Case Analysis: Startup in Bangalore:

MeritTrac

Submitted to:
Prof. Suresh B

Submitted by:
Group 9

Akhil Sonthalia

Albert Rohan Silas

Bhargavi Malireddy

Ranjini Ballal

Saket Khandeliya

Shilpa Sinha

Sonam Jagga
 We, as a group analysed the case keeping the entrepreneurial concepts
like skills, experience, knowledge etc.

1. What are the entrepreneurial traits that were shown by the

MeritTrac team members?

Answer:

The traits exhibited by the team which paved a path for the growth are as
follows:

Initiative:

Madan Padaki and Murlidhar planned a business, of which their working

domain was entirely different and not many people thought about it,even
then they took the initiative to start the business.

Apart from this, there are other instances as well where they have
demonstrated this trait. E.g. they had the courage and took initiative in
leaving their jobs when they wanted to give more time to their project.

Problem Solving:

Entrepneurship is not only taking initiative and being consistent, one’s

success depends also on how efficiently and within how much time one is
able to solve the problems encountered. The team had the ability shown
by many instances as:

When they faced stiff financial crisis, they were able to convince their
employees to work without salaries for six months. Which itself is a huge
sacrifice on part of the employees.
When the venture capitalists could not financially support for the firm’s
growth , they looked for other alternatives and finally they make a deal
with Mr. Ranganath. They analyzed each and every problem and then
found the suitable and practical solution for that rather than living in a
fantasy world and being adamant on their requirements.

Self Confidence:

It was their self confidence which drove them to jump into a totally new
venture; leaving their jobs without proper financial support. Since from the
very beginning till the end, it was there self confidence that encouraged
them to put in their best efforts in their project.

Persuasion:

It is because of their persuasion skills that even though the business plan
was in entirely new area, even then Mr. Ranganath, employees, venture
capitalists believed in them and supported. Yes, in the beginning not
many people were convinced to provide funds to them, but that is
because most of them had their demands exceeding the optimal.

They could persuade the customers with their work and service
efficiency; this was an impressive part of the growing MeritTrac. This is
one of the most important skill to run the business.

Persistence:

At any stage of the business, they did not give up. During tough times,
they could have stepped out of business and could have gone in for better
paying jobs, the so called “safe jobs”. But they lived up to their project to
attain their goals and fulfil their dreams.

Adaptabilty:
The team was flexible enough .They always accepted the best offer
available to them rather than being rigid on their demands and
expectations.

E.g. when they came to know the worth of their company as good as US
$3 million, even then they did not get funds, they took it very practically
and accepted the best offer available to them. When they did not get high
loans they they were flexible enough to go for not so high funds.

Systematic Planning:

MeritTrac started with none of the resources except for manpower. From
initiatial stage of the business till the growth, they had clearly estimated
their business options and always planned steps for the future. (They
estimated their financial needs and the customers they could gain)

Assertiveness:

One of the major problem MeritTrac faced was to work without funds. At
that juncture they confronted the problem with the employees directly
and took them into confidence.

Efficiency Orientation:

The team always had an eye on the costs so that they could plan
according to the available budget. They always looked for options that
helped them to sustain in the business in a cost effective manner. (In early
2002 they had gone for excessive marketing and looked for developing
techniques to prepare candidates for tests)

Information Seeking:

While developing a business plan, they looked at the options available and
the drivers for business in the sector.

Commitment to work:

They had great commitment to their business because of which they could
not leave it any difficult stage.
Sees and acts on opportunities:

The DotCom boom was an opportunity for the BPO business. Madan and
Muralidhar grabbed this opportunity to establish MeritTrac; basically to
serve back-office business.

2. What were the goals set by the team and how did they
overcome the obstacles faced?

Answer:

Goal: The goal set by MeritTrac was to be a pioneer in providing labour

resources to IT and BPO companies.

Action: In spite of having resource constraints they stepped into the

business.

Personal Block: Both Madan and Muralidhatr were not from technical
background to venture into this service sector. They overcame this block
by bringing in Jayant.
Worldly block: They were always short of funds. When the situation
became worst after September 2001, they got help from employees;
thereby overcoming the situation.

Achievement:

By the end of 2004 , the sales and customer base of MeritTrac was
commendable.

3. What kind of risks did the MeritTrac team face? How did
they mitigate them?

Answer:

High risk: Due to the 9/11 incident they lost many of their clients and got
less new orders. At that tome they faced a very high risk of being get
closed and leaving of the employees. But when they approached to their
employees and told them about the problem they are facing very frankly
they were able to minimize the risk.

Moderate risk: During the initial initial stage when they were finding it
difficult to attract any of the VC. But they planned this and decided to go
for high net worth businessmen who can invest on their project this is how
they mitigated there risk.

Low Risk: they left their original job to make this project successful. But
as they had clear vision in their mind and also they have planned all the
things the risk was minimized.
 4. “Problems are not external to a business venture. They
persist throughout the business.” Discuss with respect to
the case.

Answer:

The case of MeritTrac is an excellent example for the budding

entrepreneurs about the problems that come along the life of the
business. It also says that problems may be internal or external to the
business and may arise at any time. Entrepreneurs should have requisite
qualities to overcome them and keep growing with the going concern of
the business.

5. Starting a new business is always been risky. But it can be

minimized with proper planning. Explain this how MeritTrac
did this?

Answer: There are many risk involved while starting the new business
such as financial risk, personal risk, external risk etc. Whenever a new
setup is started it has to be started with proper planning and with proper
research. No business can be started without proper study of all the
possibilities all the bright side and the dark side of the project especially
when you are the pioneer in introducing the project. As same happened in
the case of MeritTrac which was started on 2000 unique of its own type.
There were many problems faced by the company but with proper
planning and strategy they were able to overcome all the problems and
can move forward.

The case where problem were solved by proper planning

- As it was a new concept in the market it was becoming difficult for

them to find and Venture Capitalist who can invest on their project
so they planned out and decided to approach to high net worth
businessman who have spare capital and are ready to invest in this
kind of new project.
- After the great disaster Of 9/11 the business was affected very badly
and they don’t have enough cash to even pay to the employee but
with proper planning and by doing their cash inflow and outflow
analysis they decided to talk to the employee and tell them about
their present condition and that work for them in the positive way.

- Many times in the case proper financial planning has helped them to
know where they stand and has helped them to predict their future
need for finance.

6. How effective was MeritTrac credit policy in managing there

cash flow?

Answer: From the case it’s very clear that they need a good amount of
working capital for doing there day to day business. But as their clients
are not making payment on the time of 30days they have to increase it
to 60 days due to which they have to again work on there working
capital issue. Managing the cash flow is a very important financial task
for any business and as they are attracting many new customers they
can re think one there credit policy by coming out with some scheme of
discounts on early payment and can solve there working capital issue.

7. Should MeritTrac think for diversification?

Answer: At the present scenario of high competition the company

should think for more area of diversification by adding new SBU
(strategic business unit) for providing software solutions and also they
can go for providing extra services to the clients. As the future of this
kind of organization is very bright so they can expand their unit in the
same sector also.