This case discusses the dilemma faced by Harsh Mariwala, the business leader who relinquished the CEO position of Marico Limited, his family-owned fast-moving consumer goods company. Harsh had built the Marico business from scratch after a division in the senior generation of his business family. For over 30 years Marico had been an integral part of his identity and purpose of existence. Harsh is concerned about what to do after relinquishing his CEO position at Marico, which has so far defined his identity and purpose. At the same time, Harsh faces his family's pressure to ensure continued influence over Marico's business. Harsh is on a quest to carve for himself an identity that is distinct from Marico. He is facing the dilemma of how to detach from Marico and search for a larger meaning for his family business and himself. The is portrays a typical scenario of the letting-go challenge faced by family business leaders as they prepare to call it a day after a long spell of leading the business.
This case discusses the leadership succession dilemma faced by Harsh Mariwala, CEO of Marico Limited, a fast-moving consumer goods company. Harsh wishes to relinquish the post of CEO and is in search of a capable successor. The company has complex business operations within India and abroad, which requires an effective leader with a strong understanding of business strategy. Harsh has limited successor options within his family. Outside the family, Harsh is unsure whether someone from outside Marico will be a more appropriate choice than an old-timer from within the company. The choice of the successor is critical as it will determine the future of the business and that of his family.
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.
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.
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.
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.
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 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.
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.
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.
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?
Dr. K. Anji Reddy founded Dr. Reddy's Laboratories Ltd (DRL) in 1984. Since then, the company had grown to become one of the largest pharmaceutical companies in India. The company professionalized early on, and over the years, the family members defined and refined their roles for the efficient running of the company. Dr. Reddy passed away on March 15, 2013. His son-in-law, G. V. Prasad, had been with DRL for more than 25 years by then. Prasad acknowledged that a lot needed to be done to fulfill Dr. Reddy's dreams. He had been contemplating his own future role in the company and the need for a smooth succession. But who would succeed him? What would be the qualities of the person who would succeed Prasad, a passionate member of the founding family of DRL? Would a non-family CEO be a suitable replacement?
The case deals with issues on the management of values in a family organization when it is growing and undergoing a generational transition. The organization at the center of this study is Aravind Eye Care System (Aravind), a non-profit organization managed as a trust but fully financially self-reliant, both for its current expenses and its expansion needs. It gave about 50% of its services free, and though its medical competence was unquestioned, its executives believed that its main strength was its value system. Though it may not be fully correct to call it a "family organization" (many of its top management people were not from the family at the time of the case events), family members were seen as having a special responsibility in not only managing the organization but also as custodians of its values and legacy. Its founder, Dr. Govindappa Venkataswamy (Dr. V), had passed away in 2006, and his siblings, who were responsible for building the hospital in its early years, had largely dissociated themselves from its day to day operations and even some aspects of its strategic management. The units were run by the second generation, who would themselves be retiring in a few years. The third generation members were already functioning at the lower levels of the organization, and in another five to ten years, the fourth generation would be coming in. The case presents Aravind Eye Care System's situation in this context, with a view to identifying the problems in retaining its legacy, which all of its executives agreed was not only invaluable but also the source of its competitive strength. It describes the different mechanisms employed in the organization to preserve the values and culture, such as recruitment, training, communication as regards the norms of behavior to patients, colleagues and staff and the reflections of its executives. regarding the continuance of the legacy.
Navas Meeran, the Chairman and Managing Director of Eastern Condiments Private Limited (ECPL) had been instrumental in the growth and professionalization of ECPL by bringing in non-family professionals, introducing state-of-the-art systems and processes in manufacturing, and nurturing the values of compassion and loyalty that his father had instilled across the organization. In 2014 he had taken a sabbatical and handed over the company operations to his younger brother Firoz. ECPL, the flagship company of the INR 8 billion, family managed Eastern Group headquartered in Kochi, India, was engaged in manufacturing and marketing spices, blended spice powders, pickles, breakfast staples and beverages in both domestic and international markets. The company began as a small shop set up by their father M.E. Meeran in 1961. It had grown to record revenues of INR 5.60 billion in 2014. Though Navas was pleased with the company's 2015 business performance under Firoz's leadership he was uncomfortable with the pace and execution of major organizational changes brought in by Firoz. He was worried about Firoz's aggressive approach; the speed of the internal changes Firoz had made to tap external market opportunities had resulted in 10 -15% attrition at all levels in the organization. Was it right for a traditional family run business bred on a culture of compassion and loyalty to make a sudden shift to a metrics-based performance culture? Would Firoz's efforts to transform the company into a professional organization ultimately sustain the growth of the business? Was there a need to both cultivate professionalism and reward loyalty across the ECPL value chain? Could a company based out of a Tier 2 city such as Kochi be able to attract high-quality talent easily? These were some of the questions that worried Navas.
Rohit Gupta, the oldest third generation member of a family business, has to decide whether to continue working for the business, towards which he has a strong sense of loyalty and responsibility, or follow his dreams and venture out on his own. Both alternatives have strong positive and negative implications. Rohit jointly headed the Western India unit of his family business, Ketan Logistics Limited (KLL). His grandfather had set up KLL, a logistics provider, in 1986. Over the years, the company expanded its fleet, acquired a license to operate freight trains, and diversified into ocean freight services and the transportation of large industrial equipment and food products. By 2014, it had become an integrated, multimodal logistics provider to business customers. KLL's operations were divided into four geographic zones, each headed by one of the second generation family members, i.e., Rohit's father and uncles. KLL took several measures to professionalize operations, such as deploying enterprise resource planning (ERP) software, adopting a code of conduct and organizing employee training and workshops. After graduating from college, all the third generation members of the family, except one, joined KLL. Some of them, like Rohit, had high aspirations and wanted to make changes at KLL, but their attempts invariably met with strong resistance. This led to frustration among some next generation members who had considered venturing out on their own at different points in time. Rohit also had a business idea, which he shared with his old friend Amit Goyal who also belonged to a business family. Goyal liked the idea instantly and offered to invest in the new venture. Rohit was emotionally attached to his father and other family members and did not want KLL to suffer as a result of his exit. He also had to consider his own hopes and future. He would not easily get an opportunity again to launch his own venture. Rohit was facing a tough decision dilemma.
Achal Industries was a 40-year-old proprietary family enterprise engaged in cashew processing and export. Giridhar Prabhu, 57, was Achal's second generation entrepreneur and managed its operations in the Indian states of Karnataka and Maharashtra. He had been in this labor intensive business for close to three decades. Family owned businesses and private partnership firms dominated this sector. The cashew processing industry was facing severe constraints due to high employee turnover and a labor shortage. Many enterprises had started exploring the option of automating cashew processing at their factories. Giridhar had also been studying and analyzing this option. He anticipated that, five years hence, automation would prove more economical than labor-intensive cashew processing. His own plan was to retire from the business in five years, but to his disappointment, he found that none of his three daughters was interested in running the business. Giridhar felt he would not have the ability to manage a new, profitable automated factory, which would demand quite an effort, as he got older. Lack of support from the family would add to that burden. In November 2014, he was contemplating future options that included selling his business, expanding the business and inducting professional non-family members to steer the enterprise's future. The dilemma before him was to choose the option that would be best for him, his enterprise and his family.
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?
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?
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.