POM Case Study

Case 2
S.L Kirodia was engaged in the family business of trading in natural silk
yarn in a large town of Bastern Uttar Pradesh. The town had lot of
potential for silk yarn demand as there were plenty of weavers
engaged in weaving sarees popularly known as 'Banarsi Sarees, At the
initial stage, the trading business of Kirodia's father was not
flourishing. However, after the death of his father, when S.L. Kirodia
assumed the full-fledged responsibility of the business, he expanded
it manifold with untiring efforts. With the result, he became number
one trader of the city and earned a lot of money, He constructed his
own five-story house in prime business area of the city with a view
that ground and first floors would be used for business purpose and
the remaining floors would be used for residential purpose,
Trading of silk yarn involves procuring of silk yarn from silk producing
centres mostly at Bangalore and adjoining areas and some part of
Jammu and Kashmir. Besides silk yarn is imported mostly from China.
Silk yarn is distributed directly to weavers who are mostly illiterate
manual workers or to semi-wholesalers. The yarn is supplied on credit
basis ranging from one week to two weeks with a provision that
interest at the rate of two percent per month will be charged if the
payment is delayed beyond the stipulated time. When Kirodia made
huge profit in his trading business, he started investing a part of the
profit in buying shares of different companies both from the primary
market and secondary market. Gradually, he along with his family
members became shareholders of about 250 companies. Kirodia has
three sons and when they were quite grown up, he decided to step
down from the trading business and entered the field of share-
broking. In late 2004, he approached a share broker of National Stock
Exchange (NSE) for the purpose with his friend and was successful in
getting sub-brokership from the main broker located at Mumbai. He
formed a firm known as S.K.Financial Services. Since this was the only
firm of this type in the city, it attracted of of business at the initial
stage. Over the period of time, the firm was converted into a limited
company under the name of Kirodia Capital Services Limited with
shareholders drawn mostly from his family and friends. NSE offered
computerized trading system from the very beginning. In this system,
a share broker or sub-broker has to install VSAT (Very Small Apperture
Terminal), a special purpose dish antenna, and computers and
accessories besides office furniture, etc.
The process of operating a sub-broker's office is as follows: 1. Orders
for buying/selling shares are obtained from the customers either
through personal contacts or through telephones. A customer may
give order either at the market rate, that is, at the prevailing rate on
which he can buy-sell immediately, or a prescribed rate and
transaction will be affected when this rate comes. In both these cases,
the transaction has to be confirmed by the sub-broker.
2. After the end of the settlement period, the sub-broker prepares a
list of transactions which have been executed. He collects money for
the purchases from his customer immediately but gives shares atter
about three weeks because he has to deposit the money in advance
to his broker who sends the shares later after the settlement of shares
takes place at NSE. Similarly, the sub-broker receives shares from his
customers and sends these to his broker from where money comes
after an interval, of about three weeks.
3. The sub-broker has to maintain records relating to various
transactions, Customers accounts, main broker's accounts and other
relevant records.
At the initial stage, share-broking business did quite well, but later, it
started dwindling. Many customers shifted away to other brokers as
many new brokers entered the business subsequently. The turnover
rate of employees at Kirodia's office was quite high; on an average no
computer operator worked for more than a year. Some of the reasons
which old customers of Kirodia cited were as follows:
1. Kirodia did not believe anyone in the matter of customer
relationships.
2. He used to interfere unnecessarily in the customers' transactions
by telling why selling at low rate or buying at high rate'. This
interference used to upset their mental set.
3. lf a customer had negative impact from his transactions, Kirodia
would reprimand him like anything saying that he had advised not to
do this or that. This became quite embarrassing to the customer and
hurt his feelings.
4. He spoke too loudly on telephone which interfered unnecessarily
with the concentration of the customers who used to be present in
the sub-broker's office.
5. His overall behaviour was not that of helping and cooperating.
Many customers just wondered "how he made so much money in his
trading business and flopped in share-broking business."
Questions
a) Assess the personality of Kirodia (with respect to management)
and point out the personality factors which made him successful
in trading business and factors which led him down in share-
broking business.
b) What behavioural change would you suggest for Kirodia and
how such a change can be brought?
c) Can his behaviour be changed at such a late stage of life? Give
reasons to support your answer