Where Family Comes First
ISB, the first Indian business school to build a definitive curriculum
and pedagogy around family business, has an unwavering commitment to
helping business scions enhance the survival, growth, and expansion of
Indian family-run businesses.
India has the distinction of being one of the nations that has the
highest number of family-run business. Around 67% of $1 billion-plus
businesses in India are family-run (The Economist, Nov. 1, 2014), while
close to 55% of the top 200 Indian companies by revenue, are family
businesses (The Economist, Apr. 18, 2015). Half of the Nifty Fifty and
73% of ET 500 firms are family controlled.
Coupled with their
manifold opportunities for value creation, family-run businesses are
beset by unique challenges. Most do not survive beyond two or three
generations. One can imagine the impact on the economy and on society
that could result, were more firms to last longer in emerging economies
like India. Surprisingly, until ISB pioneered academic activities in the
area in 2003, no other premier business school in the country focused
seriously on family business.
Professor
Kavil Ramachadran (author of
The 10 Commandments for Family Business) was appointed as the Thomas
Schmidheiny Chair Professor of Family Business and Wealth Management in
2007. A formidable influence in the field, Professor Ramachandran has
been
ranked among the 50 Best Management Thinkers from India in 2015. The Thomas Schmidheiny Centre for Family Enterprise, set up in 2015,
undertakes a variety of activities, including research, training,
teaching and networking. Under the leadership of Professor Ramachandran,
it has brought out a number of case studies published by Harvard
Publishing and Ivey Publishing. All efforts of the Centre have strong
practical relevance; the most important among them is the bi-annual
Asian Invitational Conference on Family Business. Over its past five
installments, the conference has emerged as one of the best such events
anywhere in Asia, attracting about 400 delegates from the region.
Two hundred alumni currently comprise the steadily growing
ISB Alumni Family
Business Network, which recently organised the first annual
Family Business Conclave in November 2015 and is mentored by the
likes of Adi Godrej, Chairman Godrej Group and Chairman of the Board of
ISB and Sunil K Munjal, Joint Managing Director, Hero MotoCorp Ltd.
The School’s seminal
Management Programme for Family Business (MFAB) is a PGP level
modular programme that grooms young family members to become more adept
at the managerial aspects of family businesses. They are trained in
executing good family governance that will facilitate the long-term
survival of family businesses. The programme has a diverse pool of
participants belonging to variety of industries, locations, communities
and business sizes. As quoted by one of the MFAB students, “The
experience at ISB was truly transformational. The School drives
excellence and brings the best in each student. It was a self
exploratory journey for me. The MFAB programme provided the right
environment to work and learn and gave me the opportunity to connect
these two worlds. It challenged me to unlearn and understand the
fundamentals of my core beliefs with a new perspective. The peer network
of like minded individuals from Family Businesses gave us a platform to
interact, exchange ideas and build networks”- Navin Venkadasubbu, MFAB
Co 2015
The MFAB class meets one week out of six on ISB's Hyderabad and Mohali
campuses. For one week during their 16-month program, they attend
classes at the Kellogg School of Management at Northwestern University,
hosted by Kellogg's Center for Family Enterprises (CFE). According to a
Co-Academic Director of Kellogg Week 2015, “The classroom learning
culture the students contributed to was stunning… All agreed they left
Kellogg better prepared for the challenges they will be facing as
business, family and community leaders.” Read more about the exchange
programme
here.
In sum, family business at ISB is serious business, indeed! The School
has set a benchmark in terms of its foresight and commitment to
knowledge creation and innovation in the field; and is deeply invested
in helping empower family enterprises to achieve sustained success.
A SELECTION OF CASES ON FAMILY BUSINESS
A comprehensive listing of cases developed by ISB can be found
here.
"Professionalization of Sudarshan Chemical Industries", 2015
Ramachandran, Kavil; Mathew, Alexander; Bhatnagar, Navneet
Abstract:
In 2011, Sudarshan Chemical Industries Limited, a global pigment company
with sales in over 40 countries, was poised to become one of the top
four pigment producers in the world. The vice-chairman was about to meet
with an external consultant whom he had hired when he assumed leadership
of the family business in 2003 following the demise of both the founders
— his father and eldest uncle. The agenda of the meeting was to discuss
the various initiatives that had been undertaken at Sudarshan since 2003
to systematically professionalize the group. The vice-chairman could not
help wondering whether the company was heading in the right direction.
Should a family member always be the head of the business? What if the
family member being prepared for the leadership role did not gain the
acceptance of the family and non-family professionals to lead the
business?
Link to purchase:
https://www.iveycases.com/ProductView.aspx?id=69361
"Zandu Pharmaceutical Works: The Takeover Bid (A)", 2014
Ramachandran, Kavil; Suresh, Jayshree; Bhatnagar, Navneet
Abstract:
This case is about the takeover bid of Zandu Pharmaceutical Works, a
small Indian traditional medicine manufacturer based at Jamnagar,
(Gujarat, India). It encapsulates the protracted multi-level
negotiations among its two promoter families - the Parikhs and the
Vaidyas - with Kolkata, India based Emami group that intended to take
over the firm in 2008. The two families had established Zandu Pharma in
1910. The Vaidyas came from a lineage of Ayurveda practitioners and
brought technical know-how to the business. The Parikhs belonged to a
traditional trading community and brought their business acumen to the
firm. Complimenting each other, the two families managed the business
for about hundred years. However, with passage of time, the later
generations of the Parikhs gained technical knowledge and became firmly
entrenched within the firm's operations. On the other hand, the Vaidyas
failed to effectively pass on the technical expertise to their later
generations. Thus their importance in the eyes of the Parikhs went down
and Vaidya descendants were viewed as incompetent. The Vaidyas felt
ignored and marginalized; the Parikhs repeatedly denied their demand for
a director's position on the company's board. Pushed into a corner, the
Vaidyas sold their stake in Zandu to Kolkata based beautycare and
healthcare company - Emami. The Parikhs viewed this as a hostile move
and tried to thwart Emami's bid for Zandu's control. The decision
dilemma that Parikhs face in the case is - whether to sell their stake
to Emami or to fight the takeover battle. The case narrates the
circumstances and the actions taken by parties involved. The case deals
with various managerial issues like leadership, communication,
acquisition strategy and emotional issues faced by promoter families.
The case serves as an effective tool for students to learn and apply
leadership, communication, strategic and negotiation skills in complex
acquisition scenarios, like those in family controlled businesses.
Link to purchase:
https://cb.hbsp.harvard.edu/cbmp/product/ISB045-PDF-ENG
"Zandu Pharmaceutical Works: The Takeover Bid (B)", 2014
Ramachandran, Kavil; Suresh, Jayshree; Bhatnagar, Navneet
Abstract:
Supplement case to ISB045, Zandu Pharmaceutical Works: The Takeover Bid
(A).ß
This case is about a takeover battle between two Indian companies, Zandu
Pharmaceutical Works Ltd and Emami Limited, in 2008. Zandu Pharma was
owned by two promoter families, the Vaidyas and the Parikhs. Emami
bought the Vaidyas’ stake in the company without the knowledge of the
Parikhs. The Parikhs viewed Emami’s stake acquisition as a hostile move
and strongly opposed Emami’s offer to run the firm under a joint
management arrangement. What followed was an intense battle for control
of Zandu. Neither of the two parties was prepared to give up the fight
and unleashed a series of attacks and counter attacks on various fronts
— business, legal and family. After months of fighting each other in the
courts, on the stock markets and in the media, both Emami and the
Parikhs were battle weary and under heavy financial and mental strain.
The markets were watching closely to see which of the two contenders
would blink first.
During what seemed to be an insurmountable deadlock, the Emami group
made an unexpected offer to the Parikhs: the Parikhs could choose to
sell their stake to Emami or buy Emami’s stake in the company. The
Parikh family had to decide its course of action, that is, whether to
sell out to Emami or to buy out Emami’s stake. For the Parikhs, whose
association with the company went back 100 years, the choice was not an
easy one. The case requires students to appreciate the business decision
scenario from different standpoints. It deals with management issues
concerning leadership, communication, ownership, acquisition strategy
and law/ regulation as well as emotional issues faced by promoter
families. The case serves as a suitable tool for students to learn and
apply leadership and communication skills in business and families, more
specifically in complex and hostile acquisition situations.
"Ensuring Family And Business Continuity At India's GMR Group"
Ramachandran, Kavil; Ward, John; Waikar, Sachin; Jha, Rachna
Abstract:
Most family businesses do not survive beyond two or three generations.
One of the main reasons for this short lifespan is the lack of
governance mechanisms in family businesses. With better family
governance, business development becomes a richer experience and
continuity is ensured across generations. This case is about an Indian
family business, GMR Group, which was established a quarter-century ago,
and by 2010 had become one of the major diversified infrastructure
organizations in the country, with large-scale interests in
infrastructure (energy, roads, and airports) and manufacturing
(agri-business, mainly sugar). Since its founding, the Group had come a
long way, from an independent proprietary enterprise to a family-owned
holding corporation with several companies under its control, along with
external stakeholders. The growth of the group had been led by the
entrepreneurial zeal and organizational capabilities of its founder, G.M.
Rao. Having seen many family businesses breaking up for lack of adequate
governance mechanisms, Rao led the way for the writing of his family
business's constitution with the help of several experts in 2007. The
writing process of the constitution and the policies and processes
developed were optimal for maximizing GMR's performance and the family's
prosperity in current and future generations. This case captures the
essential processes and outcomes of writing a family business
constitution.
Link to purchase:
https://www.iveycases.com/ProductView.aspx?id=51823
"Manjushree Technopak Limited", 2014
Mehrotra, Sonia; Pereira, Arun
Abstract:
The managing director, founder and promoter of Manjushree Technopak
Limited, based in Bangalore, India, had exploited various market
opportunities to establish his third venture, which over 20 years had
become the largest manufacturer of polyethylene terephthalate bottles
and preforms in Southeast Asia. His brother and sons had also joined the
company, which was listed on the Bombay Stock Exchange, and were now
co-directors under his leadership. By 2013, the company was ready to
expand to meet the growing demand for plastic containers in the food,
beverage, health care and pharmaceutical industries and to counter its
competition. It needed to convey a clear vision to all its stakeholders.
Growth also meant the need for clarity in leadership roles and a sound
internal governance structure. The managing director had three choices:
1) continue the status quo with himself as head of the company; 2) step
aside and allow his professionally qualified sons to step up to the
company leadership; or, 3) hire a professional from the corporate world
as a new chief executive officer.
Link to purchase:
https://www.iveycases.com/ProductView.aspx?id=65588
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