Unit 2
Entrepreneurship and Micro, Small, Medium Enterprises
Q1) Concept of business groups and role of business houses and family business in India
Q2) Discuss the significance of business houses in India.
A) to Q1 & Q2.
Business is defined as a group of companies that does business in different markets under common administrative or financial control whose members are linked by relations of interpersonal trust on the basis of similar personal ethnic or commercial background. On the basis of ownership business group is classified as-
1) State owned: Such business houses are owned by the state government. Some examples are, ONGC, SAIL, NTPC etc.
2) Privately owned: Such business houses are owned by private individuals, group of persons etc. For example, TCS, ITC ltd etc.
3) Family owned: Such business houses are owned by family and it is the oldest form of business in India. In India such business is taken in the form of HUF. For example, TATA Sons Pvt Ltd., Reliance Industries Ltd. etc
Role of business houses and family business in India are-
(a) Infrastructural development:
The business houses improve the infrastructure of locality where its business is situated. Some of the examples of such facilities include Jamshedpur (or Tatanagar, affiliated with the Tata Group), Pirojshanagar (Godrej Group), Birlagram (Birla Group), and Modinagar (Modi Group). In each case, the group provides such basic services as power generation, roads, schools, and employee housing for the joint use of its companies.
(b) Improves the quality of Human resources:
The business houses undertake measures to improve the quality of human resources in its locality by facilitating and improving educational institutions, healthcare services, housing, drinking water facility, hygiene and sanitation etc.
(c) Supply of inputs:
Since the concentration of industries is relatively sparse in less-developed areas, there is usually insufficient demand to stimulate the development of supporting industries. Basic inputs and repair services must therefore be sourced from relatively distant suppliers. A potential producer with only a local operation may have trouble establishing and coordinating these relationships, particularly given the poor quality of communications in less-developed areas. Group firms, on the other hand, already have well-established supplier networks, and are able to coordinate the delivery of materials through a corporate headquarters. Often, the supplies will come from a company which is itself a group-affiliate.
(d) Risk and diversification:
Locating a production facility in a region without supporting services is more risky, simply because there are more things that can go seriously wrong. Groups are more capable of bearing this risk because of their greater size and diversification.
e) Promote other businesses:
The big business houses also promote other businesses by providing financial services through venture capital fund.
Q3. Discuss about contemporary role models in Indian business.
Q4. Discuss about the values, philosophy and behavioural orientation of Indian business houses
Q5. How does the Indian business house determine their vales and philosophy of business?
Q6. Discuss the valus and phlisophy of Reliance Group, Tata Group and Aditya Birla Group.
A) to Q3, 4, 5, 6
Indian business is witnessing a great success over a period of time and able to get recognition in international parlance. Some of the contemporary role models in Indian Business are
Reliance Industries Ltd. is the largest private sector company in India started under the visionary leadership of Dhirubhai Ambani. He stated his career with Yarn business in India and it has diversified business to different area like textile, telecommunication, steel, transport, information technology, oil refinary, food processing etc. His sons Mukesh Ambani and Anil Ambani carry forward the legacy.
Values of reliance group
a) Customer value: They believe that customer is the reason for their existence.
b) Excellence: They believe that everything they do and everything they think can always get better.
c) Integrity: They strive to be honest and forthright with one another and with all stake-holder.
d) Ownership mindset: It enables accountability and accomplishment and ensures their strong commitment to the highest standards of safety and environment.
e) One team: They work as a team and trust each other to deliver on our respective obligations.
f) Respect:
g) Respect: They believe that without respecting their stakeholders there can be no stakeholders.
Business philosophy
a) To provide most valuable advice within investor relations, financial communications, media relations, crisis communication, issue management and CSR.
b) To provide excellent advice for clients in connection with IPOs, ECM and M&A transactions etc.
Behavioural orientations
a) Shareholder interest
b) People care
c) Consumer focus
d) Excellence in execution
e) Team work
f) Proactive innovation
g) Social responsibility
h) Respect for competition
2) TATA group:
Jamshedji Tata stated the TATA group business by starting textile mill. Companies of TATA group include TCS, TATA motors, TATA chemicals, TATA motors, TATA steel, TATA global beverages, Titan, TATA, capital, Tata power, Tata communications etc.
Values
a) Integrity: They will be fair, honest, transparent and ethical in their conduct.
b) Responsibility: They will integrate environmental and social principles in their business.
c) Excellent: They will be passionate about achieving the highest standards of quality.
d) Pioneering: They will be bold and agile, courageously taking on challenges.
e) Unity: They will invest in their people and partners, enable continuous learning, and build caring and collaborative relations based on trust and mutual respect.
Business Philosophy
Vision statement- “We aspire to be global steel industry benchmark for value creation and corporate citizenship.”
Mission statement- “To improve the life of the communities we serve globally, through long term stakeholder value creation based on leadership with Trust.”
Behavioural orientation
a) Highest morale and ethical standard
b) Highest standard of corporate governance
c) Respect for human rights and dignity
d) Professionalism, honest, fairness and integrity
e) Economic development of communities
f) Highest standards of safety
g) Maintain balance in the interest of stakeholders.
h) Not engage in unfair and restrictive trade practices
3) Birla Group:
The Birla group is founded by Aditya Birla in 1960. The subsidiaries of Birla group are Grasim, Hindalco, Ultratech cement, Aditya Birla Navo, Indo Gulf, Idea, Birla Sun Life Insurance Co. etc.
Values
a) Integrity: acting and taking decision in a fair and honest manner.
b) Commitment: being accountable for their decision and action.
c) Passion: A voluntary, spontaneous and relentless pursuit of goals and objectives with the highest level of energy and enthusiasm.
d) Seamlessnes: thinking and working together across functional groups, hierarchies, business and geographies.
e) Speed: responding to internal and external customers with a sense of quick urgency.
Business philosophy
Vision statement- “To be a premium global conglomerate with a clean focus on each business”
Mission statement- “To deliver superior value to our customers, shareholders, employees and society at large.”
Behavioural Orientations
a) Fair dealing
b) Freedom from discrimination, harassment and other abusive situations.
c) International business
d) Fair competition and antitrust
e) Trade controls
f) Freedom from conflicting interest.
Q7. Discuss different reasons for conflict of family business in India. 5
Q8. Discuss about solutions for the conflict of family business in India. 5
Q9. Discuss the reasons for and solutions for conflict of family business in India.
A) to Q7,8,9.
The different reasons for conflict in family business are-
The family traits of protectiveness, loyalty, sacrifice etc. etc plays a significant role in family business. Any misunderstanding among family members, unable to meet expectation etc. leads to conflict
2. Attachment to legacy:
An over attachment to legacy sometimes leads to conflict among family members.
3. Disagreement:
Disagreement among the members regarding decision making leads to conflict among
4. Multiply overlapping roles:
Family members with varied roles in organisational set up irrespective of their age and authority, at home, may create confusion and tense due to overlapping in family and business.
5. Communication pattern:
The unconscious usages of certain words, expressions, or body language can be loaded with meaning which can lead to outsized reactions.
Resolutions to family business conflict
1) Completion strategy imposes or forces solutions using authority, thus it is not likely to fully address many issues of business and family
2) Accommodation strategy is based on high concern for others and low concern for self. It can help resolve conflicts in family business.
3) Collaboration is an integrative approach that attempts to satisfy the concerns of all involved parties.
4) Compromise involves giving up of something by each party so that the outcome is acceptable to all involved.
Avoidance is the failure to address conflicts by either denial or brushing the issue aside. It avoids immediate direct conflicts over time, it builds frustration that usually has negative after affect.
