Synopsis

CONSUMER BUYING BEHAVIOUR

(study of consumer buying behaviour with reference to car in jodhpur )

Submitted to

ALL INDIA MANAGEMENT ASSOCIATION CENTRE FOR MANAGEMENT

EDUCATION

MANAGEMENT HOUSE, 14 INSTITUTIONAL AREA

LODHI ROAD, NEW DELHI – 110003

February 2013

SUBMITTED BY –KAUSHAL KUMAR

REGISTRATION NO. – B11120469

GUIDED BY

Mr.

For the partial fulfillment of

Post graduation diploma in management

“PROJECT REPORT SYNOPSIS”

Name Kaushal kumar

Registration no. B11120469

Address of correspondence 17-18 defence lab road

ratanada, jodhpur

Name of project guide Mr.

Designation and address Associate professor

ICMT

Defence lab road, Jodhpur

Title of the project study the consumer buying behaviour with

reference to car in jodhpur

Purpose of the Research

Management control is the process by which managers assure that resources are obtained and

used effectively and efficiently in the accomplishment of the organization’s objectives. MCS is

thus the process that links strategic planning and operational control. Management Control

Systems (MCS) have the purpose of providing information useful in decision-making, planning

and evaluation. The focus of MCS is not only on one form of control like performance measures

but on multiple control systems working together.

The modern complex business organizations the internal control system is an integral part of the

information processing system. Consequently, a discussion of management control system

begins with a consideration of some of the general aspects of information processing system. The

goals normally established by management for the information processing system are described

first. Second, the general means of accomplishing these goals are discussed. Finally, the

behavioral hypothesis underlying these means is clarified.

Financial sector reforms were initiated as part of overall economic reforms in the country and

wide ranging reforms covering industry, trade, taxation, external sector, banking and financial

markets have been carried out since mid 1991. A decade of economic and financial sector

reforms has strengthened the fundamentals of the Indian economy and transformed the operating

environment for banks and financial institutions in the country. The sustained and gradual pace

of reforms has helped avoid any crisis and has actually fuelled growth.

The most significant achievement of the financial sector reforms has been the marked

improvement in the financial health of commercial banks in terms of capital adequacy,

profitability and asset quality as also greater attention to risk management. Further, deregulation

has opened up new opportunities for banks to increase revenues by diversifying into investment

banking, insurance, credit cards, depository services, mortgage financing, securitization, etc. At

the same time, liberalization has brought greater competition among banks, both domestic and

foreign, as well as competition from mutual funds, NBFCs, post office, etc. Post-WTO,

competition will only get intensified, as large global players emerge on the scene. Increasing

competition is squeezing profitability and forcing banks to work efficiently on shrinking spreads.

A positive fallout of competition is the greater choice available to consumers, and the increased

level of sophistication and technology in banks. As banks benchmark themselves against global

standards, there has been a marked increase in disclosures and transparency in bank balance

sheets as also greater focus on corporate governance.

Also to study followings terms in banking sectors management control system:

control function: all of the control activities which are performed under the governance and

organizational structure established by the bank’s board of directors and senior management and

in which each individual within the organization must participate in order to ensure proper,

efficient and effective performing of the bank’s activities in accordance with the management

strategy and policies, and applicable laws and regulations and to ensure the integrity and

reliability of accounting system and timeliness and accessibility of information in the data

system,

control system: all of the financial, operational and other control systems which are carried out

by internal controllers and which involve monitoring, independent evaluation and timely

reporting to management levels systematically in order to ensure that all the bank activities are

performed by management levels in accordance with current policies, methods, instructions and

limits;

Internal audit (inspection) system: a systematic audit process which is carried out by internal

auditors independently as a part of internal control function and in the form of financial activities

and compliance audit independent of the bank’s daily activities, considering the management

needs’ and the bank’s structure; which covers all the activities and units of the bank, mainly the

internal control system and the risk management system, and which enables the assessment of

these activities and units, wherein evidences and findings used in assessments are obtained as a

result of reporting, monitoring and examination.

Supervision (control & audit) system: the integrated process consisting of the internal control

system and the internal audit system;

Risk management system: all of the mechanisms concerning the process of standard-setting,

reporting, verifying the compliance with standards, decision-making and implementing, which

are established by the board of directors in order to monitor, to keep under control and, if

necessary, to change the risk/return structure of the future cash flows of the bank and,

accordingly, the quality and the extend of the activities;

Senior management: the bank's general manager and deputy general managers, and managers

of operational departments who hold signature authority;

Inspector: a staff who inspects the conformity of the bank’s activities with the banking law and

the internal regulations of the bank, based on the authority of the bank who according to the

fourth paragraph of Article 9 of Banking Law no. 4389, based on an authority granted by the

bank’s board of directors or by the office of president whom the board of directors appointed,

inspects the conformity of the bank’s operations to the banking regulations, and banks' internal

regulations;

control unit: A unit that organizes, manages and coordinates the bank's internal control process;

Internal controller: A staff of the bank, other than inspectors, who is authorized by the bank

management to monitor, examine and control the activities of the bank on an on-going basis;

Risk management group: The whole structure that comprises the executive risk committee,

bank risk committee, and risk management committees of the individual operational units,

centralized or decentralized, established in order to manage the risks the bank is exposed to in a

systematic way;

Asset/liability management committee: The committee assigned by the board of directors with

the duties of determining the policies for asset/liability management and mobility of the funds

and taking decisions to be executed by relevant units within the framework of the bank’s

balance-sheet management and monitoring implementation of the activities;

Risk management staff: Staff in risk management committees who is responsible for such

issues as defining, verifying, and assessing risks to which the bank is exposed through certain

criteria, quantitative and analytic techniques, and has adequate knowledge and experience in risk

management; who works in coordination with internal controllers in accordance with the

provisions and procedures set out by the board of directors.

Risk: The probability of decrease in economic benefit due to a monetary loss or an unexpected

expense or loss occurred concerning a transaction;

Controllable risks: Risks where the probability of a loss that may be incurred by the bank can

be mitigated by using risk mitigation techniques or imposing limits to transactions that may

generate risk;

Uncontrollable risks: depending on the variability of controllable risks over time, Risks of loss

which cannot be predicted by using any risk measurement and mitigation techniques or by

implementing exposure limits, and which is realized when emerge;

Participations controlled by the bank: The participations on which a bank has a controlling

power, as mentioned in the regulations related to consolidated financial statements which are in

effect pursuant to banking regulations.

Obligation to establish a system

Article 3 Banks shall establish, maintain and improve internal audit and risk management

systems within their organizational structure with quality, sufficiency and efficiency in response

to changing conditions, in conformity with the nature and scope of their activities and in

compliance with the provisions of this Regulation.

Introduction to Banking Sector in India

Without a sound and effective banking system in India it cannot have a healthy economy. The

banking system of India should not only be hassle free but it should be able to meet new

challenges posed by the technology and any other external and internal factors.

For the past three decades India’s banking system has several outstanding achievements to its

credit. The most striking is its extensive reach. It is no longer confined to only metropolitans

or cosmopolitans in India. In fact, Indian banking system has reached even to the remote

corners of the country. This is one of the main reasons of India’s growth process.

The government’s regular policy for Indian bank since 1969 has paid rich dividends with the

nationalization of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting a draft

or for withdrawing his own money. Today, he has a choice. Gone are days when the most

efficient bank transferred money from one branch to other in two days. Now it is simple as

instant messaging or dial a pizza. Money have become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till today,

the journey of Indian Banking System can be segregated into three distinct phases. They are

as mentioned below:

Early phase from 1786 to 1969 of Indian Banks Nationalization of Indian Banks and up to

1991 prior to Indian banking sector Reforms. New phase of Indian Banking System with the

advent of Indian Financial & Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II.

Phase-I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and

Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay

(1840) and Bank of Madras (1843) as independent units and called it Presidency Banks.

These three banks were amalgamated in 1920 and Imperial Bank of India was established

which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab

National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913,

Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank

of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic failures

between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline

the functioning and activities of commercial banks, the Government of India came up with

The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949

as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with

extensive powers for the supervision of banking in India as the Central Banking Authority.

During those days public has lesser confidence in the banks. As an aftermath deposit

mobilization was slow. Abreast of it the savings bank facility provided by the Postal

department was comparatively safer. Moreover, funds were largely given to traders.

Phase-II

Government took major steps in this Indian Banking Sector Reform after independence. In

1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale

especially in rural and semi-urban areas. It formed State Bank of India to act as the principal

agent of RBI and to handle banking transactions of the Union and State Governments all over

the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th July,

1969, major process of nationalization was carried out. It was the effort of the then Prime

Minister of India, Mrs. India Gandhi. 14 major commercial banks in the country was

nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with

seven more banks. This step brought 80% of the banking segment in India under Government

ownership.

Nationalization of Banks in India:

The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then prime

minister. It nationalized 14 banks then. These banks were mostly owned by businessmen and

even managed by them.

Central Bank of India

Bank of Maharashtra

Dena Bank

Punjab National Bank

Syndicate Bank

Canara Bank

Indian Bank

Indian Overseas Bank

Bank of Baroda

Union Bank

Allahabad Bank

United Bank of India

UCO Bank

Bank of India

Before the steps of nationalization of Indian banks, only State Bank of India (SBI) was

nationalized. It took place in July 1955 under the SBI Act of 1955. Nationalization of Seven

State Banks of India (formed subsidiary) took place on 19th July, 1960.

Introduction to management control system

A management control systems (MCS) is a system which gathers and uses information to

evaluate the performance of different organizational resources like human, physical, financial

and also the organization as a whole considering the organizational strategies. Finally, MCS

influences the behavior of organizational resources to implement organizational strategies. MCS

might be formal or informal. The term ‘management control’ was given of its current

connotations by Robert N. Anthony (Otley, 1994).

Robert N. Anthony (2007) defined Management Control is the process by which managers

influence other members of the organization to implement the organization’s strategies.

Management control systems are tools to aid management for steering an organization toward its

strategic objectives and competitive advantage. Management controls are only one of the tools

which managers use in implementing desired strategies. However strategies get implemented

through management controls, organizational structure, human resources management and

culture. Anthony & Young (1999) showed management control system as a black box. The term

black box is used to describe an operation whose exact nature cannot be observed. MCS involves

the behavior of managers and these behaviors cannot be expressed by equations. Anthony &

Young (1999) showed that management accounting has three major subdivisions: full cost

accounting, differential accounting and management control or responsibility accounting.

Abstract:

This thesis investigates how managers use the management control systems as levers of

strategic change. This question is interesting both from a theoretical and a practical

viewpoint.

The investigation is focused on the case of management control operations in banks. Firms

operate in an increasingly turbulent environment caused by technological, social, political, and

ethical change.

This thesis develops two new ideas: firstly, that the framework of analysis could be extended

to cover four dimensions: the management tool, the organizational structure, the use of control

system, and the compensation system; secondly, it explores how all four dimensions interact

in practice. The tool dimension originates from the managerial literature on control systems. It

emphasizes the importance of the horizontal coordination of the material flows from suppliers

to customers. The organisational dimension comes from the literature on project management,

which enlarges this coordination issue to new products and new services. The compensation

dimension has already been introduced by Simons, though this dimension has rarely been

explored in practice.

Aims and Objective:

1. To measure the management control systems in banking sector

2. To evaluate the management control systems in banks

3. To analyze the management control systems in light of management control boundaries

4. To identify the key strategies are being introduced by banks time to time in respect of

management control system

5. To suggest and recommend to improve this system in banking sector

6. To analyze their capabilities and commitment in effectively delivering its services in cost

effective ways.

Research questions:

1. How banks are used to implement its strategies in respect to establish management

control system over there

2. What is the risk and boundaries to implement management control system in banks

3. How to effectively monitor projects of different size and different scope

4. How they used to manage formal financial controls

5. What is the role of accounting systems of banks having effective management control

system

Scope of the study:

This study will throw light on measurement and evaluation of management control systems in

the banking sector of India. This study is important to find out the key results related to

management control system of banks in India.

Hypothesis:

In the following a set of hypotheses will be developed on how firms change their MCS in times of increasing uncertainty and risk. For the purpose of this paper the summary of the hypotheses are shown here only.

Summary of hypotheses

H 1:Boundary systems are used to a higher extent under conditions of increasing Perceived Environmental Uncertainty.

Research Methodology:

The sample is taken on the basis of random sampling method.

The data’s are collected as secondary.

To undertake a detailed study of the measurement and evaluation of management

control system in light of its boundaries, I shall study the literature available of the

evolving concept of banks management control systems. I shall also study the

management strategies, the risk factors and the general banking terms used by Indian

banking sectors.

Research problem:

How to make effective management control systems in banking sector in India.

Work plan:

The main body of the thesis has the following chapters, which are arranged in the

following manner as a chapter-

1. Introduction

At the outset, I have introduced the subject matter of the thesis.

2. Banking sector of India

Information about the banking control systems.

3. Evaluation and measurement of management control systems in banks

4. Boundaries of management control in banking sector of India

5. Review of literature

6. Management of financial controls

7. Includes summary, finding and suggestion for the effective management control

system

8. Includes bibliography and index