General Management Zandu Pharmaceutical Works: The Takeover Bid (B)
Supplement case to ISB045.Learn MorePublished: Nov 1, 2014
Strategy Suprajit Engineering: Ensuring Family and Business Continuity
Ajith Rai hailed from a humble background. As a first-generation entrepreneur, over the last three decades he had built a successful automotive business under the umbrella of Suprajit Engineering Limited (SEL). Rai and his wife, Supriya, along with their three sons were a close-knit family. The two older sons were deeply involved in the family business, and the third son was close to finishing his engineering studies. Supriya, a dentist, was engaged in the philanthropic activities of Supriya Foundation, the corporate social responsibility (CSR) arm of the business. Rai had seen many business families disintegrate for lack of governance, and hence early on in his business career, he decided to formulate a family constitution. His sole objective was to safeguard family kinship and business longevity. The case reveals not only the process adopted by Rai to formulate the instrument of family governance-the family constitution-but also his ability to focus on building the capacity of all family members. The case closes with Rai reflecting on the satisfying journey thus far and hoping that the family constitution will be comprehensive enough to take care of the conflicting scenarios that could arise in the future.
Published: Sep 25, 2022
- Understand the importance of instituting different organizational entities into a family constitution,
- Evaluate the possible conflicting scenarios that may arise on the basis of the policies devised in the SEL family constitution
- Evaluate the different ownership models that family businesses can pursue for succession planning and wealth management.
Strategy Suprajit Engineering: De-Risking for Future Growth
In 2019, Ajith Rai, Executive Chairman of Suprajit Engineering Limited (SEL), a pioneer in the design and manufacture of mechanical control cables in India, is contemplating his company's future growth strategy in the face of changing trends and demands in the automotive sector. Established as a private limited company in 1985, SEL became a public limited company in June 1995. In its over three decades of existence, SEL had grown from a single-product, single-customer, single- segment, single-brand, and single-location company to a multi-product, multi-business, multi-brand, multi-customer, multi-location, global company. SEL's growth and evolution as a truly diversified company was the result of Rai's ability to expand its operations in domestic and overseas markets organically and inorganically through acquisitions. In 2019, when the case is set, new developments in the automotive sector, both in terms of new technology as well as competition, made it necessary for SEL to take stock and plan for the future. Rai decided it was time to conduct a thorough analysis of the business, its growth both organically and inorganically, its ability to integrate its acquisitions, and its environment, in order to reinvent itself and identify the next wave of growth. By tracing SEL's inspiring growth story and highlighting the reasons behind its success, the case provides valuable insights into the rapid growth strategies used by entrepreneurial firms.
Published: Jun 27, 2021
- Understand the importance for a firm of constantly reinventing its product portfolio and the business for survival and growth
- Understand the use of rapid growth strategies such as diversification, mergers & acquisitions, and internationalization by entrepreneurial firms.
- Examine the performance of a company's diversification strategy.
- Understand the options used by a rapid-growth entrepreneurial firm to strategize and exploit significant opportunities in an evolving market environment.
Entrepreneurship & Innovation Zee Entertainment and Essel Group: A Quest for Legacy and Beyond (B)
Case B of the two-part series "Zee Entertainment and Essel Group: A Quest for Legacy and Beyond" describes the evolution and eventual resolution of the personal crisis that looms in front of Subhash Chandra, Chairman of Zee Entertainment Limited, in Case A. Chandra was very well-known in India as a successful entrepreneur who brought entertainment to the masses in the 1990s through his television channel Zee. Although Zee had performed very well over three decades, Chandra found himself under significant debt stress due to failures associated with his infrastructure business, which he had founded in 2007. By January 2019, Chandra had offered most of the shares of the listed firms he owned as collateral to banks to borrow additional debt to sustain his infrastructure business. Several developments had occurred by this time that deepened Chandra's predicament, including the tightening of credit by financial institutions, a statutory body investigation into a firm that he owned, and an investigative report outlining his personal indebtedness. These factors contributed to a dip in the stock price of many listed Essel Group companies, and banks threatened to sell the shares of companies of Chandra's thriving media business to recover the debt. Chandra had to sell assets of his infrastructure business and most of his stake in Zee to pay off his debt. Corporate governance lapses at Zee also emerged at the time of the stake sale by Chandra, particularly around related party transactions with other companies that he and his brothers owned. Although his son Punit Goenka continued as the CEO of Zee, Chandra had to resign his chairmanship of the company and was left with a measly 5% stake in Zee, with the dominant shareholders now being institutional investors.
By offering a first-hand view of Chandra's decisions and challenges, the case shows how skilled entrepreneurs often end up destroying value and personal wealth in the hunt for legacy and wealth creation. The case also looks at the potential corporate governance challenges that may arise when a powerful figure is at the helm of the firm.Published: Nov 30, 2020
Entrepreneurship & Innovation Zee Entertainment and Essel Group: A Quest for Legacy and Beyond (A)
The case traces the entrepreneurial journey of Indian media baron Subhash Chandra. It starts with his entry into a struggling family business in 1967 and observes his evolution from a young, aspiring entrepreneur to the chairman of Essel Group, one of India's largest business entities with interests in diversified sectors such as media, entertainment, education and infrastructure. Chandra entered his family's agricultural commodities business in 1967 when it was in dire straits. In the 1970s and 80s, he forayed into entirely new sectors such as packaging and amusement parks. In 1991, he set up Zee Telefilms (later Zee Entertainment) and launched Zee TV, India's first non-public service television channel. By creating and broadcasting content in local Indian languages, Zee reached a wide audience of viewers across the country. Due to a first-mover advantage, Zee instantly became a huge success. Over the next three decades, Chandra pursued new business opportunities in the media industry, with considerable success. In 2018, Zee was a thriving enterprise, with a global viewership of 1.3 billion and business segments spanning broadcasting, music, film production, and digital over-the-top (OTT) media. In 2007, to create a long-lasting legacy and diversify his personal wealth, Chandra entered the Indian infrastructure industry and bid for multiple projects in a short span of five years, winning several of them. However, unable to convert the infrastructure projects into profitable ventures due to unprofitable bids and execution mistakes, he started to accumulate significant debt. His personal financial situation deteriorated to such an extent that he resorted to offering the shares of the listed companies he owned (including Zee) as collateral to banks to take additional debt to save his infrastructure business. The case ends with Chandra, and indeed his whole business empire, in a precarious situation due to indebtedness and facing some tough decisions.
The case outlines the journey of an eminent entrepreneur in a developing market context. By studying the case, students will learn that, in such markets, identifying new opportunities and swiftly going to market often gives entrepreneurs a significant opportunity to create value. The case also deals with challenges related to legacy building, succession planning, and business diversification that entrepreneurs and business families face when their existing business ventures start doing well.Published: Nov 30, 2020
OB and Leadership Continuing the Legacy of Annapurna Studios
Annapurna Studios was founded by legendary Indian actor Akkineni Nageswara Rao (ANR) in Hyderabad in 1975. Over the years, Annapurna had grown to become a modern-day powerhouse in the field of entertainment and filmmaking. In 2019, it was well known for its state-of-the-art production facilities, creative content production, and film and media institute. ANR's older son, Venkat joined the studio a few years after its inception but struggled to keep it afloat. Nagarjuna, ANR's younger son, began helping out at the studio after finishing college, but the studio's fortunes only changed in the mid-80s when Nagarjuna decided to become an actor In 1999, Venkat handed over management control of the studio to Nagarjuna. Their niece Supriya joined the business as a management executive. The studio had two divisions: operations and content creation. The operations division, which included post-production, editing and dubbing facilities, ran smoothly under the COO with minimal intervention from the family. In the content creation side of the business, the family's presence was greater. Nagarjuna and Supriya made all the critical decisions related to content, guided by their business sense and passion. With the second generation of the family still at the helm of Annapurna Studios, the next generation's involvement was relatively low. Chaitanya (Nagarjuna's son) had started showing some interest, but the other members of the third generation were either not yet involved in the studio or were busy with their own acting careers. Nagarjuna was worried that the next generation might not have the same level of passion for the studio as the previous generations. He wanted to ensure that the studio's legacy sustained into the future. What strategy should the studio to adopt to ensure its long-term survival in the risky and ever-changing film and entertainment business?
The steps that the family needs to take to institutionalize the studio and continue its legacy will make for an engaging classroom discussion, through which students will gain an understanding of: • The importance of professionalization, meritocracy and performance evaluation in a family business • The elements of parallel planning and resource building • Institutionalization of a family firm • Legacy building challenges and responsibilities of family stakeholders • Revitalizing a business in a new context • Ownership as a responsibilityPublished: Aug 11, 2020
General Management Hilti - Leadership and Ownership Transition in a Culture-Rich Company
The Hilti Corporation was founded by Martin Hilti in 1941 in Liechtenstein, Germany. From its inception, Hilti set the highest standards of peoples' practices, innovation, quality and governance. The values of the company; Team, Commitment, Integrity and Courage, defined by Martin, remained unchanged over the years, even though the company leadership transitioned from Martin to his son Michael to the non-family Chairman Baschera and later Fisher. Continuity was given a lot of importance at Hilti. In 2017, the family trust and the board of directors of the Hilti corporation, both had non-family leaders. Michael Hilti, the Lifetime Honorary Chairman of the Board of Directors, was happy that the transition of leadership had happened smoothly and as planned. He was keen to identify and correct possible areas of weaknesses existing or that might emerge in future. He knew that he didn't have a long time to further institutionalize the family and business.
The case takes students through the journey of Hilti Corporation and the Hilti family. The company is a strong example for culture building practices and ownership models. It has successfully integrated its culture into strategizing for growth and has well laid out succession plans for the smooth transition of leadership to ensure continuity. There are a number of takeaways from the case on the best practices followed by the company.Published: Aug 1, 2019
General Management Merck, Darmstadt: Sustaining Legacy Beyond 350 Years
This case is about the business, governance and leadership transformation of Merck - a 13th generation, family-owned, German multinational group operating in the pharmaceuticals, performance materials and life science industries. Established in 1668 as a pharmacy in Darmstadt, Germany, Merck ventured into the manufacturing of pharmaceuticals and specialty chemicals in 1827. Successfully overcoming several business and family challenges, it continued to grow. By 2017, Merck had a legacy of nearly 350 years of successful business operations, a presence in 66 countries and about 52,000 employees on its rolls. In 2017, Merck was led by Dr. Frank Stangenberg-Haverkamp (69), an 11th generation member who was the Chairman of the executive board and the family board of E. Merck KG (the group's holding company). With his 70th birthday approaching, Frank wanted to identify an able successor who could help him build the group for the next 100 years and take the Merck legacy forward.
The case is intended to help the participants understand the essential building blocks of a long-lasting, multi-generational family business and specifically comprehend the role played by (i) family values, (ii) strategic vision, and (iii) the owner family's adherence to their mission in transforming a family business into a long-lasting institution. This case is appropriate for MBA and Executive education programs, in courses like, Family Business Management, Governance and Strategy.Published: Oct 22, 2018
General Management Touchdown Footwear on a Slippery Slope
This case is based on the professionalization and governance challenges faced by Touchdown Footwear Limited (TFL), a mid-sized Indian footwear manufacturing family business. TFL was set up in 1965 in the southern Indian city of Mangalore by three brothers, Ramnath, Krishna and Ganesh Pai who had inherited their father's rubber trading business. Initially, TFL made flip-flops and catered to the local market. Over the years, it had expanded the product portfolio to include school shoes and other non-leather footwear. By 2016 TFL had a pan-India presence with some exports to African markets. In the early years, the three brothers managed all the functions of the business. When the next generation came of age and joined the firm in the 1970s and '80s, they took up various roles based largely on business exigencies. By 2016, TFL had a turnover of INR 16.19 billion but lacked professional management and a clear strategy. In the absence of an appropriate structure, systems and processes, decision-making was ad hoc. Inefficiencies and wastage were evident across the organization, and working capital was under severe strain. The firm suffered from a deficit of governance at both the family and business systems. The lack of clear policies and processes delayed many crucial decisions. Earlier attempts to professionalize the business had failed to achieve the desired results as family members lacked clear policies to follow and were unable to change their mindset. Furthermore, when the fourth generation began to enter the business, there were questions about their level of commitment and discipline. TFL required transitional change on multiple fronts to sustain the business but there was lack of clarity on the roadmap for the future.
The case aims to help the participants recognize and effectively manage the challenges of professionalization and governance that a small family business faces during the process of growth and transition into a larger organization. This case serves as a tool for understanding and mapping the transition needed on three dimensions of - (1) Strategy, (2) Professionalization, and (3) Family Governance, as a family business crosses the initial threshold of growth in its life cycle.Published: May 10, 2018
General Management Dodla's Dilemma
D. Sunil Reddy established Dodla Dairy in 1995 in Nellore district of the southern Indian state of Andhra Pradesh. An industrial engineer from Mangalore University, Sunil set up Dodla as a greenfield company at the age of 27 with seed money provided by his father. He was inspired by his grandparents and father to help those in need grow and flourish and by Mahatma Gandhi's call to "reach out to rural India". The company had grown well over the years. In fiscal 2015-16, it achieved an annual turnover of over INR 11 billion and aimed to touch INR 25 billion in revenues by 2020. It had a workforce of more than 2,000 employees, procured about a million liters of milk per day from 250,000 milk producers, and processed and sold milk and milk products at 67 locations in nine states in India. In 2011, Private equity fund Proterra invested INR 1.1 billion in Dodla, bringing down the family's shareholding from 100% to 76.34% (it would later go down to 72.3%). Sunil knew that if the company had to move to the next orbit, both in terms of size (revenues, assets and market share) and professionalization, certain organizational changes would be necessary. He wondered what these changes would be and who would make them. How could he better prepare himself and the company for the future? How would the company move from being a family-owned enterprise to a professionally run, sustainable organization? Would one of his daughters join the organization, bringing freshness to the company while providing continuity in terms of family values? Would the company be run by an outsider? "Who after me?", thought Sunil. He often wondered whether the brand "Dodla" and the company he had founded would sustain beyond himself. While he continued his efforts to increase capacity, expand and capture more market share, he kept asking himself, "What next" and "How do I build a legacy?
The case takes students through the journey of an entrepreneur who built a very successful company and has reached a stage in the company's growth and his own life where he is uncertain what future course to take. Students should be able to discuss the dilemmas faced by the founder, Sunil Dodla, and come up with options that are available to him to tackle them.Published: May 1, 2018
- Author Kavil Ramachandran Remove This Item