Global Journal of Flexible Systems Managementgiftsociety.org/download/gift-journal/2-2.pdf · contemporary literature. Bhagvad Gita, an ancient scripture elucidating the ethical principles

��

Global Journal ofFlexible Systems Management

��

�� !��!�� "��

#�� "�� "�� "�� "�� "�� $%&!'%&� �$��!%�� !&�� !'��!%��!&�� "�� "�� "� ��

�� "�� (�� "�� )� �� "��

��"�� " �� "�� )

*�� +�� ,�� -�� "�� !

"""�� "�� "�� )� .� �� $�� -�� %�� /�� " �� /�� #��"

�� #�� ,�� "�� (�� ,��!�!+�� )� &�� $� �� *�� 0�� $�� #��

# �� 1��2� �� 3�"�*�� !� 445� 546�� &�)� 74!44!6874469�� 74!44!6:899:9�� )� 74!44!6874469�� 74!44!6:6;6;5�#�� "�� &�� <"��=� �� "�� )� �� %��

"�� "�� +�� "�� >#�� "�� "�� "��

�� #�� ? � �� "�� %�� "�� ,�� ,�� "�� "��

��

!�� " �� # !�� # !�� # !��$�%��# �� # !�� # &�� '�� # !�� (��

��# ��" � ��" �� '# !��(&��(

��# �� # �� )� ��

�� $�� %#

�� "�� / �� "�� "�� "�� 45!4;�"�� *��3�� "�� "�� ? � �� #� � �� !��

�� !�� +�� "�� "� ��

�� 455!485"�� #�� "��

�� "�� "�� !"""��

�� "��

�� %��

��

�� %�� ,�� "�� "�� "��"�� "� ��

�� "��

�� ""�� ? � �� "�� @�� 4779�� %�� " )�� $��

�� 0� �� (�� 4776�� 0�>�"!1�� /�� @��1�A�� 4779��/�� B�� 0��0� �� C5� �;�� 467!4:C��&�� ? � �� "�� &�� "�� +�� "�� %��

"�� "�� "��

��

%�� "�� "�� "�� >#��

�,&!-�� ,�� "��"�� "��"�� "��

�� >#�� D$E� 855�

��

� � ��

of contributions from specific interest areas, it is planned to bring out special issues of ��from Volume 3. The first special issue is planned on the theme; “Organizational StrategyFormulation and Flexibility”, which will be guest edited by Prof. Jatinder N.D. Gupta. A callfor papers for this special issue can be seen at the end of the current issue of the journal.

Thus, the flexible structure of GIFT in the form of these schools in contemporaryareas of relevance along with the mechanisms of synthesis will bring ‘diversity with focus’ inthe sharing and learning process to make this movement more meaningful and contemporary.

��!��"��"#��$

��

��

�� !� � �� !��

� ��"

��Global Journal ofFlexible Systems Management2001, Vol. 2, No. 2, pp iii-iv

��

�� !�� #��!��

� �� $�� %

� �� &�� '

�(��

��

�� ' � ��

��

)�� ' � � ��

© 2001, Global Institute ofFlexible Systems Management

�,&! �� -��.�� &��

While discussing the genesis and launch of �� in its first issue, it was brought out that‘Flexible Systems Management’ is a movement towards a new synthesis of knowledge in thedisciplines of systems and management, where the bottom line is ‘flexibility’. In order to aidthis process of synthesis from multiple directions, GIFT schools in the contemporary areas ofinterest are being developed. As in most of the evolving managerial approaches ‘flexibility’ is acommon point, these schools in various thrust areas will be enriching the ‘Flexible SystemsManagement’ paradigm from multiple perspectives.

The professional society GIFT has a flexible organizational structure, in which new schoolscan be created based on new interest areas and the schools dealing with obsolete interest areascan be phased out. It provides an evolutionary and organic structure so as to adapt with theevolution of knowledge. To begin with, the following eight schools have been planned:

• GIFT School of Global Management

• GIFT School of Technology and Innovation Management

• GIFT School of Information Technology and Knowledge Management

• GIFT School of E-Commerce and E-Governance

• GIFT School of Learning Organization and Strategic Transformation

• GIFT School of Quality, Productivity and Wastivity Management

• GIFT School of Environment Management and Sustainable Development

• GIFT School of Human Values and Management Ethos

Each school has sufficient autonomy to organize its activities to enrich the specific area ofinterest, and at the same time its synthesizes with the larger framework of ‘Flexible SystemsManagement’. In order to aid the process of synthesis, three major routes are built into thesystem, viz. cross-membership in schools, annual global conference GLOGIFT, and �� .

Each member of GIFT can opt for an association with any of the two GIFT schools inoperation at any point in time. This association can be changed every year as per the shiftinginterests of members. In this manner, each school may have members with interest in all otherschools. This type of cross-membership will aid a great deal in cross-fertilizing the ideas andultimately facilitating the synthesis of knowledge generated in various quarters.

The synthesis in further aided by a formal route of an annual global conference GLOGIFT,where the interest of various schools are represented. Though every year lead may be taken bysome schools, the conference is an opportunity to share cross-learning of all the schools. Forexample, for GLOGIFT 2002, the lead is coming from the schools of Technology and InnovationManagement and Global Management, giving the theme to the conference as: “Perspective onInternational Technology and Know How Transfer: Towards a Flexible Enterprise”. The issuesof technology and know how transfer highlight the interest of these schools, where the concernfor flexible enterprise helps in synthesizing it with other schools and ultimately to ‘FlexibleSystems Management.’

Another major vehicle of synthesis is �� , where researches and experiences fromvarious perspectives and directions focusing on the issue of ‘flexibility’ are published at oneplace. �� is evolving as a general management journal with a specific focus on ‘flexibility’.Since flexibility is a multi-dimensional concept, coalescing of these diverse developments willaid the evolution and enrichment of the flexible management paradigm. In view of the relevance

*��&�� &��

�(�� +,,+� � � ��

� � � �� -�� '�� -��

��

$�� !�� .


ISSN 0972-2696 Vol. 2 No. 2 April- June 2001

��

Editorial iii

Research Papers

� Multiplicity of Cognitive Frameworks for Ethical Decision-Making:Variability across Gender and Age Groups 1

Kanika T. Bhal and Poonam Sharma

� Flexibility and Related Issues in Evaluation and Selection ofTechnological Systems

11B. V. Chowdary

� Manufacturing Strategy Perspective on Flexibility :A Case of Select Indian Companies 21

G. S. Dangayach and S. G. Deshmukh

� International Supply Chain Management :Learning and Evolving Networks 31

Sameer Prasad, Jasmine Tata and Jaideep Motwani

� Flexible Framework for Strategic Information Systems Planning :A Case Study from Banking Sector 37

A. M. Rawani and M. P. Gupta

Learning Lesson on Flexible Systems Management

� SAP-LAP Models 55

Sushil

Event Diary 62

Book Review 63

Call for Papers for Special Issue 65

��

�


��

Kanika T. BhalAssistant Professor

Department of Management StudiesIndian Institute of technology

New Delhi-110016. India

Poonam SharmaScientist

Division of Agricultural ExtensionIndian Agricultural Research InstitutePusa Road, New Delhi-110012, India

��A moral judgment is a considered opinion of what ought to be done (i.e., a decision about the morally right thing to do) when confrontedwith an ethical dilemma Ethical ideologies or frameworks have been studied to identify the underlying reasoning of an individual inmaking decisions in a situation of ethical dilemma. Western philosophers and thinkers have identified a variety of frameworks that havebeen explored in the context of business. The present work explores some of the ethical ideologies/frameworks identified in the Indianphilosophical systems along with western frameworks, and tests their use by the Indian managers. Three hundred and nineteen managersformed the sample for the study. Two ethical ideologies (Moksh and Karma) rooted in Indian ethical philosophies were juxtaposed withother more universal ones. Further, difference in the use of these frameworks was tested for the two genders and two age groups. Resultsindicate that Indian managers use both, the Indian as well as the universal (western) philosophies. There were some gender and age-group related differences in the use of the frameworks. Implications of the findings are discussed. The results indicate flexibility in theuse of these multiple frameworks.

�� ethics, ethical frameworks, gender, justice, karma, moksh

EmpiricalStudy

��Global Journal ofFlexible Systems Management2001, Vol. 2, No. 2, pp 1-10

(Bhal, 2000), flexibility in the use of frameworks in differentsituations found support. In this paper, we focus on actorrelated flexibility and variability.

!��"��

For the purpose of understanding individual ethicalphilosophy and behaviour, it is important to know about theprevailing theories in the field of ethics. At the outset, theethical theories may be divided into two fundamental types,teleological and deontological. These two approaches entaildifferent conclusions about what ought to be done.

Teleological theories emphasize the importance ofconsequences of the actions or practices. According to thesetheorists, the consequences of an action or practice determineits moral worth. The most widely studied teleological theoryis Utilitarianism. According to utilitarianism, an action orpractice is right if it leads to the greatest possible balance ofgood consequences or to the least possible balance of badconsequences for all the people involved (Bayles, 1968).

Deontologists (derived from the Greek word for “duty”),on the other hand, emphasize that actions are not justifiedonly by their consequences and the concept of duty isindependent of the concept of good. Besides good outcome,there are other factors as well like fairness of a distributionprocess, keeping a promise etc., which determine the rightnessof an action. Deontological “duties” are from this perspective,

#��

The Oxford Dictionary defines ‘ethics’ as the “science ofmorals or morality” and operationally it may be treated asan “....inquiry into the nature and background of morality,where the term morality is taken to mean moral judgments,standards and rules of conduct” (Taylor, 1975). Thus, thesubject matter of ethics is morals or morality, which are theindividual or group standards of right and wrong or goodand bad. Ethics, then, involves an examination of thesemorals used by individuals and groups and their applicabilityin real life situations. Hence, it is the individual’s or thegroup’s logic, norms or principles used in decision-making,which is at the heart of ethical behaviour.

Over time, the individual develops an ethical decisionhistory. Through a repeated process of decision-making,ethical philosophies and decision ideologies become relativelystable. The content of one’s ethical system, the network ofethical norms and principles one holds, constitute a person’sethical philosophy, which is referred to as ethical frameworkin the present work. Social scientists have contended foryears that these normative structures influence the decisionsmade by individuals (Hogan 1973, Fritzche and Becker 1984,Premeaux and Mondy 1993, Stead, Worrell and Stead 1990).

Flexibility in ethical decision frameworks implies a useof multiple cognitive frameworks and variability in their useas per the situations as well as actor. In an earlier study

�

��

��

an undeniable feature of business ethics. One of the mostpopular deontological theories is ‘Categorical imperative’given by Immanuel Kant (1724-1804) an eighteenth centuryphilosopher. He emphasized on the performance of one’sduty for the sake of duty and not for any other reason andinsisted that all persons should act not only in accordancewith duty but also for the sake of duty (Sullivan, 1989). Theother popular deontology theories are related to the notionof justice and right. The theory of justice requires thedecision-maker to be guided by the concepts of equity,fairness, and impartiality (Rawls, 1971) and a theory of rightasserts that human beings have certain fundamental rights orentitlements that should be respected in all decisions (White,1984). Thus, whereas utilitarians focus on ends, deontologistsare more concerned with the means.

Besides teleological and deontological bases, one obvioussource of morality might be taken to lie in religion. God, isthe best authority on deciding what is right and what is not.Thus for a Christian the ethical rulebook is the ‘Bible;’ for aMuslim (following Islam) it is the ‘Quran’, for Jews it is the‘Torah’ (the first fivebooks of the Christian’sold testament interpretedby Talmud) and for Hindusthe various scripts from‘Upnishads to BhagvadGita.’

#�� !��

Although Indian ethics does not exist as a separate subject,but the ethical aspect of Indian philosophy is thousands ofcenturies old and is referred to in historical as well ascontemporary literature. Bhagvad Gita, an ancient scriptureelucidating the ethical principles in governance is seen as asource of ethical philosophy by modern day thinkers andpractitioners (Chakravarty, 1987). Two principles propoundedin Gita that may be considered relevant in the context ofbusiness are the philosophy of Karma (Duty) and Moksh(Salvation).

��

Preaching of Bhagvad Gita advocates that one has a choice inone’s action, but never in results. The results are determinedthe moment the action is performed. One cannot avoid thefruit of action. The results of action are governed by laws,which are not under our control. Therefore, individuals shouldonly concentrate on their actions without worrying about theresults (Swami Dayanand, 1999). Thus, Karma gives ametaphysical orientation to the concept of duty by saying thatthere is another superior force that controls the outcomes of anaction.

��

All the Indian systems agree in believing that an action doneby an individual leaves behind it some sort of potency, whichhas the power to ordain for him joy or sorrow in the futureaccordingly (depending upon whether it is good or bad).

Flexibility in ethical decision frameworks impliesuse of multiple cognitive frameworks and variabilityin their use as per the situations as well as actor.

When the fruits of the action are such that they cannot beenjoyed in the present life or human life, the individual hasto take another birth as a man or any other being in order tosuffer them. It was believed that the unseen potency of theaction generally required some time before it could be fitfor giving the doer the merited punishment or enjoyment,which results in cycles of birth and rebirth.The ultimate aimof this life then is to free oneself from this cycle of birthand rebirth and attain salvation or Moksh.

Thus, in this ideology, every action is to be seen in afuturistic perspective. The long-term impact of an action hasto be kept in mind without getting too swayed by the present.As might be expected, all Indian systems agree upon thegeneral principles of ethical conduct that must be followedfor the attainment of salvation or freedom from this cycle ofbirth and rebirth. That all passions are to be controlled, noinjury to life in any form should be done, and that all desirefor pleasures should be checked, are principles which arealmost universally acknowledged. (Dasgupta 1957, Sharma1965).

There are managementteachers and trainers whohave used theseprescriptions to bring aboutorganizational change.They have focused on

these values as normative goals and their efforts have largelybeen towards transforming managers. However, there is nostudy in the Indian context that identifies the actual use ofthese frameworks by Indian managers. Thus, there is apossibility of the use of multiple frameworks rooted indifferent philosophical traditions. Though, the frameworksrooted in Indian ethical philosophy have not beenoperationalised and studied in the context of business ethics,there are other frameworks, mentioned in the earlier sections,that have been. A brief review of the literature on the use ofethical frameworks in business is as follows.

�� $��!��%��

Arthur (1984) has provided an extensive list of frameworksof moral reasoning which include: Hedonism - extremeselfishness, Utilitarianism - the greatest good for greatestnumber, Pragmatism - whatever minimizes conflict, Salvation(a) - good works to earn redemption, Salvation (b) - isolation,mediation and devotion, Golden Rule - based on faith, charityand reciprocity, Divine Right - maintenance of the ‘’pecking-order”, Egalitarianism - push down the rich, push up thepoor, and Paternalism - nature is sacred.

While suggesting a contingency model of ethical decision-making Ferrell and Gresham (1985) talked about ethicalframeworks as individual variable factor. They followed theclassification of ethical framework based upon the basicteleological and deontological philosophies, whereteleological included Utilitarian philosophy anddeontological philosophies included Rights and Justiceprinciple.

�


�� !��"� �� #�� $��"��

Some of the other frameworks studied more directly in thecontext of business include the

� doctrine of the means - seeking the means or moderatecourse of action between the extreme behaviors,

� intuition ethics - being guided by simply what peoplefeel or understand to be the right course of action,

� conventionalist ethics - it is assumed that business is likea game and therefore has its own set of rules, supportingthe statement that it’s all fair in love, war and business(Steiner and Steiner, 1988),

� professional ethics -taking only those actions, whichwould be viewed as proper by a panel of professionalsor colleagues, and

� TV test- acting in such a way that one would becomfortable explaining his/ her action on TV to thegeneral public (Laczniak and Murphy 1991).

In an exploratory study, McDonald and Pak (1996) studiedthe use of self-interest, utilitarianism, cate-gorical imperative,duty, justice, neutralization, religious conviction and light ofthe day frameworks.

It is evident thata set of frameworkshas been used byresearchers in theWestern countries.There are theoriststhat prescribe the useof Indian philosophybut there is littleempirical work thatstudies the actual use of these philosophies by Indianmanagers.

Thus, our first objective is to assess the cognitiveframeworks of Indian managers for decision-making insituations of ethical dilemma and our proposition is asfollows:

Proposition: Indian managers would show a use of ethicalframeworks based on Indian ethical philosophies along withthe other Western frameworks.

��

Understanding how individuals make decisions in situationsof ethical dilemma, has been a concern of the researchersprimarily in the area of psychology. The researchers havefocused on the individual, the situation and the interactionof the two. Major focus of the individual approach is toidentify characteristics of the moral individual. Studiesemphasizing individual factors influencing ethical decision-making have shown a number of variables to be significantdeterminants of ethical or unethical behaviour. Researchershave identified age and gender as two variables which mayaffect ethical decision-making, hence gender and age weretaken as important variables in the study. They were alsoused as a test of the differentiating power of the measure ofethical frameworks emerging in the study.

Some important frameworks of moral reasoning are: Hedonism– extreme selfishness, Utilitarianism – the greatest good forgreatest number, Pragmatism – whatever minimizes conflict,Salvation (a) – good works to earn redemption, Salvation (b)– isolation, mediation and devotion, Golden Rule – based onfaith, charity and reciprocity, Divine Right – maintenance ofthe “pecking-order”, Egalitarianism – push down the rich,push up the poor, and Paternalism – nature is sacred.

��

Whether males and females are different in their perceptionof ethical dilemma and social issues has been a matter ofmuch debate in the literature on gender issues. Gilligan (1982)suggested that male and female have distinctly different moralorientations and argued that whereas women think of moralquestions as problem of care involving empathy andcompassion, men appear to conceptualize them as problemsof right, justice and fairness. Lyons (1983) expands on thistheme suggesting that the focus of men’s and women’s senseof what is or is not moral is not the only difference. Shehypothesizes that the fundamental processes by which menand women make moral choices are different, in that menare more immersed in an ongoing ethical consciousness notlimited to discrete events and situations.

Gender related differences in the use of ethicalframeworks were also reported by Harris (1989) in hisstudy of four ethical maxims. The model responses of maleshowed a decisive preference for egoist (self interest) based

decision approach.Females, in contrast,professed the use ofutilitarian approach.The findings weresupported by areplication study inwhich Galbraithand Stephenson(1993) used the sameethical maxims asHarris.

However, men and women have also been found not todiffer in the use of ethical frameworks, e.g. Schminke (1997)studied gender differences among seventy-five managers inethical decision-making. He used Brady’s (1990) classificationof ethical framework i.e. formalist and utilitarianism. Surveyof Ethical Theoretic Aptitudes (SETA) (Brady, 1990) alongwith three vignettes (each one rated as neutral, utilitarianand formalist by trained raters) was used in this study. Resultsof the study showed that men and women did not differ onthe ethical models to which they personally subscribed. Thereis a strong body of literature suggesting that there is nodifference between men and women in their ethical behaviour(Fritzsche 1988, Hegarty and Sims 1978, Singhpakdi andVittell 1990); no difference in their moral reasoning (Derry1989, Lifton 1985, Walker 1984); no difference in their ethicalperception (Davis and Welton 1991, Kidwell Steven andBethke 1987); no difference in their ethical attitudes andvalues (Shukla and Costa 1994); no difference in the ethicalbeliefs and ethical judgments (McNichols and Zimmerer1985, Stanga and Turpen 1991, Tsalikis and Oritz-Buonafina1990).

In the Indian context, the social roles are such that womenare expected to perform the religious rituals and use religiousguidelines in their day-to-day life.

%

��

Thus, the study aimed to test whether Indian male and femalemanagers differ in their use of ethical frameworks identifiedin the Indian context. The Indian women, though have comeout to work, but they are still seen as primarily responsiblefor carrying on the religious traditions and care for the family(Jolly-Wadhwa 2000, Mathur and Mathur 2001), our firsthypothesis, then states.

H1: Women are likely to show a greater use of ethicalframeworks based in Indian philosophy as compared to men.

��

A number of past studies have compared the ethical valuemeasures of students and practitioners to analyze the effectof age and experience on ethical behaviour. There are somestudies that report no age related differences. For Glover, etal (1997) age was not a predictor of ethical decision-making.Callan (1992), too, in a study of 226 state employees foundthat age did notsignificantly influencethe attitude ofrespondents towardsethics.

However, majority of these studies (Arlow and Ulrich1980, Bellizzi and Hite 1989, Kreitner and Reif 1980,Singhapakdi, 1990) show business professionals to besignificantly less tolerant of questionable business practicesthan students. Barnett and Karson’s (1989) study of 513executives analyzed decision involving ethics, relationship andresults. Career stage was viewed as a surrogate for age inthis study. Early career stage respondents acted significantlyless ethically than later career stage respondents. Rueggerand Ernest (1992) found that students falling in the range of40-plus year age group were most ethical, followed in orderby the 31-40 group, the 22-30 group and those 21 years ofage and under. Serwienk (1992) in a sample of smallinsurance agencies found that older workers had stricterinterpretation of ethical standards in two of four indices usedin the study. Premeaux and Mondy (1993) found thatsegments of the group who were five years or less fromretirement were much more likely to act in accordance witha “rule” or “right” philosophy.

Age is a potential determining factor for commentingupon the ethical standards of an individual and needs to beexplored for the Indian managers too. Thus, the study alsoaimed to test and compare the use of frameworks for youngand old managers. In the Indian context, older generation isseen as more religious with mythic cosmic orientation. Theother view, particularly relevant in the Indian context couldbe the changing value systems of the young and the old.Young and old mangers have shown to have differentorientations and values systems (Bhal, 1997). Hence, oursecond hypothesis is as follows:

H2: Older managers are more likely to use frameworks basedin the Indian ethical philosophies as compared to youngermanagers.

��

Proposition : Indian managers would show a use ofethical frameworks based on Indian ethical philosophiesalong with the other Western frameworks.

��

��

The study was carried out in 10 organizations-five from thepublic sector and five from the private sector organisations.

! � � �� " ��

Altogether 316 executives from 10 different organizationsconstituted the sample for the study. Care was taken to includeparticipants from different divisions of the organizations likeproduction, accounts, sales, personnel, etc. Care was alsotaken to include the respondents from all the three levels i.e.lower, middle and higher managerial levels. Because of lessnumber of women working in the managerial posts, only asmall number of women executives could be included in thesample. Women respondents constitute around 8% of thesample, which is close to the actual constitution of the

population. Table 1 listsage -group (Young andOld) and gender -wisesplit of the sample. Meanage of the Youngrespondents was 33.24

years with in sd of 6.38, whereas the mean age of the oldrespondents was 51.81 years with an sd of 3.43. Mean ageof the male respondents was 40.90 years with an sd of 10.53,and mean age of the female respondents was 34.24 yearswith an sd of 8.84.

��

Age group Gender Total

Men Women

Young 173 22 195

Old 118 3 121

Total 291 25 316

Note: Young upto 45 years; Old 46 years and above

#�� $�� %��

Based on literature six frameworks were used in the study,to begin with. Of these, three were from traditional Westernliterature and models. Definitions of these frameworks arebased on Velasquez (1998) and Hosmer (1987). The itemswere based on McDonald & Pak (1996) and Sharma andBhal (In press).

The definitions of the Indian frameworks of Moksh andKarma are based on the discussion above. Their operationaldefinitions are given below.

&�� "�

When the decision is taken under this framework, theemphasis is on balancing the costs and benefits, or good andbad in an effort to maximize utility. Utilitarianismasserts that the decision-maker should always act so as toproduce the greatest ratio of good over bad for every one.

'


The focus of the decision- maker in this framework is onthe consequences of his or her decision and the impactof these consequences on those concerned with thedecision.

�� (��

This framework is based on the principle that an action iseither morally right or wrong regardless of the consequences.This framework comprises of two formulations, which aresimplistically referred to as the universal and the means-endrules. The universal rule is concerned with the question:would the decision-maker be willing to have others act inthis way to him or her? The means-end rule is concernedwith the question: are the individuals concerned being treatedas ‘end’ in themselves, i.e. respected and in possession ofrights, or are they being treated as ‘means’ and utilized purelyfor the sole achievement of a specific objective?

)�"��

This framework is concerned with ‘fairness’ of the decision,and whether there has been a just distribution of benefitsand burdens among all those concerned with the decision,despite their age, sex, religion, interests, income, personalcharacteristics, socialand occupationalpositions. It is basedon the pre-existingnotion of freedom,equality and concernfor disadvantaged,although it has beensuggested that most adult individuals do possess an intuitivesense of fairness based on natural justice.

*� ��"� ��

Under the ethical framework of religious conviction, thedecision-maker will refer to their religious convictions andthe decision is based on the directions of one’s faith.

��"�

This framework is based on the belief that present life is ablock in the cycle of birth and rebirth. The individual wantsto obtain moksh (liberation which is eternal happiness) fromthe cycle of birth and rebirth. The present life is an outcomeof the actions in one’s previous life and actions in the presentlife will decide your next life, i.e. activities in this life willdetermine the fate of our next life. Hence, every action isjudged in terms of its impact on next life. Therefore, allactivities, which lead to liberation from this cycle ofbirth and rebirth, or improving our next life, should beindulged in.

��

In this framework, the decision-maker considers every actionas his duty– without any attachment to the fruits of action.He believes that his jurisdiction is restricted to performingor not performing an action/duty or performing that in a

different way, the results of the action do not fall in his/herjurisdiction. Karma emphasizes on action that is detachedfrom the results that it may yield.

Respondents were presented with two situations involvingan ethical dilemma and they were asked to make a decision.This was followed by a set of items on ethical frameworks.Respondents were asked to rate 21 items (on a 5-point scale)as their reasons for making the decision (see Appendix I).These 21 items covered the six frameworks-Utilitarianism (3items), Categorical Imperative (3 items), Justice (3 items),Religious Belief (3 items), Moksh (5 items) and Karma (4items).

"��

&��"�$ � �' � �� (� ��

To check the match between the proposed frameworks andthe managers’cognitive conceptualization of the frameworks,factor analysis was conducted. Results of the factor analysisare given in Appendix II A.

Factors with eigen- values more than or equal to onewere retained. Also, only, those factors were included wheremore than two items could be retained. An item was retained

in a factor when ithad a loading of .5or more and crossloading of .40 orless. On the basisof these criteria,factor analysis

yielded three neat factors (Appendix II A).

The first factor explaining the maximum varianceconsisted of 5 items. All these items were initiallyconceptualized as the items constituting the Mokshframework. This is a framework based in Indian ethicalphilosophy and may be linked to religious beliefs of Indianmanagers.

The second factor also consisted of 5 items. Of these,two items were originally from Justice dimension and threewere from Karma. Thus, this second dimension as perceivedby the respondents did not match the theoreticallyconceptualized dimensions.

The third factor consisted of three items, all of whichwere originally conceptualized as constituting the frameworkof Religious Belief.

The nature of factors reveals that two of the originallyconceptualized frameworks emerged as it is and both thesehad a philosophical or transcendental element, not rooted inhere and now. These two frameworks of Moksh and ReligiousBelief had an element of faith, which the Indian managersclearly identified. There seems to be some faith in thephilosophical or religious frameworks for ethics. The seconddimension had elements of Karma (duty) and Justice. Justiceis a universal framework rooted in logic and here and nowexperiences but Karma is conceptualized as consisting of two

�� !��"� �� #�� $��"��

Results clearly indicate a variability in the use of frameworksamply supporting the flexibility thesis in the use of ethicalframeworks, which has significant implications for the designand implementation of softer systems within the organizations.

+

��

components— duty and detachment from the results. Though,as per our definition (and subsequent framing up of theitems), it had a transcendental element but it seems it wasnot perceived to be so by the managers as they clubbedthese items with the concept of justice. Many people ofteninterpret karma as duty and it is possible that managersperceived it to be so. This factor was termed as Duty andFairness.

In essence, then our results indicate use of the philosophyof Moksh in particular, religious philosophy (Religious Belief)in general and a practical framework-Fairness of Action.This provides support for the use of multiple frameworksfor ethical decision- making. For all subsequent analyses,these three frameworks are considered as they also show highreliability (Cronbach’s coefficient alpha) coefficients.

%�� (� ��)* �� +�� )��$"� � ��

Our next objective was to assess whether the use of theseframeworks varies across gender to test for flexibility relatedto actors. To assess these differences t-test was conducted.Results of the t-test for male and female responses are givenin Appendix II B.

The resultsindicate differences ontwo of the three ethicalframeworks, viz. Mokshand Religious Belief.Men use both theseframeworks more oftenthan women. Oursecond hypothesis thus is not supported in the right direction.Though, men and women do differ on the use of frameworks,the differences are just the reverse of the hypothesisedrelationship. Traditionally, women have been associated morewith religion and a mythic orientation to life in India. Mostof the rituals related to religion (like fasting etc.) have beenassociated with women but our results indicate that womenuse these frameworks less often as compared to men. Self-selection theories as stated by Dobbins and Platz (1986) assertthat those who choose business career have traits differentfrom those typical of their gender. This proposition couldaccount for observed differences in ethical attitude orbehaviour of women in the general population compared tothose in the work environment and there is no difference inthe behaviour of men and women at their work place. Also,differences between the sexes due to early socialization mayget overridden in the work environment by the perceivedcosts and rewards associated with occupational goals; thus,while women may enter business career with values differentfrom men, they may respond similarly to the same trainingand occupational environment and become more like men intheir actions and perceptions (Derry, 1989). Also, it ispossible that the differences in gender related behaviour mayvary from situation to situation, thus, there may be situationswhere women have more religious orientation (like home andfamily) but these differences do not exist in workplaces. Thus

situational variations may be possible in gender relateddifferences (Barnett and Karson 1989, Tansey et al 1994).The underlying causes for these variations may be exploredin subsequent studies providing deeper insights into genderrelated differences in ethics.

Differences between the young and old managers too weretested as the second test for flexibility related to actors usingt-test. Results are given in Appendix II C.

Results indicate older managers use Moksh morefrequently as an ethical ideology as compared to youngermanagers. Even though, there is no significant difference inthe use of the other two frameworks, the trends indicate thatolder managers use Religious Belief and Moksh more ascompared to the younger managers. Whereas youngermanagers use more Duty and Justice as compared to oldermanagers. Thus, our third hypothesis finds support in thisstudy. The literature suggests that age or career stage is afactor in determining values, as younger managers tend toassign less importance to trust and honor, and moreimportance to money and advancement than older executives(Johnson, Neelankavil & Jadhav, 1986). The view is mixedas ethical position changes with age, but no single factorcan be identified as causing this change. College freshmen

and juniors, forexample, were foundto be more justiceoriented (fairness andequality) than MBA’swho tended to bemore utilitarian

(maximize benefit / minimize costs) in their approach toethical dilemmas (Borkowski & Ugras, 1992). The authorsconcluded that this difference might be due to idealism onthe part of the former group, and experience from theemployment for the latter. It is possible that as one maturesthere is less emphasis on selfish interest and an increase inconcern for others. It is not certain however, whether it isage or the accumulating work experience associated with age,which causes individuals to modify their ethical positions asthey move from different stages of life.

Our results clearly indicate a variability in the use offrameworks amply supporting the flexibility thesis in the useof ethical frameworks, which has significant implications forthe design and implementation of softer systems within theorganizations.

#��

The study primarily addresses the issues with a view tocontribute to theoretical development, however it has practicalimplications too. To begin with, the kind of issues that wouldhave significant moral implications would be substantiallydetermined by the frameworks under use. As a variety offrameworks are being used, it is likely that different situationswould involve different criteria for ethical evaluation. Hence,first of all, if the organisation attempts to institutionalize anysystem of imbibing organisational values, the system will have

If the organization attempts to institutionalize any systemof imbibing organizational values, the system will have tobe flexible to incorporate the variations in the ethicalideologies or framework.

��

,


to be flexible to incorporate the variations in the ethicalideologies or framework. This, however, should not be takento mean a compromise on values or a flexible use of valuesthemselves but a flexible implementation of the values inthe light of the variety of frameworks being used as the moralintensity of different issues is going to vary substantially.

Work in the field of normative ethics has focused largelyon utilitarian, justice and other frameworks. However, littleeffort has been made to use religious and other prescriptionsfor studying the ethical decision -making. Our results indicatethat not only do the mangers use a combination of westernand Indian ideologies, these ideologies also vary acrossgender and age group. This places demands on theorganisation to design systems that respond to these varyingdemands. The formation of cliques, and political entities arelikely to center around these ethical ideologies.

"��

Arlow P. and Ulrich T. A. (1980) Social Responsibility and Business Studies:An Empirical Comparison of Clark’s Study, Akron Business and EconomicReview, 11, 17-23.

Arthur H.B. (1984) Making Business Ethics Useful, Strategic ManagementJournal, 5, 313-319.

Barnett J.H. and Karson M.J. (1989) Managers, Values, and ExecutiveDecisions: An Exploration of the Role of Gender, Career-Stage,Organisational Level, Function, and the Importance of Ethics, Relationships,and Results in Managerial Decision-Making. Journal of Business Ethics,8, 747-771.

Bayles M.D. (1968) Contemporary Utilitarianism. Doubleday & Co. Inc.Garden City, NY.

Bellizi J.A. and Hite R. E. (1989) Supervising Unethical Sales forceBehavior, Journal of Marketing, 53 (2), 36-47.

Bhal K.T. (1997) Work Related Values of Indian Managers: LeadingPatterns. In Gautam, V. (ed.) Organisational Futures. Hindustan PublishingCorporation. New Delhi.

Bhal K.T. (2000) Ethical Decision making and the use of Frameworks:Effect of Situation and Gender, International Journal of Business Studies,8, 83-105.

Borkowski S.C. and Ugras Y. J. (1992) The Ethical Attitudes of Studentsas a Function of Age, Sex and Experience, Journal of Business Ethics,11,63 - 69.

Brady F.N. (1990) Ethical Managing, Macmillan, New York.

Callan V. J. (1992) Predicting Ethical Values and Training Needs in Ethics,Journal of Business Ethics, 11, 761-769.

Chakraborty S.K. (1987) Managerial Effectiveness and Quality of Worklife: Indian Insights, Tata McGraw Hill, New Delhi.

Dasgupta S.A. (1957) A History of Indian Philosophy, Cambridge UniversityPress, New Delhi.

Davis J.R. and Welton R.E. (1991) Professional Ethics: Business StudentsPerception, Journal of Business Ethics, 10, 451-463.

Derry R (1989) An Empirical Study of Moral Reasoning Among Managers,Journal of Business Ethics, 8, 855-862.

Dobbins G. and Platz S. (1986) ‘Gender Differences in Leadership: HowReal are They?, Academy of Management Review, 11, 118-127.

Ferrell O.C. and Gresham L.G. (1985) A Contingency Framework forUnderstanding Ethical Decision making in Marketing, Journal of Marketing,49, 87-96.

Fritzsche, D.J. (1988) An Examination of Marketing Ethics: Role of theDecision Maker, Consequences of the Decision, Management Position, andSex of the Respondent, Journal of Macro Marketing, 8, 29-39.

Fritzsche D.J. and H. Becker (1984) Linking Management Behaviour toEthical Philosophy: An Empirical Investigation. Academy of ManagementReview, 27 (1), 166-175

Galbraith S. and Stephenson H.B. (1993). Decision Rules used by Maleand Female Business Students in Making Ethical Value Judgment: AnotherLook, Journal of Business Ethics, 12 227-233.

Gilligan C. (1982) In a Different Voice: Psychological Theory and Women’sDevelopment, Harvard University Press, Cambridge.

Glover S.H., Bumpus M. A., Logan J.E. and Ciesla J. R. (1997)Re-examining the Influence of Individual Values on Ethical DecisionMaking, Journal of Business Ethics, 16, 1319-1329.

Harris J. R. (1989) Ethical Values and Decision Processes of Male andFemale Business Students, Journal of Education for Business, 8, 234-238.

Hegarty W. H. and Sims H.P. (1979) Organizational Philosophy, Policiesand Objectives Related to Unethical Decision Behavior: A LaboratoryExperiment, Journal of Applied Psychology, 64(3), 331-338.

Hogan R. (1973) Moral Conduct and Moral Character: A PsychologicalPerspective. Psychological Bulletin, 79 (4).

Hosmer L.T. (1987) The Ethics of Management, Irwin Homewood, Ill.

Johnson R. A., Neelankavil J.P. and Jadhav A (1986) Developing theExecutive Resource, Business Horizons, 29, 33.

Jolly_Wadhwa R.S. (2000) Gender: A Cross-cultural Perspective, Gyan,New Delhi.

Kidwell J.M., Steven R.E. and Bethke A.L. (1987) Differences in the EthicalPerception of Male and Female Managers: Myth or Reality, Journal ofBusiness Ethics, 6, 489- 493.

Kreitner R. and Reif W.E. (1980) Ethical Inclination of Tomorrow’sManagers: A Cause for Alarm?, Journal of Business Education, 56, 25-29.

Laczniak G.R. and Murphy P. E. (1991) Fostering Ethical Decisions, Journalof Business Ethics, 10, 259-271.

Lifton P.D. (1985) Individual Differences in Moral Development: TheRelation of Sex, Gender, and Personality to Morality, Journal of Personality,2, 306-334

Lyons N.P. (1983) The Perspectives on Self Relationships, and Morality,Harvard Educational Review, 53, 125-145.

Mathur S.S. and Mathur A. (2001) Socio-psychological Dimensions ofWomen’s Education, Gyan, New Delhi.

McDonald G. and Pak P.C. (1996) It’s all Fair in Love, War and Business:Cognitive Philosophies in Ethical Decision-Making, Journal of BusinessEthics, 15, 973-996.

McNichols C. W. and Zimmerer T.W. (1985) Situational Ethics: AnEmpirical Study of Differentiators of Student Attitudes, Journal of BusinessEthics 4, 175-180.

Premeaux S.R. and R.W. Mondy (1993) Linking Management Behavior toEthical Philosophy, Journal of Business Ethics, 1, 349-357.

Rawls J. (1971) A Theory of Justice, Harvard University Press, Cambridge.

Ruegger D. and Ernest K. (1992) A Study of the Effect of Age and Genderupon Student Business Ethics, Journal of Business Ethics, 11, 179-186.

Schminke M. (1997) Gender Differences in Ethical Framework andEvaluation of Others Choices in Ethical Dilemmas, Journal of BusinessEthics, 16, 55-65.

Sharma I.C. (1965) Ethical Philosophies of India, Johnson Publishing Co.,Nebraska, Lincoln.

Serwinek P.J. (1992) Demographic and Related Differences in Ethical ViewsAmong Small Businesses, Journal of Business Ethics, 11, 555-566.

�� !��"� �� #�� $��"��

-

��

Sharma I.C. (1965) Ethical Philosophies of India, Johnson Publishing Co.,Lincoln, Nebraska.

Sharma, S. and Bhal K.T. (working paper) Cognitive Frameworks in EthicalDecision-making: Identification of the Constructs, their Measurement andvalidation.

Shukla A. and Costa A.D. (1994) Are Women more Ethical than Men?,Journal of Business Ethics, 13, 859-871.

Singhapakdi A. (1990) Perceptual Framework of Marketing / EthicsDecision Making: An Exploratory Comparison Between Students andPractitioners in R. Viswanathan (ed.) Marketing Magic, American MarketingAssociation, Chicago: pp.13-17.

Singhpakdi A. and Vittell S.J. (1990) Marketing Ethics: Factors influencingPerceptions of Ethical Problems and Alternatives, Journal of MacroMarketing, 12, 11-18.

Stanga, K.G. and Turpen R.A. (1991) Ethical Judgments on SelectedAccounting Issues: An Empirical Study, Journal of Business Ethics,10, 739-747.

Stead W.E. Worrell D.L. and Stead J.G. (1990) An Integrative Model forUnderstanding and Managing Ethical Behavior in Business Organizations,Journal of Business Ethics, 9, 233-242.

Steiner G.A. and J.E. Steiner (1988) Business, Government and Society: AManagement Perspective (4th Ed.), Random House, New York.

Sullivan R.J. (1989) Immanuel Kant’s Moral Theory, Cambridge UniversityPress, New York.

Swami D. (1999) The Teachings of Bhagvad Gita, Vision Book Publishers,New Delhi.

Tansey R., Brown, G., Hyman M.R. and Dawson L.E. (1994) PersonalMoral Philosophies and Moral Judgments of Sales People, Journal ofPersonal Selling and Sales Management, 14

Taylor R.W. (1975) Principles of Business Ethics: An Introduction,Dickenson Encino, CA.

Tsalikis J. and Ortiz-Buonafina M. (1990) Ethical Beliefs Differences ofMale and Females, Journal of Business Ethics, 9, 509-517.

Velasquez M.G. (1998) Business Ethics: Concepts and Cases (4th Ed.).Prentice Hall, NJ.

Walker L.J. (1984) Sex Differences in the Development of Moral Reasoning:A Critical Review, Child Development, 55, 677-691.

White A.R. (1984) Rights. Clarendon Press, Oxford.

��

When making a decision on each of the case justpresented, what factors did you generally takeinto consideration? Review the following statementsand select one of the five responses given below foreach statement. Write the corresponding number of theselected response against each statement in the givenspace.

Very often ..... 5

Often ..... 4

Sometimes ..... 3

Rarely ..... 2

Never ..... 11. _______It should not have bad affect on my next

life (janm).2. ________It is waste of energy worrying about the

effect that an action might have; one should just geton to what one has to do.

3. _______It is important that justice is seen to be done.4. _______It should help in improving my next life

(janm).5. _______Results of the duties that we perform do

not fall in our jurisdiction.6. _______The decision should produce the greatest net

value to all the parties.7. _______Every action is judged in terms of its impact

on next life.8. _______Only thing that is in our hand is to keep

performing our duties without worrying about theresults.

9. _______It should be the most equitable decision.10. ______What is the right thing to do in my religious

beliefs.11. _______People must be treated fairly at all times.12. ______Consequences of the decision should affect

the majority in a positive way.13. ______It is in line with the advice from a religious

or philosophical source.14. ______Whatever is happening with me now is the

result of my previous life.15. ______Our job is to do our duty to the best of our

capability without thinking about the result.16. ______It should secure the benefit of the larger

number.17. _______My religious faith must permit such an

action.18. ______Its not fair to treat people as a means to an

end.19. ______How would I feel if someone did that to me.20. ______I would not do to others what I don’t want

them to do to me.21. ______I consider my next life too while making a

decision.

� �� I

��

You are in the board of selection committee for the postof manager works. Instead of selecting a moreexperienced long-term employee, you favored your firstcousin who also appeared for the interview and is wellqualified for the post.

4) I would Strongly Agree.....Agree......Neutral.......Disagree......... Strongly Disagree, with the decision.

��

A corporate learned that his company intendedto announce a stock split and increase the dividend.On the basis of this information, he bought additionalshares and sold them at a gain following theannouncement.

5) I would Strongly Agree.....Agree......Neutral......Disagree...... Strongly Disagree with the decision.

��

.


� ��

�� !��"� �� #�� $��%�� !��&�

Item No. Factor 1 Factor 2 Factor 3

1 .66 .10 .10

4 .82 -.09 .17

7 .83 -.06 -.05

14 .72 -.07 .34

21 .74 -.05 .34

3 -.03 .55 -.08

5 -.11 .76 .00

8 .07 .63 -.09

11 -.11 .55 .09

15 -.07 .66 .19

10 .33 .18 .76

13 .37 .05 .68

17 .18 -.18 .77

Eigen value 4.323\ 3.529 1.625

%Variance 20.587 16.803 7.737

Mean 11.2636 21.0858 8.4684

sd 5.6727 3.0150 3.2604

Reliability .85 .70 .75

�'� �� (�� !��&�� )�� *� +�� !�� +��

Gender Mean sd t

Male 2.32 1.13 2.836**(234)

Female 1.61 1.04(22)

Duty and Male 4.22 .60 -.382 Fairness (241)

Female 4.26 .59(25)

Religious Male 2.86 1.07 1.99*Belief (243)

Female 2.40 1.17(24)

Note: Numbers in parentheses indicate the sample size. *=p<.05; **=p<.01

Moksh

%'� �� (�� !��&�� )�� *� ,�� $�� +��

Mean sd t

Moksh Young 2.13 1.06 -2.177*(154)

Old 2.44 1.21(104)

Duty and Young 4.23 .57 .534Fairness (165)

Old 4.19 .65(103)

Religious Young 2.74 1.09 -1.479belief (165)

Old 2.94 1.07(104)

Note: Numbers in parentheses are the sample size. *=p<.05.

�� !��"� �� #�� $��"��

Ethicalframework

Age group

Ethicalframework

� /

��

��&�� !��'� !��

�' -��* ��*�� .#�� "��0��/��

� !��*��,�"� ��-

� !��*� �� ,�� -

� !��*��,� �� -� �� '

�' ��*�� * �� 0�� *��&��1�$��"� ��*��1

2 ' �*�� *��&��'� 34��&��&�� 3��55'

%��0�� !��&

�� * -�� *

�� (�� !��&

6��*�7�!�� "�� 38��534��5

9 ' 6�0�� 4�#�4� 3��4��#��4��5�� .#�� $��"��/'

"�� "��%��

�' -��&��0��*��*��0��&��&��*��:�� 1

�' 6��*�� 1

��

� �


��&��"��#��(��)�� (��

B. V. ChowdaryDepartment of Production Systems Design

Faculty of Management & Organization University of Groningen, P.O. Box 8009700 AV Groningen, The Netherlands

��At any point of time the performance evaluation of a manufacturing system plays a crucial rule for economic appraisals and systemreorganization. In this paper, the notion of an integrated manufacturing performance measure for evaluation and selection of amanufacturing system has been proposed with flexibility and related issues as one of the main focus. This paper also demonstrates theuse of the derived integrated manufacturing performance measure through different manufacturing situations. In the first case, the impactof addition of a new facility on a manufacturing system was investigated. In the second situation, current and past performance of amanufacturing system was compared. Finally, in the third case, evaluation of system performance has carried out when there are certainvariations in the product design.

�� flexibility, integrated manufacturing performance measure, productivity, quality, unified framework


PerformanceMeasure

#��

The much-sought-after flexibility of a manufacturing systemis its ability to respond to changes either in the environmentor in the system itself. Such a flexibility is required for thepresent day industry owing to the environmental changes likevarying customer needs, development of advancedtechnologies and rise in production costs. Incorporation ofthe required level of flexibility in a manufacturing systemdepends upon the type of uncertainty to cope with theunpredictable changes in the environment.

A flexibility framework is a structure representing asequence of steps or actions to be followed for reaching thedesired objective. Flexibility framework captures the impactof system features including various kinds of flexibilities onsystem performance measures like productivity and quality(Son and Park, 1987). Identifications of gaps in the literatureon flexibility frameworks (Gerwin 1993, Rao and Mohanty1991, Slack 1987, Taymaz 1989, Zelenovic 1982) motivatedfor development of a unified framework in terms of variousperformance measures such as flexibility, productivity andquality. This leads to arrive at a new performance index i.e.revised integrated manufacturing performance (RIMP)measure, which quantifies both tangible and intangiblebenefits and costs. This new acronym is used just fordifferentiation of the proposed manufacturing measure fromthe earlier index. RIMP measure primarily differs from theexisting integrated manufacturing performance (IMP) measuremainly in handling more number of partial flexibilities. Tomeet the current needs of the modern industry, someadditional issues related with flexibility and quality areincorporated in the current study, which are not focused inthe past studies (Son and Park, 1987).

In the literature, various authors have proposed differentframeworks for different objectives. The major contributionsof these authors are: (i) a hybridized perspective, which canintegrate both hierarchical and functional aspects for FMSevolution (Rao and Mohanty, 1991), (ii) extraction of overallproduction flexibility at the system level (Taymaz, 1989),(iii) enumerating the types of uncertainties faced bymanufacturing managers to identify specific flexibilitydimensions (Gerwin, 1993), (iv) better work conditions,motivation, work satisfaction, making decisions on their ownwork (Zelenovic, 1982), (v) conceptualizing and analyzingthe flexibility needs of manufacturing organizations (Slack,1987), and (vi) to quantify and combine various criticalperformance measures for evaluation of a manufacturingsystem as a whole (Son and Park, 1987). In this study, aunified framework for evaluation and selection ofmanufacturing systems has been proposed with flexibility asone of the main focus.

!�� $ � �� $� ��$� ��

Performance of an enterprise is often measured as a ratio ofoutput to input. The outputs constitute the products of theenterprise and the inputs are the resources used by theenterprise. Neely et al. (1994) defined performancemeasurement as the process of quantifying the efficiency andeffectiveness of a manufacturing system. In the life cycle ofany manufacturing system, decision-making is involved atvarious stages of planning, design, and operation(Viswanadham and Narahari, 1994). During the design andplanning stages, performance modelling can help in decidingthe number and type of machines, number of materialhandling devices, number of buffers, number of fixtures, bestpossible layout, and part type selection (Stecke, 1985).

� �

��

�1� ��!��

Performance modelling and evaluation of manufacturingsystems helps decision makers at higher levels to conduct aneconomic feasibility analysis for expansion/diversification ofthe system. This could help in installing a new manufacturingsystem with a substantial reduction in the number ofmachines, floor space, inventory level, throughput and leadtime and also high quality products, with a greater flexibilityto respond to the market needs (Kakati and Dhar, 1991).Barad and Sipper (1988) investigate the relative impact ofversatility as a selected physical characteristic of theresources, versus some operating strategies, on flexiblemanufacturing system performance. Also, in their work,simulation experiments are designed and analyzed to enableestimation of interaction effects between flexibility,environmental factors, and changes. Individual and combinedeffects of flexibility and reliability on a multi-component,multi-product system are analyzed under the framework ofproducibility (Nagrur, 1992). Gelders et al. (1994) expressedthe need for identification of manufacturing objectives,performance measurement systems, and improvementprogrammes with respect to time. It is seen from the literaturefor contributions of various researchers that how the flexibilityis linked to various performance measures, such as,productivity (Son and Park 1987, Tayyari and Kroll 1990,Troxler and Blank 1989), cost (Gelders et al. 1994, Stamand Kuula 1991, Tayyari and Kroll 1990, Wabalickis 1987),reliability (Datta et al. 1992, Nagrur 1992), and time (Dattaet al. 1992, Templemeier et al. 1989, Troxler and Blank1989).

. �� ' � �� ! "��

This paper is composed of six sections. It presents thenecessity for a unified framework based on survey ofliterature. then the proposed unified framework is explaind.The next section describes the procedure for deriving theRIMP measure. Then it highlights performance evaluationand selection ofmanufacturing systemsthrough RIMP measure.In the last section itgives the conclusionsand possible extensionsof the study.

��$��!��*��

The reasons for proposing a unified framework in the presentstudy are:

i. to forecast uncertainties of manufacturing, because thereis not much emphasis in this regard in the past,

ii. to incorporate organizational flexibility at par with otherflexibilities, because this flexibility component has notbeen treated properly,

iii. to attempt a micro level analysis considering theflexibility options to deal with various manufacturinguncertainties, because not much emphasis in this regardis given in the literature, and

iv. to derive RIMP measure for performance evaluationand selection of manufacturing systems (such asconventional, FMS or future automated factory) owingto lack of a proper flexibility measure to suit all typesof manufacturing systems in the literature.

In the light of the above, a unified framework that offersguidelines for evaluation and selection of manufacturingsystems is proposed with flexibility and related issues as themain focus. This framework is illustrated with three casestudies in the subsequent sections of this paper.

!�� 4� �� )�� !��&� �� 4��(0�� +�� *��

!��*�� !��(�� (��

The basic features of the unified framework begin with theforecasts of different manufacturing uncertainties as shown

in Figure 1.At any pointof time, theuncertainties inmanufacturingcan be mappedto different

flexibilities through various environments (see Table 1)from which the system flexibility can be assessed. Fromhere onwards the system flexibility is treated as totalflexibility of the system. The impact of total flexibility onproductivity and quality measures can be investigated further.Ultimately all the three measures – total productivity, totalquality, and total flexibility – are used to compute the RIMPmeasure which can be used as an integrated performancemeasure for evaluation and selection of manufacturingsystems. In the proposed framework, the major flexibilitiesdefined so far are categorized into four levels, which includebasic, system, organizational and aggregate (Stecke andRaman, 1995). The reason for addition of organizational

All the three measures - total productivity, total quality, andtotal flexibility - are used to compute the RIMP measure whichcan be used as an integrated performance measure forevaluation and selection of manufacturing systems.

� �


�2�3� �� *� �� (""��"� �� #�� "��"

flexibility in this framework is due to the fact that theflexibility is not only a technical issue but also a part of amanagerial system, which may have to involve all factors,needed to effectively manage an organization (Rao andMohanty, 1991).

In the four levels identified above, all the levels areinterconnected as shown in the Figure 1. The range of secondlevel flexibilities can be fixed up based on the knowledge ofthe incoming basic flexibilities. Similarly, the organizationalflexibility is the resultant of system flexibilities. The overallimpact of basic, system, and organizational flexibilitiesinfluence the final level, i.e. production flexibility of themanufacturing system.

The flexibility measure of each type is computed to arriveat the resultant total flexibility measure. Each flexibility typeunder each level is connected with the performance measuresnamely total productivity and total quality to contributetowards the total system performance measure. The partialflexibility measures are computed in terms of cost factors,which may help the decision maker to take an appropriateand timely decision. The procedure for arriving at RIMP ispresented subsequently after deriving various total measures.In Figure 1, the significance of the dotted boundary line isto draw attention of the system designer to the productionsystem so that appropriate production planning and controlfunctions may be exercised. In the proposed framework, thelinkage between uncertainties, factors causing uncertaintiesand the flexibilities is further discussed below.

%�� $�� (��/�+� � � � ��

Modern industry suffers from technological lacunae resultingin various manufacturing uncertainties in the form offluctuations in product demand, product characteristics, lengthof product life cycles, machine down time, raw materialstandards, and product delivery times (Gerwin, 1987). To copewith these uncertainties, the relationships among flexibility,environment and factor of uncertainty have been developed.While mapping of flexibilities to various factors ofuncertainty, familiar flexibility definitions from the literaturehave been taken into consideration (details are presentedin Appendix I). A schematic representation inthis regard, which illustrates the relationships amongflexibility, environment and factors of uncertainty hasbeen shown in Table 1. These relationships may help thedesigner in tackling the manufacturing uncertainties andsubsequently to decide a suitable type of flexibility to meetthat environment. Uncertainties under five environments (Raoand Mohanty, 1991) are linked through the factors ofinfluence as shown in Figure 2. The procedure forcomputation of RIMP measure based on partial measures ofproductivity, quality and flexibility is presented in the nextsection.

!�� !�� +�� (�0��

%� ��

a : Development of Advanced Technologyb : Competitionc : Employee Participation in Automation Projectsd : Import/Export Policye : Government Policy Towards Industryf : Sources of Financeg : Price Sensitivityh : Technical Backing from the Governmenti : Lead Timej : Raw Material Specificationsk : Customer Relationsl : Price of Materialm : Requirementsn : Specificationso : Quantityp : Variety of Productsq : External Uncertainty

* short product life cycle* product proliferation* market fragmentation* processing requirements

r : Internal Uncertainty* machine breakdown* variability in processes* operator absence* variability in product quality

�� !��(�0�� !��

Flexibility Environment type

type

Machine a rRouting a rProcess a qAction b,d,e,f,g m,p qOperation a,c qVolume d,e,f,g L m,n,o,p qExpansion a d,e,f,g,h m,n,o,p qProduct a i,k,l m,n,o,p qMarket a,b d,e,f,g i,j,k,l m,n,o,p qProduction a d,e,f,g m,n,o,p qDesign a,b m,n,o,p q

Quality a d,e,g j,l,k m,p q,r

Legend: a, b, ..., r represent the influencing factors as shown in Figure 2

Technical Economic Supplier Customer Focalproduction

system

� %

��

�� "�� #�� !�� !��$�� $��

Total productivity (Son and Park, 1987) for a given period isthe integrated measure of partial measures like labourproductivity, capital productivity, material productivity andoverhead productivity.Let

OT = System output (usually expressed in physicalvolume, such as pieces, tons and othermeasurable units).

C L = Labour costC C = The service cost of using invested capitalC R = Raw material costC OH = Overhead cost

Now TP is given byTP = O

T / (C

L + C

C + C

R +C

OH) ... (1)

�� 0$ � � �� $��

Total quality measure (Son and Park, 1987) for a given periodis the integrated measure of partial measures like preventionand failure costs. But based on the literature and the opinionof the experts in the field it is decided to include the appraisalquality in the definition of the total quality measure (TQ).

Let C

P= Prevention cost

C F

= Failure cost C A = Appraisal costNow TQ is given by

TQ = OT / (C

P + C

F + C

A) ... (2)

�� (��/�+� � � �� $��

In addition to the partialflexibilities such as demand,volume, equipment, andprocess defined earlier (Sonand Park, 1987), some more partial measures of flexibilitiesin terms of monetary values are considered in this research.These measures are presented as below:

LetC

IC= Inventory costs of finished products and raw

materialsC

OB= Cost of obsolete products

C I

= Infra-structural cost incurred to produce break-even volume

C CU

= Cost of additional tooling for capacityutilization

C SU

= Cost of setupC

A= Additional cost of infrastructure for expansion

C W

= Parts waiting costC

S= Cost of additional setup

C R

= Additional cost incurred due to reroutingC

IE= Idle cost of equipment

C MH

= Additional material handling cost

In the proposed framework, the major flexibilitiesdefined so far are categorized into four levels, whichinclude basic, system, organizational and aggregate.

C PR

= Cost incurred due to frequent changes inproduction programs

C IN

= Investment cost for information processing

C CF

= Cost of controlling

C TPC

= Total production cost

The various partial measures of flexibilities can be given by

a) Demand flexibility (FD) = OT / CIC

b) Market flexibility (FM) = OT / C

OB

c) Volume flexibility (FV) = OT / C

I

d) Capacity flexibility (FC) = OT / C

CU

e) Product flexibility (FP) = OT / C

SU

f) Expansion flexibility (FEX) = OT / C

A

g) Process flexibility (FS) = OT / C

W

h) Machine flexibility (FM) = OT / C

S

i) Routing flexibility (FR) = OT / CR

j) Equipment flexibility (FE ) = OT / C

IE

k) Material handling flexibility (FMH) = OT / C

MH

l) Program flexibility (FPR) = OT / C

PR

m) Information and Data handlingflexibility (FID) = O

T / C

IN

n) Control flexibility (FC) = OT / C

CF

o) Production flexibility (FPD) = OT / C

TPC

The TF during a given period is given by

TF = OT / (CIC + COB +...+CTPC) ... (3)

� � � � � � � # � � � � � � � � � � � $ � � � $ � � � � � ! � � � � � � � � �� $ � �

The revised integratedm a n u f a c t u r i n gperformance (RIMP)measure in terms of TP,TQ and TF is given by

1 1 1 1 ——— = —— + —— + —— ... (4) RIMP TP TQ TF

or

RIMP = (TP X TQ X TF) / (TP X TQ) + (TQ X TF) + (TF X TP)) ... (5)

The physical significance of this measure with suitableillustrations is given in the next section. Different case studiesrepresenting various manufacturing situations such asprecision machine tool (both conventional and CNC) unitsand automobile engine cylinder liner unit have beenconsidered for demonstration of the proposed unifiedframework. The results are presented in the following section.

!��)�� "#�!��

�� #�" �� 1��( �� $� ��$� �� & �� $�� 2�

The case unit considered here is a manufacturing unitproducing cylinder liners for various types of automobile

�1� ��!��

� '


engines that have domestic and international market. Theproduct, cylinder liner has some variations in its dimensions(such as total length, thickness, collar diameter, collar width,inner and outer diameters) depending upon its application.However, the product undergoes nine different operationssuch as parting, outside diameter turning, collar width, fineboring, chamfering operations on various conventional centrelathes, centreless grinding (for finishing purpose), and honing(for rough and fine boring operations). Completion of theoperations on a centre lathe requires 28 minutes tooling time,whereas centreless grinding and honing machines requiredonly 6 minute tooling time. RIMP measure for suchconventional system has been computed and presented inTable 2. At this stage it was felt that the operations listedearlier which were done on various centre lathes if done ona single CNC lathe, would result in both tangible andintangible benefits. The results from the RIMP computationsin this regard are shown in Table 2. For demonstration ofreduction in operation times on CNC lathe, the data availablefrom a well establishedindustrial unit has beenconsidered. From theCNC programming ofthe machine it wasobserved thatapproximately 5minutes of tooling timeis required forperforming first 5 operations, i.e. parting to chamfering (asspecified in the existing system). Thus the total operationtime for manufacturing a cylindrical liner has been reducedto 11 minutes provided that unaltered tooling times oncentreless grinding and honing machines.

Productivity Total productivity 01.48 01.20Labour (TP)CapitalMaterialOverhead

Quality Total quality (TQ) 11.47 21.20PreventionFailure

Flexibility Total flexibility 04.51 11.17Equipment (TF)ProcessDemand

TP Revised integrated 01.02 01.03TQ manufacturingTF performance

(RIMP) measure

Partial measure Total measureExistingsystem

(conventional)

Modifiedsystem (afterintroduction

of CNC lathe) Partial measureof performance

Performancemeasure

Past CurrentMeasure of performance

Productivity Total productivity 0.55 0.37Labour (TP)CapitalMaterialOverhead

Quality Total quality (TQ) 2.86 3.52PreventionFailure

Flexibility Total flexibility 0.46 0.39Equipment (TF)ProcessDemand

TP Revised integrated 0.23 0.18TQ manufacturingTF performance

(RIMP) measure

Different case studies representing various manufacturingsituations such as precision machine tool (bothconventional and CNC) units and automobile enginecylinder liner unit have been considered fordemonstration of the proposed unified framework.

�� 4�� +�� (�� *�� 0�� +�� *��

�� 2� �� 4�� +�� *�� 4��

�2�3� �� *� �� (""��"� �� #�� "��"

(�� *�"� �"

Based on the results (refer to Table 2), the system designermay not be satisfied with the lowered productivity measureof 1.203 against 1.489 for the existing system. The reasonfor such a decrease is due to the huge capital investment ininstallation of CNC lathe. However, installation of such aadvanced facility increases RIMP measure as a result ofincrease in total quality and total flexibility from 11.47 to21.00 and 4.51 to 11.17 respectively. Also, the reason forthe marginal increase in RIMP measure is due to the highunit cost of the CNC lathe, which is introduced in the system.But interestingly here the additional capital cost iscompensated to some extent through the increase in TQ andTF. Further it has been inferred from the case applicationthat the capital investment and unit cost of production arecomparatively higher than those of the conventional system.

&��" �� &$�� ! �� !�� $� ��$� �� & �� $�� 3�

The selectedorganization is one ofthe sophisticatedmachine toolmanufacturing units inIndia producingdifferent kinds ofmachine tools such as

surface grinder, thread rolling machine, cutter and toolgrinder, milling machines etc. For demonstration ofthe derived RIMP measure, only thread rolling machinehas been considered. However, while computing RIMPmeasure, selective partial measures of flexibility areconsidered (as the selected manufacturing system is aconventional one). The results in this regard are presentedin Table 3.

� +

��

(�� *�"� �"

It is clear from Table 3 that the total performancemeasures such as productivity, and flexibility are decreasedsignificantly though there is an increase in marketdemand. The inherent reasons behind the decreasein total performance measures and the correspondingRIMP measure are listed in Table 4. From the results(Table 4), it is self explanatory that the decrease in RIMPmeasure from 0.23 to 0.18 may be due to decrease in anyone of the three total performances or any combination ofTP, TQ, or TF. From this, it has investigated further theinherent factors associated behind these changes and theappropriate actions that are necessary to respond to thechanges.

��9 � ��*�� 4�� +��

More overheads due to1. more frequent

traveling time ofpersonnel and material

2. high maintenance costsof old machines

Under utilization of thesystem due to

1. frequent breakdownsof machines (since50% of machines aremore than 15 yearsold)

2. increase in employeeabsenteeism

3. more man-hours arelost because of powerfailure

Competition from privatesectors

1. fluctuations inincoming raw material

2. day to day changes incustomer expectationstowards end product

3. no prompt delivery ofthe final product atcustomer door step

4. increase in toolinspection/ andappraisal cost

5. increase in rework costdue to close producttolerance

1. high set-up costs2. no routing flexibility3. increase in idle cost of

equipment4. part waiting costs due

to unplanned changesin the product design

5. poor communicationand data handling

6. no organizationalrestructuring flexibility

Due to changes in TP, TQand TF

Overheads can beminimized by replacingthe existing system withadvanced technology

Improvement of systemutilization is possible byreplacement of the troubleshooting machines withnew machines

Training and motivationof the employees

In this case total qualitymeasure has marginallyincreased.

Grouping of facilitiesbased on part features forrerouting etc.

Phased introduction ofadvanced facilities

Phased introduction ofadvanced technology

Totalproductivity(TP)

Total quality(TQ)

Totalflexibility(TF)

RIMP

�� $ � �� !�� $�� * �� !��$�� & �� $�� 4�

The organization selected is a precision machine toolmanufacturing company producing sophisticated andadvanced machines like CNC machining centres and CNClathes for the local as well as global market. In the existinglayout, there are two NC machines, two CNC machines andthe other is conventional. The system is capable ofmanufacturing six models of first type and three models ofsecond type by utilizing the existing resources. In this caseillustration, the RIMP measure has been computed for thetwo product models (CNC machining centre and CNC lathe)separately. Afterwards, for certain design changes in the firstproduct (CNC machining centre), the RIMP measure has beencomputed. The results are given in Table 5.

Productivity Total Productivity 00.61 00.57Labour (TP)CapitalMaterialOverhead

Quality Total Quality (TQ) 12.01 11.25PreventionFailureAppraisal

Flexibility Total Flexibility (TF) 01.11 00.95ProcessDemandProductMachineMaterial-Handling

TP Revised Integrated 00.38 00.34TQ ManufacturingTF Performance Measure

(RIMP)

�� ;� � 4�� !�� %�� 4�� 6��

Product feature Before Afterchange change

Number of 147 151sub-assemblies

Work table size 630 x 630 800 x 800(millimeters)

Power (kW) 15 15

Work table traverse 800 x 800 x 630 1000 x 800 x 630(millimeters)

(�� *�"� �"

Table 6 shows that there is a change in the existing modeldesign in terms of worktable traverse and worktable size.

�� < � �� 4�� +�� *�� %��

�� 4�� 6��

�1� ��!��

Total measure Reason for decrease Remedy

Afterchange

BeforechangePartial measure Total measure

� ,


which one new CNC lathe was introduced. It was observedthat this acquisition leads to an increase in the RIMP measureof 1.3 per cent only. This small increase, however, hadremarkable intangible benefits. There is improvement inquality and flexibility to the tune of 84.82 per cent and 147.3per cent respectively. Thus it can be extended to othermanufacturing situations tovisualize the intangible benefits such as quality and flexibility

by evaluatingthe systemperformancet h r o u g hR I M Pmeasure.

The studycan further beextended inthe followingways:

The effect ofTP, TQ and

This leads to changes in the system performance measuresnamely productivity, flexibility and quality. The changes interms of additional input costs push these measures to thelower side. The value of TF decreasesfrom 1.11 to 0.95 due to additional tooling cost (machineflexibility), rerouting cost (routing flexibility) and materialhandling cost (material handling flexibility). Though thedifference in the two measures is 0.11, it accounts for ana d d i t i o n a lcost of 9.83millions ofrupees to fulfillthe abovef l e x i b i l i t i e s( m a c h i n e ,routing andm a t e r i a lhandling). Inthe beginning,it may not beencouraging toinvest such ahuge capital by any practitioner. But in future it is worthwhileto meet the varying product demands.

��

Based on the review of literature on flexibility frameworkssome efforts have been made on developing a unifiedframework for integrating the system flexibility measure withother significant performance measures like productivity andquality to arrive at a new performance measure, i.e. revisedintegrated manufacturing performance (RIMP) measure.This may serve the needs of modern industry in terms ofproviding guidelines to evaluate and select an appropriatemanufacturing system. The robustness of the RIMP measureis tested through different case studies and is depicted inTable 7. From Table 7 it is very clear that the proposedintegrated manufacturing measure can be used as a decisiontool for a wide variety of manufacturing situations forinstance,

(i) it can be used as a decision tool for introducing a newmanufacturing facility (as illustrated in Case Study 1).

(ii) it can be used for evaluation of manufacturingperformance with time, i.e. whether to continue theproduction in the existing conditions or not (asillustrated in Case Study 2).

(iii) it can be used to compare the system performance whenthere are certain variations in the product design (asillustrated in Case Study 3).

�/�� $��

The present work can be extended to develop and study aunified framework on a variety of production systems.Gaining of evidence is likely to provide valuable insightsinto the structure and combination of flexibilities in differentkinds of manufacturing systems. For instance, the case study1 dealt with a conventional type manufacturing system in

CaseStudy

Objective Total measure

TP / TQ / TF RIMP

1.

2.

3.

To investigatethe impact ofaddition of anew facilityon amanufacturingsystem

To comparethe current andpastperformance ofa manufa-cturing system

To evaluate thesystemperformancewhen there arecertainvariations inthe productdesign.

In the selected case,TP measure isdecreased due toacquisition of a CNClathe

1. TP is decreased inthe currentsystem due to atremendousincrease inproductionoverheads

2. Fluctuations inproduct demandpushes the TF tolower side in thecurrent system

3. On the other handin the samecurrent system,TQ is increaseddue toimplementation ofISO 9000 systems

All the threemeasures aredecreased especiallydue to additionalcosts to meet the newproduct designrequirements

Only there is amarginal increase inRIMP measure i.e.from 1.02 to 1.03,especially due tomachine acquisitionand subsequentincrease in TQ and TF

RIMP is pushed downfrom 0.23 to 0.18. Thisis due to lower valuesof TP and TF in thecurrent year (refer toTable 4).

The decrease in RIMPi.e. from 0.38 to 0.34is indicates that theexisting system is notflexible enoughfor meeting theuncertainty in productdesign

�� = � 4�� (0�� %�� )�� !��&� ��

The proposed integrated manufacturing measure can be used as a decisiontool for a wide variety of manufacturing situations for instance,

(1) it can be used as a decision tool for introducing a new manufacturingfacility (as illustrated in case study 1).

(2) it can be used for evaluation of manufacturing performance with time,i.e. whether to continue the production in the existing conditions ornot (as illustrated in case study 2).

(3) it can be used to compare the system performance when there are certainvariations in the product design (as illustrated in case study 3).

�2�3� �� *� �� (""��"� �� #�� "��"

� -

��

TF when combined with other performance measures of theproduction system can be investigated.

(i) Micro-level analysis of ill-structured costs such as qualityand flexibility for justification of automation projectscan be carried out.

(ii) Investigations on RIMP measure with financialjustification.

(iii) Development of a decision support system for flexibilityin manufacturing for evaluation and selection ofmanufacturing systems.

"��

Barad M. and Sipper D. (1988) Flexibility in Manufacturing SystemDefinitions and Petrinet Modelling, International Journal of ProductionResearch, 26 (2), 237-248.

Benjaafar S. and Ramakrishnan R. (1996) Modelling Measurementand Evaluation of Sequencing Flexibility in ManufacturingSystems, International Journal of Production Research, 34 (5), 1195-1220.

Bernardo J.J. and Mohamed, Z. (1992) The Measurement and Use ofOperational Flexibility in the Loading of Flexible Manufacturing Systems,European Journal of Opeartional Research, 60, 144-155.

Bessant J. and Haywood B. (1986) Flexibility in ManufacturingSystems OMEGA, International Journal of Management Science, 14 (6),465-473.

Buzacott J.A. (1982) The Fundamental Principles of Flexibility inManufacturing Systems, Proceedings of First International Conference onFlexible Manufacturing Systems, Bringhton U.K, 13-22.

Chandra B. and Tombak M. M. (1992) Models for the Evaluation ofRouting and Machine Flexibility, European Journal of OperationalResearch, 60, 156-165.

Chen I.J. and Chung C. H. (1996) An Examination of FlexibilityMeasurements and Performance of Flexible Manufacturing Systems,International Journal of Production Research, 34 (2), 379-394.

Das S. K. and Nagendra P. (1993) Investigations into the Impact ofFlexibility on Manufacturing Performance, International Journal ofProduction Research, 31 (10), 2337 - 2354.

Das S. K. (1996) The Measurement of Flexibility in Manufacturing Systems,International Journal of Flexible Manufacturing Systems, 8.

Datta V. Rao K. V. S. Ram Babu K. and Deshmukh S. G. (1992) Multi-attr ibute Decision Model Using the AHP for the Justification ofManufacturing Systems, International Journal of Production Economics,28, 227-234.

Gelders L. Mannaerts P. and Maes J. (1994) Manufacturing StrategyPerformance Indicators and Improvement Programmes, International Journalof Production Research. 32 (4), 797-805.

Gerwin D. (1987) An Agenda for Research on the Flexibility ofManufacturing Processes, International Journal of Operations andProduction Management, 7 (1), 38-49.

Gerwin D. (1993) Manufacturing Flexibility: A Strategic Perspective,Management Science, 39 (4), 395-410.

Gupta Y. P. and Goyal S. (1989) Flexibility of Manufacturing Systems:Concepts and Measurements, European Journal of Operational Research,43, 119-135.

Kakati M. and Dhar U. R. (1991) Investment Justification in FlexibleManufacturing Systems, Engineering Costs and Production Economics,21, 203-209.

Kusiak A.(1986) Application of Operations Research Models and Techniquesin Flexible Manufacturing Systems, European Journal of OperationalResearch, 24, 336-345.

Nagarur N. (1992) Some Performance Measures of FlexibleManufacturing Systems, International Journal of Production Research, 30(4) 799-809.

Neely A. Gregory M. and Platts K. (1994) Performance MeasurementSystem Design - A Literature Review and Research Agenda, InternationalJournal of Operations and Production Management, 15 (4), 80-116.

Rao P.P. and Mohanty R.P. (1991) Searching for Definitions and Boundariesin Flexible Manufacturing Systems, Production Planning and Control 2(2), 142-154.

Sarker B.R. Krishnamurthy S. and Kuthethur S. G. (1994) A Survey andCritical Review of Flexibility Measures in Manufacturing Systems,Production Planning and Control, 5 (6), 512-523.

Slack N. (1987) The Flexibility of Manufacturing Systems, InternationalJournal of Production and Operations Management, 7 (4), 35-45.

Son Y.K. and Park C.S. (1987) Economic Measure of Productivity Qualityand Flexibility in Advanced Manufacturing Systems, Journal ofManufacturing Systems, 6 (3), 193-207.

Stam A. and Kuula M. (1991) Selecting a Flexible Manufacturing SystemUsing Multiple Criteria Analysis International Journal of ProductionResearch, 29 (4), 803-820.

Stecke K.E. (1985) Design Planning Scheduling and Control Problems ofFlexible Manufacturing Systems, Annals of Operations Research, 3, 3-12.

Stecke K. E. and Parker P. R. (1997) Cells and Flexible Automation: Historyand Synergistic Application Working Paper #9709-16 University ofMichigan School of Business Administration Michigan.

Stecke K.E. and Raman N. (1995) FMS Planning Decisions OperatingFlexibilities and System Performance, IEEE Transactions on EngineeringManagement, 39 (4), 395-410.

Taymaz E. (1989) Types of Flexibility in a Single Machine ProductionSystems, International Journal of Production Research, 27 (11), 1891-1899.

Tayyari F. and Kroll D.E. (1990) Total Cost Analysis of Modern AutomatedSystems, Justification Methods for CIM systems Planning DesignJustification and Costing, 234-241.

Tempelmeier H. Kuhn H. and Tetzlaff U. (1989) Performance Evaluationof Flexible Manufacturing Systems with Blocking, International Journalof Production Research, 27 (11), 1963-1979.

Troxler J.W. and Blank L. (1989) A Comprehensive Methodology forManufacturing System, Evaluation and Comparision Journal ofManufacturing Systems, 8 (3), 175-183.

Viswanadham N. and Narahari Y. (1994) Performance Modelling ofAutomated Manufacturing Systems, Prentice-Hall of India Private Limited,New Delhi.

Wabalickis R. N. (1987) Justification of FMS with the Analytic HierarchyProcess, Journal of Manufacturing Systems, 7 (3), 112-120.

Zelenovic D.M. (1982) Flexibility - A Condition for EffectiveProduction Systems, International Journal of Production Research, 20 (3),319-337.

�1� ��!��

� .


� �� 6��!��-��+� ��)��(�0��

Other sources supportingthe selected definition

of flexibility

Definition adoptedFlexibilitytype

Machine The ease of making thechanges required toproduce a given set of parttypes (Browne et al.,1984)

Routing The ability to handlebreakdowns and tocontinue producing thegiven set of part types(Browne et al., 1984)

Process The ability to produce agiven set of part types,each possibly usingdifferent material, inseveral ways (Browne etal.,1984)

Action The capacity for takingaction to meet newcircumstances. It facilitatesresponse to change bytaking appropriate action(Buzacott, 1982)

Operation The ability to interchangethe ordering of severaloperations for each parttype (Browne et al., 1984)

Stecke and Raman (1995),Benjaafar et al.(1996),Chen and Chung (1996),Das (1996), Stecke andParker (1997), Buzacott(1982), Lim (1986),Nagarur (1992), Rao andMohanty (1991), Sarker etal. (1994), Taymaz (1989)

Stecke and Raman (1995),Chen and Chung (1996),Das (1996), Stecke andParker (1997), Chandra andTombak (1992), Das andNagendra (1993), Gerwin(1993), Nagarur (1992),Sarker et al. (1994),Taymaz (1989)

Barad and Sipper (1988),Bessant and Haywood(1986), Lim (1986), Raoand Mohanty (1991), Sonand Park (1987), Stecke andRaman (1995), Taymaz(1989)

Barad and Sipper (1988),Bernado and Mohamed(1992), Bessant andHaywood (1986), Gerwin(1993), Kusiak (1986), Lim(1986), Rao and Mohanty(1991), Slack (1987),Stecke and Raman (1995)

Other sources supportingthe selected definition

of flexibility

Definition adoptedFlexibilityType

Volume The ability to operate amanufacturing systemprofitably at differentproduction volumes(Browne et al., 1984)

Expansion The system’s ability ofbeing built and expandedincrementally (Stecke andRaman, 1995)

Product Defined as a set of parttypes, which can bemanufactured in a systemwith minor set-up (Steckeand Raman, 1995)

Market The ability of a system toefficiently adapt to changingmarket conditions (Steckeand Raman, 1995)

Production It is defined as the universeof part types that an flexiblemanufacturing system canproduce. It is attained byincreasing the level oftechnology and theversatility of the machinetools (Browne et al., 1984)

Design The ability to redesign amanufacturing processincluding its expansion anddevelopment measures forthe flexibility based on thefactors range, time, and cost(Rao and Mohanty, 1991)

Quality The ability of the system tochange the qualityrequirements of variousproducts that aremanufactured on the system(Rao and Mohanty, 1991).

Bard and Sipper (1988),Bernado and Mohamed(1992), Bessant andHaywood (1986), Gerwin(1993), Lim (1986), Raoand Mohanty (1991), Sonand Park (1987), Slack(1987), Stecke and Raman(1995)

Browne et al. (1984),Kusiak (1986), Lim (1986),Slack (1987), Zelenovic(1982)

Browne et al. (1984),Bessant and Haywood(1986), Das and Nagendra(1993), Gerwin (1993),Slack (1987), Stecke andRaman (1995), Taymaz(1989)

Stecke and Parker (1997)

Sarker et al. (1994), Steckeand Raman (1995), Taymaz(1989), Gupta and Goyal(1989)

Bernardo and Mohamed(1992), Taymaz (1989)

�2�3� �� *� �� (""��"� �� #�� "��"

� /

��

��&�� !��'� !��

�' -��* ��*�� .#�� "��"/��

� !��*��,�"� ��-

� !��*� �� ,�� -

� !��*��,� �� -� �� '

�' ��*��* ��0��0��*��*��'�$��"� ��*��1

2 ' �*� �� *�� :�� *�� '� 34�� &� ��&� �� 3��55'

�* ��!��*

(��!��* �� :�� !��*

4��

�� 4��0��* �� >��*

!��*

�*�� !��* �� !��*

9 ' 6�0�� 4�#�4�3��4��#��4��5��.#�� "��"4� �� 5��

"�� "��%��

�' �� 0��+��4��38�+45��*��:�� '

�' %�*��*�� *��"�� "��*��:��&�� *�� '

�1� ��!��

� �


�� (�� !��&�� (��#��

G. S. Dangayach and S. G. DeshmukhDepartment of Mechanical Engineering

Indian Institute of Technology, New Delhi - 110 016, India

��Manufacturing managers in a broad array of industries may concur that achieving low cost and high quality is no longer enough toguarantee success. In today’s fierce competitive scenario, companies are increasingly concentrating on flexibility as a way to achievenew forms of competitive advantage. This flexibility will enable them to respond to customer orders quickly, provide a broad productrange, and introduce new products quickly. Flexibility has been recognized as an important competitive priority in manufacturing strategyliterature. This research presents a manufacturing strategy perspective on flexibility from Indian industry point of view. The objective ofthe survey was to assess the status of flexibility in Indian manufacturing companies. In general, flexibility seems to be one of theimportant priorities for Indian companies. The issue of flexibility is mapped using a manufacturing strategy framework. Two dimensionsof flexibility (structural and infrastructure flexibility) are identified and a sectoral comparison is made.

� � �� advanced manufacturing technology, competitive priorities, empirical research, flexibility,manufacturing strategy


$��

The issue of manufacturing flexibility is assuming significantimportance in production management. The need forflexibility is growing due to the changing nature ofcompetition (Buzacott 1982, Gerwin 1987, Slack 1987).Upton (1994) defines flexibility as “the ability to change orreact with little penalty in time, effort, cost or performance”.Flexibility has long been recognized as a manufacturingcapability that has the potential to impact the competitiveposition and the business performance of an organization(Cox 1989, DeMeyer et al. 1989, Gupta and Goyal 1989). Itis identified as an important competitive priority inmanufacturing strategy literature (Skinner 1969, Hill 1987,Gerwin 1993). The manufacturing strategy is a plan thatdescribes the way to produce and distribute the product. It isdefined by APICS dictionary as “a collective pattern ofdecisions that acts upon the formulation and deployment ofmanufacturing resources. To be most effective, themanufacturing strategy should act in support of the overallstrategic directions of the business and provide for competitiveadvantages” (Cox and Blackstone 1998).

Hill (1987) categorized manufacturing strategy issues intotwo types, i.e. structural and infrastructural. Structural issuesset the process and technology choice for productiveoperations, whereas infrastructural issues provide it long-termcompetitive edge by continuously improving upon humanresources policies, quality systems, organization culture andinformation technology. Infrastructural issues are developedthrough persistent day-to-day use and with commitment oftop management and team work at all levels. Effective

integration of infrastructural issues with structural issues helpsa company achieve manufacturing excellence.

In line with Hill’s framework we have classifiedmanufacturing flexibility into two broad types i.e. structuralflexibility and Infrastructure flexibility. Structural flexibility(such as related to capacity, facility and technology) dealswith issues that set the process and technology for operations.

Capacity : Production capacity of a company.

Facility : The system, which facilitates the production.

Technology : The type of technology used (whetherconnected or standalone).

Infrastructure flexibility (such as related to humanresources policies, quality policies, organizational culture,environmental issues etc.) provide the necessary support tothe operations function. These are discussed below in brief.

Human resources policies: These include skill levels of staff,nature and extent of training, why committed to work? Howmuch they are paid? How they are approached? And howthey are motivated? For example, In cement industry, due todusty and foggy environment, human resources policies aremore important. To reduce labour turnover and keep theirmotivation high, effective labour welfare policies are amust.

Quality policies: These deal with how defective products andservices are prevented? How quality systems areimplemented? What is the system for monitoring, measuring,and improving upon quality.

Organizational culture: Organisational culture includes teamwork, central versus distributed control, degree of autonomy,degree of decentralization etc. which are very important in

EmpiricalStudy

� �

��

Flexibility is “the ability to change or reactwith little penalty in time, effort, cost orperformance”.

industry to achieve the target production in a multi-plantenvironment.

Environmental issues: Use of pollution control equipment,commitment to environmental protection etc. constitute theenviranmental problem.

It is seen that, Indian manufacturing companies have quiteoften followed an opportunistic approach and paid very littlestrategic attention to their shop floors in the last few decades(Dangayach and Deshmukh, 2000). This was reflected in poorquality of products, little awareness about competitiveness,little integration of various functions such as marketing, sales,production etc. However, since the introduction of reformsin 1991, Indian companies are facing a very differentcompetitive scenario compared to the past. As a result ofthis, Indian industry is facing competition both from importsand from multinational companies in the domestic markets.The new competition is in terms of reduced cost; improvedquality, products with higherperformance, a wider range ofproducts and better service, alldelivered simultaneously. Inthis light we have conducted anextensive survey of Indianmanufacturing companies. Thespecific objective of the study was to assess the status offlexibility from manufacturing strategy point of view in Indiancompanies.

The paper is organized as follows. It discusses theliterature review and reported empirical studies on flexibility.Next section discusses a conceptual framework of flexibility.Then it presents the research methodology and discussionon findings. Finally, concluding remarks are given.

)�� %��

Various researchers have attempted to define the flexibilityand its dimensions. Upton (1995) acknowledged the importantrole of flexibility in today’s competitive environment. Sethiand Sethi (1990) discovered through an extensive survey thatmost of the literature focused only on the taxonomies offlexibility. They presented a set of 11 types of flexibility,which were grouped into system flexibility and aggregateflexibility. Koste and Malhotra (1999) presented a frameworkfor analyzing the dimension of manufacturing flexibility.Dixon (1992) presented a framework for measurement ofmanufacturing flexibility. Recently some researchers havereviewed the literature on flexibility. De Toni and Tonchia(1998) reviewed the literature on flexibility. Vokurka andLeary-Kelly (2000) have defined 15 dimensions of flexibility.Koste and Malhotra (1999) conducted a study of automotiveindustry and stressed upon trade-offs among various flexibilitydimensions. D’Souza and Williams (2000) proposedtaxonomy of manufacturing flexibility based on their studyof 240 manufacturing firms of USA.

Ettlie and Penner-Hahn (1994) in their empirical studyexplored the relation between flexibility ratio andmanufacturing strategy. Berry and Cooper (1999) assessed

impact of product variety on performance in processindustries. Lau (1999) studied 382 US computer andelectronics companies and related flexibility andinfrastructural issues in manufacturing strategy. Beach et al.(2000) conducted a survey of UK manufacturing companiesand examined flexibility in manufacturing operations. Vokurkaand Leary-Kelly (2000) reviewed literature and presented acomprehensive contingency-based framework for flexibility.Dangayach and Deshmukh (2001) studied 25 processcompanies from India to identify various manufacturingstrategy issues. In their study of automobile companiesDangayach and Deshmukh (1999) discussed various aspectsof manufacturing strategy observed in Indian companies.

Various researchers examined flexibility aspects (Sethi andSethi 1990, Dixon 1992, D’Souza and Williams 2000, Beachet al. 2000) in their studies of manufacturing companies. Mostof the studies were based on developed economies such asUSA and UK. very few studies have been made on flexibility

aspects in developing countries.This research is an attempt tofill this gap. In this study, wereport findings of a multi-sectorsurvey of Indian manufacturingcompanies. The survey aimed to

examine manufacturing flexibility perspective on flexibility.

�� &��

Figure 1 shows a conceptual framework of manufacturingflexibility, which is developed, based on the literature (Dixon1992, Gupta 1993, Lau 1999). In this research, an attempt ismade to test this framework.

#�"��

Manufacturing flexibility is influenced by various imperativessuch as globalized market, competitive pressures, demandingcustomers, and shortened technology life cycle. These areexplained in brief.

� Globalized market: This is because of the liberalizationof economies, WTO agreements, and advancements ininformation technology.

� Competitive pressures: These pressures are felt since thereare no trade boundaries.

� Demanding customers: The customer is also globalizedand being exposed to a variety of products/services,demands value for money through quality.

� Shortened technology life: Today the life cycle of anytechnology is very volatile. Information technology,materials and biotechnology have made the life spans verysmall. Due to this, a company needs to keep continuouswatch on technology front.

(��/�+�� "�� .�� ' � ��

We hypothesize that an organization responds to the abovepressures by employing flexibility as a competitive weapon.Six attributes of manufacturing flexibility (design changes,volume changes, product mix adjustment, large product

6� �� $�� 6� $�"��

� �


features, capacity adjustment, and large product variety) areidentified and given in Appendix-I. Based on themanufacturing strategy literature, we have categorizedmanufacturing flexibility into structural flexibility (SF) andinfrastructure flexibility (IF). We hypothesize that a companydeploys various tools and techniques to incorporate flexibleresponse. Issues of structural flexibility may be addressedby use of Advanced Manufacturing Technology (AMT).Similarly, Integrated Information Systems (IIS), AdvancedManagement Systems (AMS), and Autonomy enable acompany to address the issue of infrastructure flexibility.Detailed attributes of AMT, IIS, AMS, and Autonomy aregiven in Appendix I. Thus the organizational response tomanufacturing flexibility can be actuated by employing AMT,IIS, AMS, and Autonomy.

Advanced Manufacturing Technology (SF): Deployingadvanced manufacturingtechnology like CAD,CAM, FMS etc.

Integrated InformationSystems (IF):Integration of variousfunctions throughinformation systems(MRP, ERP etc.).

Advanced ManagementSystems (IF): Simplifi-cation of processes with advancedmanagement systems such as TQM, BPR, WI etc.

Autonomy (IF): Giving workers more responsibility forplanning and inspection.

We have measured structural and infrastructure flexibilitythrough attributes of AMT, IIS, autonomy and AMS.

Manufacturing strategy is a collective pattern ofdecisions that acts upon the formulation anddeployment of manufacturing resources. To be mosteffective, the manufacturing strategy should act insupport of the overall strategic directions of thebusiness and provide for competitive advantages.

developed and administered. The questionnaire is given inAppendix II. In the next section, analyses of survey findingsare given.

�� *��

The survey methodology is used for study and focus of studyis cross-sectional. The objective of study is to become morefamiliar through survey and information is collected at onepoint in time. The methodology was based on a questionnairesurvey with mono-respondent approach. One hundred andtwenty filled responses have been received (34.8% responserate)(Table 1). This response rate is higher than as suggestedby Flynn et al. (1990) (between 10 to 30%). The detailedresearch methodology is given in Appendix II.

The discussion of the results is divided into five sections.The first section describes attributes of manufacturing

flexibility. The followingsections are devoted tothe, structural flexibility(advanced manufacturingtechnology), andinfrastructure flexibility(integrated informationsystems, advancedmanagement systems, andautonomy), effect of

company size on flexibility, and correlation coefficients.

�� "�� 2�3� ��7� 8� ��"�� (�� "

!�� %�� !��&� �� +�� !��*

To examine the flexibility perspective in Indianmanufacturing companies, a survey was conducted in fourmajor manufacturing sectors, i.e. automobile, electronics,machinery, and process. A structured questionnaire was

�� 8�� %�� 6��

Number of employees

1. 1002. 100-5003. 500-10004. 1000-30005. 3000-50006. > 5000

Total

Annual sales (million US $)1. 0.25-1.252. 1.25-2.53. 2.5-12.54. 12.5-255. > 25 Total

Exports (% of total sales)1. Nil2. ( 10 %3. 10-20 %4. 20-30 %5. > 30 % Total

Industry sector1. Automobile2. Electronics3. Machinery4. Process Total

Respondent companies (%)24 (20)

22 (18.4)20 (16.6)39 (32.5)

6 (5)9 (7.5)

120 (100)

24 (20)10 (8.4)24 (20)12 (10)

50 (41.6)120 (100)

35 (29.2)65 (54.1)15 (12.5)

2 (1.7)3 (2.5)

120 (100)

31 (26)31 (26)24 (20)34 (28)

120(100)

Imperatives forFlexibility

OrganizationalResponse

MANUFACTURING

FLEXIBILITY

� %

��

�� +$�� $� ��$�� (��/�+� � � ��

Respondents were asked to indicate degree of importancegiven (on five point Likert scale) to various attributes offlexibility (MF1-MF6). These attributes were identified basedon the literature (Gupta and Buzacott 1989, Guptaand Somers 1992, Gupta 1993, Stecke and Raman 1995).Table 2 presents the sector-wise mean and standard deviationvalues. It is observed that in general Indian manufacturingcompany feels to “adjust capacity quickly” (MF2), as themost important attribute (mean score 3.60), which providesflexibility. Design changes (MF1) is the least importantattribute (mean score 3.00) for Indian manufacturingcompanies. Rapid volume changes (MF3) is the mostimportant attributes of flexibility for automobile sector,whereas “adjust capacity quickly” (MF2) is the most

(a) that the most preferred AMT for automobile sectorcompanies is CNC and that of electronics and machinerysector is CAD, whereas process companies are investinghighly in automated material handling systems (AMHS) dueto their continuous flow type production process.

�� +�� !��*

AttributeOverall

(N = 120)Mean SD

Automobile(N = 31)

Mean SD

Auectronics(N = 31)

Mean SD

Machinery(N = 24)Mean SD

Overall(N=120)

Mean SD

MF1 3.00 1.40 3.48 1.50 3.29 1.24 2.83 1.37 2.41 1.30

MF2 3.60 1.23 3.64 1.27 3.83 1.18 3.70 1.19 3.26 1.26

MF3 3.35 1.30 3.70 1.10 3.45 1.36 3.29 1.12 3.00 1.49

MF4 3.17 1.35 3.32 1.27 3.51 1.33 3.25 1.18 2.64 1.47

MF5 3.33 1.32 3.54 1.33 3.67 1.30 3.12 1.03 2.88 1.47

MF6 3.38 1.23 3.51 1.26 3.29 1.32 3.58 1.01 3.14 1.28

Grand 3.30 1.30 3.53 1.28 3.50 1.28 3.29 1.15 2.88 1.37mean

SD - Standard deviation (on five point Likert scale; 1-least important,5-most important) Values in bold represents the manufacturing flexibilityattribute with the highest mean score.

Rather than allowing politics and gut feeling to solvepriority conflicts, they should be resolved on the basis ofperceived value to the organization, customer and society.

important attribute forelectronics, machinery,and process companies.Similarly “making rapiddesign changes” (MF1)is the least importantflexibility attribute for electronics, machinery, and processsector.

��$��$� �� (��/�+�� (�

8��

Based on the literature (Mechling et al. 1995, Clark 1996)12 relevant advanced manufacturing technologies (AMT) areidentified for Indian companies which provide structuralflexibility. Details of these activities are given inAppendix-I. Respondents were asked to indicate degree ofinvestment in these AMTs in their companies on five pointLikert scale (where 1- No investment and 5 - Heavyinvestment). Overall and sector wise mean and standarddeviation score is given in Table 3 (a). It seems that, ingeneral Indian manufacturing companies are investing highlyin CAD (overall mean 3.18). It is depicted from the Table 3

6� �� $�� 6� $�"��

�� 2� 3�5� � � �� !��*� 3�!5 ��0�� +�� *� 3�+�5

AMTOverall

(N = 120)Mean SD

Automobile(N = 31)

Mean SD

Electronics(N = 31)

Mean SD


Process(N = 120)Mean SD

CAD 3.18 1.31 3.58 1.08 3.51 1.17 3.50 1.21 2.32 1.31

CAE 2.52 1.30 2.77 1.30 2.67 1.32 2.37 1.31 2.26 1.28

CAPP 2.51 1.38 2.61 1.47 2.70 1.32 2.41 1.38 2.35 1.39

CNC 2.90 1.62 3.64 1.35 2.93 1.69 2.62 1.61 2.47 1.65

DNC 2.18 1.32 2.61 1.47 2.19 1.32 2.00 1.28 1.88 1.14

RO 1.61 1.01 1.58 0.80 1.87 1.20 1.54 1.02 1.52 1.02

CM 2.00 1.20 2.48 1.26 1.83 1.15 2.04 1.16 1.67 1.12

FMS 2.30 1.29 2.83 1.29 2.06 1.28 2.45 1.21 1.97 1.21

AMHS 2.27 1.32 2.38 1.30 2.09 1.22 1.87 0.94 2.64 1.55

AGV 1.65 1.09 1.67 1.13 1.54 1.09 1.41 0.82 1.94 1.20

BC 2.00 1.29 2.22 1.38 2.03 1.40 1.66 1.00 2.02 1.31

AS/RS 1.89 1.27 1.96 1.27 2.12 1.38 1.54 1.02 1.85 1.32

Grand 2.25 1.28 2.52 1.26 2.29 1.29 2.11 1.16 2.07 1.29mean

SD - Standard deviation (on five point Likert scale; 1-No investment,5-Heavy investment)Values in bold represents the structural flexibility attribute with thehighest mean score.

#�� $��$�� (��/�+�� #(�

(�� (�� "��"� 9( �:

Integrated Information Systems (IIS) encompasses systemssuch as MaterialRequirement Planning(MRP), ManufacturingResource planning(MRPII), EnterpriseResource Planning(ERP), and Activity

Based Costing (ABC). Respondents were asked to indicatedegree of investment in these activities in their companieson a five point Likert scale (where 1- No investment and 5 -Heavy investment). Overall and sector wise mean andstandard deviation score is given in Table 3(b). It is observedfrom Table 3(b) that mean score is highest for MRP, whichreflects that Indian manufacturing companies (from all foursectors) are investing in MRP to achieve infrastructureflexibility.

8�� "��"� 9( �:

Eleven advanced management systems (AMS) are identifiedfor Indian companies, which help in simplification ofprocesses. Details of these activities are given in Appendix I1. Respondents were asked to indicate degree of investmentin these activities in their companies on five point Likert scale

� '


(where 1– No investment and 5 - Heavy investment). Overalland sector-wise mean and standard deviation score is givenin Table 3(c). It is noted from Table 3(c), that in generalIndian companies are investing highly in management training(mean = 3.81) programs to keep pace with the competition.Through training their employees the companies are tryingto achieve infrastructure flexibility. TQM is the preferred pathfor achieving flexibility for automobile and electronics sectorcompanies. However,machinery and processsector are in line withgeneral manufacturingcompanies, i.e. investinghighly in managementtraining.

mean score 3.60) to achieve infrastructure flexibility.Electronics, machinery and process sector companies aregiving more decision-making power (A3; mean score 3.67,3.58, 3.67 respectively) to its employees, however automobilecompanies are following the trend of general manufacturingcompany, i.e. giving more responsibility to their workers forinspection.

The new competition is in terms of reduced cost;improved quality, products with higher performance, awider range of products and better service, all deliveredsimultaneously.

�� "�� 2�3� ��7� 8� ��"�� (�� "

�� 2� 3�5� � �� !��*� 3�!�5 �� *�� 3��5

IISOverall

(N = 120)Mean SD

Automobile(N = 31)

Mean SD

Electronics(N = 31)

Mean SD


Process(N = 34)

Mean SD

MRP 3.18 1.28 3.58 1.25 3.09 1.37 2.79 1.25 3.20 1.17

MRPII 2.80 1.41 3.25 1.36 2.51 1.45 2.50 1.31 2.88 1.40

ERP 2.76 1.58 2.93 1.45 2.74 1.73 2.70 1.57 2.73 1.58

ABC 2.60 1.39 2.64 1.33 2.41 1.50 2.50 1.17 2.82 1.50

Grand 2.83 1.41 3.10 1.35 2.68 1.51 2.62 1.32 2.90 1.41mean

SD - Standard deviation (on five point Likert scale; 1-No investment,5-Heavy investment) Values in bold represents the infrastructureflexibility attribute with the highest mean score.

�� 2� 3�5� � �� !��*� 3�!�5 ��0�� +�� *�� 3�+�5

IISOverall

(N = 120)Mean SD

Automobile(N = 31)

Mean SD

Electronics(N = 31)

Mean SD


Process(N = 34)

Mean SDOA 3.16 1.19 3.06 1.15 3.22 1.20 3.08 1.01 3.29 1.36CR 3.69 1.03 3.80 1.01 3.90 0.94 3.12 1. 15 3.76 0.95TQM 3.70 1.08 4.16 0.77 3.93 0.85 3.16 1.23 3.47 1.23RC 2.48 1.25 2.35 1.11 2.61 1.38 2.50 1.10 2.47 1.39BPR 2.95 1.26 3.25 1.18 2.96 1.27 3.08 1.31 2.58 1.25SPC 3.25 1.16 3.41 1.20 3.41 1.05 2.91 1.24 3.17 1.16JIT 2.89 1.32 3.67 1.07 2.87 1.33 2.41 1.24 2.50 1. 26WI 3.62 1.00 3.70 1.03 3.77 1.02 3.37 1.09 3.55 0.89BM 3.21 1.17 3.58 1.11 3.00 1.23 3.12 1.11 3.14 1. 18EE 3.36 1.08 3.54 0.99 3.51 1.09 2.95 0.99 3.32 1.17MT 3.81 0.98 3.77 0.99 3.83 0.96 3.83 1.00 3.91 0.99Grand 3.28 1.13 3.48 1.05 3.36 1.12 3.04 1.13 3.19 1.16mean

SD - Standard deviation (on five point Likert scale; 1-No investment,5-Heavy investment)Values in bold represents the infrastructure flexibilityattribute with the highest mean score.

8�� 9( �:

The respondents were asked to indicate their degree ofagreement for four attributes of autonomy (A1-A4) on a fivepoint Likert scale. Table 3(d) gives the overall and sectorwise mean and standard error scores. It is observed fromTable 3(d), that in general Indian manufacturing companiesare giving more inspection responsibility to workers (A2;

�� 2� 3�5� � �� !��*� 3�!25 ��*

IISOverall

(N = 120)Mean SD

Automobile(N = 31)

Mean SD

Electronics(N = 31)

Mean SD


Process(N = 34)

Mean SD

A1 2.74 1.16 2.87 1.11 2.80 1.30 2.79 1.21 2.47 1.02

A2 3.60 0.95 3.83 0.89 3.61 0.88 3.54 0.97 3.41 1.04

A3 3.50 1.22 3.12 1.20 3.67 1.24 3.58 1.13 3.67 1.22

A4 3.28 1.42 3.38 1.33 3.29 1.55 3.04 1.39 3.38 1.45

Grand 3.28 1.18 3.30 1.13 3.36 1.24 3.23 1.17 3.23 1.18mean

SD - Standard deviation, (on five point Likert scale; 1-Totally disagree,5-Totally agree). Values in bold represents the infrastructure flexibilityattribute with the highest mean score.

�� &��" ��'�� (��/�+� � � ��

To study the effect ofsize of the companieson flexibility, wehave classified the

respondent 120 companies into three clusters (small, mediumand large) based on two criteria. First classification is basedon number of employees, and other is on annual sales.Number of employees ranges from 100 to above 5000 andannual sales varies from US $ 0.25 million to above US $25 million. The companies are labeled as small, medium andlarge based on criteria given is Table 4.

�� 9 � %�� %��*� %��

Criterion Small (N) Medium (N) Large (N)

Number of employees ≤ 500 (46) 500 - 3000 (59) > 3000 (15)

Annual sales ≤ 2.5 (34) 2.5 - 25 (36) > 25 (50)(million US $)

N - Number of companies

Mean scores of structural flexibility (advancedmanufacturing technology (AMT)), infrastructure flexibility(integrated information systems (IIS), advanced managementsystems (AMS), and autonomy), and manufacturing flexibility(MF) for small, medium and large clusters of companies aregiven in Table 5. It is observed that there is no statisticallysignificant difference as far as investment in AMT and IISbetween “small” and “medium”, and “large” and “small”clusters of companies in both classifications (based on numberof employees and annual sales). In rest of the dimensions offlexibility, i.e. advanced management systems (AMS),manufacturing flexibility (MF), and autonomy, the difference

� +

��

in mean is statistically significant. This reflects thatmanufacturing flexibility matters in small, medium and largesize of companies based on number of employees and annualsales.

is observed (from Tables 2 to 3(d)) that grand mean ofmanufacturing flexibility (MF1 to MF6) is the highest,i.e. 3.30.

� Infrastructure flexibility attributes (AMS, Autonomy, andIIS) are more preferred by Indian manufacturers ascompared to structural flexibility (AMT).

� Indian companies are investing more in advancedmanagement systems (AMS: grand mean–3.28) andAutonomy (grand mean–3.28) to achieve infrastructureflexibility as compared to integrated information systems(IIS: grand mean–2.83).

� Advanced manufacturing technology (AMT: grand mean–2.25) has attracted least emphasis by Indian companies.

� Indian companies are investing only in CAD and CNCto achieve structural flexibility. It is the structuralflexibility, which provides basis for competitive edge toa company in present intense global competition.

� Decisions to achieve flexibility could be addressed byinvesting in various improvement activities such as AMS,IIS, AMT, and autonomy.

� It is worthwhile to recollect Skinner’s (1969) insistenceon the importance of human factors and “productionsystems”. The findings in this study reaffirm theimportance of “infrastructure”- the software (AMS), in asense, that a company employs to select and control theperformance of its hardware (AMT). These systemsshould be designed to encourage the continual adaptationand improvement of a company’s skill base.

� Indian manufacturing companies seem to be following“people-intensive” capabilities based approach to achieveflexibility. It is reflected with the more emphasis givento infrastructure flexibility attributes such as advancedmanagement systems, integrated information systems, andautonomy.

� Large companies (in annual sales and number ofemployees) invest more in infrastructure flexibility thansmall and medium size companies. We observedstatistically significant difference in mean scores amonglarge, medium, and small companies (Table 5).

#�"�� $��

�� (�� "

For practitioners, this study provides several importantimplications:

� By building on the work of previous studies conductedin the industrialized countries, this study helps to providea better understanding on flexibility in a dynamic andchanging business environment, and points outmanufacturing strategy perspective on flexibility for Indianmanufacturers.

� The results underscore the importance of attributes offlexibility (i.e. manufacturing flexibility, structuralflexibility (advanced manufacturing technology), andinfrastructure flexibility (integrated information systems,and advanced management systems)) for practitioners. To

��<� �+�� %�� !��*� 6��

Flaxibilitydimension

SmallCriter. Criter

1 2

MediumCriter. Criter

1 2

LargeCriter. Criter

1 2

AMT (12-items) 1.68 1.83 2.49 2.26 2.61 2.52

IIS (4-items) 2.51 2.57 2.98 2.70 3.21 3.11

AMS (11-items) 3.15 3.13 3.34 3.17 3.42 3.47

Autonomy 3.28 3.28 3.31 3.27 3.20 3.35(4-items)

MF (6-items) 3.13 3.17 3.44 3.37 3.32 3.35

Criterion 1: based on number of employees, Criteroion 2: based on annualsales

&�� &��

Figure 2 shows the correlation coefficients betweenmanufacturing flexibility (MF) and dimensions of structuralflexibility (AMT) and infrastructure flexibility (IIS, autonomy,AMS). Two tailed Pearson correlation coefficient is calculatedwith SPSS for Windows (version 7.5). Our results show thatcorrelation coefficient between MF and IIS is the least, i.e.0.254, however it is highest between MF and AMS (0.410).Correlation coefficients are significant at level 0.01. Theseresults validate our findings that Indian companies are payingmore attention to AMS as compared to IIS and AMT.

�� "��

�� ( ��

� Economic reforms and global competition have givenIndian manufacturing companies an opportunity to lookat the strategic role of manufacturing. This has motivatedIndian companies to give high priority to qualitymanagement.

� Because of competitive imperatives, Indian companiesneed to respond to global pressures. Flexibility providesa useful mechanism to respond to such pressures.

� Various dimensions of flexibility are identified. It isclassified into structural flexibility and infrastructureflexibility.

� It seems that Indian companies are giving moreimportance to attributes of manufacturing flexibility as it

6� �� $�� 6� $�"��

!�� %�� %�� 6 �� !��*

� ,


achieve flexibility in a company, managers should investin hard (advanced manufacturing technology) and soft(integrated information systems, and advancedmanagement systems) techniques.

� Manufacturers can no longer be comfortable competingon the basis of one or two functional area competencies.The globalized environment requires that manufacturershave multiple competencies such as quality, delivery,flexibility, and cost.

(�� "� �� *�"��"

The study also provides some implications for researchers.

� The questionnaire developed can be improved further toexamine linkages of flexibility with other competitivepriorities.

� Other dimensions of flexibility need to be exploredfurther.

� Sector specific dimensions of flexibility can be exploredfurther.

5�� "�� ($�$��6� � �

The four major manufacturing sector companies (automobile,electronics, machinery, and process) have been included inour study. Companies from all parts of the country (East: 6,West: 20, North: 78, and South: 16) responded to ourquestionnaire.

However, this study has some limitations, which futureresearchers could consider. First, mono-respondent approachis adopted due to high cost associated with multi-respondentapproach. Second, flexibility aspects are studied in adeveloping country like India. Future researchers may directtheir study to compare flexibility of Indian companies withthat of other developing countries. Third, other sectors canbe included in the study and/or the present sectors can befurther classified (for example, further classification ofautomobile into vehicle manufacturers and componentmanufacturers).

��

A part of the research reported here was presented at theInternational Conference: GLOGIFT-2000 and published inthe conference proceedings “New Business Paradigm: Global,Virtual and Flexible”. A discussion with Professor KathrynE Stecke has helped in refining our ideas and format of thispaper. We are grateful to her for constructive comments andsuggestions.

Authors would like to thank also, the anonymous refereesfor their valuable comments, which has improved the contentsand format of the paper.

"��

Beach R., Muhlemann A.P., Price D.H.R., Paterson A. and Sharp J.A. (2000)Manufacturing Operations and Strategic Flexibility: Survey and Cases,International Journal of Operations and Production Management, 20(1),7-30.

Berry W.L. and Cooper M.C. (1999) Manufacturing Flexibility: Methodsfor Measuring the Impact of Product Variety on Performance in ProcessIndustries, Journal of Operations Management, 17, 163-178.

Buzacott J.A. (1982) The Fundamental Principles of Flexibility inManufacturing Systems, in Proceedings of the First InternationalConference on Flexible Manufacturing Systems, Brighton, U.K., 23-30.

Clark K.B. (1996) Competing Through Manufacturing and the NewManufacturing Paradigm: Is Manufacturing Strategy Passe?, Production andOperations Management, 5(1), 42-58.

Cox III J.F. and Blackstone J.H. (1998) APICS Dictionary (9th edition),Falls Church, VA.

Cox Jr. T. (1989) Towards the Measurement of Manufacturing Flexibility,Production and Inventory Management Journal, 30(1), 68-72.

Dangayach G.S. and Deshmukh S.G. (1999) Implementation ofManufacturing Strategy: Evidences from Select Indian AutomobileCompanies, in A. Kanda et al. (Eds.) Operations Management for GlobalEconomy: Challenges and Prospects POMS-99 (India), Indian Institute ofTechnology, New Delhi, 51-55.

Dangayach G.S. and Deshmukh S.G. (2000) Manufacturing Strategy:Experiences from Select Indian Organizations, Journal of ManufacturingSystems, 19(2), 134-148.

Dangayach G.S. and Deshmukh S.G. (2000) Role of Strategic Flexibilityin Manufacturing Strategy: A Multi-sector Study of Indian Companies, inSushil et al. (Eds.) New Business Paradigm: Global, Virtual and Flexible(GLOGIFT - 2000), New Delhi, 17-20 December, 21-31.

Dangayach G.S. and Deshmukh S.G. (2001) Implementation ofManufacturing Strategy: A Select Study of Indian Process Companies,Production Planning and Control, 12(1), 89-105.

DeMeyer A., Nakane J., Miller J.G. and Ferdows K. (1989) Flexibility:The Next Competitive Battle - The Manufacturing Futures Survey, StrategicManagement Journal, 10, 135-144.

D’Souza D.E. and Williams F.P. (2000) Toward a Taxonomy ofManufacturing Flexibility Dimensions, Journal of Operations Management,18, 577-593.

DeToni A. and Tonchia S. (1998) Manufacturing Flexibility: A LiteratureReview, International Journal of Production Research, 36(6), 1587-1617.

Dixon J.R. (1992) Measuring Manufacturing Flexibility: An EmpiricalInvestigation, European Journal of Operations Research, 60, 131-143.

Ettlie J.E. and Penner-Hahn J.D.P. (1994) Flexibility Ratios andManufacturing Strategy, Management Science, 40(11), 1444-1454.

Flynn B.B., Sakakibara S., Schroeder R.G., Bates K.A. and Flynn J.E.(1990) Empirical Research Methods in Operations Management, Journalof Operations Management, 9(2), 250-284.

Gerwin D. (1987) An Agenda for Research on the Flexibility ofManufacturing Processes, International Journal of Operations andProduction Management, 7(1), 38-49.

Gerwin D. (1993) Manufacturing Flexibility: A Strategic Perspective,Management Science, 39(4), 395-410.

Gupta D. (1993) On Measurement and Valuation of ManufacturingFlexibility, International Journal of Production Research, 31(12),2947-2958.

Gupta D. and Buzacott J.A. (1989) A Framework for UnderstandingFlexibility of Manufacturing Systems, Journal of Manufacturing Systems,8(2), 89-97.

Gupta Y.P. and Goyal S. (1989) Flexibility of Manufacturing Systems:Concepts and Measurements, European Journal of Operations Research,43, 119-135.

�� "�� 2�3� ��7� 8� ��"�� (�� "

� -

��

FlexibilityDimension

Notation Explanation

Structuralflexibility (SF)

(AMT)

Infrastructureflexibility (IF1)

(IIS)

Infrastructureflexibility (IF2)(AMS)

CADCAECAPP

CNCDNCROCM

FMS

AMHS

AGVBC

AS/RS

MRP

MRPIIERPABC

OACR

TQM

RCBPR

SPCJITBMWIEE

MT

Computer aided design: computer supporteddesign and drafting systemComputer aided engineering: computerassisted engineering methodsComputer aided process planning: computerassisted systems and techniques for processplanningComputer numerical control: numericallycontrolled machine toolsDirect numerical control: numericalcontrolled machine with centralizedcomputerRobotics: use of Robots for pick and placeor other material handling workCellular manufacturing: organizing the shopfloor such that an operator has the resourcesto produce an entire productFlexible manufacturing systems: computerintegrated systems which have the flexibilityto rapidly change product type and mixAutomated material handling systems:automatic material handling devices such asconveyors, gantry robots etc.Automated guided vehicles: driver lessvehicles run on special painted pathsBar coding: bar identification systemAutomated storage and retrieval system (AS/RS: mechanized stock management system

Material requirement planning: computerassisted material planning systemManufacturing resource planning: computerbased system for planning and allocation ofwork among employeesEnterprise resource planning: integratedinformation management systemActivity based costing: philosophy of costreduction through activity based costaccounting

Office automation: computerization of officesystemsCustomer relations: improve customersatisfaction, customer-supplier relationshipTotal quality management: approach toimproving the competitiveness of anOrganization through kaizen, totalparticipation and continuous improvementRecycling: reusing waste materialsBusiness process reengineering: fundamentalrethinking and radical redesign of businessprocesses to achieve improvementsStatistical process control: the use ofstatistical methods to control qualityJust-in-time: produce and deliver finishedgoods just-in-time to be soldBenchmarking: comparing a company’sperformance against the best practiceWorkforce involvement: giving worker moreplanning responsibilityEmployee empowerment: philosophy ofhanding responsibility and decision makingto employees lower down in OrganizationManagement training: training and skilldevelopment programs for managersGiving workers more planning responsibility.Giving workers more inspectionresponsibility.I can do almost anything I want, withoutconsulting my boss.Even small matters have to be referred tosomeone higher up for a final answer.

�� "�� 2�3� ��7� 8� ��"�� (�� "

Gupta Y.P. and Somers T.M. (1992) The Measurement of ManufacturingFlexibility, European Journal of Operations Research, 60, 166-182.

Hill T.J. (1987) Teaching Manufacturing Strategy, International Journal ofOperations and Production Management, 6(3), 10-20.

Koste L.L. and Malhotra M.K. (1999) A Theoretical Framework forAnalyzing the Dimensions of Manufacturing Flexibility, Journal ofOperations Management, 18, 75-93.

Lau R.S.M. (1999) Critical Factors for Achieving Manufacturing Flexibility,International Journal of Operations and Production Management, 19(3),328-341.

Mechling G.W., Pearce J.W. and Busbin J.W. (1995) Exploiting AMT inSmall Manufacturing Firms for Global Competitiveness, InternationalJournal of Operations and Production Management, 15(2), 61-75.

Mortia M. and Flynn E.J. (1997) The Linkage Among ManagementSystems, Practices and Behavior in Successful Manufacturing Strategy,International Journal of Operations and Production Management, 17(10),967-993.

Nagabhushana T.S. and Shah J. (1999) Manufacturing Priorities and ActionPrograms in the Changing Environment: An Empirical Study of IndianIndustries, International Journal of Operations and ProductionManagement, 19(4), 389-398.

Neely A., Mills J., Platts K., Gregory M. and Richards H. (1994) RealizingStrategy through Measurement, International Journal of Operations andProduction Management, 14(3), 140-152.

Nunally J.C. (1978) Psychometric Methods, McGraw Hill, NY.

Sethi A.K. and Sethi S.P. (1990) Flexibility in Manufacturing: A Survey,International Journal of Flexible Manufacturing System, 2(4), 289-328.

Skinner W. (1969) Manufacturing- Missing Link in Corporate Strategy,Harvard Business Review, 47(3), 136-145.

Slack N. (1987) The Flexibility of Manufacturing Systems, InternationalJournal of Operations and Production Management, 7(4), 35-45.

Statistical Outline of India (1999-2000) Tata Economic Services Ltd.,Mumbai.

Stecke K.E. and Raman N. (1995) FMS Planning Decisions, OperatingFlexibilities, and System Performance, IEEE Transactions on EngineeringManagement, EM-42(8), 12-16.

Upton D.M. (1994) The Management of Manufacturing Flexibility,California Management Review, Winter, 72-100.

Upton D.M. (1995) Flexibility as Process Mobility: The Management ofPlant Capabilities for Quick Response Manufacturing, Journal of OperationsManagement, 12, 205-224.

Vokurka R.J. and Leary-Kelly S.W. (2000) A Review of EmpiricalResearch on Manufacturing Flexibility, Journal of Operations Management,

18, 485-501.

Notation ExplanationFlexibilityDimension

Make rapid design changesAdjust capacity quicklyMake rapid volume changesOffer a large number of product featuresOffer a large degree of product varietyAdjust product-mix

MF1MF2MF3MF4MF5MF6

Manufacturing

flexibility(MF)

� �� (� �� !��*

Source: MF (Upton 1995), SF (Mechling et al. 1995), IF1 and IF2(Dangayach & Deshmukh 1999), IF3 (Mortia & Flynn 1997)

� .


6� �� $�� 6� $�"��

� �� 8�� +��*� 3>?��5

&�� #��$�� + ��

A database of 345 manufacturing companies has been createdbased on companies from all over the country. Themanufacturing industry is made up of many different sectors;the overall-manufacturing climate influences each of which.In Indian perspective major manufacturing sectors areautomobile, electronics, machinery manufacturing and processindustries (Statistical Outline of India 1999-2000). We haveincluded all these four sectors in our study. Selection criteriais based on two parameters i.e. number of employees (( 100)and annual sales (( 0.25 million US $).

Automobile sector includes companies producing light andheavy-duty vehicles and automotive components. Electronicsindustry includes companies manufacturing telephones,electronic circuits, control panels, computer peripherals,insulators and domestic electronic appliances. Machinerymanufacturing companies produces power presses, weighingmachines, computer numerical control machines, pumps, airconditioners, compressors, agricultural machines and materialhandling equipment. Companies in process sector producespaints, drugs and medicines, tyres, steel, cement, petroleumproducts, textile fabrics, fertilizers and chemicals.

�� #�� $��

Based on the literature (Mortia & Flynn 1997, Neely et al.1994) a questionnaire was designed. This has been developedon five point Likert scales (1- strongly disagree, 5- stronglyagree), details of which are given in Appendix. Questionnairecontained two sections ‘A’ and ‘B’. Section ‘A’ contained 15questions, pertaining to organization’s strategy and section‘B’ contained 40 questions related to competitive strengths,performance measurement activities, quality improvementcriteria, environmental friendly technologies, informationtechnology applications, world class manufacturing practices,order winning criteria, functional integration, customersatisfaction, supplier orientation of an organization.Implementers (i.e. middle management level) may fill section‘B’. Annexure was given in the end of questionnaire,which contained key for responses and explained in briefthe terminology used in the questionnaire, to avoid unknownbias.

To assess content validity a “dry run” was made and fewquestionnaires were administered to few leading practitioners,consultants and academicians. Based on their feedback thepresent form has been evolved and final version of thequestionnaire was sent to the CEOs of 345 companies. Inter-item analysis is used to check the scales for internalconsistency or reliability. Cronbach’s coefficient alpha iscalculated for each scale, as recommended for empiricalresearch in operation management (Flynn et al. 1990, andgiven in appendix. Cronbach’s alpha values for each scale ismore than 0.5, which is considered adequate for exploratorywork (Nunally 1978).

1. Attributes of manufacturing flexibility (on 5 point Likertscale, 1– Least important, 5-Most important) (Cronbach’salpha = 0.8722)

2. Investment in improvement activities (on 5 point Likertscale, 1–No investment, 5-Heavy investment)(Cronbach’s alpha = 0.9079)

3. Autonomy (on 5 point Likert scale, 1–No emphasis,5–Full emphasis) (Cronbach’s alpha = 0.7953)

�� "��

After reminders, phone calls, e-mail and re-reminders, 120filled responses have been received, which gives 34.8%response rate. Area wise distribution of respondent companiesis observed as under

Region Number of respondents (%)

Northern India (NI) 78 (65)

Western India (WI) 20 (17)

Southern India (SI) 16 (13)

Eastern India (EI) 6 (5)

Total 120 (100)

Out of 120 respondents 58 (48%) were CEO/GeneralManager/President/Vice President/Executive Director with 20-30 years experience. With 10-20 years experience, 37 (31%)respondents were of Divisional Manager/Production Manager/Head-Operations/Works Manager/Director-Technical level.Twenty-five (21%) respondents were Assistant Manager/Deputy Manager/Production Engineer/Quality Engineer with5-10 years experience.

� /

��

�� "�� 2�3� ��7� 8� ��"�� (�� "

��&�� !��'� !��

�' -�� * �� *�� .�� /� ��

� !��*��,�"� ��-

� !��*� �� ,�� -

� !��*��,� �� -� �� '

�' ��*��* ��0��*��:��'$��"�� *��1

2 ' �*� �� *�� :�� *�� '� 34�� &� ��&� �� 3��55'

+�� !��*

�� 0��

�� *��

!��

+�� *��

�� 0��

-�&��

%�� *%��

9 ' 6�0�� 4�#�4� 3�� 4��#�� 4��5� �� @.�� /� ��0�� *��:��'

"�� "��%��

�' (��* ��*��:��0�� '

�' A�� *� �� 0�"��0�� *� ��*��:��'

� �


#�� (�� %�� +��

Sameer PrasadUniversity of Wisconsin — Whitewater

Management Department, College of Business and Economics, Whitewater, WI 53190USA

Jasmine TataLoyola University ChicagoManagement Department,

820 North Michigan Avenue, Chicago, IL 60611USA

Jaideep MotwaniSeidman School of Business

Grand Valley State University, Grand Rapid, MI 49504USA

��Multinational corporations are redesigning their organizational structure from a hierarchic multi-domestic structure into a global network.Using the contingency theory framework, we identify the reasons for this change, optimal structures and the potential cost/benefits to beexpected. In addition, we also indicate how supply chains learn and adapt to the dynamic global environment. These findings can helppractitioners gain a better understanding of international supply chains and provide a theoretical model for academicians to conductfuture studies.

�� contingency theory, international operations, material and information flows


Review andDiscussion

#��

In the last two decades, competition has changed dramaticallywith the opening up of trade barriers regionally and globally.Local companies in both developing and developed countriesare being now exposed to increased competition from a newset of competitors that can exploit the comparative advantageof several countries simultaneously. Adding to the localcompanies’ problems is the growing volatility of the businessenvironment due to the larger number of international players,rapid changes in technology and shorter product life cycles.

Firms have begun to implement two strategies in orderto remain competitive: (i) by seeking supplies and productionson a global scale, and (ii) reducing value-added operationsin-house via outsourcing and strategic alliances. By sourcinginternationally multinationals can take advantage of theunique conditions existing in the countries, such as lowwages, raw material availability, and proximity to markets(Grunwald and Flamm, 1985). In addition, this distributedsystem now gives firms the flexibility to react to the increasedvolatility in technology and marketplace. It requirestransformation of the organization and proper managementof supply chains to be successful (Hobbs et al, 1998).

Initially, American firms took their ideas from the USand transplanted them to overseas locations, whereas Japanesefirms invested in operations overseas to tap the local cost,material availability and quality advantages. The European

firms set-up multi-domestic operations and let them developtheir own products, services and supply system. Today, mostlarge American, Japanese and European MultinationalCorporations (MNCs) are now moving toward the twinstrategy of global disaggregation and supply chainmanagement. In this research, we develop a model to identifywhy such strategies are necessary today and the expectedbenefits to accrue by making such a transition.

In the following sections, we will (i) examine the literaturerelevant to our research, (ii) define our model, and (iii)highlight the implications of this model for managers andnations.

%�� "��

In this research, we will examine the literature on (i) locatingplants globally, (ii) supply chain management, (iii) flexibility,and (iv) contingency theory in order to ground our proposedmodel.

Managers have had extensive literature to rely upon inlocating facilities internationally. For example, Bass, et al(1977) outline the economic, social and politicalconsiderations for locating plant sites. A number ofquantitative models are also available (Haug 1985, Hodderand Jucker 1986) to help managers in putting up plantsglobally. Next, the applicable literature on international supplychains is examined.

� �

��

Firms have begun to implement two strategies in order toremain competitive: (i) by seeking supplies and productionson a global scale and (ii) reducing value-added operationsin-house via outsourcing and strategic alliances.

�� "��;� )�"�� )��!��

The literature on international supply chain managementis extensive and includes defining the concept, providingdescriptive/survey studies of its practices, modelling flowsvia quantitative/simulation models and providing theoreticalmodels for the control of supply chains.

Logistics is defined by Davies (1987) and Gary andDavies (1991) as composed of materials management,physical distribution management, credit rating, insurance anddelivery promises. According to Houlihan (1987), the conceptof international logistics can be expanded into internationalsupply chain management by including purchasing, productdistribution and sales. A topology by Wood (1990) providesa classification of the various types of distribution channelsand the use of intermediaries.

Descriptive/survey studies have also examined theapproaches MNC’s have taken in redesigning their supplychains (Berry and Naim 1996, Ernst and Guerrieri 1998),impact of JIT systems on supply chains (Cook and Rogowski1996, Humphreys, et al 1998, Simpson et al. 1998) and therole of logistics partnerships (Kopczak, 1997). Quantitativemodels of international supply chain have been suggested(Maloni and Benton, 1997), such as using Theory ofConstraints (Perez, 1997) and strategic production-distributionmodels (Vidal and Goetschalckx, 1997). Levy (1995) findsa significant impact ofdemand variability andproduction disruptionswhich result insubstantial unexpectedcosts related toexpedited shipping,high inventories,and lower demandfulfillment using a simulation study.

Theoretical models have also been proposed (Cohen andMalik, 1997). For example, Thorelli (1986) appliesorganizational network theories to determine the optimumlevel of control in supply chain management. In addition,Delk (2000) proposes a financial model for internationalsupply chain.

Configured plants form a network or chain that needs tobe effectively coordinated (Pope and Prasad 1998, Motwaniet al 2000, Popp 2000) to achieve needed flexibility (DeMeyer et al. 1989, Fernie 1994, Kogut 1985a, Kogut andKulatilaka 1994). Multinationals view these flexible networksas a means to derive a strategic advantage (Schary and Skjott-Larsen, 1998). A number of researchers have attempted todefine the benefits of such systems (Allen and Pantzalis 1996,Gupta and Somers 1996, Upton 1997). However, none ofthese researchers examine the organizational dimension tosupport such flexible structures.

Contingency theory has been extensively used to describeorganizational structures under varying environmentalconditions. This theory assumes that there is not one “best”structure for all conditions, but rather the optimum form

varies according to the underlying condition (Burns andStalker 1961, Lawrence and Lorsch 1969). The organizationalstructures are viewed to exist on a continuum from amechanistic (hierarch) structure on one end to an organic/flat form at the other extreme. In between the two forms, isa range of structures adopting a variety of characteristics ofthe two exfremes. The mechanistic form is prescribed wherethe environment is stable. A hierarchic structure is quiteefficient when the processes can be standardized andmechanized. However, such a structure becomes inefficientwhen the environment changes and the standards andmechanisms become no longer relevant. In such situations,less formal, organic structure would be more effective.

Much of the literature in international operations isfragmented and is not able to provide an integrative approachto a manager who is trying to apply the dual strategies ofglobal disaggreation and supply chain management. In thispaper, a model is developed that specifies the type ofinternational operation and the corresponding logisticsstructure based on the dynamic international conditions usingthe contingency theory.

��(��

In this section, we develop an integrative model for theeffective application of supply chain management for

the internationaloperations. First, weexplain the typesof internationalstructures, and thendetail how thechanging environmentaffects them.

#�� ."�� $��$��

The structure of international operations can be viewed on acontinuum of multi-domestic, hybrid to global networks(Figure 1). On one extreme is a multi-domestic structure,whereas on the other end is a distributed global network.Most multinationals do not setup up operations at the extremeends, but rather exist somewhere along the continuum. Somefirms are organized more closely towards a multi-domesticstructure, while others are closer to the organic global networkform. The type of structure which is most applicable is afunction of the environment a business operates within.

Structure Multi-domestic Hybrid Globalhierarchic network

Environment Stable Dynamic

Flows (Information Formal Evolving Distributedand Material) structured learning systems

pattern

!�� '� %�� $ ��

��"� (�0�� !��

�________

�_________

�

�___________________

�

�________

�_________

�

� �


(�� 7� <�� #�� =��!��"

In this research, we will examine the literature on (i)locating plants globally, (ii) supply chain management, (iii)flexibility, and (iv) contingency theory in order to groundour proposed model.

If the environment is rather stable and closed, amulti-domestic structure would be the most efficient form.Multi-domestic operations are designed to source, produceand satisfy demand in only one country. This type of structuretends to be more hierarchic in nature, with the variousoperations functioning somewhat independently of each otherand solely reporting to the headquarters (See Figure 2). Asthe environment becomes more open and correspondinglymore dynamic, a hybrid structure would be more effective.A hybrid structure would possibly entail transactions ofproducts, markets and information across two or threecountries. For example, with the lowering of trade barriersgreater interaction between the subsidiaries is becoming thenorm. Such hybrid structures (Figure 3) allow for examplean operation in Mexico to supply finished items to theSpanish and British markets, given the possible low laborcost comparative advantage. Finally, as trade barriers fall andthe business environment becomes more open and dynamic,a network structure would be the most adaptable for suchconditions. On this side of the continuum is a networkstructure, where the entire value chain is distributed globally.This type of a network (Figure 4) takes advantages of thedifferent comparativeadvantages amongnations. By sourcingand producing on aworldwide basis andmatching them withthe value chain activities of a multinational’s operationsprovides a very effective and flexible system. For instance,

!�� '� +�� B�� C�� #��

!�� 2 � B*�� (0��0�� #��

!�� 9� � C��&� ��

in building computer systems, the semiconductors might comefrom Japan, software designs from the US, motherboardsfrom Singapore, and the final assembly performed in Mexico.

&��

�� 0��"�� $�"��

The optimum design for a closed and stable internationalenvironment is a hierarchic model, with formal rules

and regulations,centralized decision-making and control,servicing a singlelocal market,downward communi-cation using formal

channels, and an autocratic style of management. This typeof a structure results in production orders and flows that arehandled in rather routine means to satisfy local demands.Operations and logistics management activities are governedby corporate standards. Product costs are usually reducedvia learning the learning curve. Since routine proceduresare followed, the control of the workflow and decision-making can be in the hands of centralized management, andemployees with specialized skills match the narrowly definedjob (Woodward 1965, Lawrence and Lorsch 1969, Dean andSusman 1989).

An example of such types of structures would be theway Goodyear built factories in the 1960s and 1970s toaccommodate the specific demands for various countries.Hence, a plant in Brazil would only produce to satisfy thelocal demand. No material or data flow occurs between thesimilar sister plants in other countries.

>�3�� $�"��

Between these two extremes of hierarchic and organic designslie a number of hybrid forms that combine aspects of bothto varying degrees (Morgan, 1989). If the trade barriers havefallen somewhat and the environment is more dynamic, designcould be somewhat mechanistic, but with management teams,project teams and task forces extending over a number ofsubsidiaries. This type of a structure would be useful to solveproblems that cannot be settled through the formalmechanism. In addition, this type of interaction would allowfor new patterns of materials and information flows.

Software

Hardware

��

��&��(��

��&��(��

��

� %

��

An example for a hybrid structure would be Newell-Rubbermaid office products, where an injection molding plantin Madison, Wisconsin supplies to markets in the U.S.,Canada, Mexico and elsewhere. In this type of a structure,there are dedicated plants no duplication of operations.

6 �3� � =��!�� $�"��

In a global environment that is truly dynamic withinsignificant trade barriers, an organic network organizationaldesign would be recommended. This requires an informalstructure with flexible roles, implicit means of control,decentralized decision-making, organic communicationchannels, and few standard rules and procedures. This resultsin subsidiaries that do not have narrowly defined roles.Instead, they have the flexibility to source items from avariety of suppliers locally or internationally. Becauseinformation has to flow quickly between the different nodes,they have to be interdependent and use informal channels ofcommunication. The supply chain network has to make on-the-spot decisions constantly. It has therefore to trust andvalue those employees (Woodward 1965, Lawrence andLorsch 1969, Dean and Susman 1989), units, suppliers orstrategic allies that make quick decisions, even if it meanstaking a risk. This requires a growth-promoting climate,which encourages collective responsibility for decisionsthroughout the entire supply chain.

An example of this structure can be found with the PCsuppliers in the U.S. Often material and information flowstraverse several countries between strategic partners andsuppliers, taking advantage of the unique comparative benefitsof the various nations. For example, the power unit could beproduced in China, the chips come from Japan and themotherboards are sourced from Singapore. These items arethen assembled in Mexico taking advantage of the low labourcosts and proximity to the U.S. The final packaging,configuration and tests are completed in the U.S.

��

The contingency model provides a framework to determinethe optimal structure based on the international environment.In Table 1, is a list of the critical factors and the outcomes(operational and economic) for the multi-domestic hierarchicand global network forms. These issues will be next lookedinto relative to the international environment today.

The rapidly changing markets and technology environmentrequire the organization structure to be transformed. Theglobal economy is changing dramatically. With the increasedstandard of living in newly industrialized and developingcountries, multinationals have more markets to tap into.Simultaneously, the lowering of trade barriers on account ofthe World Trade Organization (WTO) requirements and thedevelopment of regional trading blocks such as the NorthAmerican Free Trade Agreement (NAFTA) has removed manyof the protections provided to multi-domestic operations. Inaddition, the accelerating flow of foreign direct investmentand other financial instruments allow production to beestablished quickly in far-flung corners of the world that cangain from the different comparative advantage of nations.Product characteristics are also becoming more homogenouswith the product life cycles shortening. Finally, the cost ofcoordination/communication has fallen dramatically due tothe new information technology. The availability of email,Internet, extranet, fax machines, video conferencing andairplanes is making the management of operations aroundthe world easier to coordinate. Supply chain software allowsfirms to optimize production and logistics for the entirecompany spanning dozens of countries, not just a factory.In addition, the Internet is now being used to coordinateentire supply chains with strategic partners over the fivecontinents.

Given these changes, it is apparent that production andmaterials management will become more networks oriented.For firms to be successful in this kind of a structure wouldrequire more cross-cultural training, a method to encouragelearning throughout the network, development of partnershiprelations. As a result of these efforts, firms would be flexibleenough to provide mass customization of products, at lowercost in shorter time.

"��

Allen L. and Pantzalis C. (1996) Valuation of the Operating Flexibility ofMultinational Corporations, Journal of International Business Studies,27 (4), 633-653.

�� "��;� )�"�� )��!��

Critical Tariffs and trade High LowFactors barriers

Transportation costs High Low

Coordination/Communication costs High Low

Operations Sourcing Local Globaloutcomes

Production Local Distributed basedon local corecompetencies

Flexibility Low High

Rationalization None Complete

Economic Economies of Scale Local production Globaloutcomes

Price/cost Standard/stable Varies to dynamic environment

Optimization Global Possible sub-optimization

Other Markets Local Globaloutcomes

Learning Learning curve Network learningin productionand sourcing

Partners 100% owned JV, Strategicalliances

Cross-culture Limited to Distributedinteraction subsidiary - throughout the

headquarters organizationactivities

�� '� %�� !�� $�� $ ��

Issues Multi-domestic Global SupplyChain Network

� '


(�� 7� <�� #�� =��!��"

Bass McGregor and Walters (1977) Selecting Foreign Plant Sites: EconomicSocial and Political Considerations, Academy of Management Journal, 4(20),535-551.

Berry D. and Naim M.M. (1996) Quantifying the Relative Improvementsof Redesign Strategies in a P.C. Supply Chain, International Journal ofProduction Economics, 46-47, 181-196.

Burns T. and Stalker G.M. (1961) The Management of Innovation, SocialScience Paperbacks, London:

Cohen M.A. and Malik S. (1997) Global Supply Chains: Researchand Applications, Production and Operations Management, 6(3),193-210.

Cook R.L. and Rogowski R.A. (1996) Applying JIT Principles toContinuous Process Manufacturing Supply Chains, Production and InventoryManagement Journal, 37(1), 12-17.

Davies G.J. (1987) The International Logistics Concept, InternationalJournal of Physical Distribution and Materials Management, 17(2),20-27.

Dean J.W. Jr. and Susman G.I. (1989) Organizing for Manufacturing Design,Harvard Business Review, 67(1), 28-36.

Delk J. (2000) International Financial Management Concepts StrengthenSupply Chain Links, Production & Inventory Management Journal, 41(2),59-64.

De Meyer A.J. Nakane Miller J.G. and Ferdows K. (1989) Flexibility: TheNext Competitive Battle - The Manufacturing Futures Survey, StrategicManagement Journal, 10(2), 135-144.

Ernst D. and Guerrieri P. (1998) International Production Networks andChanging Trade, Oxford Development Studies, 26(2), 191-213.

Fernie J. (1994) Quick Response: An International Perspective,International Journal of Physical Distribution and Logistics Management,24(6).

Gary R. and Davies G.J. (1991) Decision Making in International Physicaldistribution. International Journal of Physical Distribution and LogisticsManagement, 21(5/6), 21-38.

Grunwald J. and Flamm K. (1985) The Global Factory, The BrookingsInstitution, Washington DC:

Gupta Y.P. and Somers T.M. (1996) Business Strategy ManufacturingFlexibility and Organizational Performance Relationships: A PathAnalysis Approach, Production and Operations Management, 5(3),204-233.

Haug A. (1985) Multi-period Mixed Period Integer ProgrammingModel for Multinational Facility Location, Journal of Management, 3(11),83-96.

Hobbs J. Kerr W. and Klein K. (1998) Creating InternationalCompetitiveness Through Supply Chain Management: Danish Pork. SupplyChain Management, 3(2).

Hodder and Jucker (1986) A Plant Location Model for the MultinationalFirm, Computer and Operations Research 601.

Houlihan J.B. (1987) International Supply Chain Management,International Journal of Physical Distribution and Materials Management,17(2), 51-66.

Humphreys P. Mak K. and Yeung C. (1998) A Just-in-time EvaluationStrategy for International Procurement, Supply Chain Management, 3(4).

Kogut B. (1985) Designing global strategies: Comparative and CompetitiveValue-added Chains, Sloan Management Review, Summer, 15-28.

Kogut B. and Kulatilaka N. (1994) Operating Flexibility GlobalManufacturing and the Option Value of a Multinational network,Management Science, 40(1), 123-139.

Kopczak L.R. (1997) Logistics partnerships and Supply ChainRestructuring: Survey Results from the U.S. Computer Industry, Productionand Operations Management, 6(3), 226-247.

Lawrence, P.R. and Lorsch J.W. (1969) Developing organizations: Diagnosisand Action, Addison-Wesley, Reading MA.

Levy, D.L. (1995) International Sourcing and Supply Chain Stability,Journal of International Business Studies, 26(2), 343-60.

Maloni M.J. and Benton W.C. (1997) Supply Chain Partnerships:Opportunities for Operations Research, European Journal of OperationalResearch 101(3), 419-429.

Morgan G. (1989) Creative Organization Theory, Sage Publications,Newbury Park CA.

Motwani J. Madan M. and Gunasekaran (2000) A Information Technologyin Managing Global Supply Chains, Logistics Information Management,13(5).

Pope J. and Prasad S. (1998) The Measurement of International Inventorysystems, Logistics Information Management, 11(6).

Popp A. (2000) Swamped in Information but Starved of Data: Informationand Intermediaries in Clothing Cupply Chains, Supply Chain Management,5(3).

Perez J.L. (1997) TOC for World Class Global Supply Chain Management,Computers Industrial Engineering, 33(1-2), 289-293.

Schary P. and Skjott-Larsen T. (1998) Managing the Global Supply Chain,International Marketing Review, 15(5).

Simpson M. Sykes G. and Abdullah A. (1998) Case Study: Transitory JITat Proton cars Malaysia. International Journal of Physical Distributionand Logistics Management, 28(2).

Thorelli H.B. (1986) Networks Between Markets and Hierarchies, StrategicManagement Journal, 7(1), 37-51.

Upton D.M. (1997) Process Range in Manufacturing: an Empirical Studyof Flexibility, Management Science, 43 (8), 1079-1092.

Vidal C.J. and Goetschalckx M. (1997) Strategic Production-distributionModels: A Critical Review with Emphasis on Global Supply Chain Models,European Journal of Operational Research, 98(1), 1-18.

Wood D.F. (1990) International Logistics Channels, International Journalof Physical Distribution and Logistics Management, 20(9), 3-9.

Woodward J. (1965) Industrial Organizations: Theory and Practice, OxfordUniversity Press London.

� +

��

�� "��;� )�"�� )��!��

��&�� !��'� !��

�' -�� * �� *�� .�� /� ��

� !��*��,�"� ��-

� !��*� �� ,�� -

� !��*��,� �� -� �� '

�' ��*� �� * �� 0�� *�� :�� '� $�� "� ��*��1

2 ' �*�� *��:��*�� *�%��+��'34�� &��&� �� 3��55'

��

+�� &B��

(�0��

�� 6*��

!��

!�� 6�� *��

9' 6�0�� 4�#�4�3��4��#��4��5��.�� 4��0�� *��:��'

"�� "��%��

�' B��*��0��0�� *�%��+��&��*��1

�' B��*�� *�%��+�� *��:��1

� ,


��&�� (�� #��(��!�� (��$�� (��

A.M. RawaniReader, Govt. Engineering College

Raipur, Chhatisgarh-492.010, India

M.P. GuptaDepartment of Management Studies I.I.T., New Delhi-110016, India

��This paper presents a flexible approach to Strategic Information Systems Planning (SISP) for banking sector in India. SISP has becomean increasingly important issue for both researchers and practitioners. Various frameworks are proposed in the past, which are predominantlybased on strategic behavior of U.S. business culture. The dynamics of market space is engineering Because of globalization, merger,speed of product change, innovation etc.. This necessitates the need of a more flexible approach in IS planning. Therefore, an attempt ismade to propose a flexible framework with specific focus to Indian banking sector. The framework is then validated by implementing it inthe case of State Bank of India.

�� Indian banks, SAP- LAP methodology, strategic information systems planning

CaseStudy


#��

�� #�� !� ��

Information System (IS) planning has evolved over the lasttwenty-five years. In the late 1970s, primary objectives wereto improve communications between computer users and MIS(Management Information Systems) department, increase topmanagement support for computing and identifying new andpayback computer applications (McLean and Sodan, 1977).In the late 1980s, two new objectives emerged. They areidentification of strategic IS applications - those that givethe organization a competitive advantage and developmentof organization-wide information architecture (Moskowitz,1986). Strategic Information System Planning (SISP) hasbecome an increasingly important issue for both researchersand practitioners (Earl 1993, Sass and Keefe 1988). In supplyof key issues over the past ten years, SISP has consistentlyremained among the top ten issues (Caudle et.al. 1991, Palviaand Palvia 1992, Teo et.al. 1997).

Lederer and Sethi (1992a) have given two simultaneouslyperformed approaches to SISP. On the one hand, SISP helpsorganization use IS in innovative ways to build barriersagainst new entrants, change the basis of competition,generate new products, built- in switching cost (Porter, 1985).As such SISP promotes innovation and creativity. On theother hand, SISP is a process of identifying a portfolio ofcomputer based applications to assist an organization inexecuting its current business plans and thus realizing itsexisting business goals. The distinction between the twoapproaches results in the former being referred to asattempting to impact organizational strategies and the latter

as attempting to align MIS objectives with organizationalgoals (Lederer and Sethi, 1992).

7�� #�!� �� 8(� ��

Various frameworks are developed by the researchers to helpthe practitioners to identify IS strategy. An evolutionary modelsuggested by Nolan (1979) is a well-known six-stage modelwith the help of which an organization is able to see whereit stands and where it is heading in terms of computerization.IS strategies can be formulated depending on the type ofstage the organization is in with respect to IT. The modelomits to encompass human and technological dimension(Robson, 1997). Critical Success Factor (CSF) analysissuggested by Rockart (1979) and Business System Process(BSP), an IBM or proprietary technique, are the techniquessuggested for information requirements of the organizations.CSFs are the key activities for any organization in whichperformance must be satisfactory if the business is to surviveand flourish. Its weakness is that it needs very skilled andprescriptive interviews to do the abstracting of CSF fromsenior managers. It is usually impossible to build a truepicture of organization information requirements using onlyCSFs (Robson, 1997). CSF is more useful in designingsupport systems for isolated senior executives than inresolving company wide issues of integrated informationsystems (Sullivan 1985). A further difficulty associated withCSF analysis is that the resultant decision may ignore anyresource constraints surrounding their management. BSP isa lengthy process that offers a structured approach to planningvia a number of defined stages that lead from theidentification of business processes to a definition of requireddata structures. It involves top-down planning followed by

� -

��

8��*�!�� 6��

bottom-up implementation. From the top-down, organization’sbusiness mission, objectives and functions are recognized. Itanalyzes the processes for organization’s data needs. Fromthe bottom-up, data currently needed to perform the processesare identified. The final BSP output describes an overallinformation system architecture comprised of databases andapplications as well as the installation schedule of individualsystems. Rather than identifying isolated applicationsprojects, BSP takes a co-ordinated inter system view. It is abusiness-oriented approach. Despite these advantages; BSPhas limitations. It was designed for centralized environments.This is not surprising,considering that it wasdeveloped and promotedby IBM during a periodwhen firm’s principalproducts were main framecomputers. Nothing in theoriginal methodologyhelps an organization if its computing resources has becomeorganizationally or physically decentralized (Sullivan, 1985).

Sullivan (1985) has nicely explained suitability of differentapproaches with the help of a two-dimensional matrixindicating the combination of extent of system infusion(impact) and system diffusion (deployment), as shown inFigure 1.

Stage of growth method applies in what we call atraditional environment, in which both infusion and diffusionare low. This is conventional data processing center. BSPworks in backbone environment, in which computing hasbecome strategic to company, but it is still centralized in themanner of its deployment. CSF is suited to the environmentin which technology is more distributed than it is crucial,i.e. high diffusion but low infusion. This is federation. Today,the system diffusion and infusion both are high, i.e. complexenvironment where no methodology best suits. Here firmsdevelop eclectic approach to meet their specific needs.Therefore, few more frameworks are suggested in theliterature to guide formulate IS strategy.

In the literature, there are many more frameworks to helpthe practitioners. The range of frameworks on offer isbewildering to managers and some rationalization is required.The value and limitation of frameworks is not always clear(Levy et.al., 1999-2000). Earl’s Framework of Frameworksprovides a useful means by which to consider the relativevalue of each. According to Earl, individual frameworks may

�� !��&� �� !��&�

Attribute Awareness Opportunity Positioning

Purpose Vision Ends Means

Scope Possibility Probability Capability

Use Education Analysis Implementation

be classified under one of the following three headings:awareness, opportunity and positioning. Table 1 summarizesthe key characteristics and Table 2 provides the exemplarsunder each category.

Awareness frameworksindicate how IT can be usedfor strategic advantage. Theyprovide insight to industrylevel rather than the firmlevel. They are intended toraise awareness. Opportunity

frameworks are directed towards enabling the individualorganization to identify suitable strategic opportunities fromthe use of IS. Position frameworks consider the importanceof existing IS to the business. These are intended to help

In India, one bank might be mature user of ITwhile another might be just introducing IT becauseof vast geographical spread and varying nature ofcustomer’s requirements.

Awareness

RefocusingFrameworks:Identification ofpotential to use IS/ITin the organization.Exemplar: Strategicopportunitiesframework (Benjaminet.al.)

Impact Models:Identification ofimpact, which IS/ITcould have on theorganization’scompetitive position.Exemplar: GenericStrategies (Porter)

Scoping Models:Identification ofstrategic scope of ITin industry sectors.Exemplar:Information IntensityMatrix (Portar andMillar)

Opportunity

Systems AnalysisFrameworks:Identification ofinformation flowwithin the business.Exemplar: Value chain(Porter)

Application SearchTools: Identification ofspecific areas withinthe business, whichmight benefit from IT.Exemplar: CustomerResource Life Cycle(Ives and Learmonth)

Technology FittingFrameworks:Identification ofspecific IT to achievea business benefit tothe organization.Exemplar: IndustryDependent.

Business StrategyFrameworks:Identification ofbusiness strategyopportunities for IT.Exemplar: Five forceModel (Porter)

Positioning

Scaling Frameworks:Identification of scaleof importance of IT toan organization.Exemplar: StrategicGrid (McFarlan et. al.

Spatial Frameworks:Identification ofinformationmanagementimplications for anorganization.Exemplar: Sectorinformationmanagement grid(Earl).

TemporalFrameworks:Identification of ITsuitable for the stageof IT development oforganization.Exemplar: Stages ofGrowth Model(Nolan)

FEEDERATION

(Critical successFactor)

TRADITIONAL

(Stage of Growth)

COMPLEX

(Eclectic)

BACKBONE

(BSP)Syst

em D

iffu

sion

System Infusion

!�� *� �� 4��

�� (�� !��&�)�� (�� %��*

� .


�2�3 �� !�� (�� "��"� � ��7�8� ��"��

managers’ plan the future development of IS given a goodunderstanding of the current situation.

Few more models and frameworks are suggested in therecent past. Mentzas (1997) has given a five-phase SISPmodel. The different phases are - Strategic awareness,Situation analysis, Strategy conception, Strategy formulationand Strategy implementation planning. He concluded thatstrategy formulation is more a creative activity than ananalytic procedure. The proposed method has the advantageof explicit and formal incorporation of structures formanagement involvement and supports a team approachduring the process’s implementation. However, suggestedapproach treats planning as a one-shot activity; neverthelessIS planning operations should be on going managementactivities and should form parts of dynamic process ofdefining and monitoring corporate strategy. Hatten and Hatten(1997) have given an IS strategy framework, which lists theprincipal strategic issues facing a business and is structuredto help IS managers find ways to use IS to deal with theseissues. The framework requires a synthesis of the impacts ofthe factors of success for the business, and its competition,the business’s opportunities and threats, and the present andfuture competitive impacts of IS. The framework omits thehuman and political issues.

!�� #�� 7 ��

The Indian banking sector consists of public sector, privatesector and foreign banks apart from smaller regional and co-operative banks. Public sector banks dominate the bankingsector in terms of market share, but are hindered by legacyfactors as well as service quality issues. Public sector banksoffer services in both metro and rural areas. They have adual business mission that of behaving like a viable profitmaking organization, in addition to fulfilling social missionof taking banking to the remotest villages in India. Rigidity,inability to respond quickly to changing environment, andconstraints on human resources front are some of theproblems of public sector banks. Business strategy of publicsector banks is having mass banking systems and costreduction. Private banks are constrained by the size factor,as they are basically niche players. Their business strategy isdifferentiation of products and providing value added services.Foreign banks have a limited branch network and capitalcommitment. They have the advantage of being able to drawupon the experience of their parent organization. They focuson high-end customers who know what they want and whosebusiness can help sustain the IT-enabled banking services.

Authors have conducted a detailed questionnaire surveyand prepared case studies of select banks to understand thepresent practices of SISP in banking sector in India. Detailsof questionnaire survey and case studies are not presentedhere considering the scope of this paper, however a brieflearning is presented. Questionnaire survey and case studiesrevealed the fact that, in India, one bank might be a matureuser of IT while another might be a just introducing ITbecause of vast geographical spread and varying nature ofcustomer’s requirements. In other words, banks have different

role of IS in their operations. IT applications is mainlygoverned by guidelines laid down by Reserve Bank of India(RBI) and not always based on bank’s business requirements.IS planning is more focused on technology aspects, relativelyneglecting business issues. It is found that top managementinvolvement in IS planning is not adequate. User involvementin IS planning has not been very much appreciated. Mainissues in Indian banking sectors are –dual business missioncommercial and social), low user participation in IS planning,low rate of absorption of technology, resistance from tradeunions and least interaction of IS planners with businessplanners. Based on the synthesis of questionnaire survey andcase studies, authors have proposed a framework in this paperand tried to illustrate its application in largest public sectorbank of the country, i.e. SBI.

��,�� &�� +��&��

Literature review on different models and frameworks forevolving IS strategy suggest that most of the methodologieshave some or the other weakness. All current SISPmethodologies seem somewhat descriptive in that they donot address managerial problems of how strategic planningis to be done and how to make the best use of currentmethodologies. In other words, they focus on issues of ‘Whatshould be done’, rather than ‘How to do it’ (Zviran, 1990).Palvia (1997) and Palvia et.al (1990) have highlighted theneed of a refined model to identify strategic opportunities.According to them, while developing strategic informationsystems for developing countries government plays asignificant role. This role may be regulatory, supportive orboth. A firm may be able to develop an information systemto address massive government regulatory requirements.Reason of IT applications in Indian banks is also to meetgovernment/RBI norms. Another important force identifiedby Palvia et.al is logistics, which includes communicationsystems and distribution network. They argue that thisstrategic force may not be particularly important in developednations, but generally very significant in developing countries.Often the logistics systems and infrastructure in suchcountries are far from adequate. Therefore, arguments givenby Palvia et.al. supports the need of a framework to suitIndian condition. Moreover, there is no universal agreementthat existing methodologies are useful today, nor is theagreement that they have ever been useful (Pun and Lee,2000). Available frameworks are predominantly based onstrategic behavior of US business culture (Levy et. al. 1999).

Multi dimensional nature of SISP has been highlightedby Earl (1990) and Galliers (1991) stressed the need formultiple method for SISP. SISP should include human,organizational and infrastructural issues (Earl 1989 Ward et.al.1990). Waema and Walsham (1990) argued that strategyformation is a complex social and political process, which isnot adequately captured by formal rational process. This isparticularly true in less developed countries like India, wheredecision-making procedures are rarely well established andwhere they are often not adhered to even when they do exist.

% /

��

Main issues in Indian banking sectors are - dualbusiness mission (commercial and social), low userparticipation in IS planning, low rate of absorption oftechnology, resistance from trade unions and leastinteraction of IS planners with business planners.

Political issues involve resource control, changes in autonomy,changes in management, intervention, division and use ofrules and procedures. Cultural issues involve resistance tonew technology, barriers between cultural groups andmanagement style. Therefore, IS strategy formation processshould be linked to important context such as businessstrategy, organizational culture and structure, people’sperceptions and expectations, and technical infrastructureincluding the availability of technical skills. They furtherhighlight the dynamic nature of strategy by saying thatstrategy formation is subjected to constant modification asthe perceptions and interests of key actors and groups change.

Information system planning should have the built inflexibility to allow adoption of Information System processof new opportunities as they present themselves, and thusfoster creativity (Raghunathan and Raghunathan, 1991). Atthe same time, it should try to balance such creativity throughthe use of adequate control mechanisms so that frequentadaptations on the grounds of creativity do not lead to lossof control. Flexibility in IS planning is the ability of theplanning systems toanticipate crises, identifyopportunities and adapt tounanticipated changes(Ansoff, 1975). The useof strategic system asstrategic weapon requiresplanned and effectiveorganizational responses to environmental changes. Thesechanges impinge directly on the organizational informationsystem and can be considered to be important inputs to ISplanning because of the need to recognize and respond tothem, such as customer’s and user’s changing preferencesand demands and technological developments. Developmentof technologies like Internet, Smart cards etc. must beresponded quickly by the banks to get strategic advantage ofinformation systems. The degree to which these factors areemphasized in the development of the IS plan have a directimpact on the effectiveness of the IS plan. Top managementbelieves that IS flexibility enables strategic success andthereby leads to organizational success (Sushil, 2000-2001).For obtaining flexible information systems, users should takethe responsibility of planning and suggesting the strategicuses of IS in their functional areas. Business managers shouldtranslate business strategies into IS strategies. Topmanagement should promote innovative culture. For obtainingthe flexible IS, which is the outcome of strategic planningprocess, the process itself has to be flexible enough. ISplanning has to be enriched with integrative, innovative andinteractive applications.

Critique of available frameworks: Existing methodologiesdo not fit the present environment of high levels of systeminfusion and diffusion. Doyle (1991) argues that there is anassumption that frameworks exist outside time, which mayrender some frameworks irrelevant, particularly whenaddressing the impact of new technologies. For example, theInternet is radically changing the way firms do business and

make current frameworks seem parochial and dated.Positioning frameworks assume that the market place is staticand that there are generic strategies for positioning oneselfin that space. Because of globalization, merger, speed ofproduct change, innovation etc., the market space is dynamic.The company needs to mould market space and position itself.This necessitates the need of a more flexible approach.

)��

Looking to the need of a flexible approach to SISP, aframework is proposed here using SAP-LAP methodology.The framework is presented in Figure 2. SAP has three basiccomponents, viz. Situation, Actor and Process (Sushil 1994,1997, 1999). Situation is the present status, potential forgrowth or decay, present and future state of the art etc. Theparticipants who influence the situation and alter it by theiractions or inaction are termed as actors. The procedural stepstaken by the actors who alter the situation are termed asthe process. LAP part of the framework again hasthree components, i.e. Learning issues, Actions and

Performance. Learningissues emphasize thetypicality of the situationas well as some featuresof its uniqueness.Learning issues also leadto action, which whentaken would lead to

improved performance.

Banking industry being a business entity has certainbusiness objectives, mission and goals. Informationtechnology may play a supportive role to help carry outbusiness functions and achieve business objectives. IT maybe a business partner and help in deriving a new set ofbusiness objectives. Therefore, in information intensiveorganizations like banking, situations can be grouped broadlyinto two groups. These are business domain situation andtechnology domain situation. Technology domain is furtherdivided into internal and external situation. Internal situationis organization specific situation and external situation isindustry specific situations. Similarly actors are also dividedinto internal actors and external actors. Actors, who are withinthe organization, are grouped under internal actors. Externalactors are outside the organization but play key roles in SISP.The procedural steps taken by these actors to alter thesituation compore the process. We have defined a set ofvariables in the context of banking sector for all thecomponents and sub components of SAP and LAP part ofthe framework. Detailed lists of identified variables arepresented in Figures 3 and 4.

SAP part of the framework helps to identify prevalentsituation in the context of SISP, key actors and present SISPpractices followed by the bank. Synthesis of situationalfactors, roles of actors and SISP practices would result inlearning issues. Here begins the LAP part of the framework.Learning issues lead to key actions to improve the situation,actor and process. Finally, the expected impact of these

8��*�!�� 6��

% �


actions on the performance of situation, actor and processcan be explored. To help in identification of learning issues,actions and expected impact on performance, guiding issuesare presented in Figure 4.

SAP analysis and LAP synthesis helps to derive ISstrategy, mission of IS department, role of IS, IS applications,organizational structure of IS department (responsibilityassignment) and action plan. The framework allows afeedback from the derived outcome indicated as ‘AdditionalLearning’. Additional learning leads to appropriate changesin the strategies. In other words, additional learning will serveas input for further SAP analysis, and result in new set ofstrategies and IT applications. Feedback of ‘AdditionalLearning’ incorporates dynamic feature to the suggestedframework.

To implement the framework generously, it is suggestedto apply the techniques of creative problem solving. Thereare various critical steps in the framework, which requirecreative thinking. Therefore, a checklist of possible methodsis also presented in the Table 3. While applying theframework, IS practitioners can use any of the suggestedmethods at these steps and formulate suitable strategy forthe bank.

+��!��

The proposed framework has the following strengths.

� It gives a multi-paradigm approach to IS strategyformulation. It provides the management a wider scope toconsider social, cultural and political environment of thebank. Framework proposes looking at the bank fromvarious perspectives so as to add richness to the analysis,leading to more acceptable solution. Framework forcesmanagement to assess role of Government/RBI and tradeunions in implementing IS projects. Such issues are morerelevant in India.

� The framework is flexible and modular. It providesopportunity to foresee the problems and opportunities

S-A-P Analysis

D� 6�� 0�� !�� 2� �� 9

Will Matchwith

BusinessMission

Will Matchwith

BusinessStrategy

Will Matchwith Business

long-termobjectives

Will Matchwith

BusinessProcess

Will Matchwith

OrganizationalStructure

Will Matchwith

AvailableResources

!�� !��&� �� *�� 4��

Results

BUSINESS DOMAINSITUATION

� Mission

� Strategic Business Units

� Market Segment

� Resource (Finance and Human)

� Critical Success Factors forBank’s Business

� Core Competency

� Organizational Structure andCulture

TECHNOLOGY DOMAINSITUATION

Internal� IT Units� IT Applications in the Bank� Role and Growth of IS in Bank� Resources� User’s Expectations� Critical Success Factors

External

� IT based Products and Services� Use of IT by Competitors� Customer’s Expectations and

Social Commitment

ACTORSInternal Actors:

� Top Management as amotivating force

� Bank’s Business Planners� IS team Involved in Planning� Trade Unions� Business Managers and End-

users of the System� IT Training Institute

External Actors

� Competitors.� IT Planning Consultant and

other Software and HardwareProviders.

� Customers� RBI and other Government

Agencies as RegularityBodies.

Actor Variables

� User’s and Customer’sSatisfaction Level

PROCESS

� Level of Computerization

� Extent of Outsourcing

� Focus of IT Applications

� Top Management Involve-ment in IS Planning

� Involvement of BusinessManager and User in IS

Planning

LEARNING ISSUES

� Strategic Thrust� Business Focus� Market Focus� Customer’s Expectations� Bank’s Strength and

Weakness in IT� Inefficiencies in Current IT

Systems� Strategic IT Opportunities� Interaction of IS Planners

and Business Planners

!�� 2� � �� 4��C�#,��

EXPECTED IMPACT ON PERFORMANCE

� Strategic Impact on Quality/Cost of Products andServices

� Impact on Customer Base� Impact on Financial Performance� Impact on Business Strategy� Impact on Performance of Actors

� !�� 9� � �� #��4� �*��

ACTIONS� Ensure Involvement of

Top Management,Business Managers andUsers in IS Planning

� Develop Creative Culture� Preparing Internal People

for Change� Implementation of

Customer ConvenientServices/Products

� Innovative IS Applications� Centralize the Database

�2�3 �� !�� (�� "��"� � ��7�8� ��"��

Ad

diti

on

al L

earn

ing

L-A-P Synthesis

Outcome

(Why IS) (How IS) (What Type (Where to (Who) (When)of Support) use IT)

% �

��

1. Generation of Learning Issues

2. Generation of Possible Actions

3. Prediction of Impact of Actionson Performance

4. Defining IS Mission, Goals &Objectives

5. Defining IS Strategy

6. Identification of Role of IS

7. Identification of IS Process

8. Assignment of Responsibility

9. Implementation Plan

Attribute Listing, GeneticLearning Approach, GapAnalysis

Morphological Analysis,Genetic Learning Approach,Options Field Methodology

Delphi, Brain Storming,Scenario Building, Cause &Effect Analysis

TKJ Technique, MorphologicalAnalysis

Dialectical Approach, BrainStorming, Nominal GroupTechnique

Dialectical Approach, BrainStorming

Critical Questioning Technique,Idea Engineering, AnalyticalHierarchical Process,Desirability Feasibility Study,Cost Benefit Analysis, ABCAnalysis

Attribute Listing, CriticalQuestioning Technique

ISM, Desirability FeasibilityStudy, Cost Benefit Analysis

S.No. Critical Steps in Framework Available Techniques

�� 2� � #�� E�� !��&

within a turbulent, complex and rapidly changing businessand IT environment.

� Ciborra (1992) arguethat strategyformulation is likelyto involve elements ofsurprise or sudden,redical shifts inpreferences and goals.The proposed framework favors learning over monitoring.After S-A-P analysis learning issues are derived, whichhelp to formulate desired actions. A feedback loop ofadditional learning provides an opportunity of post-implementation evaluation.

� Framework provides combination of analytical andcreative techniques. The former takes a structured analysisroute by systematically probing and decomposing thebusiness requirements into their constituent parts, anddelivering a structured view of the business objectives,strategy, activities and information needs. The latter, hasat its disposal several creative problem solving techniques(Table 3) to arrive at innovative solutions.

� Many of the Indian banks do not have a formal businessstrategy. IT applications are mostly driven by immediateconcerns. They do not have full time staff for IS planning.Indian banks, particularly public sector banks have to

serve cost conscious rural customers as well asconvenience conscious metro customers. Such uniquefeatures of Indian banking sector necessitates to take aholistic view while planning for IS. The proposedframework provides a holistic approach to themanagement.

��(��$��#��

State Bank of India (SBI) has been selected purposively forillustration of the framework. SBI is the largest bank in Indiain terms of profits, assets, deposits, branches and employees.With a network of over 9,000 branches in India and 52foreign offices in 31 countries, the Bank commands aboutone-fifth of the total deposits and loans in all scheduledcommercial banks in the country. Application of frameworkis illustrated by its application in SBI. Every component andsub-components of the SAP-LAP framework are discussedbelow.

� � !� ��

� � �$ � ��

Situation is the present status, potential for growth or decay,present and future state of the art etc. Here, situation isgrouped broadly into two groups. These are business domainsituation and technology domain situation. Issues under thesetwo groups are discussed below.

98: ��"��""� $��

��""��

Stated mission of SBI encompass balanced focus of customer,shareholder andemployee’s interest andemerge as world-classbank. Bank’s businessmission statement is asfollows.

“To retain bank’sposition as the premier

Indian financial service group, with world class standardsand significant global business, committed to excellence incustomer, shareholder and employee satisfaction and to playa leading role in expanding and diversifying financial servicesector, while continuing emphasis on its development bankingrole”.

�� "��""� &��"

State Bank of India being the largest and oldest Indian bank,has spread its banking interest in diverse areas over a periodof hundred years. Accordingly, it has following strategicbusiness units.

� Corporate Banking

� National Banking

� International Banking

� Associate and Subsidiaries

Corporate Banking is single window shop for the entire range

IS strategy formation process should be linked toimportant context such as business strategy,organizational culture and structure, people’s perceptionsand expectations, and technical infrastructure includingthe availability of technical skills.

8��*�!�� 6��

% �


of financial services needed for large corporates. Two majorfunctions, which come under this unit, are Project andInfrastructure Financing and Leasing Business.

National Banking Unit, through its two distinct networks,namely, Personal Banking and Commercial Banking Network,provides basic banking services to its customers. About 99%of domestic deposits and 84% of domestic advances of thebank fall in the domain of National Banking Unit.

A network of 52 overseas offices of the bank spread over31 countries falls under the International Business Unit.Bank’s foreign offices contributed about 20% of net profitof the bank at March end 1999.

Associate and Subsidiaries Business Unit has seven associatebanks. Currently only the Corporate Banking and NationalBanking units are headed by Managing Directors. Other twobusiness units are headed by Deputy Managing Directors;consequently they are invitees to the board meetings and haveto route all papers through the chairman.

��

Bank is operating in metro, urban, semi-urban and rural areasas well. Table 4 shows the emphasis of different segment ofmarkets. Bank is drawing major portion of its business frombranches located at metros. About 12% of the brancheslocated in metro account for about 42% of the total bank’sbusiness. On the other hand, about 43% of the branchessituated at rural area account hardly for 12% of the business.This clearly indicates the market segment where the bankhas to focus.

*�"�� 9 �� >��:

Undoubtedly, State Bank of India is the largest bank in Indiain terms of profits, assets, deposits, branches and employees.As of 31st March 2000, the Bank possessed total assets worthINR 26,15,049 million and total deposits worth INR19,68,210 million. Bank commands about one-fifth of thetotal deposits and loans in all scheduled commercial banksin the country. As far as human resources are concerned,bank has a work force of more than 230,000 persons. Totrain the employees, SBI and group has two training colleges,sixty-seven training centres, one institute dedicated to ITtraining and research and seven rural training institutes.

AreaTotal No. of

Branches‘A’

% of total number of branches

‘B’

TotalBusiness inRs. Million

‘C’

% of totalBusiness

‘D’

Metro 1128 12.5% 950660 42.2%

Urban 1661 18.5% 545480 24.2%

Semi-Urban 2270 25.2% 481330 21.4%

Rural 3944 43.8% 274430 12.2%

Total ∑∑∑∑∑ 9003 100 2251900 100

* As on November’ 1999. Figures are provided bySBI Central Office, Mumbai.

�� 9� � +�&��

�� ""� ��"� �� ?"� ��"��""

Wide branch network and well-established brand are thecritical success factors for the bank’s business. The strengthof SBI brand can be seen from the fact that it mobilized$4.2 billion through the Resurgent India Bond (RIB) issuein 1998, barely three months after the U.S. imposed sanctionson India and the country was downgraded by internationalrating agencies.

��

Retail banking is identified as bank’s core business indomestic operations. The ‘Personal’ segment deposits, whichprovide a low cost and stable resources base for the bank,constituted 57% of the bank’s total domestic deposits for thefinancial year ending March’2000. This clearly indicatesbank’s competency and focus of business. The same is alsowitnessed in the statement given by the chairman in theannual report 1999-2000, ”Our leadership in retail bankingemanates from a strong brand name, large customer baseand extensive distribution network.”

@��5��

It is found that SBI operates through a three-tier system. Acentral board of directors headed by a Chairman and twomanaging directors manages it. Presently, the board has 13members including one nominee director from RBI. Thirteenlocal boards spread across the length and breadth of thecountry, look after regional operations and assist the centralboard of directors. These regions are further classified into52 zones and each looks after administration of around 175-200 branches. The bank also has a central committeeconsisting of 9 members. It seems that SBI board worksindependently but reality is different. The Government haskept control on the bank’s board for political objectives. TopSBI posting gets politicized with the Prime Minister’s Office(PMO) taking the final decision. Besides, the finance ministryissues more informal directives to SBI than to any other PSUbank.

9�: �� $��

Computerization in SBI can be traced back to seventies, whenbank succeeded in arriving at an informal understanding withthe unions for the installation of few ledger-posting machinesat some specialized branches and also a mainframe computer.In recent times, SBI and other competing banks have realizedthe importance of IT. This can be analyzed by examiningthe internal and external situation in the context of technologydomain.

9�: (��

(� ��"� 7� Bank has Systems and Technology wing situatedat its central office at Mumbai. Chief General Manager isthe in-charge of the wing. Organization chart of theSystem and Technology department is shown in Figure 5.Down the line, structure of IT department is such that itindicates bank’s emphasis on technology rather than business.At the zonal office level, they have MIS department, which

�2�3 �� !�� (�� "��"� � ��7�8� ��"��

% %

��

is a user department, the function of which is basically togenerate reports required by the management from time totime.

Training of the employees is under Computer Planningand Services wing. Bank is having a separate training institute‘State Bank Institute of Information and CommunicationManagement’ at Hyderabad. Total branch computerizationimplementation is looked after by Commercial andInstitutional Services. Data-net and VSAT network is dealtwith by Communication Services wing. At all 13 local headoffices, bank has Computer and Communication Departmentto take care of computerization and communication. ISplanning is totally centralized at its central office Mumbai.Chief General Manager is the key person who reports toDeputy Managing Director.

(�� "� �� 3�� 7� Following wereidentified as the main ITapplications in the Bank.

� SWIFT: Society forWorldwide Inter-bankFinancial Teleco-mmunication (SWIFT) in used for exchange of financialmessages worldwide. 131 domestic branches of SBI arecovered under the SWIFT network.

� Remote Access Terminals: Bank is extending remoteaccess facility to its corporate customers.

� Data-net: SBI Data-net covered 1,013 branches and isused for inter-branch/inter-office data transmission. Thepurpose is for reconciliation and fund settlement.

� Accounting Applications: Bank’s accounting applicationsare managed by ‘Bank Master’. Bank Master software isdeveloped by ‘Kindle Banking Company’. It is amulti-currency accounting and management informationsystem.

� Trade Finance: For managing the trade finance activities,bank is using ‘IBSNET’, software developed byMorganlabs, USA.

� ATM: The Bank at present has 139 ATMs, including twooffsite ATMs, in 52 cities. Most of the ATMs are on site.ATMs are neither interconnected nor connected to thebranches.

� Electronic Data Interchange: This is used for handlingcustoms transactions at airports and seaports and has beenimplemented at 11 centers.

In information intensive organizations like banking,situations can be grouped broadly into two groups. Theseare business domain situation and technology domainsituation. Technology domain is further divided intointernal and external situation.

� VSAT network: VSAT connectivity is used for fast fundtransfer and at present covers 147 critical branchesrendering cash-management services.

� Local Area Network: Almost all-administrative offices,Staff training centers and colleges are provided with localarea network. E-mail connectivity is also provided onselect branches.

*� �� !�� (�� 3��7�Till recently bank was usinginformation systems for handling voluminous work. But, nowbank has plans to use IT to get competitive advantage in future.SBI Chairman G.G. Vaidya says -

“We are behind others but we cannot afford to delay anyfurther. The bank has called a dozen international and nationalInternet consultants to make presentations for an Internetstrategy.”

Bank has plans to integrate credit card system with ATM,introduce Internet banking at all NRI, overseas, specialized,personal segment branches with e-commerce, e-banking ande-trading and networking of at least 300-400 branches (urban/metro) by March 2001. All such plans indicate that presentstrategic impact of IS may be low, but the bank hasapplication under development, which will give it a strategicadvantage in future. In other words, bank is in the turnaround

cell of the strategic grid.

Six different stages ofgrowth of IT in anyorganization asidentified by Nolan(1979) are initiation,contagion, control,

integration, data administration and maturity. Kanungo (1999)suggested a modified model suited to Indian organizations.Five stages suggested by him are inception, extension,stagnation/consolidation, expansion and integration. Anorganization can be mapped on any of these stagesconsidering the factors like infrastructure, applicationportfolio, top management attitude, IT management and user’sawareness and involvement. Existing IT infrastructure in thebank suggests that bank is in the third stage of ‘Stagnation/Consolidation’ and moving towards its fourth stage.Considering the IT applications, bank is in fourth stage of‘Expansion’. Bank is shifting from third stage to fourth stageof IS growth i.e. ‘Expansion’ considering top managementattitude. Bank has a separate department for IT managementand dedicated institute for training and research anddevelopment for IT related issues. The IT consultant isappointed recently. It indicates that bank is in the movetowards ‘Expansion’ stage as far as IT management isconcerned. From user’s participation point of view, bank isin ‘Stagnation/Consolidation’ stage because user participationin IT issues is not proactive.

*�"��"�7�Bank’s financial resources appear adequate. Hence,financial resources for IT implementation is not a constraint.The bank has kept more than INR 5000 million separately withIDBI under the scheme IDBI- ADS (Investment DepositScheme), which can be very well utilized for IT investments.

8��*�!�� 6��

!��<� �$��:��%�� *�� *� 6� ��

% '


As far as IT trained human resources are concerned; bank isnot going to face any problem, because it has a dedicatedinstitute, i.e. State Bank Institute of Information andCommunication Management for imparting IT training to itsemployees.

&"��?"� �2��"� 7� It has been found during the interviewthat end users of the computer systems want trouble freeand easy to operate systems. They also expect uninterruptedsystem availability. Users also realize need and importanceof formal IT training not simply to operate the system butalso have some knowledge about what is behind the system.

�� "��""� ��"� 7 Critical Success Factors for bank’sIT operations is availability of required IT infrastructure atthe place of bank’s operations. Bank is located at very remoteplaces, acquiring needed IT infrastructure at such location isa great challenge for the bank. Therefore, success of IT isgreatly influenced by the available infrastructure.

9��:� #2��

(� 3�"�� "� �� "��"� 7� In the Indian market,various IT based banking products, services and solutionsare available. The most common of them are given below.

� Phone Banking

� ATM facility

� Credit, Debit and Smart Cards.

� Internet Banking

� Mobile Banking

� SWIFT Network

� INFINET Network

� Connectivity of bank branches to facilitate anywherebanking.

In addition to the above, software are also availableto support bank’s various requirements.

� MIS helping the bank to generate RBI reports like SLR,CRR (Cash Reserve Ratio) etc.

� NPA Management, Asset & Liability Management, GAPand Trend analysis.

� Branch wise Profitability Assessment

� Intelligent Balance Sheet Analyzer

� Relational Database Management Systems formanagement of data mining from data warehouse.

&"�� (� 3�� "� 7� New private sector banks andforeign banks operating in India are the main competitors ofSBI. Main features of use of IT by the competitors are:

� Use of Centralized or Clustered Database

� Networking of all of their branches

� Offering Internet Banking and Mobile Banking Services

� Electronic Clearing Systems

� E –Broking

� Screen touch information kiosks

� Wide presence of ATM centers

��"��?"� �2��"� �� "�� 7�SBI hasa branch network, which is widely spread from metros torural areas as well. Therefore, it has to meet theheterogeneous nature of expectations of the customers. It findsitself burdened with onerous task of entering into informationage while serving the poorest of farmers in the remotest ofplaces that do not have any infrastructure in place. Customersof SBI can broadly be classified in two ways:

(a) Location of Customers

� Placed in Metros or Urban areas.

� Placed at Semi-urban or Rural areas.

(b) Need of Customers

� Individual Customers

� Corporate Customers

Customers based at metros and urban areas are, in general,interested in convenience and for that they are ready to paysomething extra, whereas rural based customer are interestedin cheaper products. Their saving habits and creditsrequirements could also be different. Individual customersare interested in retail innovative and convenient products,whereas corporate customers are more interested inrelationship banking. A corporate customer also wantsefficient cash management, advisory and market researchservices from the bank.

��

9�:� (�� 8��"

� Top management as a motivating force

� Bank’s business planners

� IS team involved in planning

� Trade unions

� Business Managers and end-users of the system as ISplanning is going to affect them directly

� IT training institute of the bank to provide necessarytraining and skills

9��:� � #2�� 8��"

� Foreign banks and new private sector banks as majorcompetitors

� KPMG as IT planning consultant and other softwareand hardware consultancy providers.

� Customers as a main stakeholder of the systembecause their satisfaction is of prime business objectiveof the bank. Therefore, while IS planning their interesthas to be taken care.

� RBI and other Government agencies as regularitybodies. Bank operating in India has to work as perthe guidelines given by Indian government. Legalcomplications of any transactions say transactionsrelated with Internet banking has to be resolved asper prevailing Indian rules.

�2�3 �� !�� (�� "��"� � ��7�8� ��"��

% +

��

9��:� 8��"� 1��3 �"

&"��?"� �� "��?"� "��"�� 7� End users aresatisfied with computerization because it has helped to reducetheir workload. It has also simplified the work ofreconciliation, minimized the duplication of entries. Butcomputerization has not helped customers much exceptextended banking hours. Customers cannot still enjoy thebenefit of ‘Any-where any-time banking’. For withdrawal ofcash from ATM, customer is expected to go to a particularassigned ATM resulting in inconvenience. Because of offeringof customized services by the competitor private banks, SBIis losing their customers, particularly in metros. Consequently,SBI’s solus position as the nation’s banker has gradually beenslipping away. The 20% share in bank’s advances used to be32% a decade ago. Similarly, its share in deposit is also downfrom 35 to 20 percent within couple of years.

!��

<�� 5��

The bank is continuously converting the branches to fullycomputerized branches. Table 5 indicates the level of com-puterization.

The table indicatesthat level ofcomputerization is quitehigh in metros ascompared to semi urbanor rural area. More than60% of the metrobranches are totally computerized, whereas hardly 2% ofbranches are totally computerized in rural area. Similarly,out of total business derived from metro, more than 83% isdrawn from totally computerized branches (TBC). Hardly11% of the rural business come from TBC.

are added internally. Recently, the bank has appointedmanagement consultant KPMG for preparing long-term ITstrategy for the bank. It indicates that, although bank hasgot a dedicated IT institute for research, development andtraining in IT field, it is heavily dependent on outside agenciesfor IT support.

��"� �� (� 8�� "

Although the bank states that IT applications are businessdriven and are mainly for obtaining excellence in customerservice, but very few instances can witness this. For instance,SBI’s telephone banking is confined to merely three branchesand only informs a customer of the status of his accountduring business hours. Secondly, if the bank were seriousabout customer satisfaction, it would have ensured that allcomputerized branches were networked. Bank’s website isan information provider for the visitors. Bank’s annual reportwas made available on the web site for the first time in 2000.Site is not providing any account opening form, which aprospect customer can download. Focus of IT applications ismainly computerization of branches. No doubt, this is a goodstart but only automating the branches will not help the bankto meet its business objective and mission. Bank has, thoughlate, realized the fact and has future plan of launching Internetbanking.

� � � �� ( � �� ( ��

Top management are notdirectly involved in IS

planning process but they support the IT initiatives andrealizes its need. Top management’s attitude towardstechnology implementation is favorable. They have realizedthe new way of banking. Chairman of the bank remarks,

“In my view, the biggest challenge banking industry facesas it enters the millennium is technology. Those banks, whichare able to keep pace with the technological innovations,alone, will be able to survive. Having realized this fact, thetechnology team of the bank is working round the clock inthis area.”

It seems obvious that top management has now realizedthe importance of information technology to face increasedcompetition. Chairman expressed his clear view that widenetwork will no longer be an advantage for the bank. Hi-tech banking compensates small size of the foreign andprivate banks.

(�� "��""�� &"�� (��

There is no direct formal involvement of business managersin this exercise. Participation of business mangers in the ISplanning exercise is in the form of feedback, which is routedthrough Computer and Communication department. End usersare also not involved in the process. User’s satisfaction levelis measured by State Bank Institute of Information andCommunication Management (SBIICM) through researchsurveys and collected feed back is forwarded to Systems andTechnology wing.

Computerization has not helped customers much exceptextended banking hours. Customers cannot still enjoythe benefit of ‘Any where any time banking’.

% of totalBusinessobtained

from TBC'E/B'‘D’

Businessobtained

from TBCin Rs.

Million

‘E’

Area % ofTBCC/A

‘D’

No. ofTBC

‘C’

TotalBusiness

in Rs.Million

‘B’

TotalNo. of

Branches

‘A’

% ofTBC

businessareawise'

‘E/ΣΣΣΣΣE’

Metro 1128 950660 685 60.7% 797780 83.92% 55.83%

Urban 1661 545480 807 48.6% 468070 85.81% 32.76%

Semi- 2270 481330 291 12.8% 132760 27.58% 9.29%Urban

Rural 3944 274430 82 2% 30190 11% 2.11%

Total ΣΣΣΣΣ 9003 2251900 1865 - 1428800 - 100

* As on November’ 1999. Figures are provided by SBI Central Office,

Mumbai. TBC = Total Branch Computerized.

�� <� � �� %�� :��D

8��*�!�� 6��

#2�� @��"��

Bank is outsourcing all its IT support on outside agencies.This seems a strategic choice made by SBI. Hardwareconsultancy is, at present, obtained from I.I.T. Bombay,whereas various software used in the bank are developed byoutside agencies. To customize the software, few modules

% ,


Direct interaction between key personnel of variousstrategic business units and IT department is also highlyinadequate. IT function is treated as supportive function andthis is reason that head of IT department has no representationin board of directors. Interaction between business plannersand IS planners is low and users are not provided withsufficient opportunity to come up with creative ideas touse IT. Planning for IS is started, generally, at the topmanagement level.

5�!� ��

5� �� #��$��

Synthesis of the S-A-P analysis led to following learningissues.

Strategic Thrust

Bank’s strategic thrust are-

(a) Excellence in Customer, Shareholder and Employeessatisfaction.

(b) Growth as well as diversification of financial services.

(c) Bank wants to continue development-banking role.

��"��""� ��"

Bank’s business focus is clearly in Retail/CommercialBanking. This is confirmed from the fact that more than halfof the deposits come from personal segment. Personalbanking business is receiving focussed attention in recentyears as per the Chairman’s message in the Annual Report’1999 and 2000. The retail market is high volume low valueand liability oriented business for banks, and hence demandscustomer’s convenience, product innovations and sensitivityto pricing. SBI, byeffective databasemanagement, can ensureprompt and effectivecredit disbursement andadd in quality accounts.

�� "

Bank is having only 31% of the total branches in metrosand urban areas covering 66% of the total business.Remaining 69% of the branches in semi-urban and rural areasare contributing to only 34% of the business. So clearly,market focus should be on metros and urban branches. Whileusing IT for strategic purposes, requirements of metros andurban market should be given prime importance.

��"��?"� #2��"

Customers in metros and urban areas are convenienceconscious, whereas those in semi-urban and rural areas arecost conscious. Bank is burdened with onerous task ofentering into information age while serving the poorest offarmers in the remotest of places that do not have anyinfrastructure in place. Bank, while deciding its strategy, musttake care of the two extreme ends of the customer’srequirements and has to find a way to balance it.

��?"� �� A��""� �� (

Bank’s strength is not in IT, which is very clear from itsoutsourcing policy. Its wide network, which was one time,thought of as strength for getting a good customer base hasnow become a weakness in the age of networking and e-commerce. This calls for suitable strategy to maintain bank’sstrength of wide spread of branches.

(��"� �� (� ��"��"

Some inefficiencies identified in the implemented IS projectsare:

� ATM machines are installed at many locations. They areneither interconnected, nor connected to the branch.

� Branches are having integrated computerizedenvironment. Integration is helping the users and not thecustomers.

� Web site of the bank is basically an information kiosk.Simple facilities like down loading of various forms(which does not require any centralized database andinvolvement of money transactions) are not available.

�� (� @��"

Following are the strategic opportunities, which would givea long leap to the bank in maintaining world-class standardof service.

� Networking of branches of metros and urban areas.

� Internet banking and Mobile banking services at least inmetros

� Phone banking

� Installing information kiosks

� Increasing no. ofATMs and connectingthem.

� Smart cards.

(�� (�� "��""�� "

The interaction is very poor. Improvement in this aspect willlead to better integration of business with IS.

��

Based on the learning derived, following are the possibleactions to meet the business objectives of the bank.

#�"� �� ( �� ; � �� " �� " "��"� �� &"��"� �� (��

As per present situation, top management support the ITinitiatives and realizes its need, but they are not directlyinvolved in IS planning process. Some strategy has to beevolved to ensure top management’s involvement. Once theyare involved, they will appreciate the need of IS projectsand extend necessary resources required for.

It has been observed that business managers are notdirectly involved in IS planning process. The focus of ITimplementation is more for fulfilling Government norms. To

More than 60% of the metro branches are totallycomputerized, whereas hardly 2% of branches are totallycomputerized in rural area.

�2�3 �� !�� (�� "��"� � ��7�8� ��"��

% -

��

get strategic advantage of IT, it is necessary to haveintegration of bank’s business with IS. This can be achievedonly when there is sufficient involvement of managers ofstrategic business unit in IS planning process. Planningcommittee must have proper representation from suchbusiness units. End users are not involved in the planningprocess, which otherwise is essential because ultimatelysystems are to be used by them. User satisfaction is of primeimportance because satisfied users can only satisfy customers.

At present the bank is in ‘turnaround’ category, fromwhere it has to move to ‘strategic’ category of the strategicgrid. This is a migration from one category to the other. Itneeds to establish suitable mechanisms to ensure sufficientinvolvement of top management, business managers and usersin planning process. It may also need to establish betterlinkages with bank’s business planning group and changethe scope and focus of planning.

To ensure involvement of top management and businessmanagers in IS planning and improve interactions of IS andbusiness planners following steps would be helpful:

� Bank’s product development team must haverepresentation from IT department.

� IS PlanningCommittee mustconsists of head ofall strategic businessunits i.e. National,Corporate etc. inaddition to personnelfrom IT department.

� Head (IT) should be a member of Board of Directorsand should participate in bank’s business planning.

� A Steering Committee consists of head (IT) from alldivisions (e.g. National, Corporate); key operationalmanagers and system auditors must be used to givedirection to IS planning/ implementation.

� IS Project planning and implementation team must haverepresentation of concerned end users.

$��

The stated business mission of the bank would require it todeliver innovative products. This is possible by:

(a) A strong product development capacity - requiresinnovative approach of product development team.

(b) The capacity to produce its products in technologicallyefficient manner - requires proper blending of bankingwith IT.

(c) Capacity to deliver products and services at world classlevel of cost and quality - necessary as per bank’s missionto achieve world class standard.

Most of the changes in services and products offered bySBI in the past are the result of supply driven imitativeinnovations. They are not demand driven or creative. Thisapproach underestimates the role/importance of technologyto gain a competitive advantage.

Adopting multiple distribution channels will enhanceflexibility and hence customers will enjoy the facility ofselecting any channel of their choice. This will ultimatelyresult in value added services to customers.

8��*�!�� 6��

The bank’s business mission statement extends a promiseto provide excellent service. It is not aiming to be the leader.Therefore, this would not nurture any creative innovations.However, atleast imitation of best available products andservices is absolutely essential to maintain bank’s positionas a premier institute and achieve stakeholders’ satisfaction.

�� (��

Recent changes in the environment, expectations of customersand availability of new technology have made it essential toprepare internal bank’s people so that they can skillfullyrespond to change. SBI and group already have total 72training colleges and institutes for imparting training to theiremployees. However, quality of training can be updated andimproved to be able to change the people’s mind set in newworking environment. For this it is necessary to:

� Provide new training and arrange re-skill program toenhance employee value

� Provide new orientation

� Explain new roles

� Make aware and prepare for new responsibilities

(�� "�� "B��"

Bank has implementedmany IT orientedprojects but these arenot showing good

results. Total computerization of branches has not resultedin direct appreciable benefits to the customers, particularlyin Metros. For withdrawing money through ATM, customersare required to go the specified ATM, which causesinconvenience.

Bank has to reorient their attitude towards customer’sconvenience.

� It is suggested to implement the concept of ‘SingleWindow Service’, which can be implemented without anyadditional IT investments.

� Instead of providing limit of withdrawal on the ATMmachine, such limits can be put on ATM cards itself.

� Bank’s web site is at present not even serving the purposeof full information kiosk. Few forms like account openingform etc. can be provided to download from the site. Website must also be made interactive for giving customizeddetails of personal loans, deposits etc.

� Shared Payment Network System (SPNS) should beimplemented in other metros to allow transactions withthe ATMs of other banks. Till SPNS is in place,transactions from ATM of other bank can also be allowedupto a certain limit and reconciliation of the same can bedone manually on daily basis.

� Number of offsite ATM should be increased. To save thebank’s transaction cost, customers must be motivated to

% .


transact with the ATM only.

� Phone banking facilities should be improved by placingit at more cities and also making it available round theclock. Call centers should be set up to help and guidecustomers.

(�� (�� 8�� "

� Interconnecting the ATM and branches: The Bank atpresent has only 139 ATMs in 52 cities, which are notnetworked. Networking of the ATM facilities will in realsense boost the customer’s convenience.

� Data warehousing and Data mining: Because of theshrinkage in the spread and increased competition, it isnecessary for the bank to increase non-interest incomeand try to identify and retain their best customers. Theidentification of the right customers can be done throughdata mining. Data warehousing can also be used to crossselling, application processing through credit scoring,recovery, systematic follow up and close monitoring ofportfolios through strong up-to-date reporting.

�� 5�� $��3�"�

SBI is not having any centralized database. Centralized orclustered database will help to generate profit and lossstatement frequently. Riskmanagement can bemade online and easier.Post sanction monitoringof credit accounts will beeffective.

�/"�� #�" �� !��

�� (��C�� B��"�� "��"

� Cluster Banking, as suggested action above will resultin centralization of many functions like clearing,generations of advices and forwarding schedules,follow-ups and reminders etc. It will help to reducequalified IT staff. This will provide necessaryinfrastructure for e-commerce, which can be adopted infuture.

� Internet banking in India has a good potential. Ifthe banks like SBI, having a sound customer base andestablished brand image goes for Internet banking, thereis no reason it will not result in strategic impact.

(�� "�� "�

It is a fact that technology savvy private banks like HDFCbank and ICICI bank have successfully encroached on SBI’sturf, clipping away at its market share. Besides, foreign bankslike ABN AMRO and Standard Chartered Bank have movedinto retail banking with world class services. By introducingservices and products mentioned above, the bank will be ina position to offer a tough fight to these new private banksand foreign banks. This will ultimately help the bank tomaintain its customer base.

(��

SBI is sharing 21% of the bank advances as against 32% adecade ago. Similarly, its share in deposits is also down from35 to 20 percent. With the introduction of conveniencebanking to its retail and corporate customers, the bank willbe in a position to maintain its share in the Indian economy.

(�� "��""� ��

Bank is planning to plant boutique branches with high-techservices in areas where the foreign and private banks havepresence. By adopting the suggested approach, strategy ofplanting of boutique branches will no longer be required.Involvement of all stakeholders in the IS planning processwill gradually facilitate innovation and creativity. This wouldin the long run help bank to attain leadership in the industry.Bank’s business strategy will be altered from ‘Brick andMortar’ to combination of ‘Brick and Click’ strategy.Adopting multiple distribution channels will enhanceflexibility and hence customers will enjoy the facility ofselecting any channel of their choice. This will ultimatelyresult in value added services to customers.

(�� 8��"

Internet banking and Networking of branches etc. willincrease employee’s productivity and bank efficiency. This

will ultimately increaseemployee satisfaction.Involvement of topmanagement, strategic

business managers and users in IS planning will lead todevelopment of realistic plans, foster creativity and help ingradually developing innovative culture.

.$�� ! )5�!� ! � � � �� (� ��

Based on the above discussion of SAP and LAP componentsof the framework, following outcomes are derived.

(��""��

“Delivering world-class IT based diversified financial productsand services which should enable the bank to add value toits stakeholders in digitized and information driven market.”

This mission statement is perfectly in line with bank’sbusiness mission statement. IS mission spells about providingworld class products and services and also caters therequirements of various stakeholders i.e. Customers,Shareholders and Employees.

(�� @3D��"

IS objectives to be in tune with the business objectives wouldbe:

(a) Acquire and implement world-class IS.

(b) Offering leading edge products and services.

(c) Imitating at a faster pace the innovative banking productsand services and blending it with IT.

The best way is to adopt a flexible strategy having acombination of defensive and offensive strategies.

�2�3 �� !�� (�� "��"� � ��7�8� ��"��

' /

��

(��

@��"��0�� "��7 Bank has to adopt outside-in strategy.It has to acquire better knowledge about the emergingenvironment, changing needs and preferences of customersat a fast pace.

��3��"��"�� "��7�8� � �2�3 �"��7 When a particular technology is already widespread,bank has to adopt a defensive strategy. Increasing the numberof fully computerized branches, number of ATMs etc. arethe examples where defensive strategy has to be adopted.Adopting the Internet Banking and Mobile banking are theexample of offensive strategy. Offensive strategies have, ofcourse, a higher level of risk associated with them since thenewer technologies may not be stable nor can be thecommercial success of the particular technology drivenproduct is guaranteed. Therefore, the best way is to adopt aflexible strategy having a combination of defensive andoffensive strategy.

��"�� "��7 IT should not be utilized merelyto computerize a branch. Bank’s strategy should not bebranch centric but it should be customer centric. IT must beoriented towardscustomer’s requirements.For example, installingATM has not resultedin real customersatisfaction. Customers should be allowed to withdraw fromany ATM machine. To reorient the strategy towards customers,it is necessary that bank must be able to:

� Apply one-to-one marketing principles to the customerbase.

� Understand the full relationship between the bank andits customers.

� Engage customers in new ways quickly and effectively.

� Provide service whenever and where ever the customersrequire them.

� Provide the means for customers to serve themselves.

� Introduce new products and services speedily.

� Obtain regular feedback from the customers and give aserious thought to that.

(�� 8�� "

It is found that bank is concentrating on computerized andnon-computerized branches as well. Bank’s branches, whichare situated in semi-urban or rural areas, cannot be fullycomputerized, because of infrastructure and cost consciousnature of the customers. The bank’s present strategy is tomanage both types of branches. Running a branch networkconsisting of computerized branches and non-computerizedbranches under a unified command is not an easy task.Moreover it dilutes the focus of management. The two setsof branches may look like two faces of the same coin, butthey are two different service outlets in the market place andcall for totally different approaches in product designs anddelivery mechanisms. The reasons being the differences in

Cluster banking model supports true “Any whereBanking”.

8��*�!�� 6��

the choice and preferences of customers the two sets target,the way of delivering the products etc.

Having a centralized database for all the bank branches isalso an impossible task. Wide network of branches, whichwas strength for the bank, is now becoming a problem forthe bank. Therefore, the best strategy would be to create aseparate umbrella of branches of metros and urban areas.All suggested actions can be easily implemented in thebranches of new umbrella. It will match with the increasingdemands of customers and will also give a better fight againstcompetition.

Strategy will then be to fully computerize all branchesthose come under new umbrella, inter connect them and alsohave a cluster database for all such branches. Keeping thesize of the SBI in mind, cluster-banking implementation willbe practical and economical solution. In Cluster banking, oneor more servers working together are to be installed at bank’szonal offices. Branches falling under a zone will be connectedusing leased lines to such servers at the zone. Zonal clusterservers can be connected to servers to the head office atMumbai. This will be a two-tier cluster implementation. Each

branch will have its ownserver and in addition toregular workstations,will have a specialworkstation called the

gateway PC, which will be connected to the cluster at thezonal centres through the leased lines and modem. Thegateway PC will handle data communication to and fromthe branch.

Branch transactions entered in the branch will be firstupdated in the local branch server and also at the zonal clusterserver by gateway PC. If communications lines are down,branch system will adopt store and forward mechanisms toupdate the zonal server data, whenever the communicationline comes up. Cluster banking model supports true“Anywhere Banking”. When any transaction is entered, it willbe posted at the branch as well as at the zonal serverautomatically. Customers can be offered the common serviceslike withdrawal of cash, inquires related to balances, statementof accounts, updating the passbooks, cash or cheque depositsand issue of DD etc.

Cluster banking will also provide centralization of manybanking functions like clearing, generations of advices andforwarding schedules, follow up and reminders etc. Theseservices can be transferred at the cluster centre therebyreducing manpower requirements at the branches.ATM can also be connected to the cluster center so that anybranch customer within or outside the cluster can use theseATMs.

In addition to the above, all the items discussed under thehead ‘action’ will form part of IS process. Such actions willhelp to facilitate involvement of all stakeholders in ISplanning. These will also help to create creative culture inthe bank and offer customer convenient services.

' �


*� �� (�

The present role of IS is turnaround. But with the strategicinitiatives suggested above, bank would shift to strategic role.Once bank attains that role, it will be necessary to maintainthat role. Strategic Grid is a dynamic framework and bankmay shift from one group to another. Because of strategicinformation systems, the bank may occupy strategic category,but it may again shift to other category over a period oftime. This is because of the fact that competitors may developa similar strategic system causing loss of competitiveadvantage and therefore reduced level of impact of IS onbusiness performance. Therefore, knowledge of role of ISand its continuous monitoring is essential. This requiresinnovative and creative culture. Top management shouldappreciate the creative initiatives of the employees. To achievesuch culture, a modified structure of IT department is requiredwhich is suggested below.

�� (��$��

Chief Information Officer of the bank should be CEO of thebank. This will facilitate the bank to shift from third stageof Nolan’s model to fourth stage, i.e. expansion stage. CIOshould have the direct representation in board of directors.This will help to realize the IT mission. Business orientationin all the units of the IT department would help to betterintegrate business with IS. Therefore, following structure, asshown in Figure 6 is suggested. The structure with functionaldivision will help to reorient focus of IT planning fromtechnology to business. This will also improve coordinationand communication and ultimately resulting in innovativeculture.

office and also to head of computer and communication(C & C) departments of all thirteen centres. Respondentswere asked to indicate the desirability and feasibility of eachoutcome of framework on a five-point scale ranging fromvery low to very high. After one month, they were remindedthrough e-mail, fax and phone. Finally, twelve responses werereceived. Table 6 presents the summary of designation andlength of experience of the respondents.

Analysis of desirability and feasibility scores was doneby calculating the mean of collected scores. The suggestionshaving average desirability or feasibility score more than three(>3) have been considered in the ‘High’ region, whereas thosehaving scores below three (<3) were considered in the ‘Low’region. The suggestions having scores near about three wereconsidered in the fuzzy zone of ‘Medium’ score.

Outcomes along with the mean scores are tabulated inAppendix I. There were no suggestions with less than three‘Desirability or Feasibility Score’. Most of the suggestionsare lying on high-high zone. There is only one suggestionregarding ‘restructuring of organization structure’ has highdesirability but medium feasibility. Another suggestionregarding ‘restructuring of IT department’ has mediumdesirability and medium feasibility. This validates theframework. All the suggestions can not be implementedimmediately; therefore a need is felt to suggest an actionplan. Action plan has been categorized into five phasesdepending upon the desirability-feasibility scores. Theseaction phases are:

(i) Mean Desirability Score and Feasibility Score both>= 4 - Phase I

(ii) Mean Desirability Score >= 4, Feasibility Score < 4but in high zone- Phase II

(iii) Mean Desirability Score >= 4, Feasibility Score is inmedium zone - Phase III

(iv) Mean Desirability Score and Feasibility Score are <4but in high zone - Phase IV

(v) Mean Desirability Score and Feasibility Score both arein Medium zone - Phase V

�� "��

The framework presented in this paper is flexible anddynamic. Flexible nature of framework captures the change

�2�3 �� !�� (�� "��"� � ��7�8� ��"��

!�� ;� � �� 6� ��

��

Validation is the process of establishing confidence in thesoundness and usefulness of the framework. Desirability–Feasibility study is used here to validate the outcome of theframework. If the outcome of the framework is commensuratewith excellence in the eyes of the respondents (ITpractitioners), it is viewed as desirable. In other words,desirability study indicates degree of willingness ofrespondents to pursue a suggested action. All the suggestedactions may not always be feasible due to economical,environmental, political, legal or other factors. Feasibilitystudy provides an assessment that outcome is possible toachieve. Therefore, desirability-feasibility study is found asa suitable option to develop confidence on the framework.To carry out Desirability–Feasibility study, outcomes of theframework was to head of the departments of all threedivisions of systems and technology department of central

�� ;� ��*� �� 6�� (� �� 8��

Experience Number of Designation Number ofRespondents Respondents

15-20 Years 3 Assistant General 9Manager/Head of

C & C Department

21-25 Years 2 Deputy General 2Manager

26-30 Years 6 General Manager 1

31-35 Years 1

' �

��

occurring within or outside the bank under consideration.Dynamic nature of the framework helps the practitioner tocapture the fast changing attitude of information technology.The proposed framework favours learning over monitoringand it provides combination of analytical and creativetechniques. It can serve the purpose of all groups of bankswhether they serve a niche market segment or have a widegeographical spread. Limited validity of the framework wasdone by collecting the opinion of IT practitioners of the bank.The framework can also be validated by evaluating the effectsof its application in practice. Longitudinal observations ofeffects of application of framework in a number of casescould develop more confidence on the framework.

8��! �� 7 The anthors wish to thank the reviewersfor giving valuable comments which is to improve the contentand organise the paper in present form.

"��

Ansoff H (1975) Managing Strategic Surprise by Response to Weak Signals,California Management Review, 18(2), 21-33.

Caudle S.L., Gorr W.L. and Newcomer K.E. (1991) Key InformationSystems Management Issues for the Public Sector, MIS Quarterly 15(2),171-188.

Ciborra C.U. (1992) From Thinking to Tinkering: The Grassroots ofStrategic Information Systems, The Information Society, 8, 297-309.

Doyle J.R. (1991) Problems with Strategic Information SystemsFrameworks, European Journal of Information Systems, 1(4), 273-280.

Earl M.J. (1989) Management Strategies for Information Technologies,Prentice Hall, London.

Earl M.J. (1990) Approaches of IS Planning: Experience in Twenty OneUnited Kingdom Companies in Proceedings of International Conferenceon International Systems, Compenhagen, 271-277.

Earl M.J. (1993) Experiences in Strategic Information System Planning,MIS Quarterly, 17(1), 1-24.

Gallier R.D.(1991) Strategic Information System Planning-Myths andReality, European Journal of Information System, 3, 199-213.

Hatten M.L. and Hatten K.J. (1997) Information System Strategy LongOver Due - and Still Not Here, Long-Range Planning, 30(2), 254-266.

Kanungo S. (1999) Making Information Technology Work, SagePublications, New Delhi.

Lederer A.L. and Sethi V. (1992a) Meeting the Challenges of InformationSystem Planning, Long Range Planning, 25(2), 69-80.

Lederer A.L. and Sethi V (1992b) Root Causes of Strategic InformationSystems Planning Implementation Problems, Journal of ManagementInformation Systems, 9(1), 25-45.

Levy M., Powell P. and Galliers R. (1999) Assessing Information SystemsStrategy Development Framework in Small and Medium Sized Enterprises,Information and Management, 36, 247-261.

Levy M. and Powell P. (2000) Information Systems Strategy for Small andMedium Sized Enterprises: An Organizational Perspective, Journal ofStrategic information Systems, 9, 63-84.

Mc Farlan F.W., McKenny J.L. and Philip Pyburn (1983) The InformationArchipelago - Plotting a Course, Harvard Business Review, Jan-Feb’83,145-156.

Mentzas E.R. and Soden J.V. (1977) Strategic Planning for MIS, JohnWiely and Sons, Inc.

Mentzas G. (1997) Implementing an IS Strategy - A Team Approach, LongRang Planning, 30(1), 84-95.

Moskowitz R. (1986) Strategic System Planning Shifts to Data OrientedApproach, Computer World, May, 109-119.

Nolan R L (1979) Managing the Crisis in Data Processing, HarvardBusiness Review, March-April’79, 115-126.

Palvia P., Palvia S. and Zigli R.M. (1990) Models and Requirements forUsing Strategic Information Systems in Developing Nations, InternationalJournal of Information Management, 10, 117-126.

Palvia P.C. and Palvia S. (1992) MIS Issues in India and a Comparisonwith the United States, International Information Systems, April’92,100-110.

Palvia P.C. (1997) Developing a Model of the Global and Strategic Impactof Information Technology, Information and Management, 32, 229-244.

Porter M.E. (1985) Competitive Advantage: Creating and SustainingSuperior Performance, Free Press, New York.

Pun K.F. and Lee M.K.O. (2000) A Proposed Management Model for theDevelopment of Strategic Information Systems, International Journal ofTechnology Management, 20(3/4), 304-325.

Raghunathan B. and Raghunathan T.S. (1991) Information Systems Planningand Effectiveness: An Empirical Analysis, Omega International Journal ofManagement Science, 19(2/3), 125-135.

Robson W. (1997) Strategic Management of Information Systems, PitmanPublishing, London.

Rockart J.F.(1979) Chief Executive Define Their Own Data Needs, HarvardBusiness Review, March-April 1979, 81-93.

Sass C.J. and Keefe T.A.(1988) MIS for Strategic Planning and aCompetitive Edge, Journal of System Management, 14-17.

Sullivan C.H. (1985) System Planning in Information Age, SloanManagement Review, Winter, 3-12.

Sushil (1994) Flexible Systems Methodology, System Practice, 7(6), 633-652.

Sushil (1997) Flexible Systems Management an Evolving Paradigm, SystemResearch Behavioral Science, 14(4), 259-275.

Sushil (1999) Flexibility in Management, Global Institute of FlexibleSystems Management, Vikas Publishing House, New Delhi.

Sushil (2000) SAP- LAP Models of Inquiry, Management Decision, 38(5),347-353.

Sushil (2001) SAP-LAP Framework, Global Journal of Flexible SystemsManagement, 2(1), 51-55.

Teo T.S.H., Ang James S.K. and Pavri Francis N. (1997) The State ofStrategic IS Planning Practices in Singapore, Information and Management,33, 13-23.

Ward J., Griffiphs P and Whitmore P. (1990) Strategic Planning for IS,John Wiley, NY.

Ward J. and Griffiths P. (1998) Strategic Planning for Information Systems,John Wiley and Sons, New York.

Waema T.M. and Walsham (1990) Information System Strategy Formulation,Information and Management, 18, 29-39.

Zviran M. (1990) Relationships Between Organizational and InformationSystems Objectives: Some Empirical Evidence, Journal of ManagementInformation Systems, 7(1), 65-84.

8��*�!�� 6��

' �


(I) IS MissionDelivering world class ITbased diversified financialproducts and services whichshould enable the bank toadd value to its stakeholdersin digitized and informationdriven market.

(II) IS Objectives

(a) Acquire and ImplementWorld Class IS.

(b) Offering leading edgeproducts and services.

(c) Imitating at a faster pace theinnovative banking productsand services and blending itwith IT.

(III) Strategic Actions

(a) Networking of BankBranches: Cluster Banking

(b) Data warehousing and Datamining

(c) Restructuring the Organiza-tional Structure of Bank.

(d) Restructuring the ITDepartment (As per Fig. 8.5)

(IV) Better IS Planning &Implementations.

(a) Top ManagementInvolvement in IS Planningprocess should be increased

(b) Head (IT) should be amember of Board ofDirectors and shouldparticipate in bank’s businessplanning

(c) Bank’s product developmentteam must haverepresentation from ITdepartment

(d) IS Planning Committee mustconsists of head of allstrategic business units i.e.National, Corporate etc. inaddition to personnel fromIT department

(e) A Steering Committeeconsists of Head (IT) fromall divisions (e.g. National,Corporate), Key operationalmanagers and SystemAuditors must be used togive direction to IS planning/Implementation

(f) IS Project planning andimplementation team musthave representation ofconcerned end users

(g) It is necessary to create andsupport innovative culture inthe bank

(h) New training and re-skillprogram should be arrangedto enhance employee value

� �� +�� 6��*�!��*� ��*

Outcome of Frame WorkDesirability Feasibility Action

PhaseMeanValue

Low/High

Low/High

MeanValue

Outcome of Frame WorkDesirability Feasibility Action

PhaseMeanValue

Low/High

Low/High

MeanValue

(i) Internal people must bemade aware and preparedfor new responsibilities.

(V) IT Applications

(a) Implementation of ‘SingleWindow Service’ concept inall computerized branchesto save customer’s time

(b) Putting limit of withdrawalon ATM card instead ofpresent practice of puttingsuch limits on ATMmachines to facilitatetransaction from any ATMsof SBI

(c) Increasing the number ofoffsite ATMs and tomotivate the customers totransact only through ATMswherever possible

(d) Transactions (off line) fromATM of other banks shouldbe permitted upto certainlimit, the reconciliation ofsame can be done on dailybasis

(e) All ATMs of the bankshould be inter connectedand connected to the bankto make real time ATMtransactions

(f) SPNS should beimplemented atleast in allmetros

(g) Phone banking facilityshould be extended at morenumber of cities andservices should be madeavailable round the clock

(h) Common forms likeaccount opening formsshould be made availableon the Bank’s Web site fordown loading

(i) Web site must be mademore informative byincorporating addresses ofall LHO and ZO of thebank

(i) Web site must be madeinteractive for givingcustomized details ofpersonal loans, deposits etc.

(k) Internet Banking facilityshould be offered atleast inmetros and urban cities.

(l) Mobile banking facilityshould be offered atleast inmetros and urban cities.

(m) Customer InformationSystems should beintroduced to enhancerelationship banking forhigh net worth individualsand corporate customers

(n) Call Centers should be setup to help and guidecustomers.

4.58 H 4.42 H I

4.67 H 4.00 H I

4.50 H 4.08 H I

4.50 H 4.00 H I

4.17 H 3.25 M III

4.17 H 3.58 H II

4.00 H 3.08 M III

3.33 M 3.00 M V

4.58 H 3.75 H II

4.08 H 3.42 H II

4.50 H 4.08 H I

4.33 H 3.67 H II

4.17 H 3.75 H II

4.33 H 3.75 H II

4.92 H 3.50 H II

4.58 H 3.67 H II

4.67 H 3.83 H II

4.83 H 3.50 H II

4.00 H 3.50 H II

4.42 H 3.75 H II

4.17 H 3.50 H II

4.58 H 3.67 H II

4.42 H 3.92 H II

4.33 H 3.50 H II

4.33 H 4.25 H I

4.50 H 4.67 H I

4.83 H 4.42 H I

4.75 H 4.25 H I

3.50 H 3.50 H IV

4.50 H 4.33 H I

4.25 H 4.17 H I

�2�3 �� !�� (�� "��"� � ��7�8� ��"��

' %

��

8��*�!�� 6��

��&�� !��'� !��

�' -�� * �� *�� .�� (�� "��"� � ��4� ��

� !��*��,�"� ��-

� !��*� �� ,�� -

� !��*��,� �� -� �� '

�' ��*� �� * �� 0�� *�� :�� '� $�� "� ��*��1

2 ' �*� �� *�� :�� *�� '� 34�� &� ��&� �� 3��55'

%�� :��

#�� B��

$��

C�� !��

��

��*� ��0�� 0��

9' 6�0�� 4�#�4�3��4��#��4��5��@��(��"��"� ��4� � ��0�� *��:��'

"�� "��%��

�' 6�0�� *��4�� *��:�� &��0�� '

�' %�*��4�#�4��*��*��:��0�� '

' '



�8�0<8�� "� �� "��!�� 3 ��"� ��

"�"��"� �� "�� "�"��"��"

�8�0<8�� !�� "�"�"�� "��;� ��;� ��"";

��;� ��

�8�0<8�� !�� 3��"�� "!� � �"� "�� "� ��

�� E�� 3 �� "� ��

�8�0<8�� "� �� 3�� "� ��"� ��

��"�;� �� ";� ��";��"��"";� � ��;

�� ";� �� "

Learning Lessons onFlexible SystemsManagement L3

( !-% !��SushilIIT Delhi

#��

There is a pressing need to evolve a management approach which is holistic and flexible in thelight of dramatic change in various external factors of the business environment and thecorresponding change in the internal factors of the organizations. The concept of ‘systemicflexibility’, dealing with options, change and freedom of choice, has been discussed in theLearning Lesson L1 (Vol. 1, No.1). Based on this concept, the SAP-LAP (Situation Actor Process-Learning Action Performance) framework has been evolved, as presented in the Learning LessonL2 (Vol. 2, No. 1). This is a holistic framework that blends the analytic as well as syntheticparadigms on the one had, and hard systems (optimizing) and soft system (learning) paradigmson the other.

The SAP-LAP framework consists of three entities in any context, viz. a situation to bedealt with, an ‘actor’ or group of actors who deal with it and a ‘process’ or processes thatrecreate the situation. In this framework, freedom of choice lies with the actor. A synthesis ofSAP leads to LAP which deals with learning, action and performance.

Based on the SAP-LAP framework, we can prepare generic as well as specific models formanagerial inquiry and problem solving. These models could be qualitative in terms of criticalquestions or may employ certain tools, such as quantitative analysis tools, matrix representationetc.

!��( !-% !��

We often encounter situations in managing organizations and conducting management researchto carry out an in-depth inquiry of the problem/case at hand for effective action. The effectivenessof the outcome of inquiry/problem solving/case development will depend a great deal on thedeep rooted and creative group learning about the key facets of the problem. Such a holisticinquiry requires some systemic aids to channelize the creative process adapting to the problemat hand. A flexible modelling framework can facilitate this action learning process to aidknowledge management. SAP-LAP framework is generic and flexible and can be used to developgeneric as well as specific models for managerial inquiry and problem solving.

The purpose of a SAP-LAP model is to aid the process of analysis and idea generationabout the ‘situation’, ‘actors’ and ‘processes’ and their interfaces. The model also guides theprocess of synthesis in terms of key learning areas, action points and performance impacts.Thus, the SAP-LAP model prepares the group for effective action in the changing situation.The model can be applied iteratively, as with each action the situation is changed and a freshinquiry can be made.

)��( !-% !��

SAP-LAP models can be of various types depending on the purpose, application focus,comprehensiveness, time dimension, levels of inquiry and tools used for analysis as well aspresentation.

Depending on the purpose of the model, the SAP-LAP models can, basically, be of twotypes:

i. Exploratory models : Used for managerial inquiry and case development.

ii. Normative models : Used as a guideline for implementation, e.g. strategyformulation, technology transfer, project selection etc.

' +

��

A typical SAP-LAP model for case development for core competence and flexibility ispresented by Kak and Sushil (2000) which is used for developing six cases in IT and Pharmasectors. A normative model for strategy formulation and implementation using core competenceand flexibility is presented by Kak (2000).

Keeping in view the application focus, the SAP-LAP models can be classified into twobroad categories:

� 6�� "7 These models are developed to make an inquiry into certain genericareas such as problem solving, change, flexibility (Sushil, 1999, 2000a), enterprisetransformation (Sushil, 2000b), core competence (Kak and Sushil, 2000) and so on. Thesemodels provide guiding critical questions on the six components of SAP-LAP which canbe suitably adapted as per the requirement by adding or dropping a few critical questions.A typical generic model for ‘General Problem Solving’ is shown in Exhibit 1.

�� "7 Specific SAP-LAP models can be developed in any typical context as aplan for inquiry, e.g. study of economic reforms, recession in IT industry, dot.com revolution,market penetration, new product launch and so on.

As per the comprehensiveness, the SAP-LAP models can again be classified into two categories:

� =�� "� 7 These are preliminary models that take into consideration thesix basic components of SAP-LAP framework, i.e. situation, actor, process, learning, actionand performance independently without explicitly considering their interdependence orinterrelationships. Though these models are naive, they can be quickly developed bybrainstorming and can be applied with limited time, resources and expertise. The modelpresented in Exhibit 1 lies in this category.

�� (�� "� 7 These models take care of the interaction and interdependence of thebasic components, i.e. situation, actor and process. These models may either incorporateinterfaces of situation, actor and process, e.g. organizational climate and culture, strategy,structure, systems, contingency etc. or may use matrix models by taking two elements ontwo dimensions and the third one on the matrix. A typical matrix based SAP-LAP model isshown in Exhibit 2.

$�� "�;!�� 2� ��"� !� � �"��

�� "

(�� !� �� ";� ��

�"� !� � �""�� "

8"� �� "��""!�� "

�� "

�8�0<8�� 6�� 3 ��

�� "� �� E��"��"� �� "

��"� �� 3 ��

��

�&��.�( !-% !��!��(��

�� 0 �� )��

- How did we reach here?- What is happening now?- What all is expected to happen?

8�� -�� !�� 0��!"F

- What roles and capabilities are exhibited?- In what domains freedom of choice is available?

��"" 0 -�� "�3��F -�� 3 �"FWhat are the parameters?What can be changed?

- Why it is being done?- How is it being done?

What else?Why else?How else?

<�� 0 -�� ""��"� ��1- What are the key issues related to actor(s)?- What are the key issues related to process(s)?

8�� 0 -��F�� "��F- What can be done to improve the actor(s)?- What ought to be done to improve/implement the process(s)?

�� 0 -�� "��F- How the actor(s) will be affected?- How the performance of the process(s) will be affected?

��"��

' ,


Keeping the time dimension in consideration, the SAP-LAP models can be:

� �� "7 In this case, we have only one model, which is a snapshot of the problemcontext. The models presented in Exhibits 1 and 2 lie in this category.

�� $�� "7 In this case, we can make multiple snapshots over the time. Based on asituation, an action is taken which creates a new situation leading to a new model. Manysuch models in succession give a fairly good picture of the evolution over the time path. Anillustration of a dynamic model is presented in Exhibit 3 for the case of NIIT.

The SAP-LAP models could be singular or plural depending on the domains of inquiry.

� �� "7 Normally, we develop only one model for the problem context assumingthe unitary mode of people involved. These are simpler models and can be quickly developedand implemented, but fail to take care of multiple perspectives. Models shown in Exhibits 1and 2 are singular models.

�� "7 The SAP-LAP models can have multiple types of plurality. Accordingly,these can be

� Actors-oriented models- In this case, we develop a separate model according to theperspective of each key actor involved.

� Process-oriented models- In a case where multiple processes are involved, we maydevelop a separate model keeping in view each process in focus and synthesize in theend.

� Multilevel models- When more than one level is involved in the problem, e.g. businesslevel and corporate level, separate models are developed for each level, which are to becoordinated.

� Dynamic models- In these models, we have plurality on the time front as illustrated inExhibit 3.

SAP-LAP models can use multiple tools, both for analysis and presentation, andaccordingly can be of multiple types:

� �� "7 These are the simplest and most widely used models which utilizecritical questioning as the tool and present the results of inquiry in bullet form (Exhibit 1).

�� 3� �� "7 The models are presented in the form of tables giving the situation, actorand process variables classified according to importance or cruciality such as vital, essentialand desirable. The tabular models also present the learning issues in a tabular manner givingvarious categories of issues (Husain and Sushil, 1997).

�� 2� �� "7 These models present the SAP relationships in the form of a matrix. Asample model is shown in Exhibit 2.

�&��/�( !��&��

�� 2� �� "� �� ""��

"�� "��"

(�� !� �� "��;� ��

�8�0<8�� "�� 3�� 3��

"��

A�� "��

� �� "�� "

�� E��

�� "�� 3��

��;��""� ��;

��

8�� "� �"��;

�� "� �� 3�3� �� ;� ��3� ��;

��2;� �� 2��

�8�0<8�� "

(��

Generic Model for MatchingProcess to Situation and Actors

Process

A Specific Model for Change

� ActionLerning

� ConflictResolution

Actor

' -

��

� � �� "7 These models present the key SAP-LAP issues and variables pictorially,as shown in Exhibit 3.

� �� "� �"�� "� 7 More comprehensive SAP-LAP models can be developed byusing flexsy tools such as continuum, flexibility influence diagrams, quantitative relationships/mapping etc. (Sushil, 1999).

�&��0�#��

��( !-% !��+##)

#��

� NIIT started as an IT education and training company in 1982 with less than one fifthof the revenue coming from the software development.

� Today NIIT is a 266 million USD global IT and Knowledge solutions company withalmost 50% revenues coming from software business.

� NIIT has over 2000 education centres in 26 countries around the globe.

� It has 4900 employees in 37 countries in the area of education and softwaredevelopment.

� Assessed at SEI-CMM level 5 and following ISO 9001 processes.

� NIIT works on a unique business model where knowledge business and software businesscomplement each other.

� NIIT’s knowledge solutions in the form of corporate virtual university have helpedorganizations manage smooth transition to new technologies.

$��

� Experience gained while working on the projects can be used to equip students withreal life situation.

=((� "�� "�� (� ��

��

��"� ��!�� "��

"��!�� "� ��"��

�� "��"� ��

"��"��"� �2��3��"� �� "��"�

��"��

NIIT Start-Up

SituationActors

Action

' .


( ! - % !�� - (�� ##

( !-% !��-(��#*�"��"��

� �3� �5�� "� �� "��

� ��"� ��"� �� !�"��

��

#2�� "� �� "��!��

"� ��";��! �� "� ��"

�� 0 �� !� �� "��

"��"

�8�0<8�� "

Innovative andgrowth strategy

Grow in internationalmarkets diversity

S A

P

L

A

P

GlobalizationDisappearance ofboundaries in theage of Internet

� NIIT management� Global companies

entering Indianmarket

Sixth largest ITcompany in India

� Growth in software solutionbusiness:50-60%

� Growth in IT education

Interplay of vastrange of relatedservices in software andlearning business

� Companies adoptingIT as a growth tool

� NIIT Management

� Strong commitment todevelop software andknowledge solutions

� Inbuilt motivation to stayat the cutting edge oftechnology

� Innovative offeringsto customer

� Constantly renew itselfto anticipate futuretechnology needs

� Tab a wider share of themarket through its equitybased strategic alliances

�� Focus on western markets

� Expanding into the areasof software solutions knowledgesolutions and e-learning, NIIT hasset-up one of the worlds largesteducational multimedia andsoftware development facility.

� IPR in 335 educationalmultimedia titles underNIIT brand name

� Early 90's one fifth of businessfrom software developmenttoday the two business arealmost equally balanced

A

P

L

P

A

S

+ /

��

�� "��9

�$��

�� "��

��" � � /

( !-% !��-(��###

��&$��

� Intense competition

� Education is going to be the biggest Internet application in coming future

� Requirement of Business Applications in the area of healthcare and finance.

5� ��

� NIIT has to become the technology leader

� Proactive approach-anticipate new technologies and customer needs

�� !� �

� Focus on the core competency of education business

� Focus on product development

� Explore new domain areas where IT intervention has not been considerable

"��

The SAP-LAP models enunciated above provide a flexible modelling framework with wideoptions to suit the requirements of the managerial problem under consideration. Further, thesecan be implemented in an innovative manner to suit the specific requirements of the problem.While implementing the models, the recommended actions should be checked for feasibility.Ultimately, an action plan is to be prepared for desirable and feasible actions in terms of timeframe, responsibility and resource requirements. The lesson provides only a glimpse of thepanorama of SAP-LAP models. Some of these models are well tested, whereas integrative andadvanced models are to be further tested with more applications by users in a variety of areas.The SAP-LAP models are based on a generic framework, which is also manifested in specificmodels such as SWOT analysis (where strengths and weaknesses are ‘actor’ variables,opportunities and threats are ‘situation’ variables and the TOWS matrix (Wheelen and Hunger,

&��+�� $�� "��

�� /"��

#�" �� !)5�!

�� $��

"� �� 9��"�� + � � � �� $��

��"��

Competition inglobal market

S

P

A

L

A

P

� Competitors� Management of NIIT

� Highly Quality focused approach,Following SEI-CMM 5 processes

� Company focuses on what thecustomers wants rather than whatNIIT thinks they should have

L

� Any company with globalaspirations cannot do it on thestrength of somebody else'stechnology alone

� Become creator of technology� Best service to customers

� Among top 10 mostadmired companies

� Sixth largest software producerfor global market

� Business leadership 2000 award� Fifth largest value creator based

on total shareholder return

� Clearly outlined goals� Retain core competency

(to become world's largest ITcompany)

� State of ar t developmentcomplex

+ �


1998) gives the ‘process’ of strategy making), CATWOE analysis in soft systems methodology(Checkland,1990) (where customers, Actors, Owners and Worldview are ‘actor’ variables,Transformation is ‘process’ and Environment is ‘situation’) and so on. We can use either thegeneric SAP-LAP models or these specific applications.

"��

Checkland P.B. (1990) Soft Systems Methodology in Action, John Wiley and Sons, Chichester.

Husain Z. and Sushil (1997), Management of Technology: Learning Issues for Seven Indian Companies, TechnologyManagement-Applications and Strategies for Practitioners, 3, 109-135.

Kak A. (2000) Strategy Formulation with Core Competence and Flexibility : A Study of Select Organizations,Unpublished Ph.D. Thesis, IIT Delhi.

Kak A. and Sushil (2000) Core Competence and Flexibility Based Strategy in Sushil, Cornerstones of EnterpriseFlexibility, Global Institute of Flexible Systems Management, Vikas Publishing House, New Delhi.

Sushil (1999) Flexibility in Management, Global Institute of Flexible Systems Management, Vikas Publishing House,New Delhi.

Sushil (2000a) SAP-LAP Models of Inquiry, Management Decision, 38 (5), 347-353.

Sushil (2000b) Cornerstones of Enterprise Flexibility: Strategic, Organizational, Financial, Information Systems andManufacturing Flexibilities, Global Institute of Flexible Systems Management, Vikas Publishing House, New Delhi.

Wheelen T.L. and Hunger J.D. (1998) Strategic Management and Business Policy, Addison-Wesley, Reading.

��!� � � ��

�� "�� $�� 6.9

& �6.� 9 ��

�8�0<8�� "

(�� "��"��

� Develop a naive SAP-LAP model for the context of your choice.

� Develop a SAP-LAP Model in Matrix form as given in Exhibit 2.

� Develop a dynamic and pictorial SAP-LAP model in your own context as given inExhibit 3.

+ �

��

��

This section will contain events related to flexibility. Only highlights and important dates are provided. For moredetails, please visit the web page or contact the organizers. If you are planning any major flexibility related event(global conference/workshop/seminar), please submit the details ( Event title, Dates, Place, Theme, Deadlines, ContactInfo, Email,Web page, etc.) to Dr. K. Momaya at email [email protected] with Subject: giftjourn@l, EventSubmission

Event : IAMOT 2002

The 11th International Conference on Management of Technology

Dates : March 10 - 14, 2002

Place : Fontainebleau Hilton Resort on Miami Beach , Florida

Theme : Drive Towards the Internet Economy: Opportunities and Challenges for Developed and DevelopingRegions of the World

The deadlines : Submission of Abstract: September 30, 2001

Contact Address : Send abstracts to:

Dr. Yasser HosniProfessor, University of Central Florida4000 Central Florida Blvd.Orlando, Florida 32816-2450 USATel: 1 407 823 5817Fax: 1 407 823 [email protected]: www.iamot.org

Event : The Strategic Management Society

21st Annual International Conference

Dates : October 21 - 24, 2001Place : The Westin St. Francis

San Francisco, Californina USA

Theme : Reinventing Strategic Management: Old Truths and New Insights

For more info, please visit

http://www.smsweb.org/noflashIE/NewConferences/annual.html

+ �



)��&��1�� From Toshiba in partnership with www.flexibility.co.uk

BookReview

Flexibility is talked about everywhere these days but not muchliterature is available on the subject. People usuallyunderstand flexible working practice as flexible working hoursand flexi-contracts. But with the new technology various otherflexible working models can be practiced.

The Complete Guide to Flexible Working gives a deeperinsight into this aspect of flexibility. It also describes thevarious forms of flexible working practices such as flexiblecontracts, flexible hours, flexible location and flexible tasks.The need to flexible working was necessitated due to businessfactor (increased competitiveness, cost reduction, qualityimprovement) and social factors.

The advancement of technology has given boost to flexibleworking by providing new technology enabled ways ofworking. This guide had rightly brought up the point of thiswin-win situation for both employers and employees. It hasalso provided some interesting facts and figures to supportthe argument.’Facilities flexibility’ can be brought in byaddressing technology, processes, management and humanresources at the same time. The organisation has to understandwhere employees can work most effectively and create thefacilities and infrastructure to enable them to do so byrestructuring and redesigning office, office at home, officeon move etc.

This guide suggests a way of developing a strategy for newways of working by evolving a programme of cultural changeand awareness raising to deliver full range of benefits. Asvery rightly stressed upon in the guide, the strategy forflexible working should essentially involve staff from theoutset. While developing strategy for flexible working itshould consider/account social and environmentalresponsibility for which this guide has used the termresponsible working. For developing strategic framework, fourfactors, viz. facilities for work, technology and process,organisation and people, and responsible working are to beconsidered. It has shown the way by which facilitiesflexibility can be achieved, say by sharing, support service,decentralization, location, anywhere any time, third partyfacilities.

The guide has emphasized the importance of recruitment,training and providing good facilities for permanent supportstaff, as they are going to play a vital role in making ‘facilityflexibility’ successful.The guide also presents various statisticscomparing conventional and flexible working but noelaboration on methodology has been given for reaching thesestatistics or the details of the source they are taken from.

The strategic approach would be to collect information onhow facilities are currently being used and then how the staffwould prefer to work. It has also given the method by whichthis can be done. A study of public sector organisation showshigh utilization of desk by administrative and support staffand low by managers and professionals. It also shows thatan office which had 120 personnel, each of them having adesk of own, that at no point of time more than 45 desks arein use (38%) and average utilization during the working dayswas 25%.

As flexible working can only be brought through flexiblefacilities, the new information and communication technologyhad helped providing new flexible facilities. Convergence and3G will further help flexible working. This guide suggeststhe Technology infrastructure for flexible working, like fullvoice and data routing, voice divert, data-dial up, voice divert,data via ISP. Making greater use of the Internet is the solutionof future. Telephone is delivered via the PC using voice overIP and data connection using Internet tunneling. Flexibleworking could be implemented using technologies such asgroup ware, intranet, knowledge management, integratedmessaging and others.

People are the most important resource for the organisationand so is true for organisation using or plan to use flexibleworking. People play a vital role to make flexible workingsuccess. A learning culture with ten principles, viz. vision,responsibility, openness, learning, support information,consultation, recognition, caring and improvement could beused to assess an organisation’s readiness for new ways ofworking.

Stress and working hours are showing an upward trend intoday world of competition and era of globalization. But thisgrim situation can be changed, and the keyword to bringthis change is flexibility. If the employees and employer bothare flexible then employees can reduce stress, and becomemore productive as they achieve better work-life balance. Thetools suggested in The Guide to Flexible Working are flexiblehours, part-time work, job-share, term-time working, homebased working, telecentre working and parental leave.

Before bringing any change, this need to be properlycommunicated otherwise it would have negative reaction fromthe staff. Same is advised in the guide, to implement newways of working try to communicate and manage the changethat is about to happen in organisation. Share the vision,make people aware and involve staff in the changeprogramme. Proper training for staff to use technology

+ %

��

needed for flexible working should be imparted. Staff shouldbe trained in use of groupware, intranet and knowledgemanagement. It has provided with the checklist for humanresources manager around which policies for flexible workingcan be formed. The guide has discussed the points HRmanager would require to recruit and select staff for theflexible working.

A word of caution. Too much of technology can isolatepeople from colleagues and business partners. The guide hasvery aptly said that proper steps are needed to ensure thatteams continue to meet face to face. One interesting thingabout these meeting is that then these meetings will morebecome a social, enjoyable and highly productive one as mostof the transactional work is carried out electronically

Flexible working also gives equal opportunities to those whocannot work due to temporary illness or permanent disabilityor various other reasons such as child care responsibility andcaring for sick and disabled relative etc. Flexible workingpractice enables to retain key workers. The book gives anexample of Sweden and Finland, where geographicallydispersed population, advance telecommunication andprogressive social model is combined to encourage innovativeworking practices.

The relation between environmental sustainability and flexibleworking practices could not be brought out well in the book.The guide has further drawn a relation between flexibleworking practice and economic regeneration. The new wayof working provides work in areas where there is lack oflocal opportunities. The new technology which enable new

ways of working offers maximum business benefits withcontribution in urban and rural regeneration.

The benefits of flexible working practices, which are alreadyachieved by the organisation, are effective and efficientservice delivery, low operating and administrative cost, highbusiness efficiency and team/personal productivity.

The guide had identified main components of a typicalflexible working, structured around a number of key themes.These themes can be used to form the basis of inter-disiclipinary working groups for making recommendationsand developing strategy for flexible working. It has givenguidelines to organise a project and supported it with practicalapproach. It has presented the full project plan, which canbe used to practice working flexibility.

The organisations innovate continuously, to make its productsand services successful. But to become really successful intoday’s era of competition they will also need to learn toinnovate even newer ways of working as technologyimprovement over the time will require and provide new waysof working. The guide is well written focusing on the practicalapproach. But the only limitation with the guide is that ithas been written specifically taking into consideration onlyone country, UK. This does not include any examples, factsof other countries.

Overall, this is a good reading material in area of flexibleworking practice.

Reviewed byAshish Jain, Manager, GIFT

8"��"�� )��

+ '


��!��Special issue of Global Journal of Flexible Systems Management on“Organizational Strategy Formulation and Flexibility”

The formulation and implementation of organizationalstrategy are recognized as key aspects of the managementof all modern successful organizations. However, it hasbecome a daunting task to cope up with changes intoday’s hyper competitive market place. With increasinglymore global competition and the infusion of the Internetin the business world, flexibility in the strategyformulation and strategy’s implementation process hasbecome a requirement to survive and develop newbusiness. Many researchers over time have stressed theimportance of incorporating flexibility in the formulationof business strategy, as it may help achieve better businessperformance. In such an environment, traditional strategicplanning methods do not suffice. To keep organizationscompetitive, policy makers will have to overhaul theprocess of formulating and implementing strategicinitiatives to explicitly consider flexibility at various levelsin the organization. Many challenges await companiesas they formulate their organizational strategy and createflexibility in business processes. Thus, organizations areobliged to continuously explore new and innovativestrategies, and to seek powerful methodologies that willconfer competitive advantage.

The purpose of this special issue is to group togetherhigh-quality papers that lie at the intersection of flexibilityand organizational strategy issues. The term flexibilityis adapted in its most generic sense and includes boththe service and manufacturing environments. Examplesof the subject matter of the papers suitable for this specialissue include, but are not limited to, the following:

� Recent developments in strategy formulation thatconsider the issues related to flexibility that can helppractitioners, and their integration with informationtechnology and management sciences tools andtechniques.

� Development of appropriate concepts to understandthe role and significance of flexibility inorganizational strategy formulation.

� Empirical research in understanding the practice oforganizational strategy formulation that includesflexibility and the types and levels of flexibilitypossible in organizations.

� Impact of e-commerce and the Internet onorganizational strategy formulation and theconsideration of flexibility.

� Strategy formulations to achieve effective andflexible supply chain solutions for extended multi-national enterprises.

� Strategy formulations to create and manage virtualenterprises of the future.

� Identification of critical success factors to ensureflexibility in organizations.

� Description and evaluation of informationtechnology and software packages available to helpinclude flexibility in organizational strategyformulation.

� Application papers of specific interest to the businesscommunity.

All manuscripts will be promptly and carefullyrefereed. Authors should follow the Instructions toAuthors for the Global Journal of Flexible SystemsManagement (available from the guest editors) whenpreparing their manuscripts. Please submit five copiesin English, in a machine readable form as an attachmentto an e-mail, by no later than January 31, 2002, to oneof the following guest editors:

Dr. Jatinder N.D. Gupta, Guest EditorDepartment of ManagementBall State UniversityMuncie, Indiana 47306, U.S.A.Tel: 1-765-285-5301FAX: 1-765-285-8024e-mail: [email protected]

Dr. Sushil K. Sharma, Guest Associate EditorDepartment of ManagementBall State UniversityMuncie, Indiana 47306, U.S.A.Tel: 1-765-285-5315FAX: 1-765-285-8024e-mail: [email protected]

Dr. Michael G. Goldsby, Guest Associate EditorDepartment of ManagementBall State UniversityMuncie, Indiana 47306, U.S.A.Tel: 1-765-285-5320FAX: 1-765-285-8024e-mail: [email protected]

+ +

��

��

� ��

��

��

��

��

��

!�� "�� #� ��

��

�� #� �� #� �� $�� #� �� %

& �� & �� & �� '� (� ��& �� !)*�� !)��& �� +��,��"�� &�� - ��#� .�� /��& �� !�� 0��& �� 1 ��2�� !��

��

3 4��5� ��

3 - �� 6� �� )� ��

3 7� �� )� 8��9

��

�� #� �� :�� *� �� # �� %

��

��

��

��

! "! ��# �� ! � $! "! ��%!��&� �� !�� ! �� ! ��!�'��!�� %��#�!�'" !�� ()��&� ! &��*��!��#��!��+

��

�%� �! � $! "! ��%!��&� �� !�� (! �� ! �+

��

��

$�� %

�� ,��4);#� �� *��

�� 7��#� ��"�� )� <=;==<!)�� %� ��>��/��%� ��

+ ,


�&��#�)(��

�#�)(��)�� 2#��

Director : Mr M.K. Mittal

Secretary : Dr K. Momaya

Treasurer : Mr B.K. Chakravarthy

Executive Members : Mr Narender Singh

: Mr Vimal Kumar

: Mr Ajitabh

�#�)(��

Director : Prof. Rajat K. Baisya

Jt. Director : Mr Shyam S. Sethi

Secretary : Mr Ganesh Das

Treasurer : Mr Ajitabh

Executive Members : Dr J. Chatterjee

: Dr S.K. Jain

: Mr Ashish Jain

�#�)(��%�� 3� ��4��2(�� )��

Director : Dr Y. V. Verma

Secretary : Dr Abid Haleem

Treasurer : Mr Ashish Jain

Executive Members : Dr Vinnie Jauhari

: Dr Neeraj

: Mr Kapil Mittal

�#�)(��5��

Director : Dr K.M. Mital

Secretary : Mr Rajan Johree

Treasurer : Mr Deepak Garg

Executive Members : Dr Kanika T. Bhal

: Dr Neeraj

: Dr S. Karunes

�#�)(�� (��

Director : Mr A.K. Agrawal

Secretary : Dr P. Goyal

Treasurer : Mr Sanjeev Kr Manocha

Executive Members : Dr Surinder Batra

�#�)(��6��7!��1��

Director : Mr Vipin Mittal

Secretary : Prof. O.P. Sharma

Treasurer : Mr Rajiv Ranjan Bhatia

Executive Members : Mr Sushil Kumar

: Dr Abid Haleem

�#�)(��-��2�-��

Director : Dr Jayanta Chatterjee

Secretary : Dr M.P. Gupta

Treasurer : Mr Naresh Raheja

Executive Members : Mr Manmohan Rehsi

: Dr S.K. Batra

: Mr S.V. Ramanan

: Mr Sunil Jain

�#�)(��#��)�� 28��

Director : Mr R.C. Gourh

Secretary : Dr Ravi Shankar

Treasurer : Mr Gurbans Chatwal

Executive Members : Mr Sunil Jain

: Mr S.R. Krishnaiah

: Dr Parmeshwar P. Iyer

Editor-in-ChiefSushilChair, Strategic Management GroupDepartment of Management StudiesIndian Institute of TechnologyHauz Khas, New Delhi-110016e-mail : [email protected] : 91-11-6591167Fax : 91-11-6862620


ISSN 0972-2696

(Quarterly Journal of Global Institute ofFlexible Systems Management)

Subscription and AdvertisingFor subscription or giving advertisements either write to Production Manager, �� C/o �� , 1893, 1st Floor,Udai Chand Marg, Kotla Mubarakpur, New Delhi-110003 or use ‘subscription’ button at the site www.giftsociety.org, or use [email protected].

Subscription Rates (yearly for 4 issues including postage).Within India Overseas

Institutions/Corporates Rs 4,500 US$ 200Individuals Rs 900 US$ 50Advertisement RatesFull page Rs 25,000 US$ 1,000

Copyright © 2001, Global Institute of Flexible Systems ManagementThe Journal or any part thereof may not be reproduced in any form without the prior written permission of the publisher.All data, views, opinions etc. being published are the sole responsibility of authors. Neither the publisher nor the editors are in anyway responsiblefor them.

Published by Global Institute of Flexible Systems Managementwww.giftsociety.org

��

Printed by �� ., New Delhi.Mobile : 9810247997, Ph. : 91-11-6099537

Editorial Board

Rakesh Kumar AgrawalDirector of QPT Centre andChair, School of Business &Industry Operations ManagementUniversity of Western SydneyNepean, Australia

Ali DastmalchianDean, Faculty of ManagementThe University of LethbridgeAlberta, Canada

M.C. JacksonDirector of the Business SchoolUniversity of Hull, UKEditor-in-Chief,Systems Research andBehavioral Science

Jatinder N.D. GuptaProfessorDepartment of ManagementBall State UniversityMuncie, USAAssociate Editor, Decision Sciences

Anthony MichellVisiting Prof. (Strategy & Global Mgt.)School of Public Policy andManagement, KDI, Korea

H. PaulProfessor and DeanSchool of ManagementAsian Institute of TechnologyPathumthani, Thailand

Daniel RouachProfessorSchool of ManagementESCP-EAP, France

Kulwant SinghHead, Department ofManagement & OrganizationFaculty of Business Admn.National University of SingaporeChief Editor,Asia Pacific Journal of Management

MembersA.K. AgrawalCEOAutometers Alliance Ltd., Noida

Rajat K. BaisyaDept. of Management StudiesIIT, Delhi

P.K. JainDept. of Management StudiesIIT, Delhi

K.M. MitalGeneral Manager (HRM)EIL, New Delhi

Shyam SethiVice PresidentWhirpool of India Ltd., New Delhi

Sanjay K. SinghEditorial Coordinator-Higher EducationAddison Wesley Longman (Singapore)Delhi

Managing Committee

Deputy EditorsK. MomayaDept. of Management StudiesIIT, Delhi.

O.P. SharmaDelhi College of Engineering,Delhi

Nanua SinghProfessor and Director of IntegratedProduct Development Laboratory,Wayne State University, USAAssociate Editor-in-ChiefInternational Journal of Robotics and CIMEditor : Product and Process Development

Kathryn E. SteckeProfessor in Business AdministrationThe University of Michigan, USAEditor-in-Chief,International Journal of Flexible Mfg. Systems

Ushio SumitaProfessorGraduate School of International ManagementInternational University of Japan, Japan

Shashi UllalVice-ChairmanHughes Escorts Communications LimitedGurgaon, India

Henk W. VolberdaProfessor of Strategic Management & Business PolicyRotterdam School of ManagementErasmus University, The Netherlands

Global Journal of Flexible Systems Managementgiftsociety.org/download/gift-journal/2-2.pdf · contemporary literature. Bhagvad Gita, an ancient scripture elucidating the ethical principles

Documents