in a
team. In this method, the group of candidates is given
a topic or a situation, and are asked to discuss it within How to Interrupt Others Skillfully
the group. A conclusion may or may not be drawn.
■ That’s good! However...
Group discussion (GD) is a famous selection process ■ I agree. In addition...
apart from regular tests and interview. Tests and ■ That’s a great idea. But...
interview tests a candidate technically. However in a ■ I am glad that you have brought about this. In
professional set up, the candidate must be able to fact...
perform even when working with other people. This ■ Another Important point...
is where a GD helps to assess an individual as a team ■ This point needs further elaboration...
player.
■ Very correct. But I would add that...
Why do we Need Group Guidelines for a successful

Discussion Group Discussion
■ Enhances learning of a subject 1. Be a Team Player
■ Increases critical thinking 2. Reasoning Ability Skill
■ Helps in problem-solving skills 3. Leadership Role
■ Improves decision-making skill 4. Flexibility
■ Improves communication skills 5. Assertiveness
■ Builds confidence and positive attitude 6. Initiative
7. Creativity or Out-of-Box Thinking
8. Equal opportunity for all
The Group Discussion Process 9. Listening
A Group Discussion can be divided into three different 10. Awareness
phases:
Be a Team Player
1. Initiation/Introduction
The foremost objective of a group discussion is to
2. Body asses an individual’s ability to perform in a team. Being
3. Summarization a team player is a strong personality trait and a times,
a difficult one too. Individual’s communication skill or
How you initiate is really important because it makes perspective is seldom looked forward to in a GD. What
or breaks your first impression. There are different counts is the participation of every member and jointly
techniques to initiate a group discussion to make good reaching to a mutual conclusion.
first impression
GROUP DISCUSSION & DEBATE 125
A good team member have the following qualitites: ■ The leader motivates the team members to
express their views and reach to a collective
a. Build a positive rapport with fellow members. mutual conclusion.
b. Encourage others to participate.
c. Respect other member’s opinion. Flexibility
d. Does not interrupt while other member is Every member in a discussion must be open to other
speaking. ideas as well as to the evaluation of his/her own ideas.
e. Participates in discussion However it is most essential to never ever start a
f. Reaches to a conclusion with mutual consent of discussion with a stand or a conclusion. Beginning
other members. the discussion with a sudden start or conclusion steals
away the opportunity of changing one’s mind during
A team player can be a team member or act as a the discussion. A conclusion has to be mutual and
leader. often depends on listening to other member’s views
also. So, a stand or conclusion has to be given at the
Reasoning Ability Skill: end only.
Careful arguments must be given in group
discussions. A group discussion has many participants Assertiveness
with all kinds of sensibilities. So, the speaker Assertiveness is putting forth an opinion to the group
participant must be very careful while presenting his/ in a very emphatic, positive and confident manner.
her views to the group. Sometimes the topics of group Assertiveness helps the speaker to drive his/her view
discussion can be sensitive religious-wise; ethnicity- across the team. The team welcomes any opinion
wise, caste-wise, etc. So, the arguments must always put forth in a confident and positive way. In a
be supported by appropriate facts and figures. discussion, all the members speak but to make any
one view count, it has to be spoken assertively. The
Leadership Role body language of an assertive person is as follow:
“A leader is an authority who influences the group
■ Positive tone and body language.
towards achieving the objective.”
■ Polite but confident tone.
The leader in a discussion plays the role of a facilitator. ■ Gentle but firm attitude.
And has to often act in situations like:
Initiative
■ A discussion where participants do not speak Every discussion happens to evaluate its members
much and are unable to build a proper rapport. against some qualities. The initiator of a discussion
■ A discussion where participants get emotionally earns the early points ear-marked for the initiator role.
charged which results in a chaotic situation. However, the member should initiate in a discussion
■ A discussion where participants discuss the topic only if he/she is well-versed in the topic and situation.
in an aggressive manner. The initiator holds the initial responsibility of starting
the discussion on including others. If a member rushes
A good leader would have the following qualities: to speak just to earn the points, it gives a negative
impression.
■ The leader shows the direction to the group
whenever group moves away from the topic in It is best to express yourself when you are sure of
the discussion. what to speak. Every member is evaluated based on
■ The leader coordinates the efforts of all team his/her communication skill, team efforts and body
members in the discussion. language. A member supporting other members in
■ The leader stimulates and contributes to the any role is well appreciated by examiner and members
discussion by giving his/her valuable insights. themselves.
126 GROUP DISCUSSION & DEBATE
Creativity or Out-of-Box Thinking Comparison between Courage

A discussion will have all the members express their
views. However to stand out in the discussion one
and Compassion
must think of creative ways of expression. New ideas During group discussion there can be participants who
or perspective always catch attention of a member or can be high on Courage and low on Compassion
examiner. (People who just want to put there point across without
considering/respecting the other persons point of
Equal opportunity for all view.) are generally categorized as stubborn and
A discussion is successful only if all the members are people who are not open to any change or any new
allowed to express their views and ideas and then a idea. They are also not very good listeners.
mutual conclusion is drawn. A group discussion is
never an individual activity; it is always a group activity. On the other side people who are high on Compassion
The leader should make sure that every member is and low on Courage are considered to be very Liberal
given a chance to put his/her point across. All the and do not hold any firm standing of their own. They
members must make sure to coordinate while are very weak on planning and are always seeking
discussing the topic. A strong valid conclusion can for support in their subordinates.
be drawn only on hearing everyone speak. However,
In short one should be GENTLE, YET FIRM.
if someone has nothing to say, he/she must not be
forced to speak.
Do’s of a Group Discussion
Listening
■ Listen to others
A balance must be made in a discussion between
■ Maintain eye contact
expressing one’s views and listening to other’s ideas.
Since group discussion is a team activity, it is very ■ Allow others to express their views
important to first encourage and then pay attention ■ Speak clearly
while other members are speaking. Every member ■ Keep a positive attitude
should support other members in the group. ■ Back your points with facts and figures
■ Disagree politely
Awareness
A member can speak and reach to conclusion in a
discussion only if he/she is aware of his/her strengths Dont’s of a Group Discussion
and support others. There are two kinds of awareness ■ Do not get personal or emotional
required while performing in a group discussion: ■ Do not dominate the discussion
■ Never exhibit insecurity or ego
■ Internal Awareness: Internal awareness is
more of a self-evaluation. The participant must ■ Do not elaborate all the points
first be aware of his/her strengths. The ■ Do not deviate from the topic
participant must be aware of the topic and have ■ Do not argue or shout
thorough knowledge of the same.
■ External Awareness: External awareness is the Typical GD Mistakes

skill to work and perform well as a team. Once ■ Emotional outburst. Emotional outburst causes.
the member has spoken and put across his/her ■ Domination
point, he/she should listen attentively to other
■ Egotism showing-off
member and all members should build a positive
rapport with each other. ■ Get noticed - but for the right reasons.
GROUP DISCUSSION & DEBATE 127
General GD Topics ■ Cricket should be banned or not.

■ Present state of Indian Cricket team.
Form groups and discuss following topics:
■ Love marriage/Arranged marriage.
■ Role of UN in peacekeeping? ■ Advantages of Co-education.
■ Position of Women in India compared to other ■ How to deal with international terrorism.
nations. ■ Should we pursue our policy of dialogue with
■ Should Rahul Gandhi be made the PM? Pakistan?
■ BPOs in India. ■ Is peace and non-violence outdated concepts?
■ Government contribution to IT.
■ India or West, which is the land of opportunities? Key Points
■ Water resources should be nationalized.
■ Group discussion is an exercise to test an
■ Balance between professionalism and family.
individual’s ability to perform in a team
■ Education in India compared to foreign nations.
■ The key feature of group discussion is to let
■ What is the effect of cinemas on youth? Is it everyone speak and then draw a mutual
good or bad? conclusion
■ Are studies more beneficial in India or in Abroad? ■ Communication skills act as a primary skill in
■ Is China a threat to the Indian software industry? group discussion
■ About Hockey being the primary game in India.
Further Reading
1. Group Discussion http://www.ravenshawhelpline.com/groupdiscussion.html
2. Group Discussion on Current Topic by P. N. Joshi
WORKING IN TEAMS/RELATIONSHIP
MANAGEMENT
Definition and show leadership in different areas. Questions on

authority and power are resolved through unemotional
A team comprises a group of people linked in a group discussion. A feeling of team spirit is
common purpose.
experienced because members believe they have
Teams are especially appropriate for conducting tasks found their proper roles.
that are high in complexity and have many
interdependent subtasks. Tasks are completed at a Stage 4: PERFORMING
faster pace. Team members learn from each other Activity during this stage is focused on solving task
and there is healthy competition amongst team problems. As members of a mature group,
members. contributors get their work done without hampering
others. There is a climate of communication and
Because of the different nature, personality, thinking strong cooperation.
and values of people it is not easy to form a team.
Personality clashes and misunderstanding happens
Stage 5: ADJOURNING
within a team. A theory was developed by Tuckman
to explain the stages of team development. The work is done. It is time to move on to other things.
Understanding the theory also gives an insight for Having worked so hard to get along and get
how to deal with team members in different stages. something done, many members feel a compelling
sense of loss.
Tuckman’s Five-Stage Theory of

Team Building
Team Development
The term team building generally refers to the
There are following five stages through which a group
selection, development, and collective motivation of
forms and develops.
result-oriented teams. Team building is pursued via a
variety of practices, such as group self-assessment
Stage 1: FORMING
and group-dynamic games, and generally sits within
In the first stage of team building, the forming of the the theory and practice of organizational development.
team takes place. During this stage, team members
are uncertain about their role, who is in charge, and Team building also includes the process of
the group’s goals. Mutual trust is low. If the formal establishing and developing a greater sense of
leader does not assert his authority, an emergent
collaboration and trust between team members.
leader will step in to fulfil the group’s need for
Interactive exercises, team assessments, and group
leadership.
discussions enable groups to cultivate this greater
sense of teamwork.
Stage 2: STORMING
This is a time of testing. Individuals test the leader’s The process of team building includes:
policies and assumptions as they try to determine how
they fit into the power structure. Some member may ■ Clarifying the goal, and building ownership
feel overwhelmed by how much there is to do and across the team.
some members may react by questioning how
■ Identifying the inhibitors to teamwork and
worthwhile the goal of the team is. Many team fails in
removing or overcoming them, or if they cannot
this stage.
be removed, mitigating their negative effect on
the team.
Stage 3: NORMING
Team that make it through the second stage come to To assess itself, a team seeks feedback to find out
this stage. Team members learn to respect authority both:
WORKING IN TEAMS/RELATIONSHIP MANAGEMENT 129
■ its current strengths as a team members. When feedback is given it is done with a
■ its current weakness desire to help the other person.
Then, to improve its current performance, a team uses Team decision making involves a process that
the below to: encourages active participation by all members.
■ identify any gap between the desired state and Leadership is distributed and shared among team
the actual state members and individuals willingly contribute their
■ design a gap-closure strategy resources as needed.
Problem solving, discussing team issues, and

Characteristics of Good Team analyzing team effectiveness are encouraged by all
team members.
■ High level of interdependence among team
members Conflict is not suppressed. Team members are
■ Team leader has good people skills and is allowed to express negative feelings and confrontation
committed to team approach within the team which is managed and dealt with by
■ Each team member is willing to contribute team members. Dealing with and managing conflict
■ Team develops a relaxed climate for is seen as a way to improve team performance.
communication
Team member resources, talents, skills, knowledge,
■ Team members develop a mutual trust
and experiences are fully identified, recognized, and
■ Team and individuals are prepared to take risks
used whenever appropriate.
■ Team is clear about goals and establishes
targets Risk taking and creativity are encouraged. When
■ Team member roles are defined mistakes are made, they are treated as a source of
■ Team members know how to examine team and learning rather than reasons for punishment.
individual errors without personal attacks
■ Team has capacity to create new ideas Obstacles To Effective Teams
■ Each team member knows he can influence the
team agenda A Weak Sense of Direction: Nothing undermines
enthusiasm in teams as quickly as the frustration of
being an involuntary member of a team with no focus.
Team Effectiveness Leadership is weak if members aren’t sure of their
purpose, goals, and approach.
When evaluating how well team members are working
together, the following statements can be used as a
Infighting: While Effective teams don’t have to be
guide:
made up of people who like each other but there must
be respect for each other and members must be
Team goals are developed through a group process
willing to set aside petty differences.
of team interaction and agreement in which each team
member is willing to work toward achieving these
Shirking of Responsibilities: When member avoid
goals.
taking responsibility for specific assignments, a team
becomes a “pseudo team”; i.e., team in name but
Participation is actively shown by all team members
consistently underperforming.
and roles are shared to facilitate the accomplishment
of tasks and feelings of group togetherness.
Lack of Trust: If trust is lacking, members are unable
to depend on each other.
Feedback is asked by members and freely given as
a way of evaluating the team’s performance and
Critical Skill Gaps: When skills are lacking, teams
clarifying both feelings and interests of the team
flounder. Members have trouble communicating with
130 WORKING IN TEAMS/RELATIONSHIP MANAGEMENT
each other, destructive conflicts result, decisions III. Camaraderie

aren’t made, and technical problems overcome the Camaraderie, meaning comradeship, fellowship, and
group. loyalty, is a hallmark of teams where people genuinely
like each other and work hard to develop and maintain
Lack of External Support: Teams exist in a larger their relationships.
organization and rely on that organization for
resources. If outside resources like formal rules, IV. Responsibility
regulations, budgeting procedures, compensation
Having ownership of an identifiable block of work is a
systems, selection procedures, etc. are not in shape,
long-held tenet of motivation in groups. Caution:
the group may suffer.
Responsibility can be de-motivating if the
consequences of error or failure are too great. It is
Team Motivation difficult to sustain high performance when energy is
being sapped by fear.
Probably the first question to be answered in a
discussion of motivation is “What makes us do V. Growth
anything?” Why was this article written? Why are you
When people feel they are moving forward, learning
reading it? Why did you get out of bed today and go
new concepts, adding to their skill base, and stretching
to work? Why did you join that volunteer organization
their minds, motivation tends to remain high.
last month? Why did you drop out of the other one?
Each day brings with it an endless list of decisions to VI. Leadership

be made. The process of making those decisions is A good leader can be a catalyst for motivation in the
driven, in large part, by the hope of a benefit or the short term, but the best leaders create the conditions
fear of a consequence. for the team to motivate itself.Motivation is inherently
intrinsic, residing within oneself. Therefore, if one
Literally, every decision we make is filtered through depends continually on another for their source of
this process. The industrial psychologists have taken motivation, eventually it ends.
this further by defining these consequences as needs.
Our needs for sustenance, safety, security, belonging,
recognition, and a sense of growth and achievement Resolving Conflict in Work
become strong drivers (motivators) of behavior. Teams
A major advantage a team has over an individual is
Motivation in a team can rise or fall depending on a
its diversity of resources, knowledge, and ideas.
myriad of factors:
However, diversity also produces conflict. Varney
(1989) reports that conflict remained the number-one
I. Purpose
problem for most of the teams operating within a large
A clear purpose, focus, or mission of the team that
energy company, even after repeated training
aligns with the team members’ personal wants and
sessions on how to resolve conflict and how to
needs.
minimize the negative impact on team members.
II. Challenge Conflict arises from differences. When individuals

Some sort of challenge that can make even mediocre come together in work teams their differences in terms
groups respond with heroic success.Caution: If a of power, values and attitudes, and social factors all
challenge is too difficult, perhaps perceived as contribute to the creation of conflict.
impossible, then team members may give up before
they start. However, the same result may occur if the Conflict in work teams is not necessarily destructive,
members perceive the challenge as too easy. however. Conflict can lead to new ideas and
approaches to organizational processes, and off. When used in the right environment by an
increased interest in dealing with problems. Conflict experienced leader, this technique can help to
becomes negative when it is left to escalate to the prevent minor incidents that are the result of
point where people begin to feel defeated and a someone having a bad day from becoming real
combative climate of distrust and suspicion develops. problems that should never have occurred.
Negative conflict can destroy a team quickly, and often
arises from poor planning. 5. De-emphasis/Smoothing: This is a form of
bargaining where the emphasis is on the areas
Handling Negative Conflict of agreement. When parties realize that there
When negative conflict does occur there are five are areas where they are in agreement, they
accepted methods for handling it: Direct Approach, can often begin to move in a new direction.
Bargaining, Enforcement, Retreat, and De-emphasis
(Nelson, 1995). Each can be used effectively in Team Resolution Process of
different circumstances.
Conflict Management
1. Direct Approach/Confronting: This may be the Rayeski and Bryant (1994) recommend using the
best approach of all. It concentrates on the Team Resolution Process to handle conflict when it
leader confronting the issue head-on. Though occurs in teams. Conflict should first be handled on
conflict is uncomfortable to deal with, it is best an informal basis between the individuals involved. If
to look at issues objectively and to face them as the conflict remains unsettled, a mediator can be
they are. If criticism is used, it must be brought in to help resolve the situation. If resolution
constructive to the recipients. This approach is still not achieved, the dispute should be openly
counts on the techniques of problem-solving and discussed in a team meeting. A formal discipline
normally leaves everyone with a sense of process needs to occur, if resolution is not achieved
resolution, because issues are brought to the after being addressed at the team level. The
surface and dealt with. escalating process of Team Resolution is as follows:
2. Bargaining/Compromising: This is an 1. Collaboration (One-on-one): Handle the new

excellent technique when both parties have problem person-to-person. Use as many facts
ideas on a solution yet cannot find common as possible and relate the issue to customer,
ground. Often a third party, such as a team team, or organizational needs. Be open and
leader, is needed to help find the compromise. honest and conduct the session in a private
Compromise involves give and take on both setting. Document the concerns or issues, the
sides, however, and usually ends up with both dates, and the resolution, if any, and have both
walking away equally dissatisfied. parties sign it.
3. Enforcement of Team Rules/Forcing: Avoid 2. Mediation (One-on-one with Mediator): If

using this method if possible, it can bring about collaboration did not work or was inappropriate,
hard feelings toward the leader and the team. handle the problem with a mediator. The
This technique is only used when it is obvious mediator must be trained in conflict resolution,
that a member does not want to be a team player understand policy and ethics, be trusted by the
and refuses to work with the rest. If enforcement team, and have the ability to remain neutral.
has to be used on an individual, it may be best Gather facts and talk over the issue with the
for that person to find another team. people involved. Bring up as many facts as
possible and relate the issue to customer, team,
4. Retreat/Avoiding: Only use this method when
or organizational needs. Be open and honest
the problem isn’t real to begin with. By simply
and conduct the mediation session in private.
avoiding it or working around it, a leader can
Document it and have all parties sign.
often delay long enough for the individual to cool
3. Team Counseling: The conflict is now a definite Opportunities and Threats and to determine whether
issue to the team. Collaboration and/or Mediation the necessary resources are available to achieve the
could not be done, were not appropriate, or did team’s vision.
not work. Handle the conflict at a team meeting;
put the problem on the next agenda and invite Where are we going?
the necessary individuals. Again, bring up the To work with energy, commitment and enthusiasm, a
facts; relate the issue to customer, team, or team needs to know where it is going. It has to have
organizational needs. Be open and honest, a vision that is aligned with the organization’s mission
discuss it in a private setting, document it, and and goals. It needs to understand its purpose - what
have all parties sign it. Anyone on the team can makes it different from other teams, what its outputs
put an issue or problem on the team agenda, are and what outcomes they lead to.
however, this step should be used only after
Collaboration, and Mediation has been ruled out. How will we get there?
To turn a vision into reality, it is necessary to
Concept: High-Energy Teams systematically set objectives, action-plans and
measures of performance. It is important to plan the
High-Energy Teams occur when eight fundamental route from where you are now to where you want to
strategic issues are addressed: be through looking at the critical Types of Work.
■ Who are we?

What is expected of us?
■ Where are we now?
People find it difficult to perform if they don’t know
■ Where are we going? what they are meant to be doing. In a High-Energy
■ How will we get there? Team, all team members will fully understand their
■ What is expected of us? job description, their role in the team, what they are
■ What support do we need? responsible for and, most importantly, what they are
■ How effective are we? accountable for.
■ What recognition do we get?
What support do we need?
To create a High-Energy Team, team members need Once the team finds answers to the first five
to establish ways of addressing the issues associated questions, it can then focus on what support is
with these questions. Each question must be subject required to deliver results. This means doing a training
to continuous discussion and review through regular and development needs assessment and establishing
team learning processes. ongoing systems of team learning so that all team
members can continuously develop their skills.
High-Energy Teams Model
Who are we? How effective are we?
Each person brings different strengths to a team and A High-Energy Team is one that regularly reviews its
will approach problems and opportunities in a different effectiveness and continually improves its
way. Team members need to know ‘what makes each performance. Benchmarks for success can be
person tick’ so that individual differences can be established and procedures for learning from
harnessed to achieve maximum performance levels. mistakes implemented.
Where are we now? What recognition do we get?

Before planning where you are heading as a team, it In general, most teams will not attain high-energy
is useful to look at team balance, whether team levels unless there is adequate recognition for the
members are likely to be risk averse or risk accepting, accomplishments of all team members. This can be
and whether conflicting values are likely to arise. Look achieved through feedback, remuneration, fringe
at the teams’ key Strengths, Weaknesses, benefits and promotion.
When all these strategic issues have been addressed purpose about why the team exists and the function
to the satisfaction of the team, the team will be in a it serves.
‘high energy’ state ready to work optimally to deliver
excellent performance. High Communication: creating an environment of
trust and an open, honest communication.
Attributes of High Performing Future Focused: seeing change as an opportunity

Team for growth.
Attributes typically present in teams that perform in Creative Talents: appllying individual talents and
the zone of inspiration: creativity.
Participative Leadership: creating an Rapid Response: identifying and acting on

interdependency by empowering, freeing up, and opportunities.
serving others.
Shared Responsibility: establishing an environment Key Points

in which all team members feel as responsible as the ■ Coming together is beginning, keeping together
manager for the performance of the work unit. is progress and working together is success!
(Henry Ford)
Aligned on purpose: having a sense of common
Further Reading
1. Teamwork 101: What every leader needs to know by John C. Maxwell
2. Teamwork is an individual skill by Christopher M. Avery
RELATIONSHIP MANAGEMENT
Customer best for you is client. And for those that involved in
selling goods or render other services that are
A person, company, or other entity which buys goods unprofessional then customers is your choice.
or services produced by another person, company,
or other entity. (All the reference to the Customer in this chapter
should be treated as Client)
A customer is anyone who is spending the money!
A consumer is a person who purchases goods or What do customers want?

services for personal use.
While a customer is making the buying decision, they
A client is a person or organization using the services want knowledgeable assistance, available when they
of a lawyer or other professional person or company. want it. Customers place a high value on accurate
information and want to be served by product-savvy,
The nature of company’s business determines the friendly and courteous sales people. The customers
uses of either customer or client. For instance if the sees the price as only one component of the bigger
business of your organization involved in picture of “value” that includes the service, information
rendering professional services to people such and follow-up they also receive. Today’s customers
as lawyers, doctors, accountant, brokers etc. the define convenience, and the easier you can make
the shopping.. If you give customer what they want,the let customers know what you have done. Make it
way they want it and follow through with a fast finish simple for customers to complain. Value their
when it comes time to pay up, that turns them into complaints. As much as we dislike it, it gives us an
satisfied customers. opportunity to improve.
Be helpful – even if there’s no immediate profit in

Customer Service it - Make customers feel important and appreciated.
It is the provision of service to customers before, Treat them as individuals. Always use their name and
during and after a purchase. find ways to compliment them, but be sincere. People
value sincerity. It creates good feeling and trust.
Customer service is often seen as an activity,
performance measurement and a philosophy. It is a Always be helpful, courteous and
series of activities designed to enhance the level of knowledgeable
customer satisfaction – that is, the feeling that a
product or service has met the customer expectation. Take care of your internal customers - Employees
are your internal customers and need a regular dose
of appreciation. Thank them and find ways to let them
Good Customer Service know how important they are. Treat your employees
Customer service is an integral part of sales job to with respect and chances are they will have a higher
serve company’s most vital asset: its customers. regard for customers. Appreciation stems from the
When you satisfy our customers, they not only help top. Treating customers and employees well is equally
us grow by continuing to do business with you, but important.
recommend you to friends and associates. The
practice of customer service should be as present on
What is a Good Customer
the show floor as it is in any other sales environment.
It can be achieved by following means: Service?
■ Good customer service means having thorough
Listen to your customer - You are in business to
knowledge of your inventory, experience with
service customer needs, and you can only do that if
your products, and being able to help customers
you know what it is your customers want. When you make the best choices for them.
truly listen to your customers, they let you know what
■ Good customer service is treating customers
they want and how you can provide good service.
with a friendly, helpful attitude.
Appreciate the power of “YES” - Always look for ■ Good customer service means helping
ways to help your customers. When they have a customers efficiently, in a friendly manner. It’s
request tell them that you can do it. Figure out how one of the things that can set your business apart
afterwards. Look for ways to make doing business from the others of its kind.
with you easy. Always do what you say you are going
to do.
What is a Bad Customer Service?
Don’t make promises unless you will keep them - ■ When you do not take the time to help someone
Reliability is one of the keys to any good relationship, because it is not profitable to you in any way.
and good customer service is no exception. ■ You ignore the customer.
■ If you get a query and you do not know the
Deal with complaints - When something goes
answer.
wrong, apologize. It’s easy and customers like it. The
customer may not always be right, but the customer ■ Bad customer service is being impolite and not
must always win. Deal with problems immediately and helpful in any way when needed
Examples of Poor Customer to actually talk to your employees. Let them know
how well they are doing. Show appreciation for
Service doing the right thing.
1. Reaching to checkout in the supermarket and
the cashier refusing to serve you as he is “just 4. Public recognition - Let other employees and
closing the aisle”. customers know about the outstanding service
2. Phoning a call centre and getting lost in an your employees are creating. Build an
endless loop of voicemail recordings. environment that fosters this positive behaviour.
3. Having to invest your own money to use a 5. Treat your employees the way you want them
supermarket trolley (to go and BUY things from to treat your customers - This is sort of an
them!) offshoot of the “Golden Rule”. If you are
4. Being treated like a criminal at airport security. constantly yelling at an employee, how you can
5. Not getting batteries with your recent gadget expect him/her to turn around and be nice to a
purchase. customer. You need to set an example. Creating
6. Slow replies to support request emails when a truly customer focused and driven environment
you’ve just purchased a product online. is not easy. It takes time and training. Employees
7. Waiting more than 30 minutes for something to need to trust that management will stand behind
eat in a restaurant. them and not fault them for making a wrong
8. Calling up a call centre and being unable to decision.
speak with a human being.
6. Open to feedback from customer – Many
9. Having to wait in all day because the online shop organizations have implemented feedback loops
you purchased from is unable to tell you when that allow them to capture feedback at the point
they will deliver. of experience. This proves to be useful as it
10. Telephone companies charging extra if you want allows companies to improve their customer
to pay your bill in cash. service before the customer defects, thus
making it far more likely that the customer will
return next time.
Customer Driven Organization
Becoming a “Customer Experience-Driven Business”
is a journey that requires a clear focus, organization The Complaining Customer
wide involvement and change management to ensure The complaining customer - we just can’t stand them!
the required outcome is achieved. Well, most of us can’t stand them. The reality is that
business organizations should love them. You see,
a complaining customer tells you where you can
How to become a customer
improve. They actually come forward and show us
driven organization? where we make mistakes.
1. Hire right - The attitude is more important than
the skill. You can train the skill. This is what But, most of the time, people hate to hear the
companies like the Ritz Carlton and Nordstrom’s complaints. What is worse is that even if we did love
are so famous for. to hear the complaints, most of us wouldn’t hear them
anyway.
2. Constantly train - Even if you spend five
minutes every few days on something new, it is First, a few facts you should know about people who
constant training and reinforcement of your complain. Most of the time, when people have a
business and customer philosophies. complaint, they complain to everyone else rather than
the person or people who caused the complaint.
3. Continually praise good behaviour - You have
But, there is good news in all of this. If you resolve this by using sixth sense to read their minds. It is
your customers’ complaints, you will keep them most much simpler than that. We simply think and come
of the time. But first you have to know there is a up with the right questions to ask to make sure we
complaint. So, how can we find those complainers? are giving the customer what it is that they really want.
Well, most likely customers won’t tell us, so, we have The key to understanding your customer is to ask the
to ask them. It is that simple. Call them up or ask right questions. Know what the customer wants. Don’t
them in person. Actively solicit feedback to find out assume anything. Ask questions and have things
what they are thinking. And when you find a problem repeated so you don’t make mistakes. The customer
or complaint, resolve it on the spot. expects it to be done right, the first time and every
time.
And, when you hear about a problem, fix it. And make
sure you give that customer a reason to come back
so you can do it right the next time. Key Points
Key points of delivering good customer service are:
Understanding Your Customer ■ Understanding the customer
It is important to get inside your customers’ heads ■ Level of Attention
and give them what it is that they want versus what it ■ Responsibility
is that we think that they want. ■ Product Knowledge
How do you get inside their heads? Well, we don’t do
Further Reading
1. Achieving Excellence through Customer Service by John Tschohl
2. Customers for Life by Carl Sewell
3. Exceptional Customer Service by Lisa Ford
MANAGING AMBIGUITY
Essential skill for career progression in VUCA World about the variety of ways in which this is possible.
– VUCA signifies 4 elements of today’s Business &
Social environment globally viz Volatility, Uncertainty,
Complexity, Ambiguity.
Types of Ambiguity
There are two types of ambiguity, LEXICAL and
Among the above, AMBIGUITY IS ALL PERVASIVE STRUCTURAL.
A word, phrase, or sentence is ambiguous if it has Lexical ambiguity is by far the more common.
more than one meaning. The word ‘light’, for example, Everyday examples include nouns like ‘chip’, ‘pen’
can mean not very heavy or not very dark. Words and ‘suit’, verbs like ‘call’, ‘draw’ and ‘run’, and
like ‘light’, ‘note’, ‘bear’ and ‘over’ are lexically adjectives like ‘deep’, ‘dry’ and ‘hard’.
ambiguous. They induce ambiguity in phrases or
sentences in which they occur, such as ‘light suit’ and Structural ambiguity occurs when a phrase or
‘FINE WITH LITTERING’. However, phrases and sentence has more than one underlying structure,
sentences can be ambiguous even if none of their such as the phrases ‘Tibetan history teacher’, ‘a
constituents is. student of high moral principles’ and ‘short men and
women’, and the sentences ‘The girl hit the boy with
Therefore, the fact of something having more than a book. These ambiguities are said to be structural
one possible ‘Meaning/Interpretation’ and hence, because each such phrase can be represented in two
possibly causing confusion or lack of clarity is structurally different ways.
AMBIGUITY.
It can have both a lexical and a structural basis, as
Although ambiguity is fundamentally a property of with sentences like ‘He saw her duck’.
linguistic expressions, people are also said to be
ambiguous on occasion in how they use language.
This can occur if, even when their words are Uncertainty and Ambiguity
unambiguous, their words do not make what they Uncertainty and Ambiguity, both are two different
mean uniquely determinable. When people use Concepts.Ambiguity has to do with multiple meanings
ambiguous language, generally its ambiguity is not or interpretations and affects the quality of an action.
intended. It is a platitude that what your words convey It is the focal point of communication or a situation
‘depends on what you mean’ as compared to what while Uncertainty is lack of precision in estimates and
others understand. This suggests that one can mean has to do with an event, a probability or impact.
different things by what one says, but it says nothing
138 MANAGING AMBIGUITY
Hurricane Katrina graphic is the output of a Both women Wife and Mother-in-Law,” are in the
computer model of thestorm’s path, showing picture, so it is an example of a style called
probable position at different points in time in the “pictographic ambiguity,” because it cleverly
future, based on meteorological data, physics, incorporates two images. If you can’t see the two
sophisticated computerized forecasting models. portraits, notice that the chin of the young lady is
The graphic illustrates a “cone of uncertainty.” the nose of the old woman.
DO WE OURSELVES CREATE AMBIGUITY??
YES!!! WHEN OR IF WE ARE NOT PRECISE IN OUR RESPONSES OR ANSWERS
Ambiguity – Activity* 2. Learn to act without the complete picture. In

■ Harry isn’t coming to the party. Tell Joe that we’ll an ambiguous world we will never have all the
see him next week.(The “him” could refer either information we need for absolute certainty. Don’t wait
to Harry or to Joe). for that final bit of hard data that will tell what to do
■ The bark was painful. (Could mean a tree’s bark because it may never come. Get all the information
was rough or a dog’s bark communicated pain available, make the best decision you can and act on
or hurt the listener’s ears). it.
■ Sarah gave a bath to her dog wearing a pink t-
3. Understand that some of decisions will be
shirt. (Is the dog wearing the pink t-shirt?)
wrong. Now that we made the best decision we can,
■ Flying planes can be dangerous.(Could it mean realize that it might be wrong. But sometimes a wrong
“It is dangerous to fly plane” or Flying planes decision is better than no decision. Ambiguity means
that are there in air are dangerous as they might sometimes we will make the wrong decision. Don’t
hurt.) let that put us off. Being a good business person is
about making more right decisions than you do wrong.
*Answers in Bracket
4. Work on flexibility. Be willing to change course
Managing Ambiguity - The Advantage as more information comes to light. Don’t let pride
As we grow up, the more likely we are to have to rely delay from correcting course. Ambiguity can reveal
on information supplied by others, which may be facts at any time that are going to affect our best
partial or incomplete, rather than making decisions decision. Be willing to accept these gifts and
based on what we have found out personally. That’s incorporate them into direction.
when an ability to manage ambiguity becomes a big
advantage.When Ambiguity is created by others or 5. Learn to deal with uncertainty. To deal with
due to external situations, you really ‘Deal’ with ambiguity we need to be comfortable with uncertainty.
Ambiguity and ‘Not merely Manage’ the AMBIGUITY!! My natural urge is to control everything, but I can’t.
So I cope with this by being prepared for what I can.
Tips to manage Ambiguity 6. Realize there is not a defined plan we need

Here are 10 tips for dealing with ambiguity for today’s to follow. Make your peace with the fact that there is
era: no defined ‘right and wrong’.
1. Suppress urge to control things. People like 7. Be confident. Part of learning to deal with
to feel in control of their businesses. Often, this results uncertainty is to have confidence in our ability to
in stress when ambiguity enters the scene. The respond to what we can’t control. Confidence is a
business world is getting more complex not less and huge asset to a person in business and life in general.
therefore we need to suppress to let go of the notion
we are ‘controlling everything’. 8. Listen to your voice. People talk about their
‘guts’ or ‘making a gut decision’. What we attribute to
MANAGING AMBIGUITY 139
our gut is really our subconscious looking at inputs skill particularly as we take up any career and then,
from around our world. Our processing power is grow to occupy senior positions.
powered 95% from our subconscious, or our brain
looking at information ‘offline’, processing it and then
telling you what to do. Therefore, listen to it. How to deal with Ambiguity
We can deal with Ambiguity if….
9. Listen to advice. At Beyond Philosophy we use
a phrase ‘None of us are as clever as all of us’. Do v We can make decisions on basis of the
we think that because we are the boss we have all information we have, even if that isn’t the whole
the best answers? We don’t. Be comfortable with picture.
people being cleverer than us and use this as a v We can cope with uncertainty and risk.
resource. Listen to what your people say.
v We can adapt to change.
10. Learn to deal with stress. Even if we do all of
While dealing with Ambiguity, find ways and means
these things, ambiguity can still cause stress. Learn
to ‘REDUCE’ambiguity.Therefore, to reduce
to manage this stress by having outlets to relieve
Ambiguity we inquire to find new perspectives and
stress. When we are relaxed we are far more able to
we need to make sure if we are asking the right
respond to problems and challenges with successful
questions and to reduce Uncertainty, we ask explicit
solutions.
questions.Below questions would help to reduce
Uncertainty and Ambiguity:
Ambiguity is challenging by definition but we can learn
to deal with it. It is becoming an increasingly important
UNCERTAINTY AMBIGUITY
■ What is the crux of the matter? ■ What is the probability that competitor will cut
■ Are we asking the right questions? prices within 30 days?
■ Would someone with a different background ■ What is the probability that it will rain today?
define this problem differently? ■ What is the probability that technology will fail?
■ What could happen if someone misinterpreted ■ What is the probability that a driver will have an
the situation’s context? What mistakes could be auto accident this year?
made by me or by others by me or by others
Learn from Experiences probe deeper and explore potential problem

■ Try to understand a complex problem or solutions.
process by creating a visual. ■ Reflect on your emotional response to
■ When faced with ambiguity, get organized. change and ambiguity.Do we get overwhelmed
Write down what we know and document by too many possibilities or a lack of clarity? If
assumptions. Outline the major deliverables or yes, chances are our responses are
tasks we believe need to be completed. counterproductive. When we experience
■ Act incrementally when we are uncertain. ambiguity, step back and work on emotional
Take small steps, get quick feedback, correct intelligence to gain control.
mistakes, &move forward. Starting small &
getting quick feedback will help us make Learn from Others
progress despite ambiguity. ■ Ask supervisor to coach on strategies to
■ In uncertain situations, delve into what is enhance ability to deal with ambiguity.
causing the problem. Use the 5 Whys tool to Review this resource to prepare for the coaching.
140 MANAGING AMBIGUITY
Identify a couple things we can do to increase ● Decrease the need to be right all the time
our ability to deal with ambiguity. Schedule a and worry less about what people will say.
follow-up meeting a month later to review ● Spend less time waiting for the perfect
progress and ask for additional guidance. solution or gathering all the data to make
■ Identify a colleague or mentor who is the perfect decision in order to avoid
comfortable with ambiguity and who criticism; and
navigates unclear situations effectively. ● Reach a balance between thinking and
Schedule time to discuss how they make taking action.
decisions and act without having the total picture.
■ Schedule time with a few trusted colleagues
to discuss how to overcome the need for
perfection.Explore ways to:
OFFICE ORGANIZATION
INTRODUCTION make up for the weaknesses, of functional and

decentralized forms.
A social unit of people systematically structured and
managed to meet a need or to pursue collective goals
on a continuing basis. Organization Hierarchy
In an organization, the hierarchy usually consists of
All organizations have a management structure that
a singular/group of power at the top with subsequent
determines relationships between functions and
levels of power beneath them. This is the dominant
positions, and subdivides and delegates roles,
mode of organization among large organizations;
responsibilities, and authority to carry out defined
most corporations, governmentsare hierarchical
tasks. Organizations are open systems in that they
organizations with different levels of management,
affect and are affected by the environment beyond
power or authority.
their boundaries.
Organization Structure
Without an appropriate structure, business can’t
succeed hence it is important to have an Organization
structure. Organization structure is nothing but a way
to organize employees into some kind of structure to
meet business goals.
Organizational structure allows the expressed

allocation of responsibilities for different functions.
Based on how employees are grouped in the

Organization, it could be of different type
1. Functional Structure - Employees within the

functional divisions of an organization tend to
Example. Organization hierarchy in typical CA firm
perform a specialized set of tasks. This leads to
operational efficiencies within that group.
However it could also lead to a lack of Organization Chart
communication between the functional groups
within an organization.
2. Divisional Structure - Also called a “product

structure”, the divisional structure groups each
organizational function into a division. Each
division within a divisional structure contains all
the necessary resources and functions within it.
3. Matrix Structure - The matrix structure groups

employee by both function and product. This
structure can combine the best of both separate
structures. A matrix organization frequently uses
teams of employees to accomplish work, in order
to take advantage of the strengths, as well as
142 OFFICE ORGANIZATION
A company’s organizational chart typically illustrates your boss and co-workers will think of you as a
relations between people within an organization. Such dependable person.
relations might include managers to sub-workers,
directors to managing directors, chief executive officer ■ Being punctual is a sign of respect for others.
to various departments, and so forth. When an It lets them know that you take your job seriously
organization chart grows too large it can be split into and that you respect their time as well.
smaller charts for separate departments within the
organization. ■ Punctuality is a habit which comes out of
discipline in one’s life. A person who values
punctuality is always able to better manage his
Efficiency in Organization time and able to meet deadlines easily.
Working environment of an organization is made by
In light of the advantages of demonstrating your
the people working in the organization, who are part
respect and understanding of the importance of time
of that and who have built up the organization. Here
management, it is worth putting effort into adding
are some standard norms which are must for
punctuality as one of your attributes.
development of an efficient work environment.
2. Communication
1. Punctuality
One of the most crucial and challenging areas of the
Punctuality is the primary and most basic trait of good
workplace is effective communication. Maintaining a
professional conduct. Punctuality is required in all
proper communication with your seniors as well as
walks of our life, whether in our work or at home.
clients is central to the timely quality of expected
Nevertheless, importance of punctuality at workplace
output. Some general dos and don’ts to keep in mind
can never be exaggerated.
while communicating with seniors and clients are
discussed below:
Punctuality gains respect in almost any place but it is
essential in the workplace. Being on time says a lot
about you and how you feel about your company and a. Communication with seniors
your colleagues. Understanding the importance of ■ Do give regular update of the progress of
punctuality can go a long way in helping you increase work allotted
your value to your company and climb the career The first rule of effective communication is to
ladder. keep your immediate senior updated with the
progress of the work allocated to you. Not only
Given below are some reasons as to why punctuality the work completed should be communicated
is important at workplace. but also any problem faced in implementation
should be immediately communicated so that
■ Being punctual in daily office routine reflects that appropriate action can be taken in order to avoid
you understand the value of time and thus unnecessary delay in final delivery to the client.
value your work. It shows your honest One should not presume his senior to know
commitment to you work which goes on building things not actually communicated. Regular
confidence of your seniors in you. It gives the information as to the progress of work enables
positive perception that you are serious about them to plan future course of action and time
your work and you respect your seniors. schedule to ensure timely delivery to client. Also
delay in communication regarding any problems
■ Punctuality shows you can be counted on. If
faced will adversely affect the final delivery to
you are always punctual, people will naturally
client. This may go against the reputation of the
assume that they can rely on you more heavily.
organisation. Communication may be done
If you arrive to work on time, hand in your
through emails, phone or personal interaction
assignments on time, are punctual to meetings,
as may be considered appropriate in the case.
OFFICE ORGANIZATION 143
■ Don’t argue with your senior of the policies of your organization or the people
Another principle for maintaining good who are working there. But you should not
communication with your senior is to ensure that discuss theses wrongs with any third person or
you should never enter into an argument with client because the image or market value of the
your senior. It is looked upon as offensive and firm in mind of others will definitely affect with
disrespectful. Where you want to put across your your words. The more you will work towards
suggestion/idea/opinion, same should be done better image creation of the firm, the benefits
with utmost humbleness and politeness. Right out of it will turn to you also in long term.
way of putting across your suggestions is always
welcomed by seniors. To the contrary, ■ Don’t communicate directly without
contradicting your senior’s opinion rudely leaves senior’s authorisation
a bad impression and future reluctance on part Communication with the client at your individual
of the senior to allocate work and place reliance level shall be restricted to the extent authorised
on you. by your senior. Direct communication with the
client should be strictly avoided without prior
■ Don’t wait until the last minute
permission of the senior.
In business, surprises are generally not
appreciated. Any major development/
c. Informal Communication
observation, whether good or bad, shall be
communicated as soon as possible. Alerting your ■ Don’t talk badly about your co-workers
boss to potential problems gives them a chance Rivalry and bad feelings occasionally happen
to react and hopefully defuse a situation before within an office even at trainee level, but pointing
it escalates. fingers and laying blame on colleagues just
makes a bad situation worse. Office politics can
b. Communication with Clients
be difficult to navigate, but bringing your boss
■ Do maintain good cordial communication into it can often make a bad situation worse. If
with clients staff you’re having problems with a co-worker, try to
As a trainee, you may have to spend adequate address the situation yourself before escalating
time working at clients place. Support of client’s it to your superior. And if you simply must speak
staff is necessary to know about the client and to your boss about it, describe the situation as
obtain relevant information. There is a natural objectively and dispassionately as possible, and
reluctance on part of the clients staff to support avoid an emotionally charged discussion.
trainees and attending to their requirements. The
only way to seek their support and extract Knowing just the right thing to say in every
required information is to maintain healthy cordial situation is almost impossible. But following
communication with client’s staff. Informal these general guidelines will hopefully help you
communication to an extent is also useful in such feel more confident when communicating with
situations. your seniors and gain their trust and confidence.
■ Don’t make lose statements

3. Documentation
You are an ambassador and represent your
“Work not documented is work not done”. Importance
organisation in front of its Clients. Any impulsive/
of documentation of work done is often overlooked.
lose statements in front of the client or its staff
However, documentation of work done and other
may put your organisation’s reputation on stake.
relevant information is of utmost importance in light
Thus, one must be very careful while informally
of the following:
communicating with the client/client’s staff.
■ Don’t say anything negative about your ■ It provides basis for future reference. As human,
organization it is not possible for anybody to retain each and
Sometimes you may not be satisfied with some everything in his mind. Documentation of work
144 OFFICE ORGANIZATION
done in previous years provides a basis of code and then separate numbering for files in
reference in future years. Lack of documentation each section may be done.
may lead to unnecessary repetition and
duplication of work in future. ■ Files shall always be sequentially arranged at
the storage place.
■ Facilitates shifting of client/assignment to
successor team smoothly. A person/team who ■ A master record of all files shall be maintained
takes up the assignment previously done by in soft or hard form which shall include number
another person/team can understand the of file, client name, content of file, file location
important aspects of the assignment/client in a and its colour.
much better way if the information and work was
properly documented by the previous team. They ■ Further, list of files stored in different sections
can pick up the work from the point where it was may also be placed at the location to facilitate
left by the previous team. In the absence of easy access.
proper documentation, new team may have to
■ File cover/label should clearly contain
again spend time on understanding the basics.
information as to name of client, information
Thus there would be duplication of effort and
contained, relevant period and file number.
ineffective use of time and resources.
■ Provides evidence in case of any future dispute. 5. Record Keeping

Documentation of crucial information and papers Another important aspect of efficient work system is
provides evidence in case any dispute arises in proper system for recording of data. There is a
future. They provide evidence for information on substantial amount of data, information and
the basis of which conclusions and opinions were documents which are to be maintained in soft records.
arrived at. There is a general tendency to record such data at
any convenient location at the time of working or in
■ Documentation of the work done is also a personal folders from where it is difficult to retrieve
mandatory requirement in our profession as the same when the need arises. Following general
prescribed in Standards on Auditing. points may be kept in mind while recording of data in
soft form to ensure timely retrieval, avoid duplication
4. File Maintenance of storage and facilitate search:
Importance of any information documented or
recorded can be valued only if the same can be ■ Never record data in personal folders or desktop.
retrieved at the right time. For any information to be
■ There may be a separate folder for each client.
valuable, it is important that one should be able to
Where different types of services are rendered,
retrieve right information at the right time. To facilitate
broad sections for classification of data may be
this, it is important to maintain files in a proper manner
created at the top level such as audit, taxation,
so that they can be located in time.
sales tax, service tax etc. Thereafter within every
Some points that may be helpful in maintaining a section, there may be a separate folder for each
proper filing system are given below: client. Data pertaining to each client shall always
be recorded in the individual folder of each client
■ Each and every file should have a unique under relevant section.
number assigned to it. Numbering can be done
numerically, alphabetically or alphanumerically. ■ A proper tree structure will enable efficient data
retrieval.
■ Where number of files is large, files may be
classified into sections based on functional ■ Every folder and each file should be properly
areas such as Audit, Income Tax, Sales Tax etc. named so as to reflect its contents. This goes a
Each section may be assigned an alphabetic long way in making file search much easier when
OFFICE ORGANIZATION 145
particular type of data is to be searched. Naming ■ Use of personal pen drives may also be avoided
files with personal names or abstract letters shall as it puts official data more prone to virus.
be avoided.
■ Where work has been carried out at a location Key Points

different from where master data is recorded, ■ Organization is a social unit of people systemati-
subsequent to completion of assignment, data cally structured and managed to meet a need
shall be transferred to appropriate location and or to pursue collective goals
removed from its temporary location. This is
■ The achievements of an organization are the
important to avoid duplication of data.
results of the combined effort of each individual
Further Reading
1. Management by Peter Drucker
OFFICE ETIQUETTES
DEFINITION introducing administrative assistant Mira Kumar to her,

the correct introduction would be “Mr. Iyer, I’d like you
Office Etiquette or Office Manners is about conducting to meet Mira Kumar.” If you forget a person’s name
yourself respectfully and courteously in the office or while making an introduction, don’t panic. Proceed
workplace. It is mixture of some important social with the introduction with a statement such as, “I’m
values like politeness, respect to others etc. sorry, your name has just slipped my mind.” Omitting
an introduction would be a bigger mistake.
Cultural differences
Etiquette is dependent on culture; what is good Top 6 Ways to Graciously Meet
etiquette in one society may not work in another. and Greet People in Your Office
Etiquette evolves within culture and can vary widely
Your initial contact with a client, colleague or vendor
between different cultures and nations. In China, a
is critical to your success in business. Getting off on
person who takes the last item of food from a common
the wrong foot can make for a difficult relationship or
plate or bowl without first offering it to others at the
no relationship at all. Your goal within the first few
table may be seen as a greedy and insulting the
minutes of meeting other people is to make them feel
generosity of the host. In Middle East and Bangladesh
comfortable and to put them at ease so they will want
thumbs up gesture is considered obscene.
to do business or work with you. When you learn and
Also understand the difference between business use the rules of business etiquette for those critical
etiquette and social etiquette. Business etiquette is encounters, you will have a solid start for long-term
genderless. For example, the traditional chivalrous profitable relationships. Use these six simple
etiquette of holding the door open for a woman is not strategies to get started.
necessary in the workplace and can even have the
1. Stand up whenever you meet or greet someone.
unintended effect of offending her. In the work
This allows you to engage the person eye to
environment, men and women are equal.
eye and sends a message that you value this
Always remember that your guiding principle should person. If you are in a position where you can’t
be to treat people with consideration and respect. stand up (such as being trapped behind a potted
plant at the restaurant) offer an apology and an
explanation.
Etiquette at work place
2. Smile. Look as if you are pleased to meet
How you interact in your office, your behaviour with
the other person even if you are having a bad
your co-workers, client and your attitude in the office
day.
can make or break an important meeting, influence a
first impression or impress a potential client. 3. Make eye contact.
Here are a few of the specific dos and don’ts of 4. Introduce yourself immediately. As soon as you
business etiquette you are likely to encounter during approach people you don’t know or stranger
your workday: approaches you offer your name and say
something about yourself. Don’t stand around
Introduction as if someone else is in charge of introductions.
The proper way to make an introduction is to introduce
a lower-ranking person to a higher-ranking person. 5. Offer a firm handshake. Extend your hand as
For example, if your CEO is Mr. Iyer and you are you give your greeting and introduction.
OFFICE ETIQUETTES 147
6. Pay attention to names when you meet people message. Smiling adds warmth and an aura of
and use first names only when given permission. confidence. Others will be more receptive if you
It is all too common to be thinking about what remember to check your expression.
clever thing you are going to say next and forget
to focus on the other person’s name. If you ■ Your mouth gives clues, too and not just when
concentrate and repeat the name as soon as you are speaking. Mouth movements, such as
you hear it, you stand a better chance of pursing your lips or twisting them to one side,
remembering it later. can indicate that you are thinking about what
you are hearing or that you are holding
something back.
Handshakes
■ The position of your head speaks to people.
Shaking hands with someone can leave a powerful
Keeping your head straight will make you appear
impression. When someone’s handshake is
self-assured. People will take you seriously.
unpleasant in any way, we often associate negative
character traits with that person. A firm handshake ■ How receptive you are is suggested by where
made with direct eye contact sets the stage for a you place your arms. Arms crossed or folded
positive encounter. over your chest say that you have shut other
people out and have no interest in them or what
Women take note: To avoid any confusion during an
they are saying. This position can also say, “I
introduction, always extend your hands when greeting
don’t agree with you.”. The best place for your
someone. Remember, men and women are equals
arms is by your side. You will look confident and
in the workplace.
relaxed. If this is hard for you, do what you always
do when you want to get better at something -
Body Language Speaks Louder practice. After a while, it will feel natural.
Than Words ■ The angle of your body gives an indication to

Has it ever occurred to you how much you are saying others about what’s going through your head.
to people even when you are not speaking? Unless Leaning in says, “Tell me more.” Leaning away
you are a master of disguise, you are constantly signals you’ve heard enough. Adding a nod of
sending messages about your true thoughts and your head is another way to affirm that you are
feelings whether you are using words or not. Studies listening.
show that your words account for only 7% of the
■ Legs talk, too. A lot of movement indicates
messages you convey. The remaining 93% is non-
nervousness. Don’t shake you leg while talking
verbal. So it’s very important to take care of body
to others. Sit firmly and confidently.
language.
■ The distance you keep from others is crucial if
■ Eye contact is the most obvious way you
you want to establish good rapport. Standing too
communicate. When you are looking at the other
close or “in someone’s face” will mark you as
person, you show interest. When you fail to make
pushy. Positioning yourself too far away will
eye contact, you are ignoring the person.
make you seem standoffish. Neither is what you
Maintain eye contact about 60% of the time in
want so find the happy medium. Most
order to look interested, but not aggressive.
importantly, do what makes the other person feel
■ Facial expression is another form of non-verbal comfortable. If the person with whom you are
communication. A smile sends a positive speaking keeps backing away from you, stop.
148 OFFICE ETIQUETTES
Either that person needs space or you need a employees receive than actual work-related material.
breath mint. Remember that your email messages are an example
of your professional correspondence. Professional
correspondence does not include smiley faces or
Cell Phone Etiquette similar emoticons.
Here are a few tips to recall when using your cellular
phone in public: Faxes should always include your contact information,
date and number of pages included. They should not
■ Avoid taking or using your cellular phone at a be sent unsolicited — they waste the other person’s
meeting. If you must, be sure to place the phone paper and tie up the lines.
on silent, or the vibrate feature
Conference call etiquette entails introducing all the
■ Use a quiet voice. Many individuals feel the participants at the beginning of the call so everyone
need to talk loudly, or scream into their cellular knows who is in attendance. Since you’re not able to
phones see other participants’ body language and nonverbal
clues, you will have to compensate for this
■ Do not allow a phone call to interrupt the disadvantage by communicating very clearly. Be
presence of a “live” person. You are telling the aware of unintentionally interrupting someone or
person you are with that they are not important failing to address or include attendees because you
and that the call is more valuable than their can’t see them. And finally, don’t put anyone on
physical presence. Return the call at a more speakerphone until you have asked permission to do
appropriate time. so.
These are just a few of the reminders that should be

considered when using your cellular phone. Courtesy What you must do
and safety should always be remembered. The few
■ Do reply to office mails and try to use lower cases
exceptions include emergency situations, and relaying
while typing as bold letters signify a scream
urgent information. Enjoy the convenience of modern
technology but avoid the pitfalls of inappropriate ■ Do keep you voice low while talking
behavior.
■ If you have a problem that may force you to stay
away from work, keep your boss in the loop
Electronic Etiquette
Email, faxes & conference calls can create a veritable ■ Do congratulate a colleague on his/her
landmine of professional etiquette. Just because you achievements even if you do not approve of his/
have the capability to reach someone 24/7, it doesn’t her ways
mean you should.
■ Do not forget to shut you mobile phone during
Email is so prevalent in many of today’s companies meetings.
that the transmission of jokes, spams and personal
notes often constitutes more of the messages
OFFICE ETIQUETTES 149
Few Tips on Office Etiquettes
1. Respect colleagues having lunch at their desk 6. Keep your music to yourself
You’re sitting there quietly eating a sandwich and If you have to attend work related training etc keep
perhaps reading a book or a newspaper, when the volume non-existent by wearing headphones.
someone decides to come up and ask work-related
questions. Treat others on their lunch break as you 7. Stay home with the sniffles
would like to be treated on yours.
You may feel you should be applauded for bravely
2. Monitor your speaking volume soldiering into work when ill, but no-one else will. A
Kimberly-Clark report found 94 per cent of workers
People always tend to speak louder than necessary admitting they still turn up for work when experiencing
when on a mobile, so make sure you pipe down or go cold and flu symptoms. Eighty-five per cent of these
into the corridor. Talking to a friend from the phone think about the risk of passing on their illness to
on your desk? No one else wants to hear your colleagues but go in anyway. If you absolutely must
conversation about how you dumped your boyfriend appear, be considerate and use tissues and wash
or what you’re planning to wear when out tonight. your hands frequently to reduce the spread of germs.
Especially your boss.
8. Ask before borrowing
3. Be mindful of others needing the printer
Some people are fiercely protective of their office
“Printer etiquette” is a phrase. It refers to giving supplies. How many times have you been on a
preferential treatment to workers printing only one scavenger hunt to track down borrowed pens, staplers
page at a time, ahead of those using half an hour and scissors?
and half a forest to print out large documents.
9. Be on time
4. be sensitive about smells & smiles
According to a report by the BBC, two-out-of-three
Limit strong perfume, excessive body odour, and very people regularly turn up late for meetings. What
fragrant flowers — all of which can offend others. Hot message does it give to people if you’re always late,
take-away food and instant soups can also be very cancel at short notice or chat with others while
unpleasant, especially if you’re twenty floors up and a meeting is going on? Showing respect and tact in
relying on air-conditioning rather than being able to the workplace will help you build productive
open the windows. relationships.
5. Be tidy in the kitchen 10. Avoid taking part in office gossip
Remember when your mum would say, “Do you think No good ever comes from gossip and it only hurts
this is a hotel?” Similarly, at work, no one wants to others. If you’re seen as someone who is constantly
have to tidy up after your mess. Don’t leave food on meeting at the water cooler to discuss others, it will
the counter or dirty dishes in the sink for extended look as if you don’t have your priorities in order. In
periods of time. And check the fridge now and again addition, your superiors will think twice about sharing
to make sure the cheese you bought last month hasn’t confidential information with you.
sprouted a green disguise.
150 OFFICE ETIQUETTES
11. Don’t be a whiner 16. SMS Etiquette
No one wants to be around someone who complains ■ Texting is like writing so it has a formal and
all the time. You won’t be seen as a team player and informal approach.
your employer is less likely to promote you or give
■ For office mates dealing with bosses or bosses
you key projects because of your negativity. dealing with clients or anything that is about
business, it is best to call.
12. Don’t party like a rock star
■ If it is a text message, do it formally with the
Getting drunk is a faux pas in itself, and it often leads spellings and grammar intact i.e. informal text
to more inappropriate behavior, like telling bad jokes, messages, avoid abbreviating.
presenting yourself poorly, or making a fool of you.
17. E-mail Etiquette
At an interview or business meal, don’t order too much
food, and don’t order the priciest item, unless ■ Be concise and to the point.
everyone else is. Excessive ordering makes you ■ Don’t write in capital.
appear gluttonous, which reflects negatively on you.
Stick with ordering something middle of the road. ■ Reply on time.
13. Net for personal use ■ Don’t send or forward emails containing
defamatory, offensive, racist or obscene
You should avoid using net for personal use. Spending remarks.
lots of time on Facebook, downloading music, movie
■ Don’t forward virus hoaxes and chain letters.
should be avoided at all cost while you are at work.
18. Do recover gracefully
14. Check your eating habits
Overcoming an etiquette slip-up is a four-step
Do not spill food around the table, to make others process:
uncomfortable while dining. Make sure to properly
use the common resources in the kitchen. Help 1. Address the issue directly and don’t ignore it or
yourself. try to cover it up.
2. Apologize to the appropriate individual(s) and

15. Mind your attitude and Respect others
acknowledge that you made a mistake.
Park your vehicles and your attitude outside, behind 3. Make any necessary amends or take any action
the office premises. Give and gain respect. Words needed to remedy the situation.
can express the world, so monitor your expressions
and make sure you listen when people are speaking 4. Learn from your mistake and don’t repeat it
to you. again.
Key Points
■ Treat people with consideration and respect
Further Reading
1. Business Class: Etiquette essentials for success at work by Jacqueline Whitmore
2. The Etiquette Edge by Beverly Y. Langford
EXECUTIVE PRESENCE
INTRODUCTION and use mouthwash daily. Drink plenty of water to

keep your insides clean. This will also help to keep
Clothes and manners do not make the man; but, when your skin fresh on the outside.
he is made, they greatly improve his appearance.
Wear very little or no perfume. But in a country like
Grooming is necessary for the corporate world or ours, the use of a mild fragranced deodorant is
society in general. You should create powerful first compulsory.
impression. If you stink who is going to take you
seriously? Or want to be around you? It’s just plain
Hands, Feet and Nails
old professionalism.
Your hands talk for you! They should be clean and
Personal grooming is very important. Your smooth. Keep a small bottle of lotion to keep your
appearance says a lot. If you don’t care enough to hands moisturized. Nails should be clipped short (not
keep tidy, take care of yourself, and such, then you beyond1/2" beyond finger tips) and should be along
probably don’t care about many other aspects of your the shape of the fingers. Your feet should be kept
life.Your appearance influences the opinions of clean, with no cracks. Polish can be applied to both
everyone around you. Your professionalism, nails, but it should not be loud- i.e. not too bright or
intelligence, credibility, level of sophistication and the trendy. Delicate colours give a sheen to nails. They
trust people form in you is reflected from your can be devoid of polish also.
appearance.
Face
The way you look and act determines what people Make it a daily habit to clean your face twice a day
think about you. If you smile – people think that you following Cleansing, Toning and Moisturizing, one
are pleasant; if you wear wrinkled clothing people think after the other.Use face wash for cleaning your face.
that you do not care. How you feel about yourself on It should be according to your skin type. Toner is a
the inside should be reflected on the outside. Some must to give precious moisture to the skin.
of us know this; some of us do not. If we want the
outside world to respond to us in a positive way, we Make-Up
must look and act positively. Make-up is essential but should be natural looking.
The make–up should make you look fresh throughout
the day. Bright colours in nail-polish and lipstick should
What is grooming?
be avoided. Make-up, if required, can be refreshed
Grooming is nothing but taking care of one’s looks, during the day but it should never be applied in
hygiene and clothing. It is knowing what to do and public.Learn how to apply makeup properly.
putting it into practice on a daily basis.
Hair
It starts before you put on your clothing. It means
Your hair should complement your face and
taking care of your physical self,hair, skin, face, hands
complexion. Sport a maintainable length and style. If
and your total body.
hair is longer than the jaw line, it should be tied or
Result: It helps to lift your morale and increases your made into a bun. Hair holding devices should be in
self-esteem. plain/natural colours. Hair should be styled such that
it is away and out of your face.
What is Hygiene? Wash your hair at least 2-3 times a week with a good
Hygiene is an ongoing task. Have a Bath every day. quality shampoo. And then do not forget to use a
Your freshness should come across. Rinse or wash conditioner. Shampoo cleanses but also dries the hair.
your face at least two times a day. Brush your teeth
152 EXECUTIVE PRESENCE
The other option to provide moisturization to hair is Even in the Indian context, formal kurtapaijama are
to use hair oil. Oily and sticky or smelly hair in office generally not acceptable at work.
is a no-no. Hair colour should not be more than one
Ties should be made of silk or a silk-like fabric. Avoid
or two shades darker or lighter than your natural hair
the cartoon characters and go for simple and subtle
colour. Unnatural colours (burgundy, green, etc.) must
if you want to enhance your credibility.
be avoided.
Socks should be calf-length or above.
Health
For the body to look attractive outside, it should be Belts need to match or closely coordinate with your
healthy inside. Eat the right food. Proteins, shoes. Once again, quality counts.
Carbohydrates, and Vitamins; Junk food to be avoided
Keep jewellery to a minimum. In a time when men
(maximum of 1-2 outings a week). Exercise (yoga,
sport gold necklaces, bracelets and earrings, the
meditation, gym) to keep you fit. Sleep well (7 to 8
business professional should limit himself to a
hours a day) or be prepared for dark eye circles! Drink
conservative watch, a wedding band and maybe his
sufficient water (6 to 8 glasses per day). Practice
college ring.
simple chair exercises if your work involves sitting in
front of the computer for long duration. Watch your Professional Dress for Women - The same overall
pose. rules apply to women’s work attire as apply to men’s.
Business clothing is not a reflection of the latest
Clothes fashion trend.
How you dress depends on four factors: the industry
in which you work, the job you have within that Pants should break at the top of the foot or shoe.
industry, the geographic area in which you live; and Capri pants are out of place in the conservative
most importantly, what your client expects to see. business environment.
Try going to a busy restaurant at lunchtime. Look In the Indian context, formal salwar suits or sarees
around you at what people are wearing and see if are acceptable even in MNC environment.
you don’t make judgments about who they are, their
line of business, their personalities and their When it comes to accessories less is once again
competencies. Think about how you feel when you more. Keep it simple: one ring per hand, one earring
are dressed in your usual business attire as opposed per ear. Accessories should reflect your personality,
to casual dress. Your choice of business apparel not diminish your credibility.
speaks to your professional behaviour and credibility.
It is important to understand how to dress for business
Personal Grooming and Career
if you wish to promote yourself and your organization
in a positive manner. The role personal grooming plays in one’s career
growth and job search success. The overwhelming
Professional Dress for Men - Choose a conservative majority (90 percent) of HR professionals said that a
suit in navy, black or gray either pinstripe or solid. job seeker’s appearance (whether he or she looks
The quality of the material speaks as loudly as the neat and clean) is most important to making a good
colour and can make the difference between sleaze first impression during a job interview. Well-groomed
and suave. candidates project more confidence than candidates
who don’t pay close attention to their appearance,
A solid white or blue dress shirt with long sleeves
according to more than 90 percent of respondents.
offers the most polished look. The more pattern and
Meanwhile, candidates who show up for job interviews
colour you add, the more the focus is on your clothing,
with a five-o’clock shadow, with grit under their
rather than your professionalism.
fingernails, wearing wrinkled or dirty clothes, or with
EXECUTIVE PRESENCE 153
their hair in disarray come off as unprofessional and said that neat, clean employees climb the corporate
put themselves at a serious disadvantage. In fact, ladder faster than employees who aren’t well-
more than 50 percent of HR professionals surveyed groomed.
said that candidates who show up for job interviews
looking slovenly or unkempt give them the impression
that they don’t want the job. What’s more, well-
Key Points
groomed employees tend to be more successful than ■ Grooming helps to lift your morale and increases
slovenly employees: 84 percent of HR professionals your self-esteem
Further Reading
1. Dress for Success (John T Molloy)
BUSINESS ENVIRONMENT – INDIAN & GLOBAL
INTRODUCTION
control of the business and they affect the functioning
Understanding the environment within which the of a business enterprise. These include customers,
business has to operate is very important for running competitors, suppliers, government, and the social,
a business unit successfully at any place. Because, political, legal and technological factors etc. While
the environmental factors influence almost every some of these factors or forces may have direct
aspect of business, be it its nature, its location, the influence over the business firm, others may operate
prices of products, the distribution system, or the indirectly. Thus, business environment may be defined
personnel policies. Hence, it is important to learn as the total surroundings, which have a direct or
about the various components of the business indirect bearing on the functioning of business. It may
environment, which consists of the economic aspect, also be defined as the set of external factors, such
the socio-cultural aspects, the political framework, the as economic factors, social factors, political and legal
legal aspects and the technological aspects etc. factors, demographic factors, and technical factors
etc., which are uncontrollable in nature and affects
The term ‘Business Environment’ connotes external
the business decisions of a firm.
forces, factors and institutions that are beyond the
ECONOMIC SOCIAL POLITICAL

FACTORS FACTORS FACTORS
BUSINESS
ENVIRONMENT
TECHNOLOGICAL DEMOGRAPHIC LEGAL

FACTORS FACTORS FACTORS
Features of Business business environment. Environment is an

inseparable part of business which cannot
Environment operate in vacuum.
1. Environment is the Surrounding Situation:
Business Environment means the surrounding 2. Environment is Complex: Business
situation within which business organization has Environment has now become extremely
to operate. It is a sum total of cultural, political, complex and the government intervention has
economical, social, physical, technological, legal become more frequent. Business environment
and global forces which move around the is a complex phenomenon and also difficult to
business organization. These forces collectively grasp and face in its totality. This is because it is
create a socio-economic-political situation called governed by external factors. Environment
BUSINESS ENVIRONMENT – INDIAN & GLOBAL 155
develops by chance and not by choice. In adjust itself with the local, national and
addition, the environment factors vary from international environment.
country to country. The business environment
in India and in USA may not be identical. 7. Environment Influences Business
Organization: Business organizations have
3. Environment is Dynamic: Business limited capacity to influence business
Environment is dynamic and perpetually environment as it is the result of government
evolving. It changes frequently due to various policies and social and technological changes
external forces i.e. economic, political, social, which are basically external variables.
international, technological and demographic.
Such dynamism in the environment brings 8. Environment and Business Planning go
continuous change in its character. Business Together: Business Environment and business
enterprises have no alternative but to operate planning are closely related concepts. In fact,
under such dynamic environment. The only planning is necessary in order to derive
remedy is adjust business as per environmental maximum benefit from favorable environment.
changes. Similarly, planning is useful for dealing with the
problems created by unfavorable environment.
4. Environment is Multi Faceted: Environmental
changes are frequent but their shape and 9. Environment needs Adaptability: Business
character depends on the Knowledge & have to learn adjust with ever changing business
Experience of the observer. A particular change environment. One of the basic laws of nature is
in the environment may be viewed differently by that adaptability is the price of survival. In the
different businessmen. This change is welcomed prehistoric ages, the dinosaur and the mastodon
as an opportunity by some organizations – two of the strongest and largest animal that
while some others take it as a threat for their ever lived, perished, while the insignificant
survival. cockroach survived. The reason was that those
mighty animals could not adjust themselves to
5. Environment has Long Term Impact on changes brought about by the passage of
Business: Environment has long lasting impact centuries, while the cockroach could.
on functioning of business organizations. Their Businessmen have to adjust with the prevailing
growth and profitability depends upon the environment. This adaptability is the price or the
environment under which they have to operate. key survival in the business world.
Environment influences business enterprises.
Such influences may be positive or negative & 10. Business Environment Changes Regularly:
may affect the profitability, efficiency & The environment factors changes regularly. The
development of business. Business Environment in India is totally different
as was in past. Future environment is the product
6. Environment Needs Minute Study by of past & present environment.
Business Organizations: Every business
organization has to study changes constantly Confining business environment to
taking place in the environment forces. This uncontrollable external factors, it may be
facilitates easy adjustments of business as per classified as (a) Economic environment; and (b)
environmental changes. Such adjustment is Non-economic environment. The economic
necessary for its survival and growth. environment includes economic conditions,
Environmental factors are, by and large, external economic policies and economic system of the
as well as uncontrollable. In view of these country.
constraints businessmen have to study the
environment minutely and face it boldly. The Non-economic environment comprises social,
success of business depends on its ability to political, legal, technological, demographic and
156 BUSINESS ENVIRONMENT – INDIAN & GLOBAL
natural environment. All these have a bearing and control the industrial enterprises of the
on the strategies adopted by the firms and any country and shape the pattern of industrial
change in these areas is likely to have a far- development.
reaching impact on their operations.
(ii) Fiscal policy: It includes government policy in
respect of public expenditure, taxation and public
Economic Environment debt.
The survival and success of each and every business
(iii) Monetary policy: It includes all those activities
enterprise depend fully on its economic environment.
and interventions that aim at smooth supply of
The main factors that affect the economic
credit to the business and a boost to trade and
environment are:
industry.
(a) Economic Conditions: The economic
(iv) Foreign investment policy: This policy aims
conditions of a nation refer to a set of economic
at regulating the inflow of foreign investment in
factors that have great influence on business
various sectors for speeding up industrial
organisations and their operations. These
development and take advantage of the modern
include gross domestic product, per capita
technology.
income, markets for goods and services,
availability of capital, foreign exchange reserve,
(v) Export–Import policy (Exim policy): It aims
growth of foreign trade, strength of capital
at increasing exports and bridge the gap
market etc. All these help in improving the pace
between expert and import. Through this policy,
of economic growth.
the government announces various duties/
levies. The focus now-a-days lies on removing
(b) Economic Policies: All business activities and
barriers and controls and lowering the custom
operations are directly influenced by the
duties.
economic policies framed by the government
from time to time. Some of the important
(c) Economic System: The world economy is
economic policies are:
primarily governed by three types of economic
systems, viz.,
(i) Industrial policy
(ii) Fiscal policy (i) Capitalist economy; (ii) Socialist economy;
(iii) Monetary policy and (iii) Mixed economy. India has adopted the
(iv) Foreign investment policy mixed economy system which implies co-
(v) Export–Import policy (Exim policy) existence of public sector and private sector.
The government keeps on changing these policies

from time to time in view of the developments taking Non-economic Environment
place in the economic scenario, political expediency (a) Social Environment
and the changing requirement. Every business firm
The social environment of business includes social
has to function strictly within the policy framework and
factors like customs, traditions, values, beliefs,
respond to the changes therein.
poverty, literacy, life expectancy rate etc. The social
structure and the values that a society cherishes have
Important Economic Policies a considerable influence on the functioning of
business firms. For example, during festive seasons
there is an increase in the demand for new clothes,
(i) Industrial policy: The Industrial policy of the sweets, fruits, flower, etc. Due to increase in literacy
government covers all those principles, policies, rate the consumers are becoming more conscious of
rules, regulations and procedures, which direct the quality of the products. Due to change in family
composition, more nuclear families with single child (iii) The Factories Act, 1948
concepts have come up. This increases the demand (iv) Industrial Disputes Act, 1972
for the different types of household goods. It may be (v) Payment of Gratuity Act, 1972
noted that the consumption patterns, the dressing and
(vi) Industries (Development and Regulation) Act,
living styles of people belonging to different social
1951
structures and culture vary significantly.
(vii) Prevention of Food Adulteration Act, 1954
■ Capitalist Economy: Emphasis on private (viii) Essential Commodities Act, 2002
ownership. (ix) The Standards of Weights and Measures Act,
1956
■ Socialist Economy: Resources are owned and (x) Monopolies and Restrictive Trade Practices Act,
managed by the state. 1969
(xi) Trade Marks Act, 1999
■ Mixed Economy: Co-existence of public and
private sectors. (xii) Bureau of Indian Standards Act, 1986
(xiii) Consumer Protection Act, 1986
(b) Political Environment (xiv) Environment Protection Act
This includes the political system, the government (xv) Competition Act, 2002
policies and attitude towards the business community
and the unionism. All these aspects have a bearing Besides, the above legislations, the following are also
on the strategies adopted by the business firms. The form part of the legal environment of business.
stability of the government also influences business
and related activities to a great extent. It sends a signal (i) Provisions of the Constitution: The provisions
of strength, confidence to various interest groups and of the Articles of the Indian Constitution, particularly
investors. Further, ideology of the political party also directive principles, rights and duties of citizens,
influences the business organisation and its legislative powers of the central and state government
operations. You may be aware that Coca-Cola, a cold also influence the operation of business enterprises.
drink widely consumed even now, had to wind up its
(ii) Judicial Decisions: The judiciary has to ensure
operations in India in late seventies. Again the trade
that the legislature and the government function in
union activities also influence the operation of
the interest of the public and act within the boundaries
business enterprises. Most of the labour unions in
of the constitution. The various judgments given by
India are affiliated to various political parties. Strikes,
the court in different matters relating to trade and
lockouts and labour disputes etc. also adversely affect
industry also influence the business activities.
the business operations. However, with the
competitive business environment, trade unions are
(d) Technological Environment
now showing great maturity and started contributing
positively to the success of the business organisation Technological Environment include the methods,
and its operations through workers participation in techniques and approaches adopted for production
management. of goods and services and its distribution. The varying
technological environments of different countries
affect the designing of products. For example, in USA
(c) Legal Environment
and many other countries electrical appliances are
This refers to set of laws, regulations, which influence
designed for 110 volts. But when these are made for
the business organisations and their operations. Every
India, they have to be of 220 volts. In the modern
business organisation has to obey, and work within
competitive age, the pace of technological changes
the framework of the law. The important legislations
is very fast. Hence, in order to survive and grow in
that concern the business enterprises include:
the market, a business has to adopt the technological
(i) Companies Act, 1956 changes from time to time. It may be noted that
scientific research for improvement and innovation
(ii) Foreign Exchange Management Act, 1999
in products and services is a regular activity in most At the time of independence, the Indian economy was
of the big industrial organisations. Now a days infact, basically agrarian with a weak industrial base. To
no firm can afford to persist with the outdated speed up the industrial growth and solve various
technologies. economic problems, the government took several
steps like state ownership on certain categories of
(e) Demographic Environment industries, economic planning, reduced role of private
This refers to the size, density, distribution and growth sector, etc. The Government adopted several control
rate of population. All these factors have a direct measures on the functioning of private sector
bearing on the demand for various goods and enterprises. All these efforts resulted a mixed
services. For example, a country where population response. There was growth in net national product,
rate is high and children constitute a large section of per capita income and development of capital goods
population, then there is more demand for baby sector and infrastructure. But rate of industrial growth
products. Similarly the demand of the people of cities was slow, inflation increased and government faced
and towns are different than the people of rural areas. a serious foreign exchange crisis during eighties. As
The high rise of population indicates the easy a result, the government of India introduced a radical
availability of labour. These encourage the business change in economic policies in 1991. This policy
enterprises to use labour intensive techniques of abolished industrial licensing in most of the cases,
production. Moreover, availability of skill labour in allowed private participation in most industries,
certain areas motivates the firms to set up their units disinvestment was carried out in many public sector
in such area. For example, the business units from industrial enterprises and opened up the economy
America, Canada, Australia, Germany, UK, are considerably. Foreign Investment Promotion Board
coming to India due to easy availability of skilled was set up to channelise foreign capital investment
manpower. Thus, a firm that keeps a watch on the in India. Let us discuss the developments under three
changes on the demographic front and reads them heads, viz., (a) Liberalisation, (b) Privatisation, and
accurately will find opportunities knocking at its (c) Globalisation.
doorsteps.
(A) LIBERALISATION
(f) Natural Environment Liberalisation refers to the process of eliminating
The Natural Environment includes geographical and unnecessary controls and restrictions on the smooth
ecological factors that influence the business functioning of business enterprises. It includes:
operations. These factors include the availability of
natural resources, weather and climatic condition, (i) abolishing industrial licensing requirement in
location aspect, topographical factors, etc. Business most of the industries;
is greatly influenced by the nature of natural
(ii) freedom in deciding the scale of business
environment. For example, sugar factories are set
activities;.
up only at those places where sugarcane can be
grown. It is always considered better to establish (iii) freedom in fixing prices of goods and services;
manufacturing unit near the sources of input. Further,
government’s policies to maintain ecological balance, (iv) simplifying the procedure for imports and
conservation of natural resources etc. put additional exports;
responsibility on the business sector.
(v) reduction in tax rates; and
Recent Developments In Indian (vi) simplified policies to attract foreign capital and
Economy technology to India.
The economic environment of business in India has Through this liberalisation process, Indian Economy
been changing at a fast rate mainly due to the has opened up and started interacting with the world
changes in the economic policies of the government. in a big way. This has resulted in easy entry of foreign
business organizations in India. This has further investment and encouragement of foreign technology.
resulted in stiff competition and efficiency. Ultimately, These measures are expected to achieve a higher
liberalization has helped us in achieving a high growth rate of growth, enlargement of employment potential,
rate, easy availability of goods at competitive rates, a and reduction of regional disparities.
healthy and flourishing stock market, high foreign
exchange reserve, low inflation rate, strong rupee,
good industrial relations, etc. Recent Growth trends in Indian
Economy
(B) PRIVATISATION Following has been the highlights of growth trends in
Privatisation refers to reducing the role of public sector Indian Economy of late —
by involving the private sectors in most activities. Due
to the policy reforms announced in 1991, the ■ Agriculture grew at 6.6% in 2010-11. This year’s
expansion of public sector has literally come to a halt monsoon is projected to be in the range of 90 to
and the private sector registered fast growth in the 96 per cent, based on which Agriculture sector
postliberalised period. The issues of privatisation is pegged to grow at 3.0% in 2011-12.
include: ■ Industry grew at 7.9% in 2010-11. Projected to
grow at 7.1% in 2011-12
(i) Reduction in the number of industries reserved
■ Services grew at 9.4% in 2009-10. Projected to
for the public sector from 17 to 8 (reduced further
grow at 10.0% in 2011-12
to 3 later on) and the introduction of selective
competition in the reserved area; ■ Investment rate projected at 36.4% in 2010-11
and 36.7% in 2011-12
(ii) Disinvestment of shares of selected public sector ■ Domestic savings rate as ratio of GDP
industrial enterprises in order to raise resources projected at 33.8% in 2010-11 & 34.0% in 2011-
and to encourage wider participation of general 12
public and workers in the ownership in business; ■ Current Account deficit is $44.3 billion (2.6%
of GDP) in 2010-11 and projected at $54.0 billion
(iii) Improvement in performance through an MOU (2.7% of GDP) in 2011-12
system by which managements are to be
■ Merchandise trade deficit is $ 130.5 billion or
granted greater autonomy but held accountable
7.59% of the GDP in 2010-11 and projected at
for specified results. In India, as a result of these
$154.0 billion or 7.7% of GDP in 2011-12
steps, the post liberalisation phase has
■ Invisibles trade surplus is $ 86.2 billion or 5.0%
witnessed a massive expansion of the private
of the GDP in 2010-11 and projected at $100.0
sector business in India. You can have an idea
billion or 5.0% in 2011-12
of their expansion from the fact that the total
capital employed in top 500 private sector ■ Capital flows at $61.9 billion in 2010-11 and
companies rose from Rs. 1,39,806 crores in projected at $72.0 billion in 2011-12
1992-93 to Rs. 2, 34, 751 crores in 1994-95 (an ■ FDI inflows projected at $35 billion in 2011/12
expansion of 68% in just two years). against the level of $23.4 billion in 2010-11
■ FII inflows projected to be $14 billion which is
(C) GLOBALISATION less than half that of the last year i.e $30.3 billion
Globalisation means ‘integrating’ the economy of a ■ Accretion to reserves was $15.2 billion in 2010-
country with the world economy. This implies free flow 11. Projected at $18.0 billion in 2011-12
of goods and services, capital, technology and labour ■ Inflation rate continued to be at 9 per cent in
across national boundaries. To achieve these the month of July-October 2011.
objectives of globalisation, the government has
adopted various measures such as reduction in Business Process Outsourcing (BPO) &
custom duties, removal of quantitative restrictions or Knowledge Process Outsourcing (KPO)
quotas on exports and imports, facilitating foreign Business Process Outsourcing (BPO) is the act of
giving a third-party the responsibility of running what India - the World’s Preferred BPO destination
would otherwise be an internal system or service. For India has won its spurs as the world’s outsourcing
instance, an insurance company might outsource their destination of choice. Currently the country has a
claims processing program or a bank might outsource commanding share of the global outsourcing market.
their loan processing system. Other common
examples of BPO are call centres and payroll The Union Communications and Information
outsourcing. Technology Ministry in India states that the Indian IT-
BPO sector is likely to achieve a target of USD 60
Typically, companies that are looking at business billion in export revenues by 2010. Services
process outsourcing are hoping to achieve cost outsourced to India include the functions within
savings by handing the work to a third-party that can administrative support, customer relationship
take advantage of economies of scale by doing the management, technical support, document
same work for many companies. Or perhaps the cost processing, financial and accounting Services,
savings can be achieved because labor costs are intellectual property research and documentation,
lower due to different costs of living in different supply chain management, legal services, regulatory
countries. compliance documentation, medical transcription,
payroll processing services, sales and marketing,
In exchange for the potential cost savings, the publishing, research and analysis, security,
company in question must relinquish control over an infrastructure and facilities management, human
aspect of their business which explains why business resource management and training.
process outsourcing is often reserved for non-critical,
non-core type of work. Evolution of the BPO industry in India
India’s BPO industry has evolved and matured to
Frequently, BPO is also referred to as ITES —
present higher-end services that require judgment-
Information Technology-Enabled Services. Since
based analysis and domain expertise, rather than
most business processes include some form of
function-specific, rules-based performance
automation, IT “enables” these services to be
parameters alone. As service providers strive to offer
performed. BPO is as old as business itself.
end-to-end services, we see BPO falling into different
Businesses have outsourced their distribution or
segments. At one end of the spectrum is the traditional
marketing to third parties for centuries. It is the
rules-based transactional outsourcing; while at the
opening up of the global economy that has catalyzed
other end is judgment-based transaction processing
the growth of BPO to its present stature as a key
and full-service business process outsourcing.
driver of business competitiveness. The roadmap for
outsourcing success has been laid with:
India has competencies in all the segments. Some
■ Quality processes BPO service providers have developed vendor-
centric business models where they offer specialized
■ Scalability
services under one roof by representing the services
■ Integration of global markets
of multiple specializing in different verticals. Others
■ Seamless global delivery of work across borders
are niche players that have adopted vertical-specific
through the internet
models to address the needs of a specific industry,
Today, Business Process Outsourcing is known by such as healthcare or insurance.
many other names, among the popular marketing
terms being: sourcing, global outsourcing, right BPO Trends
sourcing, right shoring, near shoring, best shoring, The BPO industry is a developing sector and is being
off shoring. Whatever the business world chooses to studied by analysts and researchers all over the world.
call it, business process outsourcing is a proven Analysts tracking BPO have observed the following
management strategy helping businesses survive and trends in the industry:
thrive in the boundary-less global economy.
The BPO market worldwide is expanding with new 4. The build-operate-transfer or BOT model:
services getting added to the list of business The client partners with an offshore company to
processes that are outsourced and new locations set up and operate a foreign outsourcing
coming up as potential offshore destinations, India subsidiary with the option to transfer ownership
being the most preferred destination for offshore BPO. back to the client company after a specified time
period. The risks of setting up an outsourcing
Cost savings is one of the most important drivers now. subsidiary in a foreign country are completely
Information security, execution capability and financial borne by the partner company which takes care
stability are important considerations while selecting of the costs and ownership of the new venture
a vendor. until such time as the client chooses to take it
over.
BPO Business Models
The BPO industry features five business models: 5. The global shared services model :Global
shared services centers, also called offshore in-
1. The global delivery model - also called sourcing or captive centers create huge service
blended outsourcing: It combines onsite, enters from the company’s internal service
offsite, onshore, and offshore resources. Large operations resources. They also have assured
multinational outsourcing service providers offer markets for their services. These centers can
this model where work can be “bestshored” or be run as independent businesses and have the
“multishored” to the location where optimal cost advantages of a similar corporate culture, with
and labor efficiencies are met to predetermined less of the control issues that third-party BPOs
performance standards. In case of a disaster in face.
a particular region, work can be immediately
transferred to another region to ensure on-going,
interruption-free business processes.
Constituents of BPO
Administrative support: Outsourcing of
2. The hybrid model or dual-shore model : It administrative support functions includes data entry,
leverages onsite-offshore efficiencies to delivers document conversion, forms processing, document
results to clients at reduced costs. Clients are scanning, indexing, secretarial tasks support, etc.
involved in the process as the Global team of
the offshore vendor works onsite alongside the Finance and accounting: Finance and accounting
client’s team to perform around 20% of the work outsourcing includes services such as internal
while the Local team executes 80% of the work auditing, time and expense management, travel
offshore to leverage the cost, labor and time- expenses, credit and debt analysis, collections,
invoicing, accounts payable, accounts receivable and
zone advantages of outsourcing.
billing-dispute resolution.
3. The offshore multi-sourcing model or hub-
Legal services: Legal process outsourcing (LPO)
and-spoke model: It uses multiple offshore
involves consulting, research, transcription,
suppliers to offset the risk of a single monopoly
documents management, billing, translation and other
supplier. Users of this model typically have their
administrative and secretarial support services
own offshore operations, plus three or more required for various legal functions such as
partner outsourcing vendors with whom they commercial litigation, arbitration and mediation,
collaborate. The partners get first-hand training appeals, government contracts, legal risk evaluation,
on how the outsourcing company operates its etc.
hub center, and then apply their learning at the
spoke centers. Research and analysis: Companies require data and
its analysis for making informed strategic decisions.
These companies have started outsourcing their Maintaining these resources and implementing a fool-
research and analysis requirements to vendors who proof security policy is a difficult task which can be
specialize in typical research and analysis work such better handled by experienced third party security
data analytics, financial analytics, market research, agencies. Security outsourcing involves management
secondary research, primary research, industry of investigative services, physical security, electronic
overview, competitive intelligence, etc. security systems, computer and network security, etc.
Customer relationship management: Customer Supply chain management: Outsourcing in supply

service outsourcing includes outsourcing of functions chain management involves logistics, procurement,
such as customer support, order taking, customer warehouse management, contract management,
service, product support, technical help desk, supply chain relationship management, etc.
collections and market research.
Sales and marketing (including telemarketing):
Document processes: Document process Sale and marketing outsourcing involves delegating
outsourcing includes outsourcing of customer facing, parts of sales and marketing functions such as cold
technical, marketing and communications, financial calling, email pitches, telephone surveys, lead
accounting, and regulatory compliance documents. generation, lead qualifying, appointment setting, sales
team management, etc.
Human resources and training: Human resources
(HR) is one of the most critical assets of a company Payroll maintenance and other transaction
and companies need to carry out various tasks such processing: This segment includes payroll, payment,
as recruitment, training, attrition/ retention, database check, credit card and stock trade processing.
management, contract-worker management, etc., for
their employees. Carrying out these tasks through Intellectual property research and documentation:
an internal HR department is costly and diverts the Outsourcing in intellectual property research and
attention of the management from its core business documentation includes filing and drafting of patent
issues. Hence, companies are now resorting to HR applications, prior art research, licensing support, and
outsourcing big time. patent portfolio analysis.
Product development: Companies need to

constantly innovate to remain competitive in the Benefits of BPO
market. With the increasing specialization of expertise Robust IT and telecommunications infrastructure:
required to carry out product development, companies The developments in IT and telecommunications
choose to outsource their R&D functions to vendors infrastructure has enabled companies to transfer data
who have expertise in a given field. Over the past to any place in the world instantaneously at very little
few years, numerous MNCs have initiated off shoring cost. This infrastructure also allows them to increase
R&D to other countries including India which is their ROI and shareholder value.
emerging as a hub for R&D outsourcing.
Pressure to lower costs: Companies are facing
Medical transcription: Medical transcription is writing huge competition from their competitors to provide
down medical records dictated by physicians and better services, and at the same time lower their costs.
other healthcare professionals. These records include Companies are constantly innovating the way they
patient history and physical reports, clinic notes, are conducting businesses and BPO allows them to
therapeutic procedures, clinical course, diagnosis, partner with external specialized vendors for efficient
prognosis, discharge summaries, etc. operations. Offshore BPO is cheaper than onshore
BPO and many companies are now moving their
Security: Companies have to search for new operations to offshore locations, India being the most
technologies and employee qualified security preferred destination.
professionals to keep their data secure from theft.
Little infrastructure for automation: The IT undone if they conflict with higher-level business
revolution has not achieved success in automating plans.
business processes and most of the business
processes still need human labor for productive It is being claimed that KPO is one step extension of
delivery. In such a scenario, resorting to BPO, which Business Processing Outsourcing (BPO) because
provides human labor at a lower cost, enables BPO Industry is shaping into Knowledge Process
companies to maximize their ROI. Outsourcing because of its favourable advantageous
and future scope. But, let us not treat it only a ‘B’
Specialization and Quantum 24 x 7 service: replaced by a ‘K’. In fact, Knowledge process can be
enhanced ability to operational reduction in defined as high added value processes chain where
set, measure and improvement turnaround time
the achievement of objectives is highly dependent
monitor quality by leveraging time
targets zone differences
on the skills, domain knowledge and experience of
the people carrying out the activity. And when this
activity gets outsourced a new business activity
Limitations of BPO emerges, which is generally known as Knowledge
Loss of control: Companies perceive the risk of Process Outsourcing. Knowledge Processing
losing control over the operations of their processes. Outsourcing (popularly known as a KPO), calls for
Also, if the (trained) employees in the vendor firm the application of specialized domain pertinent
leave the job, the buyer may be at risk. knowledge of a high level. The KPO typically involves
a component of Business Processing Outsourcing
Financial instability of the vendor: If the vendor (BPO), Research Process Outsourcing (RPO) and
becomes financially unstable in some years, the buyer Analysis Proves Outsourcing (APO). KPO business
will have to search another vendor; the operations entities provide typical domain-based processes,
being at risk, if it does not search the new vendor advanced analytical skills and business expertise,
fast. rather than just process expertise. KPO Industry is
handling more amount of high skilled work other than
Loss of expertise: Customers may lose the expertise the BPO Industry. While KPO derives its strength from
and knowledge of carrying out the outsourced the depth of knowledge, experience and judgment
processes with time. factor; BPO in contrast is more about size, volume
and efficiency.
Data security: Data confidential to the customer may
be prone to theft if the vendor firm does not have In fact, it is the evolution and maturity of the Indian
stringent security policies. BPO sector that has given rise to yet another wave in
the global outsourcing scenario: KPO or Knowledge
Knowledge Process Outsourcing Process Outsourcing. The success achieved by many
overseas companies in outsourcing business process
(KPO) operations to India has encouraged many of the said
Knowledge process outsourcing (KPO) is a form of companies to start outsourcing their high-end
outsourcing, in which knowledge-related and knowledge work as well. Cost savings, operational
information-related work is carried out by workers in efficiencies, availability of and access to a highly
a different company or by a subsidiary of the same skilled and talented workforce and improved quality
organization, which may be in the same country or in are all underlying expectations in outsourcing high-
an offshore location to save cost. Unlike the end processes to India.
outsourcing of manufacturing, this typically involves
high-value work carried out by highly skilled staff. KPO Popular KPO (Knowledge Process Outsourcing)
firms, in addition to providing expertise in the Areas
processes themselves, often make many low level The large professional class available in many
business decisions—typically those that are easily developing countries like India has created trained
workers in all the modern fields of industry and Opportunities for Chartered Accountants in KPO
business. These include law, pharmaceuticals, The work to be performed in the KPO industry is of a
biotechnology, data analysis and management specialised nature. Chartered Accountants with
services, financial services, technology research, considerable exposure to trade and industry together
computer-aided simulation and engineering design, with accounting and auditing hold an advantage over
and other professional services. Some of the popular professionals from different backgrounds. Finance
KPO areas are described below: related work in the KPO industry might involve equity
research, business valuations, investment avenues
Major Companies and Firms using KPO and market analysis. People with in-depth market
Major corporations and business firms are already knowledge will be better able to serve KPO clients.
using KPO services to enhance their business. These KPO is management consultancy; a field where CAs
include some of the leading blue chip companies of have strong and established expertise. The ideal KPO
the U.S. employee should possess good computer skills, be
domain specialists, possess a high level of
Search Engine Optimization (SEO) conceptualisation, have the aptitude to manage
SEO primarily focuses on search engine marketing different database systems and be research- oriented.
business. The marketing methods employed are Additionally, the employee should be consistent with
Organic SEO, Direct Site promotions, Affiliate Internet good English language and writing skills and must
Marketing, PPC Search engines, Site Membership hold a professional degree. Chartered Accountants
mailings etc. possess these qualities and together with their natural
flair for mathematics and research, they are ideal
Legal Services candidates to be a vital part of the KPO boom in
India.
What started out as transcription work in India has
now moved on to areas like patents, drafting, legal
research, writing software licensing agreements, etc. Difference between KPO & BPO
Process: It is not a simple case of the ‘K’ replacing
Accounting Services
the ‘B’. KPO involves high-end processes like
From simple book keeping to auditing, KPO firms can
valuation and investment research, patent filing, legal
provide trained professionals who offer cheaper
and insurance claims processing, amongst others.
services with standard quality.
Focus: Unlike conventional BPO where the focus is
Journalism and Content Development on process expertise, in KPO, the focus is on
English speaking trained writers from a KPO firm are knowledge expertise.
good candidates to help newspapers and journals with
their editing and copy writing work. This sector has Specialisation: The difference lies in domain
recently seen a good growth with the rise of content specialisation. BPO employees do not generally
development firms. require specialized knowledge. Customer care
executives at a BPO require good knowledge of the
Architectural and Engineering Services English language, the ability to be articulate and
A large pool of trained draftsmen can provide expert possess basic computer skills. On the other hand, a
CAD/CAM services to clients. KPO organisation specialising in equity or financial
analysis for example, can employ highly qualified
Other Key KPO Areas professionals who possess high-end knowledge of
accounts and finance.
The areas of KPO services are as vast as the field of
business and industry. These include programming,
Driving Force: While KPO organizations are
software development, English language services,
knowledge-driven, BPOs are process driven.
content development, web site design and promotion,
etc.
Activities: KPO involves off shoring of knowledge KPO has the potential of becoming a showcase of
intensive business processes that demand human capabilities beyond IT and BPO, offering the
specialised expertise. This delivers high value to perspective of a sustainable and defensible presence
organisations by providing much required business in an increasingly competitive global services market
expertise. A few examples of KPO businesses are place.
online teaching, patent filing, legal and insurance
claims processing, valuation research, investment KPO services help improve the time-to-market and
research and media content supply. BPO on the other speed factors and access to special skills. Additionally
hand, involves a predefined way of handling a they provide peak load absorption by reducing
business process, which is taught to agents or complexities, while at the same time increasing
employees. BPO services normally include flexibility, thus enhancing organisational productivity.
transaction processing, setting up a bank account, Consistent quality is what really drives buying
selling of insurance policies, technical support and decisions.
voice and email-based support.
KPO services can enable enterprises to reduce
Contact with clients: Unlike BPOs, KPO employees design-to-market lead times, manage critical
tend to have greater direct contact both with hardware efficiently, provide research on markets,
international clients and with their teams overseas, competitions, products and services and enhance
once again underscoring the need for specialised organisation effectiveness in business administration;
skills. This could mean establishing direct channels all of which help in dealing with rapidly evolving
of communication with a team member overseas to business scenarios.
seek clarifications in the midst of completing work. If
the work involved is complicated, direct Challenges before KPO
communication with the client may also be needed,
as seen in several cases of filing tax returns. When Even though points mentioned above make KPO
comparisons are drawn between BPOs and KPOs, businesses a lucrative option for qualified personnel
some experts mention that KPOs are no different from to work in, there are many grey patches that recruiters
BPOs; that they are only a variant of BPOs. Broadly have to go through. As KPOs deliver high value
speaking, KPO is a division of BPO. While occupying services to organisations by providing domain-based
the higher end of the BPO spectrum, KPOs owe their processes and business expertise, it is not easy to
existence to BPOs. KPOs are a natural progression become a strong KPO power. There are many risk
from BPOs. factors that KPO organisations face. These processes
demand that prospective KPO employees have
Advantages of KPO advanced analytical and specialised skills together
with domain experience. Therefore, outsourcing of
By outsourcing work to low cost countries, firms in
knowledge processes poses greater challenges than
developed nations can save on costs that amount to
outsourcing business processes. The nature of KPO
anywhere between 40-70 per cent.
businesses necessitates greater infrastructure
Revenue from KPOs is at least twice that of BPOs — investments than their BPO counterparts. They also
$22 to $24 per hour offered by KPOs compared to $8 have to adhere to higher quality standards. Some of
to $11 per hour offered by BPOs - while the capital the other challenges facing KPOs are the lack of a
expenditure per seat is about the same at $6,000 to talent pool and confidentiality issues. Effective
$8,000. execution of KPO projects is a difficult proposition;
one that requires a ‘professional services culture’
KPO is a large and exciting opportunity for developing rather than a BPO culture. Processes executed within
countries, which not only generates revenue for them, the KPO domain require higher quality standards
but also significantly increases the country ’s profile because the stakes for the clients are high. Another
in the global high-value added services markets. challenge in the management of a KPO is the
identification of performance criteria – setting the right
expectations with the end-client as well as the E-FT (Electronic Funds Transfer),
professionals they hire. Continuous assessment and
monitoring, constructive feedback, appropriate E-Cash (Electronic Cash),
coaching and mentoring and identification of right
career paths for their professionals. Attrition would E-Stamp (Electronic Stamp),
be one of the biggest problems facing KPOs. It is not
E-Mail (Electronic Business or Mail),
easy for companies to attract and retain the right kind
of employees. Most qualified professionals perceive E-Commerce (Electronic Commerce)
it to be low-grade work. Besides, popular perceptions
about BPOs and pressures of 24x7 environments also
refrain professionals from opting to work in KPO Business applications of E-
companies as a career. In the case of BPO, the only commerce
prerequisite to get the job is knowledge and ability to
speak fluent English, while also having basic In this section, an attempt is made to give some of
computer skills. However, in KPO the companies look the business applications of E-Commerce. The major
for individuals who have homogenous mix of area of applications is business-to-consumer,
knowledge, English speaking skills, attitude and prior business-to-business and internal business process.
work experience. Challenges before the KPO can be
summarised as follows: (a) Business-to-Consumer
E-Commerce, between business and consumers, is
1. They require higher quality standards. accelerating the impact of information technology on
2. KPOs are more advanced and have costly consumer behaviour and business processes and
infrastructure. markets. It establishes the interrelationships among
3. They are likely to require higher amounts of E-Commerce, Consumer behaviour, and business
capital. processes and competition. Retailing on the web is
an example for the same.
4. They face lack of a good talent pool.
5. They require a higher level of control, (b) Business-to-Business
confidentiality and enhanced risk management. Business-to-Business electronic commerce is the
wholesale side of the commercial process. For
example, suppose a business house wants to produce
E-commerce and M-commerce and sell a product to other business houses, it must
E-commerce purchase raw materials and variety of contract
It refers to the paperless exchange of business services from other business houses in order to
information using network-based technologies. In the produce and sell a product. It should also make up a
past, an information-using network based network of business relationship.
technologies. In the past, a consumer had ample time
to go from store to store locate a desired item, followed (c) Internal Business Process
by bargaining, placing an order and finally getting the The purpose behind intra organisational E-commerce
supply. This entire process could range from a few is to help a business maintain relationships, which
hours to weeks depending on the product, quantity, are critical in delivering superior customer service.
quality and source of purchase. But the entire scenario Many Internet based enterprises are customer driven
has changed. and market driven. E-Commerce facilitates managers
to communicate using Video conferencing, e-mail and
Everything in today ’s world depends on electronics bulletin boards so that information is better
whether it is: disseminated and right decisions can be made. Since
information travels faster, there is a better co-
E-DI (Electronic Data Interchange), ordination between the various departments. In fact
all efforts are being made to convert organisations 2. Perishable goods eg: fish, vegetable & flower
into a paperless office. etc., and costly items such as jewellery or
antiques etc., cannot be inspected from a remote
(d) Business Value of E-commerce location.
E-commerce helps a business house overcome 3. The percentage of users of net service is
geographic, time, cost and structural barriers to considerably very low. The attitude of the
business success. These four capabilities emphasize customers using network is not good.
how several applications of E-commerce can help a 4. It is costly in many circumstances.
firm to capture and provide information quickly to end 5. The quality and quantity of the product cannot
users at remote geographic location at reduced costs be estimated to its real value.
as well as supporting its strategic organizational
objectives. These capabilities allow business houses M-Commerce
to generate cost savings from using Internet, better
Mobile Commerce is an evolving area of E-
customer service and relationships through interactive
Commerce, where users can interact with the service
marketing.
providers through a mobile and wireless network,
using mobile devices for information retrieval and
Advantages of E-commerce transaction processing. M-Commerce services and
1. E-commerce can increase sales and decrease applications can be adopted through different wireless
costs. and mobile networks, with the aid of several mobile
2. A firm can use electronic commerce to reach devices. However, constraints of both mobile networks
narrow market segments that are widely and devices influence their operational performance;
scattered geographically. therefore, there is a strong need for taking into
3. As E-commerce increases selling opportunities consideration those constraints in the design and
for the seller, it increases purchasing development phases of M-Commerce services and
opportunities for the buyer. applications. Another important factor in designing M-
4. E-commerce increases the speed and accuracy Commerce services and applications is the
with which business can exchange information. identification of mobile users’ requirements. This
Thus it reduces costs on both the sides of approach relies on mobile users’ needs and
transactions. requirements, the classification of the m-Commerce
5. E-commerce provides buyers with a wider range services and applications, as well as the current
of choice than traditional commerce. technologies for mobile and wireless computing and
6. It provides buyers with an easy way to customise their constraints. While electronic commerce (e-
the detailed information about a prospective commerce) continues to impact the global business
purchase. Buyers can have instant access to environment profoundly, technologies and
information on the web. applications are beginning to focus more on mobile
7. Some products, such as software, music, audio computing and the wireless Web. With this trend
clips, or images can also be delivered via the comes a new set of issues specially related to mobile
internet. e-commerce. In very simple terms, one can say:
8. E-commerce can make products and services
available in remote areas. For example, Distance M-commerce = E-commerce + Wireless Web
Education has made it possible for people to
learn skills and get degrees. The days of initial euphoria over the possibilities of
mobile technology have transitioned into a time of
Disadvantages of E-commerce more cautious enthusiasm. Instead of simply wanting
1. Some consumers are still somewhat afraid of to go mobile, companies are asking for proof that the
sending their credit card numbers over the introduction of mobile services will add value to their
internet due to the existence of malpractice. businesses. The most important fact is that now
mobile touches many areas other than just simply
targeting customers. Furthermore, companies initially is simply defined as the mobile execution of
focused on B2C (business-to-consumer) mobile transactions. Buying a movie ticket on a WAP phone
solutions, are now finding that B2E (Business to is an example of M-Commerce, while retrieving
Employee) applications to be more strategic. B2E is information about that _lm from a voice portal is not.
Business-to- Employee, an approach in which the Simply put, M-Commerce is a subset of m-business.
focus of business is the employee, rather than the M-business is any mobile function that adds
consumer (as it is in business-to-consumer or B2C) demonstrable value to a company, whether it directly
or other businesses (as it is in business-to-business results in the generation of a sale or not. While M-
or B2B). The B2E Solutions Set enables global commerce is a vital part of M-business, it is by no
enterprises to fully unlock the potential of their means the only measure of its potential uses.
businesses, and optimize their existing assets,
through the use of Web-based Portal technologies. Mobile Commerce (M-Commerce) is creating entirely
B2E moves a wide variety of work to the Web, new opportunities both for mobile devices and
improving collaboration, productivity and operational services. M-Commerce means transactions using a
efficiency among key stakeholders of any organization wireless device and data connection, which result in
by making critical information and tools easily the transfer of value in exchange of information,
accessible and usable, regardless of an individual’s services, or goods. An M-Commerce transaction is
role or location. The mobile technology continues to defined as any type of transaction of an economic
evolve and present an exciting range of possibilities value that is conducted through a mobile device that
for both near and long-term solutions. The uses a wireless telecommunications network for
technologies that once seemed a distant promise such communication with the e-commerce infrastructure.
as blue-tooth, location-based services and telemetric, M-Commerce differs partially from E-Commerce
are moving closer to becoming a reality. This fact can (electronic commerce) due to the special
make service provider to be capable of providing characteristics and constraints the mobile devices and
value-added mobile solutions. Companies are finding wireless networks have. The number of users of
that there is no need to simply wait on the sidelines mobile devices is continuously increasing. A projected
for these next-generation developments to occur, they number of hand-held (mobile) devices will exceed the
can leverage devices already in users hands such as number of stationary terminals in the world in the next
non-WAP phones and sync PDAs (personal digital few years.
assistants) and readily available technology to
introduce equally innovative, strategic solutions today. M-Commerce includes features and characteristics
that are different from e-Commerce, and these should
be taken into consideration during the design and
Definition of Mobile-Business development of M-Commerce services and
(M-Business) applications.
M-Business is defined as the exchange of goods, Table 1 provides examples of M-Commerce

services, information and knowledge with the aid of applications linked to their more salient features:
mobile technology. It encompasses a range of mobile
activities, from communicating with colleagues using Ubiquity: Mobile users must have the ability to receive
email, to receiving product information via SMS alerts, information and perform transactions in real-time,
to transmitting customer orders with a wireless PDA. regardless of location. M-Commerce can be present
M-Business includes not only consumer-facing in any location or several places simultaneously.
applications but also enterprise solutions that enable
companies to operate more efficiently, better serve Personalization: The huge amount of information,
customers, and generate additional revenue. It can services and applications presented on the Internet
ace the way that companies maintain their operations, is of great importance, but users of mobile devices
organize employees, and keep track of inventory. require different services and applications that should
Mobile Commerce (M-Commerce), on the other hand, be personalized according to their preferences.
Flexibility: Users of mobile devices should be able technologies and M-Commerce constraints, such as,
to engage in activities such as, receiving information, performance, reliability, security, ease of use,
and conducting transactions with ease. bandwidth, etc.
Localization: Mobile users should have access to These requirements can be summarized as follows:
local information and services. This can be
accomplished by having service providers know the ■ Easy and timely access to information (e.g. the
location of mobile users in order to promote their latest availability of flights).
products and services directly to their customers in a ■ Immediate purchase opportunity (e.g. the
local environment. immediate purchase of tickets).
■ Provision of wireless coupons based on user
Table 1: Examples of m-Commerce applications profiles (e.g. the delivery of messages about a
with their more salient features current sale in a local store).
■ Bank transactions through mobile terminals (e.g.
M-commerce Examples of M-commerce the withdrawal of money from an account that
Features Applications can be used later for an electronic payment).
Ubiquity stock prices Weather ■ Location management (e.g. locating a person/
Personalization Advertising Auctions ATM/restaurant that is nearby).
Flexibility Purchasing of Goods
Banking
Localization Customer Service Local Key Points
Directory
■ Business Environment are the external
uncontrollable forces in nature which openly or
M-Commerce customers may be more demanding
in some other way impart on the performance
and less patient than E-commerce users.
of the Business. These includes customers,
Mobile users require value-added services that can competitors, suppliers, government, social,
be feasible or non-feasible according to existing political, legal and technological factors etc.
DIFFERENT SECTORS AND THEIR SIGNIFICANCE
INTRODUCTION Thirdly, it is most through banks that foreign trade is

carried on. Whether we export or import, it is through
Banking Sector banks that money is transferred from one country to
Banks play very important role in the economic life of another. For example, bills of exchange and letters
the nation. The health of the economy is closely of credit are the regular ways banks use to transfer
related to the soundness of its banking system. money.
Although banks create no new wealth but their
borrowing, lending and related activities facilitate the Even the UN has the World Bank that is like a big
process of production, distribution, exchange and deposit for all the members’ countries. They can
consumption of wealth. borrow from it according to their needs.
In this way they become very effective partners in the Definition and Concept
process of economic development. Today, modern Banking sector primarily means Banks and other
banks are very useful for the utilization of the financial institutions which provide lending and
resources of the country. The banks are mobilizing investments services to various customers like
the savings of the people for the investment purposes. individuals, businesses, corporate or other bodies.
The savings are encouraged and saving rate
increases. If there would be no banks then a great The Indian Banking/Financial Sector comprises the
portion of a capital of the country would remain idle. following institutions:
A bank as a matter of fact is just like a heart in the 1. Commercial banks

economic structure and the Capital provided by it is a. Public sector
like blood in it. As long as blood is in circulation the b. Private sector
organs will remain sound and healthy. If the blood is
c. Foreign banks
not supplied to any organ then that part would become
d. Cooperative institutions
useless. So if the finance is not provided to Agriculture
sector or industrial sector, it will be destroyed. Loan (i) Urban cooperative banks
facility provided by banks works as an incentive to (ii) State cooperative banks
the producer to increase the production. (iii) Central cooperative banks
2. Financial institutions
The importance of banking sector in terms of
a. All-India financial institutions (AIFIs)
contribution to the growth of an economy can never
b. State financial corporations (SFCs)
be under-stated. Banking is an essential part of any
economic system. Modern trade and commerce would c. State industrial development corporations
almost be impossible without the availability of suitable (SIDCs)
banking services. 3. Nonbanking financial companies (NBFCs)
4. Capital market intermediaries.
First of all, banking promotes savings. All manner of
people, from the ordinary laborers and workers to the
rich land owners and businessmen, can keep their Contribution to Indian Economy
money safely in banks and saving centers.
Brief Background
Secondly, banking promotes investments. Banks Money lending in one form or the other has evolved
easily invest the money they get in industry, agriculture along with the history of the mankind. Even in the
and trade. They either invest it directly or advance ancient times there are references to the
loans to other investors. moneylenders. Shakespeare also referred to
‘Shylocks’ who made unreasonable demands in case
DIFFERENT SECTORS AND THEIR SIGNIFICANCE 171
the loans were not repaid in time along with interest. performing assets of these banks began to rise. The
Indian history is also replete with the instances wheel of time had turned a full circle by early nineties
referring to indigenous money lenders, Sahukars and and the government after the introduction of structural
Zamindars involved in the business of money lending and economic reforms in the financial sector, allowed
by mortgaging the landed property of the borrowers. the setting up of new banks in the private sector.
Towards the beginning of the twentieth century, with The new generation private banks have now
the onset of modern industry in the country, the need established themselves in the system and have set
for government regulated banking system was felt. new standards of service and efficiency. These banks
The British government began to pay attention have also given tough but healthy competition to the
towards the need for an organized banking sector in public sector banks.
the country and Reserve Bank of India was set up to
regulate the formal banking sector in the country. But Modern Day Role
the growth of modern banking remained slow mainly Banking system and the Financial Institutions play
due to lack of surplus capital in the Indian economic very significant role in the economy. First and foremost
system at that point of time. Modern banking is in the form of catering to the need of credit for all
institutions came up only in big cities and industrial the sections of society. The modern economies in the
centers. The rural areas, representing vast majority world have developed primarily by making best use
of Indian society, remained dependent on the of the credit availability in their systems. An efficient
indigenous money lenders for their credit needs. banking system must cater to the needs of high end
investors by making available high amounts of capital
Independence of the country heralded a new era in for big projects in the industrial, infrastructure and
the growth of modern banking. Many new commercial service sectors. At the same time, the medium and
banks came up in various parts of the country. As the small ventures must also have credit available to them
modern banking network grew, the government began for new investment and expansion of the existing
to realize that the banking sector was catering only units. Rural sector in a country like India can grow
to the needs of the well-to-do and the capitalists. The only if cheaper credit is available to the farmers for
interests of the poorer sections as well as those of their short and medium term needs.
the common man were being ignored.
Credit availability for infrastructure sector is also
In 1969, Indian government took a historic decision extremely important. The success of any financial
to nationalize 14 biggest private commercial banks. system can be fathomed by finding out the availability
A few more were nationalized after a couple of years. of reliable and adequate credit for infrastructure
This resulted in transferring the ownership of these projects. Fortunately, during the past about one
banks to the State and the Reserve Bank of India decade there has been increased participation of the
could then issue directions to these banks to fund private sector in infrastructure projects.
the national programmes, the rural sector, the plan
priorities and the priority sector at differential rate of The Banks and the Financial Institutions also cater to
interest. This resulted in providing fillip the banking another important need of the society i.e. mopping
facilities to the rural areas, to the under-privileged up small savings at reasonable rates with several
and the downtrodden. It also resulted in financial options. The common man has the option to park his
inclusion of all categories of people in almost all the savings under a few alternatives, including the small
regions of the country. savings schemes introduced by the government from
time to time and in bank deposits in the form of savings
However, after almost two decades of bank accounts, recurring deposits and time deposits.
nationalization some new issues became contextual. Another option is to invest in the stocks or mutual
The service standards of the public sector banks funds.
began to decline. Their profitability came down and
the efficiency of the staff became suspect. Non- In addition to the above traditional role, the banks
172 DIFFERENT SECTORS AND THEIR SIGNIFICANCE
and the financial institutions also perform certain new- measure on the agenda of the government. The
age functions which could not be thought of a couple government is also preparing to disinvest some of its
of decades ago. The facility of internet banking equity from the PSU banks. The option of allowing
enables a consumer to access and operate his bank foreign direct investment beyond 50 per cent in the
account without actually visiting the bank premises. Indian banking sector has also been under
The facility of ATMs and the credit/debit cards has consideration.
revolutionized the choices available with the
customers. The banks also serve as alternative Banks and financial intuitions have played major role
gateways for making payments on account of income in the economic development of the country and most
tax and online payment of various bills like the of the credit- related schemes of the government to
telephone, electricity and tax. The bank customers uplift the poorer and the under-privileged sections
can also invest their funds in various stocks or mutual have been implemented through the banking sector.
funds straight from their bank accounts. In the modern The role of the banks has been important, but it is
day economy, where people have no time to make going to be even more important in the future.
these payments by standing in queue, the service
provided by the banks is commendable.
Challenges before banking
While the commercial banks cater to the banking sector in India
needs of the people in the cities and towns, there is
It is by now well recognized that India is one of the
another category of banks that looks after the credit
fastest growing economies in the world.Evidence from
and banking needs of the people living in the rural
across the world suggests that a sound and evolved
areas, particularly the farmers. Regional Rural Banks
banking system is required for sustained economic
(RRBs) have been sponsored by many commercial
development. India has a better banking system in
banks in several States. These banks, along with the
place vis-a-vis other developing countries, but there
cooperative banks, take care of the farmer-specific
are several issues that need to be ironed out.
needs of credit and other banking facilities.
Interest rate risk
Future
Interest rate risk can be defined as exposure of bank’s
Till a few years ago, the government largely net interest income to adverse movements in interest
patronized the small savings schemes in which not rates. A bank’s balance sheet consists mainly of rupee
only the interest rates were higher, but the income assets and liabilities. Any movement in domestic
tax rebates and incentives were also in plenty. The interest rate is the main source of interest rate risk.
bank deposits, on the other hand, did not entail such
benefits. As a result, the small savings were the first Over the last few years the treasury departments of
choice of the investors. But for the last few years the banks have been responsible for a substantial part of
trend has been reversed. The small savings, the bank profits made by banks. With yields falling the banks
deposits and the mutual funds have been brought at made huge profits on their bond portfolios.
par for the purpose of incentives under the income
tax. Moreover, the interest rates in the small savings Now as yields go up (with the rise in inflation, bond
schemes are no longer higher than those offered by yields go up and bond prices fall as the debt market
the banks. starts factoring a possible interest rate hike), the banks
will have to set aside funds to mark to market their
Banks today are free to determine their interest rates investment.
within the given limits prescribed by the RBI. It is now
easier for the banks to open new branches. But the This will make it difficult to show huge profits from
treasury operations. This concern becomes much
banking sector reforms are still not complete. A lot
stronger because a substantial percentage of bank
more is required to be done to revamp the public
deposits remain invested in government bonds.
sector banks. Mergers and amalgamation is the next
Interest rates and non-performing assets Impact of BASEL - II norms

The best indicator of the health of the banking industry Norms set in the Swiss town of Basel determine the
in a country is its level of NPAs. Given this fact, Indian ground rules for the way banks around the world
banks seem to be better placed than they were in the account for loans they give out. These rules were
past. A few banks have even managed to reduce their formulated by the Bank for International Settlements
net NPAs to less than one percent. But as the bond in 1988.
yields start to rise the chances are the net NPAs will
also start to go up. This will happen because the banks The problem with these rules is that they do not
have been making huge provisions against the money distinguish within a category i.e. all lending to private
they made on their bond portfolios in a scenario where sector is assigned a 100 per cent risk weighting, be it
bond yields were falling.
a company with the best credit rating or company
which is in the doldrums and has a very low credit
Competition in retail banking
rating.
The entry of new generation private sector banks has
changed the entire scenario. Earlier the household This is not an efficient use of capital. The company
savings went into banks and the banks then lent out with the best credit rating is more likely to repay the
money to corporate. Now they need to sell banking. loan vis a vis the company with a low credit rating. So
The retail segment, which was earlier ignored, is now the bank should be setting aside a far lesser amount
the most important of the lot, with the banks jumping
of capital against the risk of a company with the best
over one another to give out loans. The consumer
credit rating defaulting vis a vis the company with a
has never been so lucky with so many banks offering
low credit rating. With the BASEL-II norms the bank
so many products to choose from. With supply far
can decide on the amount of capital to set aside
exceeding demand it has been a race to the bottom,
depending on the credit rating of the company.
with the banks undercutting one another. A lot of
foreign banks have already burnt their fingers in the
So to be ready for the new BASEL rules the banks
retail game and have now decided to get out of a few
will have to set aside more capital because the new
retail segments completely.
rules could lead to capital adequacy ratios of the
banks falling. How the banks plan to go about meeting
The urge to merge
these requirements is something that remains to be
In the recent past there has been a lot of talk about
seen. A few banks are planning initial public offerings
Indian Banks lacking in scale and size. The State Bank
to have enough capital on their books to meet these
of India is the only bank from India to make it to the
list of Top 100 banks, globally. Most of the PSBs are new norms.
either looking to pick up a smaller bank or waiting to
be picked up by a larger bank. In closing
Over the last few years, the falling interest rates, gave
The central government also seems to be game about banks very little incentive to lend to projects, as the
the issue and is seen to be encouraging PSBs to return did not compensate them for the risk involved.
merge or acquire other banks. Global evidence seems This led to the banks getting into the retail segment
to suggest that even though there is great enthusiasm big time. It also led to a lot of banks playing it safe
when companies merge or get acquired, majority of
and putting in most of the deposits they collected into
the mergers/acquisitions do not really work.
government bonds. Now with the bond party over and
So in the zeal to merge with or acquire another bank the bond yields starting to go up, the banks will have
the PSBs should not let their common sense take a to concentrate on their core function of lending.
back seat. Before a merger is carried out cultural
issues should be looked.
Financial Services
Definition and Concept 2. Mobilizing savings (for which the outlets would
Financial services are the economic services provided otherwise be much more limited).
by the finance industry, which encompasses a broad 3. Allocating capital funds (notably to finance
range of organizations that manage money, including productive investment).
credit unions, banks, credit card companies, 4. Monitoring managers (so that the funds allocated
insurance companies, consumer finance companies, will be spent as envisaged).
stock brokerages, investment funds and some
5. Transforming risk (reducing it through
government sponsored enterprises.
aggregation and enabling it to be carried by
As per section 65(10) of the Finance Act, 1994, those more willing to bear it).
“banking and financial services” means the following
services provided by a banking company or a financial Characterstics and Features of Financial
institution including a non banking financial company, Services
namely; (i) Customer-Specific: Financial services are usually
customer focused. The firms providing these services,
(i) financial leasing services including equipment study the needs of their customers in detail before
leasing and hire-purchase by a body corporate; deciding their financial strategy, giving due regard to
(ii) credit card services; costs, liquidity and maturity considerations. Financial
(iii) merchant banking services; services firms continuously remain in touch with their
customers, so that they can design products which
(iv) securities and foreign exchange (forex) broking;
can cater to the specific needs of their customers.
(v) asset management including portfolio The providers of financial services constantly carry
management, all forms of fund management, out market surveys, so they can offer new products
pension fund management, custodial depository much ahead of need and impending legislation.
and trust services, but does not include cash Newer technologies are being used to introduce
management; innovative, customer friendly products and services
(vi) advisory and other auxiliary financial services which clearly indicate that the concentration of the
including investment and portfolio research and providers of financial services is on generating firm/
advice, advice on mergers and acquisition and customer specific services.
advice on corporate restructuring and strategy;
and (ii) Intangibility: In a highly competitive global
(vii) provision and transfer of information and data environment brand image is very crucial. Unless the
processing. financial institutions providing financial products and
services have good image, enjoying the confidence
Financial services can be defined as the products and of their clients, they may not be successful. Thus
services offered by institutions like banks of various institutions have to focus on the quality and
kinds for the facilitation of various financial innovativeness of their services to build up their
transactions and other related activities in the world credibility.
of finance like loans, insurance, credit cards,
investment opportunities and money management as (iii) Concomitant: Production of financial services
well as providing information on the stock market and and supply of these services have to be concomitant.
other issues like market trends. Both these functions i.e. production of new and
innovative financial services and supplying of these
Functions of Financial Services services are to be performed simultaneously.
1. Facilitating transactions (exchange of goods and
(iv) Tendency to Perish: Unlike any other service,
services) in the economy.
financial services do tend to perish and hence cannot
be stored. They have to be supplied as required by trillion (US$ 292.5 billion) in assets.
the customers. Hence financial institutions have to
ensure a proper synchronization of demand and According to data released by the Insurance
supply. Regulatory and Development Authority (IRDA), the
life insurance industry collected Rs 89,655.83 crore
(v) People based services: Marketing of financial (US$ 17.5 billion) during April 2011-February 2012
services has to be people intensive and hence it’s by writing new policies while the insurers sold about
subjected to variability of performance or quality of 35.12 million policies collectively. Private players sold
service. The personnel in financial services seven million policies.
organisation need to be selected on the basis of their
suitability and trained properly, so that they can The general insurance industry continued with its
perform their activities efficiently and effectively. growth trajectory as the gross written premium grew
24.03 per cent during 2011-12 against the year-ago
(vi) Market Dynamics: The market dynamics period.
depends to a great extent, on socioeconomic changes
such as disposable income, standard of living and Banking Services
educational changes related to the various classes According to the world’s largest rating agency,
of customers. Therefore financial services have to Standard & Poor (S&P)’s Ratings Services, India’s
be constantly redefined and refined taking into banking system has a high level of stable, core
consideration the market dynamics. The institutions customer deposits supported by the system’s good
providing financial services, while evolving new franchise, extensive branch networks, and large, yet
services could be proactive in visualizing in advance growing, domestic savings.
what the market wants, or being reactive to the needs
and wants of their customers. ■ According to the Reserve Bank of India (RBI)’s
‘Quarterly Statistics on Deposits and Credit of
Scheduled Commercial Banks’, September
Contribution to Indian Economy 2011, Nationalised Banks, as a group, accounted
and Road Ahead for 52.2 per cent of the aggregate deposits, while
State Bank of India (SBI) and its associates
The Indian financial services industry has a lot of
accounted for 21.8 per cent. The share of New
scope for further penetration, and thus has immense
private sector banks, Old private sector banks,
scope and potential to grow exponentially. The online
Foreign banks and Regional Rural banks in
genre, mobile explosion, emergence of social media
aggregate deposits was 13.7 per cent, 4.8 per
platforms, technologies like cloud computing and
cent, 4.6 per cent and 2.9 per cent, respectively.
increasing pace of convergence and interconnectivity
With respect to gross bank credit also,
of devices are intensely driving the growth of this
nationalised banks hold the highest share of 51.6
industry. These are playing pivotal roles in
per cent in the total bank credit, with SBI and its
transforming the way financial services are delivered
associates at 22.1 per cent and New Private
to the end-consumer. Further, financial institutions are
sector banks at 13.8 per cent. Foreign banks,
revamping their operational infrastructure and
Old private sector banks and Regional Rural
business delivery models.
banks held relatively lower shares in the total
Financial services industry mainly comprises the BFSI bank credit with 5.2 per cent, 4.8 per cent and
industry, that is, banking, financial services (such as 2.5 per cent, respectively.
mutual funds) and insurance. Key developments and ■ Another statement released by the RBI stated
performance pointers pertaining to each of these sub- that bank deposits grew 13.4 per cent to Rs
segments are discussed in this overview. 60.72 trillion (US$ 1.18 trillion) in the fiscal 2011-
12 (the year to March 23, 2011) while loans and
Insurance Sector advances grew 17.08 percent to Rs 47.54 trillion
There are 24 life insurers in India with about Rs 15 (US$ 927.16 billion).
Mutual Funds Industry in India taking the collective net investments by FIIs in stocks
The Rs 6.70 trillion (US$ 130.66 billion) Indian mutual and bonds to Rs 93,725 crore (US$ 18.26 billion).
funds (MF) industry has 44 asset management
companies (AMCs). Recent data released by the Recent Developments
Association of Mutual Funds in India (AMFI) indicated ■ India has launched the country’s first domestic
that average assets under management (AUM) payment card network, RuPay, to compete with
reported by these fund houses amounted to Rs multinational Visa Inc. and Mastercard Inc. The
6,68,824 crore (US$ 130.33 billion) in 2011-12. new development will not only help banks reduce
cost of issuing a debit card but will also lead to
HDFC Mutual Fund maintained its top position as the expansion of payment network in rural areas.
country’s biggest MF with an average AUM of Rs National Payments Corp of India Ltd (NPCI), the
89,879 crore (US$ 17.51 billion), followed by Reliance nodal agency to manage and promote RuPay,
MF (Rs 78,112 crore [US$ 15.22 billion]), ICICI has stated that 200,000 RuPay cards have
Prudential MF (Rs 68,718 crore [US$ 13.39 billion]), already been issued and the target is to have
Birla Sunlife MF (Rs 61,143 crore [US$ 11.92 billion]) 10 million debit cards under the brand by March
and UTI MF (Rs 58,922 crore [US$ 11.48 billion]). 2013.
■ Stating India as ‘extraordinarily attractive
Private Equity (PE) and Mergers & Acquisitions investment destination’, PE firm Bain Capital LLC
(M&A) in India
has announced that it will infuse about US$ 800
India Inc witnessed 202 merger and acquisition (M&A) million in appropriate proposals across four
deals worth US$ 9.4 billion during the first quarter of investment deals during 2012-16.
2012. According to Ernst & Young (E&Y)’s latest
■ L&T Finance has decided to buy Fidelity
transactions quarterly report, deals in January-March
Worldwide Investment’s Indian mutual fund
2012 were 22 per cent higher than those of October-
business. The deal would boost L&T’s assets to
December 2011 quarter in terms of volume and 4.5
Rs 13,500 crore (US$ 2.63 billion), making it the
times higher in terms of value. Domestic deals
13th biggest fund house and the 10th largest
dominated the M&A space as they accounted for 63
on the basis of equity.
per cent of the total number of deals and contributed
■ In a recent announcement, the RBI has granted
88.4 per cent of the total disclosed deal value for the
FIIs to invest in primary issuances of companies’
quarter.
non-convertible debentures (NCDs), provided
According to experts, M&A landscape is likely to these papers are scheduled to be listed on the
experience intense activity in the coming months, stock exchanges within 15 days of being issued.
owing to improving stock markets and better If the instrument, that is the NCD, does not get
availability of finance options. listed within 15 days, the foreign investor
concerned would have to sell the securities to a
Private equity (PE) and venture capital (VC) investors domestic investor.
infused a capital of US$ 1.88 billion across 90 deals
during the reported period. Government Initiatives
In its Budget for 2012-13, the Government has
Foreign Institutional Investors in India earmarked a capital of Rs 15,888 crore (US$ 3.11
According to the data released by Securities and billion) to be infused in public sector banks, regional
Exchange Board of India (SEBI), net investment in rural banks and other financial institutions. Apart from
equities made by foreign institutional investors (FIIs) this, the Government is also planning to set up a
stood at Rs 47,935 crore (US$ 9.34 billion) during financial holding company that will raise funds for
the financial year ended March 31, 2012. During the public sector banks.
reported fiscal, foreign fund houses injected Rs
49,053 crore (US$ 9.56 billion) in the debt market Furthermore, the RBI has liberalised regulations
pertaining to FCAs to provide operational flexibility to
Indian entities making overseas direct investments. Firstly, tougher regulatory and oversight standards
After satisfying stipulated requirements and will materialize as increased capital, liquidity and
conditions, Indian entities can open, hold and maintain provisioning requirements and more stringent
FCAs abroad that would simplify the process of consumer protection. The main consequence will be
making overseas direct investments. greater pressure on banks’ returns, forcing them to
being more selective in allocating scarce resources,
Road Ahead in particular, capital, which will become increasingly
According to a report by the Boston Consulting Group scarce.
(BCG) India, prepared in association with a leading
industry organisation and Indian Banks Associations To deal with this challenge, it will be necessary to
(IBA), Indian banking industry would be the world’s develop advanced models for management and risk-
third largest in asset size by 2025 and mobile banking adjusted allocation of capital in each geographical
would become the second largest banking mode after area, each business unit, each product and segment.
ATMs. Furthermore, owing to the positive eco-system This is the only way to dynamically manage each
of the industry and regulatory and Government portfolio and it will condition how banks diversify and
initiatives, mobile banking is anticipated to enhance grow globally. But this must all be done with value
from 0.1 per cent of transactions in a 45 per cent creation as the mainstay point of reference.
financial inclusion base in 2010 to 34 per cent of the
Secondly, the de-leveraging process. Lower credit
transactions with 80 per cent rural inclusion base by
growth will directly hit banks’ balance sheets and the
2020, as per the report.
kind of gearing that was commonplace in the past
While the Indian Government projects that qualified will no longer be feasible.
foreign investors (QFIs) would invest US$ 50-75 billion
As tougher regulatory and oversight standards and
in India’s equity and bond markets, G Chokkalingam,
deleveraging kick in, banks that wish to offset the
Executive director and CIO, Centrum Wealth
greater pressure on returns will have to maximize their
Management, believes that Indian markets would
relationships with each customer to extract optimal
witness record inflows, probably to the extent of US$
value from them. For this, business-as-usual solutions
30 billion, by FIIs in 2012.
must be replaced with new and fundamentally
Such positive forecasts are being made owing to different approaches.
monetary expansions in the West and considering
Finally, changes in society and relationship patterns.
that India would remain the second-fastest growing
Deep changes in consumer preferences will
economy in the world.
determine how banks reach out to their customers
and relate to them. This will mean evolving towards a
Challenges before Financial more efficient, more productive distribution model.
Services Industry Technology will play a fundamental role in adjusting
We are beginning to observe signs of a recovery in to these shifts. Technology must be seen as the great
the economy. The financial industry will be facing a facilitator, the way to open up the relationship space
new, demanding competitive map, which will inevitably with the customer, navigating seamlessly between
entail deep changes and adjustments. physical and the virtual contact. Successful
companies will offer superior treatment, with services
The new competitive framework may be understood tailored to each type of customer and their specific
as reflecting three present and future trends: needs.
1. tougher regulatory and oversight standards, The winning models in the new scenario that is already
2. the de-leveraging process and beginning to emerge will be based on excellent
understanding of risk and focused capital allocation.
3. changes in society and in relationship patterns.
The winning banks will be those that are able to
saturate their customer relationships with superior, distribution models that extract maximum value from
innovative proposals adding real value. And finally, technology developments.
they will be the banks that develop advanced, efficient
Manufacturing Sector
Introduction manufacturing sector workforce will increase overall
Manufacturing is slowly but surely sweeping back in income levels of the country.
the national economic space. India is witnessing a
wave of growth in manufacturing after its decline in The economic benefits of playing the manufacturing
the late nineties. The current surge in the card are quite clear - if India is to sustain overall GDP
manufacturing sector is touted to be much more growth of 8% per annum, it is essential that both
promising than the first wave. With this new manufacturing and services grow at more than 11%
manufacturing opportunity slated to be more skills even when agriculture growth picks up from its current
intensive, the industry leaders foresee India as well 2.3%.
poised to take advantage of this shift.
Definition and Concept
Over and above the feel good factor of being given a Manufacturing is the use of machines, tools and labor
second chance, there are graver reasons that to produce goods for use or sale. The term may refer
necessitate the country’s success in manufacturing to a range of human activity, from handicraft to high
this time round. Manufacturing has linkages with the tech, but is most commonly applied to industrial
all other sectors of the economy. The progress of production, in which raw materials are transformed
manufacturing still sets the tone for the overall into finished goods on a large scale. Such finished
business cycle and the health of this sector is very goods may be used for manufacturing other, more
much at the core of India’s socio-economic fabric. complex products, such as aircraft, household
appliances or automobiles, or sold to wholesalers,
Inspite of the boom in the services sector, 75% of who in turn sell them to retailers, who then sell them
India’s working population is educated only to middle to end users – the “consumers”.
school or below. This staggering figure of
approximately 600 million people is not even equipped Manufacturing takes turns under all types of economic
to benefit from the opportunities in the flourishing systems. In a free market economy, manufacturing
knowledge sector. It is only the labor intensive is usually directed toward the mass production of
manufacturing sector that has the capability to products for sale to consumers at a profit. In a
generate employment in adequate numbers to absorb collectivist economy, manufacturing is more frequently
the larger labor pool. directed by the state to supply a centrally planned
economy. In mixed market economies, manufacturing
Manufacturing has large stakes involved, not just occurs under some degree of government regulation.
because the sector employs 30 per cent of the non-
agricultural workforce in India, but also because of Modern manufacturing includes all intermediate
its contribution to the overall economy/GDP. According processes required for the production and integration
to FICCI even though agriculture supports 60% of of a product’s components. Some industries, such
the working population, it contributes only 22% of the as semiconductor and steel manufacturers use the
country’s gross domestic product. This mismatch term fabrication instead.
between distribution of workforce and value added in
agriculture is one of the main reasons for the large The manufacturing sector is closely connected with
number of poor, and this trend is expected to further engineering and industrial design.
widen in the coming decades. Against this
background, only a sharp increase in the Indian
Contribution to Indian Economy education system has also boosted the industry. Plus,
the cheap, skilled manpower has attracted an array
The Manufacturing industry of India is the backbone of foreign companies, (in diverse industries) to set
of the economy that strengthens employment, shop here. Add to this, the sheer size of the Indian
agriculture & the service sectors. market! By 2025, India is likely to become the fifth
largest consumer market in the world, according to a
The Indian manufacturing industry is an emerging
research by McKinsey Global Institute. India also
sector and has all the qualities to further enhance the
offers abundant engineering and technical manpower;
economic development of the country. In fact, it is
the country churns out nearly 400,000 graduate
this sector that is fueling growth, employment and
engineers every year.
enhancing the other industries such as agriculture
and service. In the last few years, the industry has
Major Companies Investing in India
excelled so much that it is good enough to compete
in global markets. ■ As far as the mobile phone industry is concerned,
Nokia, Samsung, LG have already established
Excellent growth in worldwide distribution systems and manufacturing plants in India. Now, Research
IT along with the opening of trade barriers has resulted in Motion, the company behind Blackberry
in tremendous growth of global manufacturing handsets has also announced plans to setup a
networks. Studies reveal that the productivity of the manufacturing plant in India.
manufacturing industry in India is approximately 1/ ■ India is even becoming a manufacturing hub for
5th of the productivity in the manufacturing industry international luxury brands. Companies like
of the US. It is about ½ as compared to the productivity Louis Vuitton and Frette are eyeing India as the
levels in South Korea as well as Taiwan. manufacturing base for their products.
■ Skoda Auto has also made India its global
The Manufacturing sector is broadly divided into: manufacturing hub. The company, which boasts
of a 30,000-unit state-of the-art manufacturing
■ Capital Goods & Engineering.
facility at Aurangabad, Maharashtra, will act as
■ Chemicals, Petroleum, Chemicals & Fertilizers the production base for the entire world.
■ Packaging ■ Major aircraft maker Airbus Industries plans to
■ Consumer non-Durables. have a manufacturing base in India in the next
■ Electronics , IT Hardware & peripherals. three-four years.
■ Gems & Jewelery. ■ Ford India, subsidiary of American Automobile
■ Leather & Leather Products. Ford Company, has got 400 acres of land in
■ Mining. Sanand taluka near Ahmedabad to establish its
second manufacturing unit in India.
■ Steel & non-Ferrous Metals.
■ Hyundai and Suzuki have made India their
■ Textiles & Apparels.
manufacturing hub for small Cars. The i10 is
■ Water Equipment.
being manufactured only in India and exported
to the world. India is Hyundai’s largest base
From automobiles to computer hardware, consumer
outside Korea.
durables to engineering products, all are being
manufactured by multinationals in India. This is ■ Nokia started its India operations in 1995, and
precisely why India has become such a major global presently operates out of offices in New Delhi,
manufacturing hub. Mumbai, Kolkata,Jaipur,Lucknow,Chennai,
Bangalore, Pune and Ahmedabad. The Indian
The manufacturing industry has taken off in India operations comprise of the handsets business;
mainly because the country has all the requisite skills R&D facilities in Bangalore and Mumbai; a
in product, process and capital engineering. The manufacturing plant in Chennai and a Design
manufacturing history in India is expansive while the Studio in Bangalore.
At present, the manufacturing industry contributes 16 The East Asian countries like China have had similar
percent to India’s GDP. Anand Sharma, the Union levels of planning but have performed better in the
Minister of Commerce and Industry, has stated that global arena with their manufacturing sector. This has
the Union Government will look to increase the been discovered in a RBI Development Research
manufacturing sector’s growth and create a policy Group study on productivity, competitiveness, and
that will assist the sector perform properly in India. efficiency of India’s manufacturing sector.
The contribution made by the manufacturing sector In 2007, the manufacturing sector contributed 34
in India’s real gross domestic product has increased percent to China’s GDP while its Indian counterpart
over the years. However, the rate of growth has not accounted for 16.1% in 2009-10 fiscal. In the last few
been at par with expectations. In the planning process years, India’s registered manufacturing sector has
of India’s economic development a lot of emphasis made better contributions than the unregistered
was given on the heavy industries and this led to sector.
greater expectations from the manufacturing sector.
The following table shows the growth rate of real GDPs of different sectors of Indian economy:
Sector 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-00 -01 -02 -03 -04 -05 -06 -07 -08 -09 -10 -11 -12
(estimated
rates)
Agriculture 0.5 -0.2 6.3 -7.2 10 1.6 5.1 4.2 5.8 0.1 1 7 2.5
Services 9.5 5.7 7.2 7.5 8.5 9.4 10.9 10.1 10.3 10 10.5 9.3 9.4
Industry 4.6 6.4 2.7 7.1 7.4 9.4 9.7 12.2 9.7 4.4 8.4 7.2 3.9
Challenges facing the improving India’s labour laws including encouraging

contract labour, FICCI has laid down guidelines to
manufacturing industry the government to accelerate growth and improve
What need to be explored are the reasons for the competitiveness of Indian manufacturing.
manufacturing industry’s chequered performance. In
a scenario wherein skilled Indian labor is as However, over and above more conducive
inexpensive as China’s in absolute terms, wherein government regulation, what the Indian manufacturing
lies the Indian manufacturing industry’s Achilles heel? sector needs is a productivity boost. CEOs of some
of India’s leading export firms on visits to China have
FICCI estimates that the higher input costs for the come away impressed at the efficiency per employee
Indian manufacturing sector as a result of cascading and the dawning realization that current productivity
effect of indirect taxes on selling prices of of their factories is half to one third levels of what
commodities, higher cost of utilities like power, might otherwise be achievable.
railway transport, water, higher cost of finance and
high transactions costs puts the sector at a Some other challenges faced by the Indian
severe disadvantage as compared to its Asian manufacturing warrant appropriate responses from
counterparts. both the govt. as well as the industry for improving
the competitiveness of the sector. There are a few
In a ten point agenda that encompasses factors such areas where both the govt. and the industry need to
as entry of more private sector investors in important put in efforts through a well-designed Public-Private
infrastructure sectors like electricity distribution, partnership mode:
aviation, roads, railways, ports and a new bill for
(i) The manufacturing sector needs to access the (iv) The inverted duty structure caused by FTAs as
vast market possibilities available at the bottom well as in all cases even otherwise needs to be
of the income pyramid in the country. rectified.
(ii) The first essentiality for ensuring manufacturing (v) Domestic indirect taxes are often singled out as
competitiveness is macroeconomic stability. a major reason why Indian manufacturing is
uncompetitive.
(iii) Lowering the cost of manufacturing and
improving the quality are essential for (vi) Each labour legislation has a separate inspector
competitiveness. and visits of inspectors are not synchronized
across all labour enactments.
INTRODUCTION TO FINANCIAL ANALYSIS
INTRODUCTION expected to play a Strategic Role, that of a True

Business Partner. In this role, finance helps the
Key factors for business survival business make the right choice and therefore creates
In modern-day business scenario, more than growth, value for the company. Finance is expected to do a
survival of a business has become a crucial factor. very objective analysis that brings out the Risks and
Survival of a business is dependent on and is judged Potential Returns from all Investments: whether
from the following key factors. marketing is trying to promote a product, or supply
chain is trying to change warehousing, or plant is trying
1. Profitability - its ability to earn income and sustain to add capacity or sales is trying to change distributor
growth in both the short- and long-term. A company’s margin. Every single decision that has a financial
degree of profitability is usually based on the income impact needs to be properly scrutinized to ensure it
statement, which reports on the company’s results of creates shareholder value.
operations.
Unfortunately, this strategic role of finance is often
2. Solvency - its ability to pay its obligation to creditors ignored, especially in many Indian companies.
and other third parties in the long-term.
3. Liquidity - its ability to maintain positive cash flow, Meaning of Financial Analysis
while satisfying immediate obligations.
Financial Analysis is the process of evaluating
businesses, projects, budgets and other finance-
Both 2 and 3 are based on the company’s balance
related entities to determine their suitability for
sheet, which indicates the financial condition of a
investment. Typically, financial analysis is used to
business as of a given point in time.
analyse whether an entity is stable, solvent, liquid, or
4.Stability - the firm’s ability to remain in business in profitable enough to be invested in. When looking at
the long run, without having to sustain significant a specific company, the financial analyst will often
losses in the conduct of its business. Assessing a focus on the income statement, balance sheet, and
company’s stability requires the use of both the cash flow statement. In addition, one key area of
income statement and the balance sheet, as well as financial analysis involves extrapolating the
other financial and non-financial indicators etc. company’s past performance into an estimate of the
company’s future performance.
Role of Finance Financial Statement Analysis (or Financial

Analysis) The process of understanding the risk and
The Finance Department in any large company plays
profitability of a firm (business, sub-business or
two roles. One is the classic Stewardship role. This
project) through analysis of reported financial
role includes Audit, Accounting, Payables, Tax,
information, particularly annual and quarterly reports.
Compliance etc. These are very critical for the
safekeeping of the company. Suppliers have to be Financial statement analysis consists of
paid on time, Tax has to be computed accurately,
compliance to various government and SEBI 1. reformulating reported financial statements,
guidelines is paramount, books have to be regularly 2. analysis and adjustments of measurement
audited externally and internally. If these are not done errors, and
on time and with accuracy, there could be severe civil
3. financial ratio analysis on the basis of
and even criminal liabilities. Think of all the fallen
reformulated and adjusted financial statements.
heroes because of just one instance of fraud.
The two first steps are often dropped in practice,
meaning that financial ratios are just calculated
Beyond this Stewardship role, Finance is also
on the basis of the reported numbers, perhaps
INTRODUCTION TO FINANCIAL ANALYSIS 183
with some adjustments. Financial statement exercise that focuses only on numerical NPV/RoI (Net
analysis is the foundation for evaluating and Present Value/Return on Investment), without
pricing credit risk and for doing fundamental providing enough perspective on the strategic fit and
company valuation. qualitative parameters around the initiative.
One of the most common ways of analysing financial Often finance sees its role starting and ending with
data is to calculate ratios from the data to compare the Excel sheet. Other departments provide key
against those of other companies or against the assumptions and finance feeds them into an excel
company’s own historical performance. For example, template and churns out the NPV. It rarely questions
return on assets is a common ratio used to determine the assumptions behind those numbers. But a good
how efficient a company is at using its assets and as finance manager should behave as a Venture
a measure of profitability. This ratio could be Capitalist – probing all assumptions in detail and
calculated for several similar companies and making sure that the fundamental business idea
compared as part of a larger analysis. makes sense. This would require not just a more
comprehensive financial analysis but also softer skills
Financial analysis (also referred to as financial on how to influence people and how to present your
statement analysis or accounting analysis or Analysis findings to senior management.
of finance) refers to an assessment of the viability,
stability and profitability of a business, sub-business A good financial analysis is supposed to:
or project.
■ Correctly and Completely Value the Value
It is performed by professionals who prepare reports associated with the choice.
using ratios that make use of information taken from ■ Provide an objective viewpoint and holistic
financial statements and other reports. These reports perspective to the decision-making process.
are usually presented to top management as one of ■ Foster smart risk taking and mitigation.
their bases in making business decisions.
■ Employ best-in-class tools and techniques to
drive decision-making and resource allocation.
■ Continue or discontinue its main operation or
part of its business; ■ Through knowledge and insights, actually
increase Value Creation.
■ Make or purchase certain materials in the
manufacture of its product;
One of the criticisms of financial analysis is that it
■ Acquire or rent/lease certain machineries and often becomes too conservative, and only looks at
equipment in the production of its goods; the risks and downsides. Business and
■ Issue stocks or negotiate for a bank loan to entrepreneurship are all about making investments
increase its working capital; today, taking intelligent and informed risks, and then
■ Make decisions regarding investing or lending reaping the rewards in future. Therefore a good
capital; financial analysis should show the Upside opportunity
■ Other decisions that allow management to make in the same league as the worst case.
an informed selection on various alternatives in
the conduct of its business.
Purpose of Financial Analysis
Analysis of financial statements is an attempt to
Role of Financial Analysis assess the efficiency and performance of an
A good Financial Analysis is supposed to do an enterprise. Thus, the analysis and interpretation of
objective assessment on the Real Opportunities and financial statements is very essential to easure the
Threats in an initiative, and therefore highlight to efficiency, profitability, financial soundness and future
management the true picture. Unfortunately, often, prospects of the business units. Financial analysis
Financial Analysis remains a number crunching serves the following purposes:
184 INTRODUCTION TO FINANCIAL ANALYSIS
Measuring the profitability parties in the financial results of a business unit. The
The main objective of a business is to earn a various parties interested in the analysis of financial
satisfactory return on the funds invested in it. Financial statements are:
analysis helps in ascertaining whether adequate
profits are being earned on the capital invested in the (i) Investors: Shareholders or proprietors of the
business or not. It also helps in knowing the capacity business are interested in the well being of the
to pay the interest and dividend. business. They like to know the earning capacity of
the business and its prospects of future growth.
Indicating the trend of Achievements
(ii) Management: The management is interested in
Financial statements of the previous years can be
the financial position and performance of the
compared and the trend regarding various expenses,
enterprise as a whole and of its various divisions. It
purchases, sales, gross profits and net profit etc. can
helps them in preparing budgets and assessing the
be ascertained. Value of assets and liabilities can be
performance of various departmental heads.
compared and the future prospects of the business
can be envisaged. (iii) Trade unions: They are interested in financial
statements for negotiating the wages or salaries or
Assessing the growth potential of the business bonus agreement with the management.
The trend and other analysis of the business provides
sufficient information indicating the growth potential (iv) Lenders: Lenders to the business like debenture
of the business. holders, suppliers of loans and lease are interested
to know short term as well as long term solvency
Comparative position in relation to other firms position of the entity.
The purpose of financial statements analysis is to help
(v) Suppliers and trade creditors: The suppliers and
the management to make a comparative study of the
other creditors are interested to know about the
profitability of various firms engaged in similar
solvency of the business i.e. the ability of the company
businesses. Such comparison also helps the
to meet the debts as and when they fall due.
management to study the position of their firm in
respect of sales, expenses, profitability and utilising (vi) Tax authorities: Tax authorities are interested in
capital, etc. financial statements for determining the tax liability.
Assess overall financial strength (vii) Researchers: They are interested in financial
The purpose of financial analysis is to assess the statements in undertaking research work in business
financial strength of the business. Analysis also helps affairs and practices.
in taking decisions, whether funds required for the
(viii) Employees: They are interested to know the
purchase of new machines and equipments are
growth of profit. As a result of which they can demand
provided from internal sources of the business or not
better remuneration and congenial working
if yes, how much? And also to assess how much funds
environment.
have been received from external sources.
(ix) Government and their agencies: Government
Assess solvency of the firm and their agencies need financial information to
The different tools of an analysis tell us whether the regulate the activities of the enterprises/industries and
firm has sufficient funds to meet its short term and determine taxation policy. They suggest measures to
long term liabilities or not. formulate policies and and regulations.
(x) Stock exchange: The stock exchange members

Parties Interested take interest in financial statements for the purpose
Analysis of financial statements has become very of analysis because they provide useful financial
significant due to widespread interest of various information about companies.
Internal and External Users operations of the organisations. They include the
management, internal auditors, other employees,
The main function of financial statement analysis is consultants and parties involved in decision-making
to help users make better decisions, whether for in an organisation. Internal users are responsible for
internal or external users of the company concerned. planning strategies and executing the company’s
operations. The purpose of financial analysis is to
Internal users provide them with information in order to improve the
Internal users of accounting information are efficiency and effectiveness in producing output or
individuals involved in the management and services of the organisation.
External users the company. Members of the board of directors will

External users of accounting information are not analyse the financial statement for the purpose of
directly involved in the operation of the organisation. monitoring the effectiveness of decisions which have
They include comprise shareholders, creditors, non- been made. Suppliers will use the financial information
executive directors, customers, suppliers, legislators, to evaluate the credit standing of the organisations.
lawyers, brokers, media and others. Generally, financial statement analysis is done to:
External users utilise accounting information to (a) make the information more meaningful to enable
determine the financial status of the company for their users to make decisions; and
own purposes. Shareholders and creditors will (b) assist users to measure the performance level
evaluate the investment and financing prospects of and financial status of the business.
Objective of Financial Analysis making rational investment, credit, and similar

decisions. The information should be
Financial Statement Analysis provides information that comprehensive to those who have a reasonable
is useful in making business and economic decisions. understanding of business and economic
The objectives of general purpose external financial activities and are willing to study the information
reporting come primarily from the needs of external with reasonable diligence.
users who must rely on information that management
communicates to them. 2. Financial Statement Analysis should provide
information to help present and potential
1. Financial Statement Analysis should provide investors and creditors and other users in
information that is useful to present and potential assessing the amounts, timing, and uncertainty
investors and creditors and other users in
of prospective cash receipts from dividends or ■ Business strategy: The overall business
interest and the proceeds from the sales, strategy which guides all other functions of the
redemption, or maturity of securities or loans. organization.
Since investors’ and creditors’ cash flows are ■ Objectives: The over-all business strategy
related to enterprise cash flows, financial broken down into various long-term and short-
statement analysis should provide information term business objectives to be achieved over
to help investors, creditors, and others assess time.
the amounts, timing, and uncertainty of ■ Annual report and other documents like
prospective net cash inflows to the related articles about the organisation in newspapers
enterprise. and business reviews.
3. Financial Statement Analysis should provide

information about the economic resources of an Tools of Financial Statement
enterprise, the claims to those resources
Analysis
(obligations of the enterprise to transfer
resources to other entities and owners’ equity), Financial Statements are usually the final output of a
and the effects of transactions, events, and company’s accounting operations. These statements
circumstances that change its resources and contain information relating to the revenues,
claims to those resources. The primary focus of expenses, assets, liabilities and retained earnings of
financial statement analysis is ordinarily the business. Business owners often pay close
considered to be information about earnings and attention to this information since the statements can
its components. Earnings analysis gives clue to provide detailed information about the company’s
operational performance. Many business owners and
(a) management’s performance, managers use specific analysis tools to closely review
(b) long-term earning capabilities, their company’s financial statements for decision-
making purposes.
(c) future earnings, and
(d) risks associated with lending to and Financial Ratios
investing in the enterprise. A traditional financial statement analysis tool is
financial ratios. These ratios take information from
Financial Statement Analysis should also provide
the company’s financial statements and calculate
information about how management has discharged
economic indicators for comparison to another
its stewardship function to stockholders for the use
company or the industry standard. Financial ratios
of the enterprise’s resources entrusted to it.
include liquidity, asset turnover, financial leverage and
Management is responsible not only for the custody
profitability calculations. Liquidity ratios calculate the
and safekeeping of enterprise resources but also for
company’s ability to meet short-term financial
their efficient profitable use.
obligations. Asset turnover ratios indicate how well
Management through financial statement analysis can the company uses its assets to generate profits.
provide significant financial information to users by Financial leverage ratios calculate the long-term
identifying events and circumstances and explaining solvency of a company. Profitability ratios help
their financial effects on the enterprise. However, companies determine how much profit they are
investors, creditors, and others who rely on financial generating from the sale of various goods or services.
reporting must do their own evaluating, estimating,
predicting, and assessing and not rely exclusively on Horizontal Analysis
management’s presentations. A horizontal financial statement analysis compares
current financial statements to a previous year’s
For Effective Financial Statement Analysis - Study financial information. Companies often conduct this
of following individual organisational factors is crucial. analysis by putting several years of financial
statements in a side-by-side comparison format. This Limitations of Financial

enables business owners and managers to review
the same month over several years to determinate if
Statement Analysis
revenues, expenses, assets or liabilities have In spite of its contribution in sustainability and growth
increased, decreased or stayed the same. Companies of any business Financial Statement Analysis suffers
can also use a horizontal analysis to compare from certain limitations also. These limitations are
changes in currency amounts or a percentage change largely inherent in the nature of financial statements
when comparing financial statements. themselves. Some of these limitations have been
discussed below.
Vertical Analysis ■ Past financial performance, good or bad, is not
A vertical financial statement analysis is conducted necessarily an accurate predictor of future
using common size financial statements. A common performance.
size financial statement shows each item on a ■ Financial statements do not tell you about
financial statement in a percentage figure for each changes in senior management.
statement line item. A vertical analysis gives managers ■ Financial statements do not tell you about the
a different option for reviewing financial information; loss of major customers.
managers may be more comfortable looking at ■ Financial statements do not tell you about the
percentages rather than currency amounts. The competitive environment in which the company
percentage figure represents how individual line-item operates.
amounts compare to the aggregate total of the ■ Financial statements do not disclose the
financial statements. For example: business owners company’s future prospects, or the results of its
or managers may wish to know what percentage expenditures on Research and Development, or
office supplies were out of the total expenses reported new product introductions, or new marketing
on income statement. A common size statement campaigns, or new pricing strategies, or the
would divide total office supplies expense by the customer’s recent decision to enter or exit a
total expenses listed on income statement. particular market segment.
This percentage is then listed where the office ■ The more out-of-date a customer’s financial
supplies expense amount would be on the financial statements are, the less reliable they are as a
statement. risk management tool.
■ Without reading the Notes to the financial
Trend Percentage Analysis statements, credit managers cannot get a clear
A trend percentage analysis is an enhanced horizontal idea of the risk they are evaluating.
analysis technique. Trend percentage analyses help ■ Unaudited statements may or may not follow
companies identify consistent revenues or expenses Generally Accepted Accounting Principles, and
from past accounting periods. These trends can help if they do not follow GAAP relying on them could
managers make business decisions regarding future be a serious mistake.
operations. Companies will use a specific financial ■ Financial statements can be altered legally by
statement as a base year for comparing all future adjusting certain types of reserves.
financial statements. Changes for each future time ■ Financial results can be improved by reducing
period are expressed as a percentage when or eliminating discretionary expenditures - even
compared to the base financial statement. Companies if this cost cutting is at the expense of long term
can conduct a trend percentage analysis at various growth and profits.
times of the year or use different financial statements ■ Foreign financial statements do not follow GAAP.
as the base during this comparison process. In some cases, local accounting rules are so
different from GAAP accounting rules that it is
easy to make the wrong decision after reviewing the customer’s financial performance is weak
the foreign financial data. but improving or weak and deteriorating.
■ Unaudited statements may be inaccurate, ■ Audited statements do not guarantee accuracy.
misleading, or even deliberately fraudulent - and ■ Even audited financial statements are subject
if they seem too good be true, they may be just to a degree of manipulation.
that. ■ Off balance sheet financing is lawful, but can
■ To see the big picture, it is necessary to have at have a devastating effect on a customer’s
least two consecutive periods of financial financial health.
statements for comparison. Trends will only ■ The fact that a company is publicly traded and
become apparent this way. The corollary is that its financial statements are readily available does
it is not enough to know a customer’s financial not guarantee that the company in question is
weaknesses. It is also important to know whether financially stable and creditworthy.
CORPORATE AND COMMERCIAL LAWS
INTRODUCTION not a complete and exhaustive law on all types of

contracts.
The Republic of India is a vast country which has
existed in one form or another for many millennia. Essential Elements of a Valid Contract
Bound by cultural commonalities, independent India
According to Section 10, “All agreements are
is the second largest country in the world — home to
contracts, if they are made by the free consent of the
about a sixth of the human population — and the
parties, competent to contract, for a lawful
seventh largest country by sheer land mass. Following
consideration with a lawful object, and not hereby
the liberalization of India’s economy in 1991, India
expressly to be void.”
experienced unprecedented growth and has become
an integral part of the global economy. India is now
Essential Elements of a Valid Contract are:
the world’s fourth largest economy and has been
growing at an astounding annual rate of 7.8% since 1. Proper offer and proper acceptance. there must
2002 India’s growth has resulted in a quantum leap be an agreement based on a lawful offer made
from a primarily agrarian society in the 1980s to an by person to another and lawful acceptance of
increasingly service and industry oriented economy that offer made by the latter. section 3 to 9 of
at present. the contract act, 1872 lay down the rules for
making valid acceptance
Doing business in India, thus, becomes a lucrative
option for both Indian and Foreign Entrepreneurs. 2. Lawful consideration: An agreement to form a
However a deep understanding of important valid contract should be supported by
Commercial and Corporate Laws prevalent in India consideration. Consideration means “something
is very crucial. Though the commercial and corporate in return” (quid pro quo). It can be cash, kind,
law regime is vast in Indian owing to numerous an act or abstinence. It can be past, present or
industry and sector specific enactments, however an future. However, consideration should be real
insight of following important legislations is a must and lawful.
for all businesses in India.
3. Competent to contract or capacity: In order to
1. The Indian Contract Act, 1872. make a valid contract the parties to it must be
competent to be contracted. According to section
2. The Companies Act, 2013. 11 of the Contract Act, a person is considered to
be competent to contract if he satisfies the
3. The Securities Exchange Board of India Act, following criterion:
1992.
■ The person has reached the age of
4. The Foreign Exchange Management Act, maturity.
1999. ■ The person is of sound mind.
■ The person is not disqualified from
The Indian Contract Act 1872 contracting by any law.
The Indian Contract Act 1872 is the main source of 4. Free Consent: To constitute a valid contract there
law regulating contracts in Indian law, as subsequently must be free and genuine consent of the parties
amended. to the contract. It should not be obtained by
misrepresentation, fraud, coercion, undue
The Indian Contract Act 1872 sections 1-75 came influence or mistake.
into force on 1 September 1872. It applies to the whole
of India except the state of Jammu and Kashmir. It is 5. Lawful Object and Agreement: The object of the
agreement must not be illegal or unlawful.
190 CORPORATE AND COMMERCIAL LAWS
6. Agreement not declared void or illegal: The offer must be distinguished from an invitation to
Agreements which have been expressly offer.
declared void or illegal by law are not enforceable
at law; hence they do not constitute a valid Invitation to offer
contract. An invitation to offer is only a circulation of an offer, it
is an attempt to induce offers and precedes a definite
7. Intention To Create Legal Relationships:-when offer. Acceptance of an invitation to an offer does not
the two parties enter in to an agreement,there result contract and only an offer emerges in the
must be intention to create a legal relationship process of negotiation. A statement made by a person
between them ...if there is no such intention on who does not intend to bound by it but, intends to
the part of the parties ..there is no contract further act, is an invitation to offer.
between them ..agreements of a social or
domestic nature do not contemplate legal
Acceptance
relationship;as such they are not contracts.
According to Section 2(b), “When the person to whom
8. Certainty, Possibility of Performance. the proposal is made signifies his assent thereto, the
proposal is said to be accepted.”
9. Legal Formalities.
Rules:
10. By surity. 1. Acceptance must be absolute and unqualified.
2. Communicated to offeror.
Offer
3. Acceptance must be in the mode prescribed.
Proposal is defined under section 2(a) of the Indian
4. Acceptance must be given within a reasonable
contract Act, 1872 as “when one person signifies to
time before the offer lapses.
another his willingness to do or to abstain from doing
5. Acceptance by the way of conduct.
anything with a view to obtain the assent of that other
to such act or abstinence, he is said to make a 6. Mere silence is no acceptance. Silence does not
proposal/offer”. Thus, for a valid offer,the party making per-se amounts to communication- Bank of India
it must express his willingness to do or not to do Ltd. Vs. Rustom Cowasjee- AIR 1955 Bom. 419
something. But mere expression of willingness does at P. 430; 57 Bom. L.R. 850- Mere silence cannot
not constitute an offer. An offer should be made to amount to any assent. It does not even amount
obtain the assent of the other. The offer should be to any representation on which any plea of
communicated to the offeree and it should not contain estoppel may be founded, unless there is a duty
a term the non compliance of which would amount to to make some statement or to do some act.
acceptance. 7. Offree and offerer must be consent.
Classification of Offer Lawful consideration

1. General Offer: Which is made to public in According to Section 2(d), Consideration is defined
general. as: “When at the desire of the promisor, the promisee
2. Special Offer: Which is made to a definite has done or abstained from doing, or does or abstains
person. from doing, or promises to do or abstain something,
such an act or abstinence or promise is called
3. Cross Offer: Exchange of identical offer in
consideration for the promise.”considertion means to
ignorance of each other.
do something.
4. Counter Offer: Modification and Variation of
Original offer. In short, Consideration means quid pro quo i.e.
5. Standing, Open or Continuing Offer: Which something in return.
is open for a specific period of time.
An agreement must be supported by a lawful
consideration on both sides.
CORPORATE AND COMMERCIAL LAWS 191
The consideration or object of an agreement is lawful, said to be consented when they agree upon the same
unless and until it is: thing in the same sense (Consensus-ad-idem).
1. forbidden by law, or A consent is said to be free when it is not caused by

2. is of such nature that, if permitted, it would defeat coercion or undue influence or fraud or
the provisions of any law, or misrepresentation or mistake.
3. is fraudulent, or involves or implies injury to the
person or property of another, or Elements Vitiating free Consent
4. the court regards it as immoral, or opposed to 1. Coercion (Section 15): “Coercion” is the
public policy. committing, or threatening to commit, any act
5. consideration may take in any form-money, forbidden by the Indian Penal Code, 1860 or the
goods, services, a promise to marry, a promise unlawful detaining, or threatening to detain, any
to forbear etc. property, to the prejudice of any person
whatever, with the intention of causing any
Contract Opposed to Public Policy can be Repudiated person to enter into an agreement.
by the Court of law even if that contract is beneficial
for all of the parties to the contract- What 2. Undue influence (Section 16): “Where a person
considerations and objects are lawful and what not- who is in a position to dominate the will of another
Newar Marble Industries Pvt. Ltd. Vs. Rajasthan State enters into a contract with him and the
Electricity Board, Jaipur, 1993 Cr. L.J. 1191 at 1197, transaction appears on the face of it, or on the
1198 [Raj.]- Agreement of which object or evidence, to be unconscionable, the burden of
consideration was opposed to public policy, unlawful proving that such contract was not induced by
and void- — What better and what more can be an undue influence shall lie upon the person in the
admission of the fact that the consideration or object position to dominate the will of the other.”
of the compounding agreement was abstention by
3. Fraud (Section 17): “Fraud” means and includes
the board from criminally prosecuting the petitioner-
any of the following acts committed by a party
company from offence under Section 39 of the act
to a contract, or with his connivance, or by his
and that the Board has converted the crime into a
agent, with intent to deceive another party
source of profit or benefit to itself. This consideration
thereto of his agent, or to induce him to enter
or object is clearly opposed to public policy and hence
into the contract.
the compounding agreement is unlawful and void
under Section 23 of the Act. It is unenforceable as 4. Misrepresentation (Section 18): “causing,
against the Petitioner-Company. however innocently, a party to an agreement to
make a mistake as to the substance of the thing
Competent to Contract which is the subject of the agreement”.
Section 11 of The Indian Contract Act specifies that
every person is competent to contract provided: 5. Mistake of fact (Section 20): “Where both the
parties to an agreement are under a mistake as
1. He should not be a minor i.e. an individual who to a matter of fact essential to the agreement,
has not attained the age of majority i.e. 18 years. the agreement is void”.
2. He should be of sound mind while making a
contract. A person with unsound mind cannot Revocation of Offer
make a contract. A proposal may be revoked at any time before the
3. He is not a person who has been personally communication of its acceptance is complete as
disqualified by law. against the proposer, but not afterwards. An
acceptance may be revoked at any time before the
Free Consent communication of the acceptance is complete as
According to Section 14, “ two or more persons are against the acceptor, but not afterwards.
A proposal is revoked - after it has been partly exercised, so as to bind the

principal (Section 204), though he can always do so,
1. by the communication of notice of revocation by before such authority has been so exercised
the proposer to the other party; (Sec 203).
2. by the lapse of the time prescribed in such
proposal for its acceptance, or, if no time is so Further, as per section 205, if the agency is for a fixed
prescribed, by the lapse of a reasonable time, period, the principal cannot terminate the agency
without communication of the acceptance; before the time expired, except for sufficient cause.
3. by the failure of the acceptor to fulfill a condition If he does, he is liable to compensate the agent for
precedent to acceptance; or the loss caused to him thereby. The same rules apply
where the agent, renounces an agency for a fixed
4. by the death or insanity of the proposer, if the
period. Notice in this connection that want of skill
fact of the death or insanity comes to the
continuous disobedience of lawful orders, and rude
knowledge of the acceptor before acceptance.
or insulting behavior has been held to be sufficient
cause for dismissal of an agent. Further, reasonable
Agency
notice has to be given by one party to the other;
The process of concluding a contract through an
otherwise, damage resulting from want of such notice,
agent involves a twofold relationship. On the one
will have to be paid (Section 206). As per section 207,
hand, the law of agency is concerned with the external
the revocation or renunciation of an agency may be
business relations of an economic unit and with the
made expressly or impliedly by conduct. The
powers of the various representatives to affect the
termination does not take effect as regards the agent,
legal position of the principal. On the other hand, it
till it becomes known to him and as regards third party,
rules the internal relationship between principal and
till the termination is known to them (Section 208).
agent as well, thereby imposing certain duties on the
representative (diligence, accounting, good faith, etc.). When an agent’s authority is terminated, it operates
as a termination of subagent also. (Section 210)
Under section 201 to 210 an agency may come to an
end in a variety of ways:
The Securities and Exchange
(i) By the principal revoking the agency – However,
principal cannot revoke an agency coupled with
Board of India (SEBI) Act, 1992
interest to the prejudice of such interest. Such In 1988 the Securities and Exchange Board of India
Agency is coupled with interest. An agency is was established by the Government of India through
coupled with interest when the agent himself has an executive resolution and was subsequently
an interest in the subject-matter of the agency, upgraded as a fully autonomous body (a statutory
e.g., where the goods are consigned by an board) in the year 1992 with the passing of the
upcountry constituent to a commission agent for Securities and Exchange Board of India Act, 1992 on
sale, with poor to recoup himself from the sale 30th January, 1992.
proceeds, the advances made by him to the
principal against the security of the goods; in The basic objectives of Securities and Exchange
such a case, the principal cannot revoke the Board of India are:
agent’s authority till the goods are actually sold,
i. To protect the interests of investors in securities;
nor is the agency terminated by death or insanity.
(Illustrations to section 201) ii. To promote the development of the securities
(ii) By the agent renouncing the business of agency; market;
(iii) By the business of agency being completed;
iii. To regulate the securities market; and
(iv) By the principal being adjudicated insolvent
(Section 201 of The Indian Contract Act, 1872). iv. For matters connected therewith and incidental
thereto.
The principal also cannot revoke the agent’s authority
Relatively with a brief act containing 7 chapters and iii. to regulate the securities market by such
35 sections the SEBI Act governs all the Stock measures as the Board thinks fit and
Exchanges and the Securities Transactions in India. iv. for matters connected therewith and incidental
thereto.
Establishment of the Securities and Exchange
Board of India The Board is entrusted with two functions, namely:
Chapter two of the SEBI Act deals with the
establishment of the Securities and Exchange Board A. Regulatory functions and
of India. Section 3 says about the establishment and B. Developmental functions.
incorporation of Board. Sub section 1 says that a
Board by the name of Securities and Exchange Board A. Regulatory Functions: The Board is
of India shall be established. The Board shall be a responsible for:
body corporate by the name Securities and Exchange
Board of India which will have perpetual succession i. regulating the business in stock exchanges and
and a common seal, with power to acquire, hold and any other securities markets;
dispose of property, both movable and immovable,
ii. registering and regulating the working of stock
and to enter in to contract and can sue or be sued by
brokers, sub-brokers, share transfer agents,
the said name. The head office of the Board shall be
bankers to an issue, trustees of trust deeds,
at Bombay. The Board may establish other offices at
registrars to an issue, merchant bankers,
any other places in India.
underwriters, portfolio managers, investment
The management of the Board is mentioned in section advisers and such other intermediaries who may
4 of the Act. The Board shall consist of the following be associated with securities markets in any
members, namely: manner;
(a) a Chairman; iii. registering and regulating the working of the

(b) two members from amongst the officials of the depositories, participants, custodians of
Ministry of the Central Government dealing with securities, foreign institutional investors, credit
Finance and administration of the Companies rating agencies and such other intermediaries
Act, 2013; as the Board may, by notification, specify in this
behalf;
(c) one member from amongst the officials of the
Reserve Bank;
iv. registering and regulating the working of venture
(d) five other members of whom at least three shall capital funds and collective investment schemes,
be the whole-time members, who shall be including mutual funds;
appointed by the Central Government.
v. promoting and regulating self-regulatory
Power and Functions of the Securities and organisations;
Exchange Board of India
Chapter 4 of the SEBI Act, 1992 deals with the powers vi. prohibiting fraudulent and unfair trade practices
and function of the Securities and Exchange Board relating to securities markets;
of India. The functions of the Securities and Exchange
Board of India has been dealt in section 11. Sub- vii. promoting investors’ education and training of
section (1) of section 11 declares that it shall be the intermediaries of securities markets;
duty of the Securities and Exchange Board of India:
viii. prohibiting insider trading in securities;
i. to protect the interest of investors in securities
ix. regulating substantial acquisition of shares and
and
take-over of companies;
ii. to promote the development of and
x. calling for information from, undertaking where the Board has reasonable grounds to believe
inspection, conducting inquiries and audits of the that such company has been indulging in insider
stock exchanges, mutual funds, other persons trading or fraudulent and unfair trade practices relating
associated with the securities market to securities market.
intermediaries and self- regulatory organisations
in the securities market; SEBI has to be responsive to the needs of three
groups, which constitute the market:
xi. calling for information and record from any bank
or any other authority or board or corporation i. the issuers of securities;
established or constituted by or under any
Central, State or Provincial Act in respect of any ii. the investors;
transaction in securities which is under
iii. the market intermediaries.
investigation or inquiry by the Board;
xii. performing such functions and exercising such Prohibition of Manipulative and Deceptive
powers under the provisions of the Securities Devices, Insider Trading and Substantial
Acquisition of Securities or Control:
Contracts (Regulation) Act, 1956 (42 of 1956),
as may be delegated to it by the Central Securities and Exchange Board of India has prohibited
Government; insider trading, substantial acquisition of securities
or control. Insider trading can be defined as securities
xiii. levying fees or other charges for carrying out trading by insiders based on material non public
the purposes of this section; information in violation of a fiduciary or similar duty of
trust and confidence to the company issuing the
xiv. conducting research for the above purposes; security to the company’s shareholders or to the
source of information. The main benefit of the insider
xv. calling from or furnishing to any such agencies, trading goes to the insider. An insider can be the
as may be specified by the Board, such directors, officers, shareholders holding substantial
information as may be considered necessary by number of shares, persons who are not employed by
it for the efficient discharge of its functions and the corporation but receive confidential information
from a corporation while providing services to the
xvi. performing such other functions as may be corporation like professional advisors, lawyers,
prescribed. investment bankers. In other words, the knowledge
of unpublished price sensitive information in hands
B. Developmental Functions
of persons connected to the companies which put
i. Promoting investor’s education; them in an advantageous position over others who
lack it, such information can be used to make gains
ii. Training of intermediaries; by buying shares a cheaper rate anticipating that it
might rise and it can be used to insulate themselves
iii. Conducting research and publishing information against losses by selling shares before the prices fall
useful to all market participants; down, such kind of transaction entered into by persons
having access to any unpublished information is called
iv. Promotion of fair practices; Insider Trading. Consequently, SEBI banned insider
trading and laid down the SEBI (Prohibition of Insider
v. Promotion of self regulatory organizations. Trading) Regulation 1992. Similarly, substantial
acquisition of shares and take-overs has also been
Beside these above mentioned functions, the Board
prohibited by SEBI (Substantial Acquisition of Shares
may take measures to undertake inspection of any
and Takeovers) Regulations, 1997.
book or register or any other document or record of
any listed public company which intends to get its Accordingly section 12A says that No person shall
securities listed on any recognised stock exchange directly or indirectly-
i. use or employ, in connection with the issue, future, SEBI should adopt more transparency to gain
purchase or sale of any securities listed or higher public confidence.
proposed to be listed on a recognised stock
exchange, any manipulative or deceptive device
or contrivance in contravention of the provisions The Companies Act, 2013
of this Act or the rules or the regulations made The Companies Act, 2013 has been enacted to
thereunder; consolidate and amend the law relating to the
companies. The changes in the Companies Act, 1956
ii. employ any device, scheme or artifice to defraud were indispensable due to change in the national and
in connection with issue or dealing in securities international economic environment and for expansion
which are listed or proposed to be listed on a and growth of economy of our country. The
recognised stock exchange; engage in any act, Companies Act, 2013 when fully implemented will
practice, course of business which operates or replace the Companies Act, 1956 in full.
would operate as fraud or deceit upon any
person, in connection with the issue, dealing in The Companies Act, 2013, which got the assent of
securities which are listed or proposed to be the Hon’ble President of India on 29th August, 2013
listed on a recognised stock exchange, in and notified in the Official Gazette on 30th August,
contravention of the provisions of this Act or the 2013, will be marked by greater focus on shareholder
rules or the regulations made thereunder; democracy, need for more corporate disclosures and
less intrusive regulations. The new law makes it
iii. engage in insider trading; mandatory for firms to maintain their documents in
electronic format, introduces the concept of one
iv. deal in securities while in possession of material
person company, Class Action Suits, Serious Fraud
or non-public information or communicate such
Investigation Office, asks big companies to set aside
material or non-public information to any other
funds for corporate social responsibility, greater
person, in a manner which is in contravention of
shareholder participation and stringent penalties.
the provisions of this Act or the rules or the
regulations made thereunder; Almost the whole of the Companies Act, 2013 has
been made effective except certain provisions, under
v. acquire control of any company or securities
chapter XV, XVI, XVIII, XIX, XX, part II chapter XXI,
more than the percentage of equity share capital
chapter XVII, chapter XXVIII of the Companies Act,
of a company whose securities are listed or
2013.
proposed to be listed on a recognised stock
exchange in contravention of the regulations
Company
made under this Act.
A company is a group of persons who have come
together or who have contributed money for some
Conclusion
common purpose.
The enactment of the SEBI Act within the context of
other statutes such as the Companies Act, A company as an entity has several distinct features
Depositories Act and Securities Contracts Regulation which together make it a unique organisation. The
Act has provided a strong regulatory framework for following are the defining characteristics of a
the Indian market. Subsequently much of the growth company.
of the Indian market can be attributed to the robust
processes for issuance, pricing, allotment and listing Separate Legal Entity
of securities enabled by SEBI. Strengthening SEBI’s
On incorporation under law, a company becomes a
power in the investigative, administrative and legal
separate legal entity as compared to its members.
aspects of enforcement would enable it to speedily
The company is different and distinct from its
address legal challenges such as those faced during
members in law. It has its own name and its own seal,
dematerialization or disclosure requirements. In the
its assets and liabilities are separate and distinct from physical presence. Therefore, it acts through its Board
those of its members. It is capable of owning property, of Directors for carrying out its activities and entering
incurring debt, borrowing money, having a bank into various agreements. Such contracts must be
account, employing people, entering into contracts under the seal of the company. The common seal is
and suing and being sued separately. the official signature of the company. The name of
the company must be engraved on the common seal.
Limited Liability Any document not bearing the seal of the company
The liability of the members of the company is limited may not be accepted as authentic and may not have
to contribution to the assets of the company upto the any legal force.
face value of shares held by him. A member is liable
to pay only the uncalled money due on shares held Capacity to sue and being sued
by him when called upon to pay and nothing more, A company can sue or be sued in its own name as
even if liabilities of the company far exceeds its assets. distinct from its members.
On the other hand, partners of a partnership firm have
unlimited liability i.e. if the assets of the firm are not
adequate to pay the liabilities of the firm, the creditors
Types of Companies
can force the partners to make good the deficit from Companies under the Act can be classified as follows:
their personal assets. This cannot be done in case of
a company once the members have paid all their dues 1. On the basis of liability:
towards the shares held by them in the company.
(a) Company limited by shares:
When the liability of the members of a company is
Perpetual Succession
limited by its memorandum of association to the
A company does not die or cease to exist unless it is
amount (if any) unpaid on the shares held by them, it
specifically wound up or the task for which it was
is known as a company limited by shares. It thus
formed has been completed. Membership of a
implies that for meeting the debts of the company,
company may keep on changing from time to time
the shareholder may be called upon to contribute only
but that does not affect life of the company. Death or
to the extent of the amount, which remains unpaid on
insolvency of member does not affect the existence
his shareholdings. His separate property cannot be
of the company.
encompassed to meet the company’ s debt.
Separate Property
(b) Company limited by guarantee:
A company is a distinct legal entity. The company’s
A company having the liability of its members limited
property is its own. A member cannot claim to be
by the memorandum to such amount as the members’
owner of the company’s property during the existence
may respectively undertake by the memorandum to
of the company.
contribute to the assets of the company in the event
of its being wound up. Thus, the liability of the member
Transferability of Shares of a guarantee company is limited up to a stipulated
Shares in a company are freely transferable, subject sum mentioned in the memorandum. Members
to certain conditions, such that no share-holder is cannot be called upon to contribute beyond that
permanently or necessarily wedded to a company. stipulated sum.
When a member transfers his shares to another
person, the transferee steps into the shoes of the (c) Unlimited company:
transferor and acquires all the rights of the transferor
A company not having any limit on the liability of its
in respect of those shares.
members. In such a company the liability of a member
ceases when he ceases to be a member.
Common Seal
A company is a artificial person and does not have a
2. On the basis of members: (c) Public company:

(a) One person company: is a company, which:
The Companies Act, 2013 introduces this new class
■ is not a private company
of companies. One person company (OPC) has only
one person as a member. OPC has been introduced ■ has a minimum paid up share capital as may be
to encourage entrepreneurship and corporatization prescribed
of business. OPC is a private limited company with ■ has 7 or more members required to form the
the minimum paid up share capital of Rs. 1 lakh and company.
has at OPC differs from sole proprietary concern in A company which is subsidiary of a public company
an aspect that OPC is a separate legal entity with a (not being a private company) shall be deemed to be
limited liability of the member whereas in the case of public company even where such subsidiary company
sale proprietary, the liability of owner is not restricted continues to be a private company in its articles.
and it extends to the owner’s entire assets constituting
of official and personal. 3. On the basis of control:
The procedural requirements of an OPC are simplified (a) Holding and subsidiary companies:
through exemptions provided under the Act in ‘Holding and subsidiary’ companies are relative terms.
comparison to the other forms of companies. A company is a holding company in relation to one or
more other companies, means a company of which
(b) Private Company: such companies are subsidiary companies.
A company having a minimum paid-up share capital
“Subsidiary company” in relation to any other company
as may be prescribed and which by its articles,
(that is to say the holding company), means a
company in which the holding company—
(i) restricts the right to transfer its shares;
(i) controls the composition of the Board of
(ii) limits the number of its members to two hundred
Directors; or
(except in case of One Person Company): Persons
who are in the employment of the company; and
(ii) exercises or controls more than one-half of the
persons who, having been formerly in the employment
total share capital either at its own or together with
of the company, were members of the company while
one or more of its subsidiary companies:
in that employment and have continued to be
members after the employment ceased are excluded
(b) Associate company:
in the number ofmembers
This is a new definition inserted in the 2013 Act.
(iii) prohibits any invitation to the public to subscribe
In relation to another company, means a company in
for any securities of the company.
which that other company has a significant influence,
Small company is also a kind of private company. It but which is not a subsidiary company of the company
means a company, other than a public company,— having such influence and includes a joint venture
company.
(i) having paid-up share capitaf which does not
exceed 50 lakh rupees or such higher prescribed The term “significant influence” means control of at
amount. Such prescribed amount shall not be more least 20% of total share capital, or of business
than 5 crore rupees; or decisions under an agreement.
(ii) having turnover which does not exceed 2 crore 4. On the basis of access to capital:
rupees or such higher prescribed amount. Such (a) Listed company:
prescribed amount shall? not be more than 20 crore
It is a company which has any of its securities listed
rupees:
on any recognised stock exchange.
(b) Unlisted company: the object of cultivating the habit of thrift (cost cutting)
means company otherthan listed company. and savings amongst its members, receiving deposits
from, and lending to, its members only, for their mutual
5. Other companies: benefits and which complies with such rules as are
prescribed by the Central Government for regulation
(a) Government company:
of such class of companies.
A company in which not less than 51% of the paid-up
share capital is held by—
The Foreign Exchange
(i) the Central Government, or
Management Act, 1999
(ii) by any State Government or Governments, or Upon review of the Foreign Exchange Regulation Act,
1973 (FERA) in 1993, it was realised that significant
(iii) partly by the Central Government and partly by changes had taken place since the promulgation of
one or more State Governments, FERA. Among the major changes noticed were: Large
increase in country’s Foreign Exchange Reserves,
It includes a company which is a subsidiary company
substantial growth in Foreign Trade, rationalisation
of such a Government company..
of tariffs, current account convertibility, liberalisation
of Indian investments abroad, enhanced access to
(b) Foreign Company:
external commercial borrowings by Indian corporates
A company or body corporate incorporated outside and active and significant participation of Foreign
India which— Institutional Investors in the Indian stock market. The
Central Govt, looking at such significant
(i) has a place of business in India whether by itself
developments, decided to bring in fresh amendments
or through an agent, physically or through electronic
in the law relating to foreign exchange to suit the new
mode; and
environments. The objective was to facilitate the
external trade, ease receipts and payments pertaining
(ii) conducts any business activity in India
thereto and promoting orderly and fully organised
foreign exchange markets.
(c) Companies formed with charitable objects etc:
Companies which are formed to promote the Thus, the Foreign Exchange Management Act, 1999
charitable objects of commerce, art, science, sports, (FEMA) which seeks to replace the Foreign Exchange
education, research, social welfare, religion, charity, Regulation Act, 1973 (FERA), was brought into effect
protection of environment etc. Such company intends from 1st June, 2000.
to apply its profit in promoting its objects and
prohibiting the payment of any dividend to its FERA aimed to regulate certain payments, dealings
members. in foreign exchange and securities, transactions
indirectly affecting foreign exchange and the import
(d) Dormant company: and export of currency for conservation of the foreign
Where a company is formed and registered under exchange resources of the country and the proper
the Companies Act, 2013, for a future project or to utilisation thereof in the interests of the economic
hold an asset or intellectual property and has no development of the country.
significant accounting transaction, such a company
or an inactive company may make an application to While FERA sought to ‘control’ foreign exchange
the Registrar in the prescribed manner for obtaining transactions, FEMA seeks to ‘regulate’ and ‘manage’
the status of a dormant company. such transactions. FERA, in its substantive form,
prohibited all foreign exchange transactions unless
(e) Nidhi Companies: there was a general or specific permission to do so
and subject to conditions as specified. Under FEMA,
Company which has been incorporated as a nidhi with
however, all current account transactions are Salient Features of FEMA

permissible by the law itself and, thus, it is a positive ■ It will facilitate trade rather than prevent misuse
law to this extent. of foreign exchange.
■ Definitions of capital account transaction and
Further, an offence under FERA attracted criminal
current account transaction have been
proceedings, whereas the offence under FEMA is
introduced keeping in mind the possibility of
considered as one of a civil nature. Also, under FEMA,
introduction of capital account convertibility in
maximum penalty would be thrice the sum involved
the near future.
(as against 5 times under FERA). Where however
the contravention amount is not quantifiable, the ■ All current account transactions shall be allowed
penalty would be Rs 2 lakh, and Rs 5,000 per day (subject to reasonable restrictions). Reserve
from second day onwards where a contravention Bank to classify those capital account
continues beyond one day. Again as per latest AP transactions that aro to bo pormlttod and to
(DIR Series) circular the government has, in regulate transfer and Issue of foreign securities
consultation with RBI, reviewed the procedures for by a resident In/outslde I ml In us well tin hotting
compounding of contravention under FEMA 1999. The up of branches/offices by foreign companies In
procedure has been reviewed to provide comfort to India.
the citizens and corporate community by minimsing ■ All key sections rotating to dealings, holding and
the transaction costs while taking severe view of the payments in foreign exchange and exports have
will full MALAFIDE and FRAUDLENT transactions. been simplified.
Accordingly the responsibility of compounding ■ Liberalisation in enforcement provisions reflects
contraventions has been vested with RBI except of that the attitude is of putting trust in the persons
(clause A) of Section 3 which deals essentially with covered.
HAWALA transactions which will continue to be dealt
with by the Directorate of Enforcement. Under FEMA,
Power to make rules
compounding of contravention allows the contravener
Section 46 of FEMA empowers the Central
to settle an offence through imposition of a monetary
Government, by notification, to make rules to carry
penalty without going in for litigation after the
out the provisions of the Act. Such rules may provide
admission of the contravention by such contravener.
for
The RBI has issued instructions to those authorised
dealers for compounding contraventions who are ■ imposition of reasonable restrictions on current
operationalising the revised procedures. Once a account transactions u/s 5.
contravention has been compounded by the
■ manner in which the contravention may be
compounding authority, no proceeding can be further
compounded u/s 15(1).
initiated against the contravener. A proper procedure
for compounding has been laid. ■ manner of holding an inquiry by the Adjudicating
Authority u/s 16(1).
Under FERA there is presumption of existence of a ■ form of appeal and fee for filing such appeal u/
guilty mind, unless the accused person proves s 17 and 19.
otherwise. Under FEMA, it is for the prosecution to ■ salary and allowances payable to and other
prove that a person has committed the offence. terms and conditions of service of the
Section 35 of FERA empowers the enforcement Chairperson and other Members of the Appellate
officers to arrest a person, if they had reasons to Tribunal and the Special Director (Appeals)
believe that the person was guilty of FERA violations. u/s 23.
FEMA provides such power of arrest only if penalty ■ salaries and allowances and other conditions of
levied under Section 13 of FEMA is not paid by the service of the officers and employees of the
guilty within the given time. Appellate Tribunal and the office of the Special
Director (Appeals) under Section 27(3).
■ additional matters in respect of which the The Central Government and Reserve Bank have,
Appellate Tribunal and the Special Director by various notifications, issued rules and regulations.
(Appeals) may exercise the powers of a civil
court under clause) i) of subsection 2 of Section Following are some other important legislations which
28. are pertinent in the Indian Corporate Scenario.
■ authority or person and the manner in which any
■ Companies (Foreign Interests) Act, 1918
document may be authenticated u/s 39( ii), and
■ any other matter which is required to be or may ■ Company Law Board Regulations, 1991
be prescribed ■ THE Companies (Amendment) Act, 2006
■ The Depositories Act, 1996.
Power to make regulations ■ The Foreign Trade (Development and
Section 47 of FEMA empowers the Reserve Bank, Regulation) Act, 1992.
by notification, to make regulations to carry out the
■ The National Securities And Depositories Limited
provisions of this Act and the rules thereunder. Such
- ByeLaws, 1996.
regulations may provide for:
■ Prevention of Money Laundering Act, 2002.
■ permissible classes of capital account ■ Prevention of Money-Laundering (Amendment)
transactions, limits of admissibility of foreign Act, 2005.
exchange for such transactions, and the
■ The Partnership Act, 1932.
prohibition, restriction or regulation of certain
capital account transactions u/s 6; ■ The Securities Contract (Regulation) Act, 1956.
■ manner and form in which declaration is to be ■ The Sick Industrial Companies Act, 1985.
furnished u/s 7 (I)(a); ■ The Sale of Goods Act, 1930.
■ period within which and the manner of ■ The State Financial Corporation Act, 1951
repatriation of foreign exchange u/s 8; Special Economic Zones Act, 2005.
■ limit up to which any person may possess foreign
■ Securities and Insurance Laws (Amendment and
currency or foreign coins u/s 9(a);
Validation) Act, 2010.
■ class of persons and limit up to which foreign
currency account may be held or operated u/s ■ The Securities Contracts (Regulation) Act, 1956.
9(b); ■ Securities Contracts (Regulation) Amendment
■ limit up to which foreign exchange acquired may Act, 2007.
be exempted u/s 9(d); ■ Securities Laws (Amendment) Act, 2004.
■ limit up to which foreign exchange acquired may ■ Securitisation and Reconstruction of Financial
be retained u/s 9(e); Assets and Enforcement of Security Interest Act,
■ any other matter which is required to be or may 2002.
be specified.
SEARCH ENGINE
Introduction search engines held an index of a few hundred

thousand pages and documents, and received maybe
A web search engine is designed to search for one or two thousand inquiries each day. Today, a top
information on the World Wide Web. The search search engine will index hundreds of millions of pages,
results are generally presented in a list of results often and respond to tens of millions of queries per day.
referred to as search engine results pages (SERPs).
The information may consist of web pages, images,
information and other types of files. Some search Drawbacks of Search Engines
engines also mine data available in databases or open
Poor precision - List of retrieved documents contains
directories. Unlike web directories, which are
a high percentage of irrelevant documents.
maintained only by human editors, search engines
also maintain real-time information by running an Poor recall - Most web’s search engines consult
algorithm on a web crawler. databases of the most frequently used words in
documents, such as words drawn from documents
title and first few sentences hence they won’t retrieve
Working of a Search Engine
documents in which the keywords for which you are
Internet search engines are special sites on the Web searching are buried somewhere within document.
that are designed to help people find information Many page authors send search engine numerous
stored on other sites. web pages containing various tricks like irrelevant title
tag or repeating certain words in first few levels that
There are differences in the ways various search are irrelevant to actual contents of the page, to boost
engines work, but they all perform three basic tasks: the ratings.
— They search the Internet Varied document quality -spider can’t discriminate
— or select pieces of the Internet between valuable documents and spams.
— based on important words.
Varied indexing depth - Some spiders retrieve only
They keep an index of the words they find, and where the document’s title others retrieve entire document
they find them. They allow users to look for words or text. Unless you understand how spider works you
combinations of words found in that index. Early are not very likely to succeed.
INTER FIRM AND INTRA FIRM COMPARISON
Inter Firm Comparison understand it own strengths and weaknesses and the
way have evolved over a period of time.
Inter Firm comparison is the technique of evaluating
the performance efficiency, costs and profits of firms 2. Comparison with the departments with-in the
in an industry. It consists of voluntary exchange of organization helps an organization develop and
information/data concerning costs, prices, profits, promote a profit-centre model (wherever possible) and
productivity and overall efficiency among firms compare the ultimate results yielded by various
engaged in similar type of operations for the purpose departments.
of bringing improvement in efficiency and indicating
the weaknesses. Such a comparison will be possible 3. Intra firm comparison also helps top level
where uniform costing is in operation. management in identifying the problem areas with-in
the organization which may have been contributing
Inter-firm comparison, is one of the main techniques, to the declining performance over a period of time.
available to management of the day for higher
management control and planning. Progressive 4. Cost control decisions, pricing decisions,
management always asks itself the questions. production planning, expenses planning, future
investments are all those decisions which may very
(1) How is our unit performing in comparison to that well be facilitated and helped by a sound intra firm
of others? comparison.
(2) Are we operating as efficiently as we might?
(3) Are there areas of our business where
improvements might be made?
Limitation of Intra Firm
(4) If we are successful, what are the ‘strong points’ Comparison
on which our success depends? 1. Top management of the organization may be
(5) How can we increase our efficiency and reluctant or un-cooperative in Intra Firm comparison
profitability? as it requires an added effort and financials may be
required to be re-grouped or presented in a different
format to facilitate the comparison.
Intra Firm Comparison
The term intra-firm comparison means comparison 2. Various departments in the organization may not
of two or more departments or divisions belonging to be functioning on same logics or in the same business
the same firm with the objective of making meaningful environment. This may either make the comparison
analysis for the purpose of increasing the very difficult or may render it useless.
effectiveness or efficiency of the departments or
3. Since management over various different periods
divisions involved.
of comparison may be different, the process of
This may also mean comparison of results achieved comparison and analysis may become a fault-finding
by an organization over two different financial periods exercise and may loose its real importance.
or periods of consideration. The idea is to compare
4. Intra firm comparison will yield limited result
the firm’s performance with its own performance in
always as it does not provide any exposure of industry
some other department or at some other point in time.
trends and best practices. It is always in isolation with
other firms in the industry therefore sole dependence
Advantage of Intra Firm on intra firm comparison may open limited venues
Comparison only.
1. Intra firm comparison helps an organization
NOTES
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I. INTRODUCTION AND GENERAL MANAGEMENT (2 Days)

II. DEVELOPING PERSONAL TRAITS (2 Days)

a. Attitude, Values and Ethics

b. Motivation-self & others

d. Self Analysis, Planning & Prioritizing

e. Goal Setting & Accountability

f. Critical and Independent Thinking

III. BUSINESS COMMUNICATION (2 Days)

d. Reading and Comprehension Skills

f. Preparation of Project Report

g. Data Analysis & Research Methodology

IV. PRESENTATION (2 Days)

a. Making PowerPoint Presentations

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b. Requisites for Effective Presentations

V. TEAM MANAGEMENT / RELATIONSHIP MANAGEMENT (1 Day)

a. Art of Questioning and Curious Questioning

b. Group Discussion & Debate

c. Working in Teams/ Relationship Management

VI. OFFICE PROCEDURES (1 Day)

VII. BUSINESS ENVIRONMENT (1 Day)

a. Business Environment - Indian & Global

b. Different Sectors (Banking, Financial Service, Manufacturing) and their significance

c. Introduction to Financial Analysis

d. Corporate & Commercial Laws

VIII. SEARCH ENGINE (2 Days)

a. Search Engine:- Getting Data/ Information using technology/ alternate sources

b. Comparison between Inter firm & Intra firm

IX. PRACTICAL (2 Days)

a. Seminars (to be evaluated)

b. Submission of Project Report (to be evaluated)

c. Evaluation of Writing skills

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DETAILED LESSON PLAN

ICITSS (ORIENTATION COURSE) (15 DAYS)

Each session shall include:

4 General Management Planning, Organizing, Staffing, Directing, 3 Hours

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4 Managing Ambiguity • Understand problem solving process and the 1 Hour

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4 Corporate & • Know the importance of Corporate Law 1 Hour

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Role and Responsibilities of ICAI

Organizational Structure of ICAI

Standing and Non-Standing Committees Other functions of the BoS include :

4. OFFICE TIMINGS articleship does not exceed one-sixth of the total

8. SEMINARS/CONFERENCES, ETC. 11.2 Should there be any dispute between the

Provided, in appropriate cases, the Executive Fee Exemption

13.2 The articled/audit assistant, the registration of Memorandum of Understanding

(b) Fee Structure: MOU/MRA with International Accounting

THE CHARTERED The articled assistant should undergo practical

Functions/Objectives of AASB ■ To develop Guidance Notes on issues arising