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CHAPTER-1INTRODUCTION
1.1 Background
Shrimps and prawns sell among the most important internationally
traded fishery
products, with a value of $10 billion, or 16 per cent of global
fishery exports.
Shrimp/prawn fisheries generate substantial economic benefits,
especially for many
developing countries. World production of shrimps/prawns, both
captured and
farmed, is about 6 million tonnes, of which about 60 per cent
enters the global
market. Globally, about 60 per cent of shrimp/prawn production
comes from fishing,
while 40 percent is from farming (Chopin, 2009). In this study,
the term
“shrimps/prawns”, are used synonymously to refer to Harmonize
System Code (HS
030613 - Frozen shrimps/prawns). Hence forth this chapter
presents an overview of
world fishery sector, with special relevance to the structure,
character and production
and export capacity of Indian marine shrimps/prawns sector. It
also analyzes the
state-wise availability of shrimps/prawns in India and
international scenario. It
attempts to discuss the health benefits of this product and
prospective areas for
research; conceptualizing the research model. The chapterization
plan of the thesis
and summaries of the main issues discussed in these chapters,
which is provided
can bring out the rationale behind this method of organizing the
thesis.
1.2 Overview of World Fishery Sector
The total world supply of capture fisheries and aquaculture is
142.29 million tones.
Out of that for consumption purpose supplied to the world with
about 113 million tons
of food fish in 2007 approximately, providing an apparent per
capita supply of 16.7
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kg (live weight equivalent), which is among the highest on
record. Of this total,
aquaculture accounted for 52.6 per cent. Overall, fish provided
more than 6.6 billion
people with at least 16.7 per cent of their average per capita
animal protein intake as
given in Table 1.1. (FAO,2010).
It is observed from the Table 1.1, the fish consumption since a
decade is
continuously surging. This indicates, there is a huge market for
this product
worldwide.
Table 1.1: Total World Fish Production and Consumption (Million
Tonnes)PRODUCTION 2002 2003 2004 2005 2006 2007 2008
INLANDCapture 8.41 8.62 8.6 9.38 9.76 9.97 10.22Aquaculture
21.73 23.07 25.18 26.84 28.7 30.67 32.89Total inland 30.14 31.69
33.78 36.22 38.46 40.64 43.11
MARINECapture 82.58 79.6 83.77 82.68 79.96 79.92
79.52Aquaculture 15.05 15.84 16.72 14.47 18.65 19.24 19.66Total
marine 97.63 95.44 100.49 97.15 98.61 99.16 99.18
TOTAL CAPTURE 90.99 88.22 92.37 92.06 89.72 89.89 89.74TOTAL
AQUACULTURE 36.78 38.91 41.9 41.31 47.35 49.91 52.55TOTAL WORLD
FISHERIES 127.77 127.13 134.27 133.37 137.07 139.8 142.29
UTILIZATIONHuman consumption 100.1 102.2 104.2 108 111 113
-Non-food uses 28.3 25 30 29 26.1 26.7 -
Population (billions) 6.3 6.4 6.4 6.5 6.6 6.62 6.70
Per capita food fish supply (kg) 16 16.3 16.2 16.4 16.7 16.69
-(Source: FAO , Aug, 2010)
1.2.1 World Production Scenario
World catch of shrimps/prawns is about 3.4 million tons per
year. Asia is the most
important area for shrimp/prawn fishing. Altogether over 100
countries export
substantial quantities of shrimps/prawn, but Asia is one of the
leading regions.
Shrimps/prawns are reared in countries of Asia which possess
tropical climates.
China, together with four other Asian countries, accounts for 55
percent of the world
catch (Chopin, 2009).
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1.2.2. World Marine Capture Fisheries Production
Global marine capture production was 89.74 million tons in 2008
(FAO,2010). China
was the leading country for marine capture fish production in
the year, whereas India
is ranked sixth in terms of same. The top ten major countries
and their production
status are given in Fig 1.1(FAO,2008).
0 2 4 6 8 10 12 14 16 18
China
Peru
USA
Japan
Chile
India
Russian Federation
Thiland
Philippian
Million Tonnes
(Source: FAO 2008)Figure 1.1 Marine and inland capture
fisheries: top ten producer countries (2006)
1.2.3 Production Capacity of Asian Countries
Table 1.2 indicates that among all Asian countries China has the
highest production
capacity of marine shrimps/prawns, followed by Thailand,
Vietnam, Indonesia and
India comes under the top five positions respectively. China’s
share is quite high,
and it is almost equal to the sum total of the Thailand,
Vietnam, Indonesia and India,
as observed from Table 1.2. The production status of other
continents involved in
has been given in Appendix I. Though the few Asian countries
have a higher
production capacity of cultured shrimps/prawns, the benefit is
not so high due to the
demand of organic product (captured shrimps/prawns) in the
global market.
1.2.4 International Market Trend
In parallel with the increase in production, international trade
has continued to grow,
and at an accelerating rate in recent years. About 38 per cent
of world fish
production is traded internationally. In 2007, total exports of
fish and fishery products
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Table 1.2: Production of Marine Shrimps/Prawns in Asia
were US$ 93.52 billions in value terms. Developing countries, as
a whole, supplied
approximately 59 per cent. Shrimps/prawns as the main fish
commodity traded in
value terms, accounting for about 16% of the total value of
internationally traded
fishery products, as observed from annexure I. In 2007, more
than 60 per cent of the
total world import value was concentrated in developed
countries, in particular in
Japan, the USA and in several EU countries. Japan was the major
importer
accounting for about 11 per cent of total import value. USA was
the second main
PRODUCTION OF ASIA IN 1,000 TONNES PER YEAR, ROUNDEDYe
ar
Chin
a
Thai
land
Viet
nam
Indo
nesi
a
Indi
a
Bang
lade
sh
Phili
ppin
es
Mya
nmar
Taiw
an
1985 40 10 8 25 13 11 29 0 171986 83 12 13 29 14 15 30 0 451987
153 19 19 42 15 15 35 0 801988 199 50 27 62 20 17 44 0 341989 186
90 28 82 28 18 47 0 221990 185 115 32 84 35 19 48 0 151991 220 161
36 116 40 20 47 0 221992 207 185 37 120 47 21 77 0 161993 88 223 39
117 62 28 86 0 101994 64 264 45 107 83 29 91 0 81995 78 259 55 121
70 32 89 1 111996 89 238 46 125 70 42 77 2 131997 103 225 45 127 67
48 41 2 61998 143 250 52 97 83 56 38 2 51999 170 274 55 121 79 58
39 5 52000 218 309 90 118 97 59 41 5 62001 304 279 150 129 103 55
42 6 82002 384 264 181 137 115 56 37 7 102003 789 330 232 168 113
56 37 19 102004 935 360 276 218 118 58 37 30 82005 1025 401 327 266
131 63 39 49 82006 1242 501 349 326 132 65 40 60 7
Entries in italics indicate gross estimates in the FAO databases
Bolded numbers indicate somerecognizable disease events. (Source:
FIGIS; FAO databases, 2007)
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importer with a share of 9 per cent, followed by Spain, France,
Italy, Germany and
the UK (FAO, 2010).
1.3. Overview of Indian Marine Shrimps/Prawns
1.3.1 Structure
India has a long coastline (8118 km) and a vast continental
shelf. The brackish water
resources are represented by mangrove swamps, estuaries,
backwaters, lagoons,
tidal creeks etc. and out of the estimated potential area of 1.2
million ha, only 0.16
million ha (13%) is utilized for farming. About 60 per cent of
the farmed area is under
scientific farming and 40 per cent under traditional farming
(Vasudevan, 2002). The
growth of shrimp farming was slow in the decade of eighties when
traditional farming
accounted for a production of 30,000MT. The area under
scientific farming increased
to 20.2 per cent (10,100ha) and production by 86.67per cent
(13,000MT). An
exponential growth in farming took place from early nineties due
to the attractive
monetary gains.
1.3.2 Special Characteristics
There are more than ten species of saltwater shrimps/prawns
which are reared
commercially throughout the world. Tiger prawns/Black Tiger
(Panaeus Monodon)
and White Fasho (P. Orientalis) are the most important species
of shrimps/prawns
reared in Asia. According to MPEDA the Indian prawn is a unique
product, for the
last 10 years. The Indian seafood industry is one of the most
important segments of
Indian economy in terms of output, foreign exchange earnings and
employment
generation. Contribution of fisheries to Indian GDP is about 1.3
per cent (2002-03)
which forms about 5.2 per cent of the agricultural GDP (MPEDA,
2008). India has
been the world's leading producer of shrimps/prawns for its
physical, chemical and
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biological properties with the bulk of production coming from
offshore landings.
International shrimp/prawn exporters including Indian exporters
are concentrated in
the US, Japan and Europe market, as these countries are import
maximum (Chopin,
2009).
1.3.3 Production and Export Capacity (Capture from Natural
Resources)
A fluctuate trend has been found for capture shrimps/prawns from
the Indian coasts,
which is illustrated from Figure 1.2. From 2004 to 2006 it seems
that, the landing of
shrimps/prawns (HS- 030613) (000’ tonnes) is almost flat,
whereas from 2006 on
ward the figure of landing is continuously increasing. In the
year 2000, the export
trade value as well as the unit value realization (UVR) was
significantly high (Table
1.3). Whereas the quantity (million tones) of the shrimps/prawns
(HS- 030613)
exported was comparatively less for that year.
Similarly, Figure 1.3 illustrates the world export share (%) of
frozen shrimps/prawns
(HS- 030613). The per cent share of world export sharply
declined from year 2000--
20081. The reason for this fluctuating trend could be due to the
product standard,
high competition in the global market or lack of appropriate
marketing strategy.
Source: CMFRI (2011)Figure 1.2: Estimated Marine Shrimps/Prawns
Landings in India (In MT)
1 In 2007 India lose the entire USA (14% of the total trade)
market due to antidumping.
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Table 1.3 India's Export to World (Marine Shrimps/Prawns)
Source: COMTRADE, WITS (2011Figure 1.3: Share (%) Export of
MarineShrimps/Prawns of India to World
1.4 Availability of Shrimps/Prawns in India
Traditional shrimp farming is an age-old practice in India going
on in about 50,000
ha, representing 36.23 per cent of cultivated brackish water
area. Farming takes
place mainly in the states of West Bengal (27.18%), Kerala
(7.03%), Karnataka
(1.71%) and Goa. Till mid eighties, only mixed varieties of
shrimp from traditional
farming contributed for cultured shrimp (
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1.5 State-wise Shrimp/Prawn Production of India
1.5.1Type of Shrimps/Prawns Available in Indian Coasts
Large varieties (species) of shrimps/prawns are found in the
Indian marine water.
Table 1.4 provides the details of the species and the coastal
lines where they are
found (MPEDA, 2009).
Table 1.4: Type of Shrimps/Prawns Available in IndiaTrade Name
Distribution StatesTiger prawn (Penaeus monodon) East coast and
South-west coast West Bengal and OrissaWhite Prawn (P. indicus)
Entire west and south-east coast Kerala and KarnatakaFlower prawn
(P.semisulcatus) East and west coasts Karnataka, Goa,
Maharashtra
and GujaratBrown shrimp Metapenaeus dobsoni West and East coasts
Kerala and KarnatakaBrown shrimp (M. monoceros) West and East
coasts Andhra Pradesh and Orissa
King prawn (M. affinis) Throughout the west coast andcertain
parts of East coast
Maharashtra and Kerala
Marine shrimp (Parapenaeopsisstylifera)
Both the coasts but more inSouth-West coast
Kerala and Karnataka
Jawala (Acetes indicus) North-west and North-Eastcoasts
Maharashtra, Gujarat, and ofAndaman and Nicobar Islands
Deepsea shrimp (Solenoccera sp) South-West Coast
1.5.2 State-wise Details of Shrimp/Prawn Production
Table 1.5 gives the clear picture of all marine shrimps/prawns
producing states’
status where Orissa, Tamil Nadu, Maharashtra and Gujarat are the
leading states
(MPEDA, 2007).
Table 1.5 State-wise details of shrimp Production during the
year 2003-04Sl.No.
State Potential Areaavailable (Ha)
Area Developed(Ha)
Area underCulture (Ha)
Production(MT)
Productivity(Mt/ha/Yr,)
1 West Bengal 405000 50405 49925 29714 0.602 Orissa 31600 12880
12116 12390 1.023 Andhra
Pradesh150000 79270 69638 53124 0.76
4 Tamil Nadu 56800 5416 3214 6070 1.895 Kerala 65000 16323 14029
6461 0.466 Karnataka 8000 3435 3085 1830 0.597 Goa 18500 1001 963
700 0.738 Maharashtra 80000 1056 615 981 1.609 Gujarat 376000 1537
1013 1510 1.49
Total 1190900 171320 154600 112780 0.73
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1.6 Health Benefits
The importance and benefits of a low fat diet have received
greater attention only
during two decades. Eating shellfish are beneficial to health
since they are very rich
in vitamins and minerals, at the same time as very low in fat.
Fish and shellfish also
contain Omega 3 Polyunsaturated acids, which cannot be produced
within the body.
1.6.1 Health Benefits of Omega 3 Polyunsaturated Acids
There is clear evidence that some Omega 3 fatty acids reduce the
risk of heart
disease, blood pressure, blood fats and possibly even
cholesterol. Furthermore,
omega 3 has been shown to aid in brain development and
intelligence, which is why
expectant mothers are advised to eat omega rich food during the
last trimester. It
also helps combat depression and even schizophrenia, aid in
nerve and eyesight
development. Finally, Omega 3 has been demonstrated to aid
arthritis patients.
Details of the health benefit by having shrimps/prawns are
provided in Appendix II.
1.6.2 Composition of Nutrients in Marine-water Prawns
Composition of nutrients of sea prawns are provided in Table
1.6. The main
processed shrimp species are generally giant tiger prawn, Indian
white prawn,
banana prawn, Parapenaeopsis, etc. and the products are whole
frozen, frozen
preliminary processed, ready processed (value added and mixed
processed) and
canned .
Table 1.6: Composition of Nutrients in 100g of Edible
ProductComposition of nutrients in 100g of edible product
Proximate composition Minerals Vitamins
Kcal g mg mg
Calories Moisture Protein Lipid Glucid Ash Calcium Phosphor Iron
A B1 B2 PP
82 79 18 0.9 0.9 1.4 79 184 1.6 20 0 0.1 2.3
Source: http://www.shellfish.org.uk/shellfish_diet.htm (
8/4/2008)
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1.7 Need for Research
The current competitive advantage that Indian seafood (marine
shrimps/prawns)
sector have in global market is due to a variety of factors
including good factor
endowments and presence of product characterized by high demand,
which
guarantees that a fixed market share of E.U., Japan, USA, Canada
and UAE
markets. This is a quota free market access product for India.
This indicates, the
Indian seafood (marine shrimps/prawns) sector will have an
opportunity to increase
the rate of export growth (and thereby the global market share)
provided it is able to
perform better than the seafood (marine shrimps/prawns)
industries of other
competing countries like China, Thailand, Vietnam and Indonesia.
In this context, it
becomes increasingly important to understand the extent to which
national (or
macro) level competitive ability of the production, processing,
value addition and
SPS measures of this sector which facilitates or inhibits export
growth (marine
shrimps/prawns) in the respective countries. It is also equally
important to study
whether there is a relationship between internal capabilities
(such as ability to control
cost; ability to maintain a high and consistent quality; ability
to add value throughout
the value chain etc.) of individual seafood exporting firms and
their export growth.
This study could help seafood (marine shrimps/prawns) exporters,
Industry
Associations and the Government to formulate appropriate action
plans to increase
and sustainable global competitiveness in the quota-free era.
Keeping this in view
the research problem and the research objectives are explained
in the next section.
1.8 Research Problem Statement and Research Objectives
The export growth of the Indian seafood (marine shrimps/prawns)
industries
depends on the following parameters- (a) the challenges posed by
the international
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business environment, (b) the internal capabilities of
individual firms to face these
challenges both individual and together, (c) the collective
capabilities of a coalition
of international related firms to jointly face these challenges
and (d) the ability of the
Indian Government to stimulate growth by creating a business
friendly macro
environment.
The research objectives are as follows:
i. To analyze the patterns of growth in global demand for Indian
marine
shrimps/prawns through analysis of the demand trends in major
importing
countries.
ii. To identify India’s major competitors in its marine
shrimps/prawns export
category and to compare their export competitiveness based on
selectived
national level capability indicators.
iii. To find out whether these capabilities are present in large
Indian firms who
have shown high export turnover in terms of Unit Value
Realization (UVR) for
the period of 2001-2008.
iv. To determine whether there is a significant statistical
correlation between any
of these capabilities and (a) net exports growth and (b) net
profit growth of the
marine shrimps/prawns industry.
v. To identify the factors that Indian industries are likely to
concentrate on in
order to achieve higher export growth and UVR in destinated
market in the
long-term.
vi. To create efficient marketing strategies so as to compete
with the developed
country as it is continuously expanding.
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1.9 Research Model
Figure 1.4 conceptualizes the model used in this research to
understand the national
and international challenges as well as the firm level
capability of Indian marine
shrimps/prawns sector. The inner most circle represents the
dependent variable, viz.
sustainable export growth of Indian seafood (marine
shrimps/prawns) industries. The
independent variables in the international business environment
that could affect the
export growth and UVR of Indian seafood (marine shrimps/prawns)
industries have
been visualized in the outer most circle of the figure. The
variables are (a) market
access; (b) competitiveness of Indian seafood (marine
shrimps/prawns) (c) changing
demand trends; (d) non-tariff barriers (NTBs); and (e)
intra-regional export growth
within trade blocs. The independent variables in the national
business environment
that could affect the export growth of Indian industries include
government policy,
infrastructure, factor endowments, development of related
industries, and
sophistication of domestic buyers and extent of local
competition. These variables
can either be a challenge or a capability for the nation
depending on whether they
favour the growth of exports for or not. Henceforth, these
variables need to be
compared with corresponding variables in the national business
environments of
other net exporting competing countries for same product. Thus,
these variables
have already been included in the competitiveness of seafood
(marine
shrimps/prawns) sectors of competing countries. The firm level
capabilities, that
could affect export growth of Indian seafood (shrimps/ prawns)
sector and also the
UVR include, (i) quality consciousness; (ii) cost control; (iii)
supply capacity; (iv)
economies of scale; (v) reliance on direct marketing and
sub-contracting; (vi) value
addition competence; (vii) compliance with international labour
and organic
standards; (viii) effective use of Information Technology
(creating product database,
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Figure1.4. Conceptual Model
CHALLENGES OF INTERNATIONAL BUSINESSENVIRONMENT
Market Access Changing Demand Condition Relative Competitiveness
in Internal level Non Tariff Barriers Trade Blocs
NATIONAL LEVEL CHALLENGES Infrastructure High Competition in
Nations Level Government Policy Capital Resources Development of
Processing Industries Sophistication
FIRM CAPABILITIES Market Focus Cost Control Quality
Consciousness Economies of Scales Direct Marketing Value Addition
Marketing Diversification
GROWTH OF MARKETSHARE & UVR OF INDIAN
MARINE FROZENSHRIMPS/PRAWNS
Cluster Dynamics Brand Development Strategic Alliances
Advertisement &
Promotion Ability to Comply with
International Standards
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websites); (ix) market diversification; (x) brand development;
(xi) market focus; (xii)
strong advertisement and promotion and (xiii) product
innovation. The inter-firm
capabilities include (a) strategic alliances and (b) trust and
cooperation. A
combination of some of these capabilities will enable a sector
to successfully face
the challenges of the changing business environment.
1.9.1 Constructs Used in the Research
This model attempts to explain the various challenges faced by
Indian seafood
(marine shrimps/prawns) exporters and the capabilities required
at the firm, inter-firm
and international level to successfully combat these
challenges.
Concept of “challenge” used in this study: The seafood (marine
shrimps/prawns)
sector is a sellers market , where there are a large number of
buyers and relatively
fewer producers. The Indian marine shrimps/prawns are very
sophisticated and
costly product. But now-a-days the countries like Vietnam
culturing and exporting a
chief variety of prawn called “Vannamei” prawn, which drags
buyers’ attention. In this
study, the various challenges include: (i) operating in a
quota-free environment (ii)
coping with sanitary and phyto sanitary (SPS) and NTB measures,
(iii) creating
product identity ( using the country of origin), and (4) keeping
pace with the growth
strategies adopted by other competing countries.
Capability (when country is the unit of reference): The term
“Capability” is used in
this study to mean the competitive ability of marine
shrimps/prawns exporting nation
to show higher export performance (in terms of Unit Value
Realization) than its
competitors on account of certain macro advantages that the
nation may have.
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These include both the natural factor endowments2 of a country
and the capability of
the government to envision and implement an industry-friendly
policy.
Capability (when industry is the unit of reference): In this
study, a industry’s
capability is defined as the ability of an industry to initiate
or react to strategic moves
and to a deal with environmental or industry events that occur
(Porter, 1990).
Capabilities include processing, product development,
operations, value chain
integration, all aspects of marketing and customer service and
organization design
(Miller et al., 2000).
1.10 Organization of the Thesis
In a sentence, the study integrates the findings of secondary
research (literature
review and analysis of secondary data) and the findings of
primary research (at the
industry level). The study has been organized in the following
manner.
Chapter one introduces the background of the subject, viz.
challenges and
capabilities of the world marine fisheries sector as well as the
Indian shrimps/prawns
export sector and also discusses the research objectives,
problems and the research
model.
Chapter two provides an extensive review of literature of the
various issues being
considered in the study. It tries to cover the definitions of
various terms that are
analyzed in this study, identifying the research gaps.
Chapter three desirable research methodology used in this study.
The analysis is
based on secondary data and primary data. Secondary sources
accessed include
MPEDA (July 2008), WITS COMTRADE (June 2008), Prowess (July
2008)
2 Natural resources for capture and culture of marine
shrimps/prawns .
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database, FAO (May 2010). The primary data has been obtained
from the marine
shrimps/prawns exporters. A qualitative, in depth, exploratory
approach was
adopted. Methodology used was a structured questionnaire
supplemented by
telephonic discussions.
Chapter four discusses the global demand for Indian
shrimps/prawns and identifies
its global competitors. This chapter narrates the country-wise
comparative
advantage in seafood sector, as well as identifies the factors
contributing in
competitiveness of this sector.
Chapter five discusses the enhancement of the Unit Value
Realization (UVR)
growth and also market sustainability of Indian marine
shrimps/prawns, through the
possibility of introducing branding. The analysis is based on
some national and
International case studies and concluded based on the empirical
analysis.
Chapter six discusses the market share enhancement by creating
proper
awareness through advertisement and promotion activities
respectively. This chapter
also analyzed based on both case studies of leading national and
international
commodity exporting industries and empirical analysis.
Chapter seven focuses on idea of value addition by strategic
alliance of India with
other competitive countries, based on some national and
international case studies.
The variables facilitating the strategic alliance are identified
through the opinion
study of the exporters
Chapter eight summarizes the findings of the study and discusses
its implications
on the future of the marine shrimps/prawns exports from India.
The limitations of this
study and the scope for future research are also brought
out.
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1.11 Concluding Remarks
This chapter has provided an insight into the general
characteristics of the global
marine shrimps/prawns industry and the unique features of the
Indian marine
shrimps/prawns export industry. Many of the issues introduced in
this chapter have
been analyzed at length in the subsequent chapters of this
thesis. This chapter has
also discussed the need for research and has introduced the
research objectives
and the conceptual model used in the research. A review of
literature covering
various research issues is reported in the next chapter.