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Avari Group: Organizational Values and Crises Leadership

Review of Case
Nasir Afghan has provided us the story of personal journey of Dinshaw, a social entrepreneur and
founder of leading Brand Avari Group. In 2010 Avari group completed six decades of marvelous
success, the mystery behind success was core values set by founder that were respect, honesty,
lifelong employment and equal employment opportunity for all. Avari group started its
operations in Pakistan in 1947 with small hotel in Karachi to in 2010 one three star and two five
star hotels, small boutique hotels and international standard five star hotel Islamabad to be
launched in 2013. Their expansion strategy is very appealing and showing their deliberate efforts
to sustain and diversify, Avari group not only stayed in hotel industry but also went for Airport
travel industry that was related diversification. Moreover another brand of this group was
Spencer Pakistan that was operating as holding and real estate Management Company since 1948
than it diversified in 1991 as Spencer Pharma that is unrelated diversification. They have also
their presence in the power generation and communication field. All the efforts made by Avari
group are vigilant and fit to the Pakistan or even for any hotel industry because hotel business is
directly linked to or integral part of the tourism industry and travel industry. They are direct and
indirect source of employment, moreover prosperity to the economy and country as whole
because tourism along with its two major components Travel business through which people
travel around the globe and hotels where they stay during their trip are sources of earning for the
business and overall inflow of money to the economy, money is circulating from business to
employees , companies paying taxes that goes to the Government that utilizes them for
betterment of country like in construction that again ads to the all businesses.
Success of hotel business can be measured through geographical coverage and occupancy level
which counts for 70% revenue in hotel business. There is 15% increase in demand of hotel
business from 2003 to 2006 due to Pakistans support of the war on terror and improved
international image, UDAID Programs, improvement of relations with India. According to 2010
data and its comparison to previous years occupancy level of Avari hotels is high and consistent
as compare to Pearl continent that is slight low but increasing, profitability of Avari group is
high. Trend analysis of income statement from 2007 to 2009 shows overall decrease in profits
due to increase in overall cost and might be due to entrance of new players( seven star and
international) has reduced profit margins.
The author has discribed the story how Dinshaw Byramji started his business; he was a man of
entrepreneurial spirits and has respect for humanity. He started his family business by buying
Bristol Hotel in 1948, he worked hard and managed hotel operations efficiently and Bristol hotel
became successful. He realized the importance of high class hotel and opened Beach Luxury
Hotel whose success lead steps for purchase of Nedous Hotel 1962 and then Avari group got into
first international collaboration and converted Pak Luxury Hotel to Hilton international 1978 and
knowing the synergies of Travel business along with hotel business opened Air travel agencies.
Mr. Dinshaw also envisioned the construction of tallest building Avari Plaza Karachi Pakistan.
He licensed the Ramada under a franchise arrangement. He was social entrepreneur and served
many institutes and worked for social welfare like Krachi Parsi Anjuman Trust Funds,
Zoroastrian etc. Then Byram started work with his father to build Hilton Lahore and completed
Avari Towers himself. He became aggressive for Venturing and took full control of Spencer &

company, Spencer Pharma and started Powergen Company of Pakistan Ltd. Trust and
independence were used for succession planning, and next generation Dinshaw and Xerxes
Avari. All were acting on the footprints of Dinshaw. With changes in industry trends and for
survival of companies it has become norm to cut cost and reduce hand counts to employees. The
Avari familys core group philosophy was Employee compassion, welfare, motivation, growth,
development and loyalty. To cope up the challenge two options has been given first to change the
company lifelong Employment policy to cut the cost and second was not to change policy and
sustaining companys core policies.

2Explain what are value based organizations and does Avari group fall in this category or
not?
Value based organization are the organizations that are meant for creating value through
difference and change in their operations and at the end betterment of society. They are aimed at
bringing maximum benefit to the society by their business practices. They have long term
orientation of the world. They utilized the resources of society in efficient ways and special
attention is given to the fact that their efforts do not at the cost of resources to be utilized by next
generations.
Yes, Avari group fall in this category because we could see its core values that are more
humanistic in approach, they give respect to their employees which mean they do not see
employee as means to achieve ends but see them as ends in themselves, who have their own
lives, want to do meaningful work that matches to their believes that is all about workplace
spirituality. They hire people who are honest, determined. Lifelong employment and equal
employment opportunity further helps to pool people of shared mind set and to motivate them
and to develop effective commitment to the organization. As it is family owned business and
each generation is contributing to maintain the theme for which organization was aimed at.
Moreover every owner is member of social affair institutes. Everyone is benefiting the society at
his own ends. So Avari Group is endeavoring to be good as well as do good and achieve
economic, social and environmental goals, so achieving goals of triple bottom line.
They view the business enterprise as a vehicle for not only achieving personal nancial goals but
also for pursuing social/environmental missions. (chapter 2) Avari group is also engaged this in
their practices.They are promoting their Companys Values and publicizing their values and
sustainable business practices as an integral component of differentiation.
According to David Y. Choi and Gray value driven Entrepreneur Build a Cohesive, Dedicated
Team. In addition to hiring sta with personal values similar to yours, utilize creative or even
highly unconventional methods to earn employee loyalty and strengthen commitment to the
company and its mission. (Chapter 7) Avari Group is doing the same they have developed open
door policy where entry is easy and depending upon capabilities they can be promoted to
anyhigher rank.

Stay With It for the Long Haul. Be willing to stick around and accomplish what you set out to
do. Dont be seduced into ipping the business for short-term prot. When it comes to selling,
nd the right buyer to maintain dedication toward your mission. (Chapter 10)
Each generation is Role Model for others, willingly sharing business philosophy, principles, and
experiences with other aspiring entrepreneurs.

3- The Way Forward; given the current situation reducing hand counts is becoming a
compulsion than a choice, what options do they have? First identify options and then based
on clear rationality select the course of actions you would take in this situation?
Options:
There has been given two options in the case that are:
1. Change the lifelong Employment policy in order to save the organization
2. If not changing policies then how to continue the company policies and core values in
dynamic environment full of crisis.
They are creating value through their Employees, they have adopted open door policy, they say
welcome to newcomers especially talented, enthusiastic and having entrepreneurial spirit.
Lifelong commitment enhances their loyalty and effective commitment and they work heartedly,
so they should not change their policy of lifelong employment policy. They can continue their
values of compassionate, determined, loyal and motivated employees if offering lifetime policy
in current situation but for this there is the need to cut cost related to bonuses offered for
performance and to bring in confidence employees that this cut is short term to cope up the
challenges of environment and in the future benefits that are dependent upon their work would
be shared, this would keep their morale high. Lifelong employment policy has became point of
differenciation for Avari group and source of competitive advantage, other are not engaged in it
thats why Avari group has gathered pool of talented workforce.