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Management Development Institute, Gurgaon

Executive Programme in Business Management for Armed Forces
Officers (25th Batch)
(DGR Resettlement Course Sr. No. 07-07-2021)
End-Term Examination, Term II
Name of the Course: Strategic Management
Name of the Course Faculty: Prof. Ankur Roy
Nature of Exam: Open Book & Open notes

Maximum Marks: - 50 Weightage: - 50% Maximum time: - 2

hrs.

Instructions to participants
1. Adhere to the word limit while answering. Extra writing will not be evaluated.

Q1. . Critically analyze the alliance between IIM Sambalpur and Flipkart to promote
entrepreneurial ventures in Orissa. How can this alliance be different as compared to other
state and central government initiatives (like KVIC) and achieve its intended objectives?
Answer in context to Exhibit 1 (Upper limit of the answer 500 words)- 50 marks

Exhibit 1

Flipkart, IIM Sambalpur to partner to support small businesses and artisans

Peerzada Abrar |, 07/08/2021

E-commerce giant Flipkart and Indian Institute of Management, Sambalpur, announced a

partnership to support and promote small businesses, artisans and weavers by leveraging
technology, e-commerce platform, and market insights. A memorandum of understanding
(MoU) for this partnership will be signed in the next few weeks.

Through this partnership, announced on National Handloom Day, IIM Sambalpur and
Flipkart will leverage their deep expertise and knowledge to create an operational
framework. This would support under-served communities by helping them build capacity
and enhance market reach.

Flipkart executives will actively participate in this program by sharing operational know-
how, market, and consumer insights. The company will also explore opportunities to
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enable pan-India market access for products created by these entrepreneurs, MSMEs
(micro, small and medium enterprises), and artisans through its marketplace.

"As a homegrown company, we aspire to leverage locally developed world-class

technology to create a positive impact in the lives of countless entrepreneurs and
underserved communities from across India leading to inclusive economic growth," said
Rajneesh Kumar, chief corporate affairs officer, Flipkart Group.

Kumar said the Flipkart team’s expertise, technology, learnings, and insights serving a
pan-India market will come in very handy for MSMEs, artisans, and the Indian handicraft
industry through this partnership with IIM Sambalpur. "At Flipkart, we believe that
entrepreneurship is essential to creating more local jobs across the ecosystem and are
committed to growing an inclusive digital e-commerce ecosystem."

The collaboration extends Flipkart’s sustained partnerships with academic institutions and
serves as a testimony to its commitment towards India and its continuous support for
entrepreneurs and the start-up ecosystem.

"Our partnership with Flipkart and the e-commerce industry will help strengthen the spirit of
entrepreneurship by creating opportunities to leverage technology and accelerate growth
for small businesses and artisans," said Prof Mahadeo Prasad Jaiswal, director, IIM
Sambalpur. "By combining institutional learning and practical industry experience, we aim
to provide entrepreneurs best practices and deeper insight on how to leverage e-
commerce for their growth."

Jaiswal said he is hopeful that weavers, artisans, and farmers will leverage this opportunity
to showcase their skills and high-quality traditional heritage products to a national
consumer base and reach new heights and recognition.

Under the Flipkart Samarth initiative, the company has partnered with several states
across the country, including Odisha. Flipkart’s partnership with the Odisha State
Government’s State Institute for Development of Arts & Crafts (SIDAC) is helping onboard
renowned Odia brands such as Boyanika, Utkalika, and Sambalpuri Bastralaya on its e-
commerce marketplace. Flipkart said handloom and handicraft artisans living in remote
Odisha are now able to market their products to consumers across India better.

ANS-1 ANALYSIS OF ALLIANCE

1. Ecommerce major Flipkart and Indian Institute of Management (IIM) Sambalpur have
come together in a partnership to support and promote small businesses, artisans and
weavers. Through this partnership IIM Sambalpur and Flipkart will leverage their
expertise and knowledge to create an operational framework to support the underserved
communities by helping them build capacity and enhance market reach. Flipkart here
will provide operational know-how, market and consumer insights. This strategic alliance
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of IIM sambhalpur and flipkart,This is a type of Non-Equity alliance with motive of Acess
Alliance,in order to harness the capabilities of the partners in best possible manner
while sharing resources and activities to pursue a common goal.

2. Since, the state government has a very important role to play for overall success of
the alliance goals and non-market environment involves social, political, legal and
ecological factors, we shall apply the PESTEL framework for critical analysis:

1.Political-Highlights the role of a stable and full-majority state government and various
campaigns in support of the initiative to provide training and market reach to local artisans,
as per best industry standards.

2.Economic-Businesses making strategic decisions should assess where they stand in

overall economic cycle. Two to Three years of estimated growth periods might make the
decisions economically viable. Also, some support from state government in terms of tax
benefits will help.

3.Social-The initiative will help a large number of businesses, which will change lives of a
large underprivileged population, giving rise to the demand of local produce as well as
innovativeness, both in terms of production and marketing the products through a well
established e-commerce platform.

4. Technology-IIM and Flipkart are well established names in the field of education and e-
commerce, using state of the art training. This technologically advanced training and
market reach will be made available to the small businesses.

5.Ecological-No environmental and ecological hurdles are envisaged, as the businesses

involve local weavers and artisans who use only ecologically viable and environment
friendly materials for producing their goods.

6.Legal-.Involvement of state government adds credibility to the businesses. Issues like

labour laws, taxation, environment laws and consumer regulations will be taken care of in
this model.

How is this alliance be different as compared to other state and central government
initiatives (like KVIC)

As far as KVIC is concerned, their business model involves providing Raw Materials to self
help groups of the artisans through established businesses, and collect the finished goods
to be marketed and sold by KVIC outlets and through independent businesses. The
artisans get paid the labour charges only, though they get assured employment. Its
functions also comprise building up of a reserve of raw materials and implements for
supply to producers. Also promote the sale and marketing of khadi and/or products of
village industries or handicrafts, the KVIC may forge linkages with established marketing
agencies wherever feasible and necessary.
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But the alliance between IIM Sambalpur and FLIPKART differs from KVIC model due to
the following reasons:-

(a) By combining institutional learning and practical industry experience, aimed at

providing entrepreneurs best practices and deeper insight on how to leverage e-
commerce for their growth.

(b) By exploring opportunities to enable pan-India market access for products made by
entrepreneurs, micro, small and medium enterprises (MSMEs) and artisans through its
marketplace.

(c) Flipkart executives will actively participate in this programme by sharing operational
know-how, market and consumer insights.

(d) Establishment of integration teams which are functional working groups made of
managers from the different partners who are assigned the task of identifying the practical
ways of implementing the alliance

(e) Faster decision on common processes, IT platform, measurement systems, managing

relationships with third parties, accounting system, etc.

(f) Stimulate a culture of permanent negotiation through which managers were supposed
to look at the benefits of the alliance (the success of the venture) before looking at the
benefits for their parent company.

(g) Revenue sharing: each partner receives the revenues generated by the alliance on the
marked proportionately to their share of work.

(h) Project Team: Individual partners are executing their own operational plan based on
the contractual agreement.

(j) Partnership would benefit customers “in making a purchase decision through rich
product content, secure payments, fast delivery, and easy returns on FLIPKART platform”.

Ways of meeting objective and creating value from this alliance are given as below:-

(i) Revenues generated by the alliance through volume of sales

(ii) Revenues generated by the alliance through the ability to command a high
differentiated price

(iii) Future revenues or costs benefits coming from joint R&D products or processes

(iv) Cost benefits resulting from economies of scale and scope.

(b) Value captured by partners comes from:

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(i) Distribution of the alliance profits when the alliance is structured as an autonomous
entity

(ii) Profit generated by the sales of intermediary products, components or services to the
alliance

(iii) Profits derived from products or processes developed by alliance

(iv) Ease of Doing Business for MSMEs: Through this alliance, Flipkart expand its
outreach initiatives to bring small businesses into the e-commerce fold. An operational
framework to support under-served communities will be created through this partnership to
enhance their market reach. Because of this alliance the products made by
entrepreneurs, micro, small and medium enterprises (MSMEs) and artisans will find a
PAN India marketplace. Also, this business model involves providing basic business
training to the artisans and weavers, so that they are able to set up their small business
units, produce the finished goods entirely and Flipkart provides the market reach to these
businesses.

(v) Not only this alliance will help MSMEs but also the students of IIM TO GET BEST
PRACTICE AND EXPOSURE of entrepreneurship of current times. By combining
institutional learning and practical industry experience, these budding entrepreneurs will
get deeper insight on how to leverage e-commerce for their growth. This tie-up will give
an opportunity to create industry-focused applied research in the areas of Artificial
Intelligence (AI), Natural Language Processing (NLP), and Machine Learning (ML) for
students and professors to work closely with Flipkart on research projects.