ISPES Section I

Case Study Project report

Academic year 2021-22

BBA Semester I
ICA Component-15 marks

Case Study 1

Title: A Yarn Manufacturing Company

Prepared by: Division, Roll No, email ID and Name of the Student:
1. C049 naman.agarwal352@nmims.edu.in
 Introduction
Outcome:
These case studies about family businesses will enlighten us on how they
survive through various business cycles. It gives us deep insights into how small
businesses, with limited resources and knowledge, put up a fight against huge
corporations and MNCs. It also teaches us that family businesses not only
operate for profit but also to serve society and create an impact to our world in
their own way. Taking interviews with business owners has helped us gain
tremendous knowledge about the functioning of family businesses.

Key Players:
Case Study 1:

Company A was started by the founder in the Year 1995 who has been till date
managing it with full dedication, however, his child has taken over as the
managing director of the company and enlightened the company with his point of
views in certain decisions. Being a part of one family, there is always clear
transparency, honesty and trust in everything done among the partners. Thus,
creating no sign of betrayal or misuse of power. The key players in the interview
were the founders of the company aged between 70-80years, the managing
director of the millennial generation aged 33 years and some top-level
employees.
 Case Study 1
COMPANY A
A YARN MANUFACTURING COMPANY

Introduction
The following case study touches on the topics of leadership, employee
engagement, conflict management and entrepreneurship in a well-established
family-run company.
Company A is a well-established partnership firm, an IS0 9000, incorporated in
the Year 1995, with an interest in manufacturing and exporting Polyester yarn. It
has its head office in Mumbai while various manufacturing units are established
in Daman. It is primarily a family-owned business, with now being run across by
two generations; Baby boomers and Millennials.
This case study is done by conducting an interview with the founder of the
company aged 72 years, managing director aged roughly 33 years old and a few
employees and workers. The purpose of the project is to study some of the
conflict and crisis scenarios faced by company A in their management, supply,
etc by taking a view of both generations and providing the company with the best
solution by exploring various alternatives.

Leadership Style:-
Company A follows a centralization method being a family run business. Starting
with the Directors of the company and Top-level employees the decision is then
transferred to the employees/labourers working in the company.
This company follows an autocratic leadership style where the director or founder
remains responsible for most of the decisions. This can be visible with the
director being concerned with every small decision taken for the company in
regard to production, supply, management, etc and giving the final word to the
employee himself. The directors make sure each decision is personally
transferred to the respective authority. Almost 73% of the employees said that
they were extremely satisfied with this type of leadership style as it shows the
deep concern of the director regarding the health of the company, providing
strong long term financial security for the company and their salary. Moreover,
the personal interaction between the employees and the director makes them
feel comfortable or guided through. However, the remaining 27% felt demotivated
as most of the decisions is taken by the centre and they lose their independence.
Ideation, Formation, Execution of the Business:-
Company A was the industry leader in the distribution of polyester, POY, Polyester
yarn, etc back then in the 1980s. Gradually, after working as a distributor for almost a
decade the founder had gathered enough capital to backwards integrate and establish
his own manufacturing unit along with his family members. Additionally, being a
distributor the founder had contacts of plenty of manufactures and customers of
Polyester yarn.
Today, Company A has a production capacity of 45000 tons per annum with 3
manufacturing units which have helped them establish a strong presence in the export
market as well as domestic.
An astonishing fact, the founder does not have a single degree with him. Today, the
company has reached its height only because of the founder’s dedication.

Conflicts/ Obstacles.. Solutions:-

Every business is big or small faces certain challenges in its lifespan. In recent times,
Company A has been facing a major conflict in decision making between the partners
due to different ideologies between both generations. The company has little or no
exposure to the internet. Now, on one hand, the Generation of Millennials is advising on
heavily investing in new software and online marketing to build a strong presence on the
internet and attract new customers. However, the Generation of Baby boomers is
orthodox in nature and believes in extreme privacy making them fearful of the fact that
building a presence on the internet may make the company visible to various relatives,
family friends and may catch “Buri Nazar”. Another conflict being faced is that the
Millennials want the company to shift to a more decentralization method where strong
power is delegated to the various department heads creating faster decision making
while the director wants to remain rigid on centralized management.
A crisis being faced in the production sector is the huge fluctuation of crude oil price
which simultaneously increases the cost of raw materials leading to an increase in the
selling price of polyester yarn. This all, in turn, affects the demand of yarn in a negative
way leading to a loss in revenue.
The possible solution to the initial problem of conflict in regard to software relies on this
popular quote by Bill Gates, an American business magnate: “If your business is not on
the internet, then your business will be out of business”. Thus, Company A should
invest in software in order to grab a greater market share and attract more customers.
Additionally, interaction with the managing director made us aware of the fact that the
company has an excess amount of idle cash lying in the bank; thus creating no financial
barrier in investment. We agree with Generation X and believe that the company should
continue following a centralization method as the company partners are sensitive to
every decision regarding the company.

Government Intervention:-
There is extremely low central government intervention in any negative possible way in
the business; thereby maintaining a healthy production. However, on a positive note,
there are subsidies provided by the central government on the purchase of machinery
and production as the industry comes under the textile sector.
Furthermore, there is heavy support from the local government of Daman & Diu by a
reduction in electricity cost, area cost due to the creation of over 500+ jobs by Company
A.

Contribution to the Society:-

Company A has achieved a green certificate by the local government for the installation
of 20+ solar panels on the roof of the factory. This has reduced the dependency of
company A on non-renewable sources of energy, impacting the environment in a
positive way.

Employee Engagement:-
The prospective employees need to meet certain requirements laid down by the
director. Some of these include good communication skills with the managers and the
people alike. Basic accounting skills is a must in this day and age and especially in this
company. Employees either need to have certain educational qualifications or have
some prior invaluable experience.
The sex ratio in this company has always been positive from the get-go and has valued
the woman workforce a lot. Currently, the company has 35%, white-collared woman
employees. Also, 55% of the factory workers consist of women as they are the ones
who are specialized in tailoring.
Employees are regularly learning from their peers and colleagues which help them grow
and be a bigger part of the company. This enables them to hone their skills and expand
their boundaries as an employee.
The employees are treated like family and are taken care of very dearly.It has been very
evident after conducting the survey that almost 80% of the workers have agreed for
regular health checkups and are reimbursed with regular medical needs and facilities.
Future plan/diversification:-
Company A at present has a strong presence in the export market particularly in Saudi
Arabia, Europe and Latin America. However, after discussion with the millennials the
company plans to step into vertical integration by setting up a manufacturing unit of
garments. On the other hand, the millennial generation is really keen on setting up a
subsidiary company for investing in startups, stock market; thereby using up the idle
cash in bank accounts in hope of good returns in future.

Conclusion:-
In the above case study, we can clearly see a difference in the magnitude of
management style between the older generation and the younger millennials. The
company has been a responsible entity and has ensured the growth of all stakeholders.
However, the company has successfully navigated itself through the business cycles in
the past 26 years and has grown as a result of it.
 Case Study 1 -Analysis
-Social Factors that Impact Business and Society

Demographics
Company A has been in business for almost 26 years, being run by almost more
than two generations now. This means there is a difference in upbringing,
ideologies, perspectives in regard to various things between the generations.
Now, on interaction with the millennial generation managing director, it was
further revealed that these different upbringing ideologies have led to various
conflicts among the management before taking any decision for the company.
For instance, the MD aged 33 years old has been influenced by the stock market
to a vast extent and believes the company should invest surplus cash in the
stock market while on the other hand the older generation is fearful about the
stock market due to various crashes in the market believes surplus funds should
be kept in a fixed deposit in the bank. Hence, the impact of these little conflicts
on the business due to the demographic difference can demotivate the
employees in regard to the survival of the company.
However, certain demographic differences have led to a positive impact on
society such as the idea of the millennial generation of installing solar panels in
the factory through the older generation was against it due to heavy installation
costs.

-Notes on Hofstede

Uncertainty Avoidance
As for uncertainty avoidance, Company A is likely to score high as they believe in
controlling the future and strive hard to do so in every possible way as the future
is unknown. As discussed earlier the company has successfully installed 20+
solar panels in their manufacturing unit which comes in regard to the major
concern of possible electricity cut-offs in the near future; as today maximum
manufacturing plants in India are controlled via coal, a non-renewable source of
energy.
Additionally, interaction with the director made us aware of the fact that Company
A has installed one of the best fire alarm systems, fire exit, etc in the
manufacturing units in concern for any mishap which may lead to the industrial
unit catching fire and destroying the machines as well as harming the labourers
working there.

Power Distance
Company A would generally be on a higher side approximately close to 80 when
compared with Geert Hofstede’s model of power distance as it prefers a
centralized method of working. This roots back with it being a family-owned
business and the director being concerned with every aspect of the company.
Interaction with the employees made us aware, they don’t seem to mind it as the
decisions made are in the best interest of the company.

Conclusion
The case study of the companies was done in a comprehensive manner and has
helped us obtain a lot of knowledge regarding the practical functioning of a
business.

Case 1:-
Speaking of Company A, studying their case helped us understand how
demographics can lead to a conflict in the management style of the
company. Nevertheless, it also proved how at times conflicts due to
different ideologies can lead to creativity and innovation in the company
having a positive impact on the business and society. For instance;
installation of solar panels on the roof of the manufacturing unit.

Most importantly, this case study teaches us the most important lesson
about trust. It was the trust and faith among the partners that helped the
company grow from a small trading company to become one of the largest
manufacturers of polyester yarn in India.