An Aspiring Entrepreneur..............................................................................................................................................2 The ‘Capital’ Constraint ................................................................................................................................................4 Freelance Programmers Limited....................................................................................................................................6 Irregular Supplies ..........................................................................................................................................................9 The Shenandoah reaper – Part I...................................................................................................................................10 The Shenandoah reaper – Part II .................................................................................................................................11 The Glass Ceiling – Part I............................................................................................................................................12 The Glass Ceiling – Part II ..........................................................................................................................................14 The Refugee Girl from Germany.................................................................................................................................16 The ‘Unfair’ Excise Policy ..........................................................................................................................................18 The Unwilling Market .................................................................................................................................................19 The ‘Engineered’ Entrepreneur ...................................................................................................................................20
* Prepared by Prof. Mathew J. Manimala as a basis for class-room discussions
An Aspiring Entrepreneur
Mr. K. Nagesh hails from a middle-class family. His father was an officer in the Finance department of the Government of India; he has retired recently and is settled in Delhi. Nagesh had his School and College education in Delhi. Though he was a bright student, he could not achieve his desired goal of doing B.Tech. in Electronics/Computers from one of the IITs. So he took up studies at the Delhi College of Engineering in the branch of Mechanical Engineering. Soon after he completed his engineering studies, he got a shop-floor job with TELCO in 1982. Considering the jobs available for mechanical engineering graduates in the early 1980s, this was a very good job. However, Nagesh was not happy with it, as his heart was always with electronics and computers. Since he has not had any professional education in the field, it was not very easy for him to get a respectable job in a computer/IT company. Starting something on his own in the field was an option but he felt that it would be very risky because of his lack of education or experience in the field. Nagesh was therefore considering the various options available to him. • Even with his mechanical engineering background, he could get a job in a computer/electronics company. But without proper qualifications, the chances of his getting into the mainstream business was low. Opportunities for part-time education in computers near the place of his work was nonexistent at that time. Nagesh was prepared to quit his job to pursue full-time studies in electronics/computers. But his parents were not in favour of that. They thought it was unwise to leave the job in a respectable company, especially at a time when his father was retired and the family had to depend on his income to a large extent. Nagesh spotted a few business opportunities in the computer and electronics field: a) There were hardly any companies doing the maintenance of electronic equipment in those days, except CMC. The latter would do it only for government organizations, leaving a large gap in the private sector. b) The most neglected segment is that of the low-end machines. But the problem here is that these machines are widely dispersed and give very low returns compared to the efforts required to maintain them. The high-end machines, on the other hand, will give good returns but needs very high levels of expertise as well as investment. c) Large companies selling computers find it unviable to service the machines even during the warranty period. However, there was no system at that time to contract out such services. So it would be difficult to persuade these companies to do so and take a service contract from them.
* Prepared by Mathew J. Manimala based on an enterprise report in Business India, November 18–December 1 1996, pp. 184-185.
so there were difficulties in creating a business opportunity from this situation.3
d) Computer manufactures at that time were concentrating on large volume/large value sales. Prepare a detailed plan for the start-up.
. e) Networking of computers within the organization was not very common at that time. implementable and cost-effective solutions to his problems. specifying the choices to be made at each stage and justifying those choices. (ii) his inability to attract highly qualified professionals for a venture to be started by him (such professionals would rather work in large reputed companies and would not care for a start-up venture). Nagesh is thinking hard for a way out to fulfil his aspiration to be an entrepreneur in his chosen field. however. f) In a casual conversation with an NRI entrepreneur it was suggested that Nagesh could take up the distribution of the communication equipment being manufactured by the NRI. Companies were not very convinced about the advantages of networking. some complaints that the equipment manufactured by him had quality and reliability problems. November 18–December 1 1996. One of the segments that was neglected at that time was the educational and scientific research institutions. (iii) shortage of funds and/or investor partners with the right competencies. You are required to suggest innovative. pp. 184-185. but there is a risk of the developed market slipping away into the hands of large players. g) The most important problems being encountered by the aspiring entrepreneur. according to his own perception. There were. The latter was also prepared to provide part of the initial capital required. are the following: (i) his own lack of expertise in his field of interest. Under these circumstances. even though the scope for such work is fairly large. Developing sales in this segment could be a business opportunity.
* Prepared by Mathew J. Manimala based on an enterprise report in Business India.
Educated individuals could get concessional finance up to 80% of the project cost. David’s lack of knowledge in the English language was also perceived by him to be a disadvantage especially when dealing with suppliers and customers from outside the state.4
The ‘Capital’ Constraint
At the age of 14. two sisters and a brother. The job was. David’s personal situation posed a few problems. With the confidence he has gained about executing FRP fabrication work. brother and sisters. bath-tubs. as per the project report being supplied by the Industrial and Technical Consultancy Organization. Though he belonged to the Anglo-Indian community. The advantage of buying this project report was that it would almost automatically be accepted by the public financial institutions. Even if he was eligible for concessional finance. there might be problems with drying or the work might develop cracks later.) using fiber-glass reinforced plastics (FRP). so to say. The cost of such a project report was Rs 1000/-. Mathew J. furniture. On taking up the job. because of his father’s accidental death in 1974. but also for giving anti-corrosion lining for vessels and tanks in the chemical industry. which was the government–approved agency for preparing SSI project reports. roofing sheets etc. His employer was very secretive about the right proportion of resin and accelerator. David felt that the market is large enough for several players. which seemed to be insurmountable. While David was a very good worker. But this is not available to David because he was a school dropout. Manimala based on the information supplied by an aspiring entrepreneur who wishes to remain anonymous. The minimum investment required for a project of this kind at that time was Rs 10 lakh. Four years of work helped him to save about Rs 5000/-. As the FRP technology (of reinforcing several layers fibreglass mats with a combination of resin and accelerator) is used not only for fabricating consumer durables. it was impossible for him to raise the 20%. he could hardly speak or write English as the family lived in a village.
. David was not even in a position to invest his own savings (Rs 5000/-) because he needed that amount or more for maintaining the family until the new business became viable and yielding. wash-basins. which would be Rs 2 lakh. David thought that he could himself start a similar business rather than waste his life working for a meager salary. forced upon this 9th class student in a vernacular-medium school in rural Kerala. While the opportunity was tempting. • The main problem was that of finance. he had to move to the nearby town where his employer’s firm was located.
• • •
* Prepared by Prof. If this proportion was not correct. He took upon himself the responsibility of looking after his mother. David Gonsalvez had to discontinue his studies to take up a blue-collar job in a small company doing fabrication of consumer durables (such as helmets. There he lived in a rented room with his mother. he felt that his knowledge of the FRP technology was inadequate.
He is keen on starting his own business. Mathew J. Manimala based on the information supplied by an aspiring entrepreneur who wishes to remain anonymous.
Assignment You are expected to find a way out for David. Advise him on the practical and cost-effective ways in which he can achieve his goal.
* Prepared by Prof.
Compared to individual freelancers. not as employees.
The opportunities provided by these problems were also correspondingly large. These professionals were registered with the company as “panel members”. The company’s job was to get business and allocate it to the panel members based on their interest and availability. operating from her own home. Mathew J. which was given at Shirley’s own house. with the files piled on top of the piano. Even though they were supported to be freelancers operating from their own houses. It was not a very pleasant existence at all in the initial years. each operating from her own home. two more in the living room. The motivation for the start-up was two fold: (i) The difficulty experienced by Shirley in getting re-employed after she had taken a break from her job for family reasons. and the realization on her part that this may be the case with several other qualified women professionals. it had a variety of competencies to offer and the capability of taking up larger projects because of
* Prepared by Prof. and the baby and me at the dinning room table. Even though there was enough scope for a few large players in the software segment. Shirley’s answer to this problem situation was to create and co-ordinate a consortium of freelance women programmers. as Shirley recollects: “In our tiny cottage.6
Freelance Programmers Limited
Freelance Programmers Limited was founded in 1962 by Ms Steve Shirley with an initial investments of £6. came to the UK from Germany during the Nazi persecution.
The initial size of the company was 12 freelancers working for it on a retainership arrangement. Hence a via-media organizational solution was to be found. It was pretty much like hell. Shirley. The prevailing practice of large computer companies focusing almost exclusively on the hardware aspects of computers.” In spite of its hardships in the initial years. Freelance Programmers grew fast because of its cost-effective and flexible organization. Manimala as a basis for class-room discussions
. who was of Jewish origin. some of them had to be given the space to sit and to work. • • The market for software products and services was largely unexploited and growing very fast. I had one woman working in a spare bedroom. She studied mathematics at school and worked with British Telecom and ICL before starting her own venture. to the near-total neglect of the software issues by the organized sector. if such companies were to be organized in the traditional manner with heavy overheads. they would not be able to compete with the freelance professionals operating as individuals and with very little overheads.
the company expanded its activities further offering its products and services to three major sectors. Mathew J. However. By 1984 the company became the 20th largest computer consulting firm in the UK with a market-share of 1. By 1970. others became unhappy about it. The all-female employment policy was not helpful in ‘hiring’ the best talents. etc at the customers’ premises. even though they have joined the company as panel members. Financial.5 million with a staff strength of more than 800. While the profitability was good. it had over 100 people working with it and had operations in two foreign countries. Growth has brought with it some problems as well. The name “Freelance Programmers” was becoming a deterrent to a few large clients. its turnover crossed £1. the home-bound nature of its panel members came in the way of organizing discussions. it was not possible because people were not available at one place at a fixed time. especially in areas where there were skill shortages. Besides. Manimala based on published material. The retention fee given to the panel members were very low as the company operated exclusively with women professionals who had become ‘unemployable’ in the organized sector because of the career break taken by them for family reasons. It was undoubtedly the cost-advantage associated with the flexible organization that helped the growth of Freelance Programmers. the company had very little overheads in terms of office space and equipment. Working from home had its other disadvantages too. and Public Sector. testing. Denmark and the Netherlands. There is hardly any spontaneous interaction and knowledge-sharing among professionals.5% (the largest one had a share of 4%). When the recession eliminated a few other competitors. • The investment needs of the company was growing fast. When some were given organizational responsibilities out of the exigencies of work. who saw a lack of professionalism implied in the name. after disguising the identity of the person(s) involved. who were paid only if they were given work.
. Even when some professionals wanted to hold discussions with others particularly on complex issues relating to large projects. There was also no commitment of salaries for the panel members. Many professionals had career ambitions.
* Prepared by Prof. Commercial. trouble-shooting. It could manage the severe recession of the early 70s only because of its flexibility and low overhead costs. since these professionals were retained as panel members operating from their own houses. Its operation spread to many more countries including the US. internal accumulation was not sufficient for meeting the expansion needs of the company.7
the large number of professionals available to it. By the early 1990s.
The company board is meeting this evening to discuss these and various other issues. after disguising the identity of the person(s) involved.8
There were also complaints about work allotment. Those who had locational proximity or were keeping in regular contacts with the head office were alleged to be favoured with more prestigious and interesting assignments. there was widespread unhappiness about work allotment as well. Since the nature of work also had a bearing on the remuneration. Manimala based on published material.
. Could you please advise the board on the future course of action for Freelance Programmers?
* Prepared by Prof. Others were given routine and uninteresting work. Mathew J.
When he enquired with the weavers about the reason for their irregularity. Local moneylenders used to charge very high rates of interest. What are your recommendations?
* Prepared by Prof. Mathew J. He thought of bringing the goods from Bombay.
. Assignment Examine the courses of action available to the trader under the above circumstances. The trader therefore had to find a way to ensure uninterrupted supply of goods in his shop. Besides. There were no banks in the area. The one located in the town was not interested in lending to small operators particularly in the rural area. the transporters were not at all reliable. The weavers therefore have developed a habit of working intermittently as and when their own money from sales came in. but found that the process would be very expensive and time-consuming. when a physician-turned textile trader in rural Karnataka found his business getting interrupted for want of regular supplies of cloth from the weavers. he was told that there was no working capital available to them. Manimala based on published material. after disguising the identity of the person(s) involved. borrowing at those rates had ruined some weavers in the past. as the area did not have any direct road/rail links with Bombay.9
It was the early 1930s. without which his own business was not viable.
John had witnessed starvation in the cities and undernourished children in townships due to chronic food shortages. 1964). When the reaper went into commercial production and sale. during those early days farmers had little money to buy such costly equipment. the American economy was struggling to recover from the destruction and destitution caused by the American War of Independence (1763-83). which made John thinking about the causes of such shortages. For Cyrus too. However. it was very critical to increase the sales. Also International Harvester: A History of Invention (Chicago: International Harvester Corporation. John came to the conclusion that harvesting is the major constraint among the various activities involved in farming. As harvesting is a time-bound activity that can be started only after the grains are ripe and has to be completed before they fall to the ground.2. and farm productivity was increased more than tenfold. cutting 6 acres of wheat in less time than a healthy farmer could cut one acre with a scythe or sickle. So he started working on the development of a mechanical reaper. He made the first reaper in 1831 and unveiled it in the Shenandoah Valley. 1987).
. John’s answer to this problem was to create a new method of harvesting food grains. It was indeed quite paradoxical that there should be food shortages in a country having vast stretches of arable and fertile land. but died with his dream unfulfilled! It was John’s son Cyrus pursued the idea further and finally designed and developed the reaper. where John McKinley (not the real name) had his farm. Film No. who had invested a lot of time and money on this invention. Thus the new invention created financial problems for both the inventor as well as the potential user. The Shenandoah Reaper replaced the way farmers had harvested grain for more than 2.000 years. it created chaos among farmers because those who had a reaper suddenly out-produced their neighbours by a substantial amount and could market grain at very low prices. The farmer who worked only with a scythe quickly realized that he had to accept the inevitable change and purchase a reaper or lose his farm. Assignment Discuss the course of action that may be taken by Cyrus to increase the Reaper sales
Source: Adapted from The Entrepreneurs: An American Adventure (Boston: Enterprise Media. Unfortunately he could not complete the work. During the early 1800s. This would imply that a farmer can cultivate only as much as he can reap using a scythe or sickle during the ripening period.10
The Shenandoah reaper – Part I
The Shenandoah Valley was a sleepy agricultural village. Hence the sales of the reaper were very sluggish. Based on his own farming experience.
Prior to the Civil War.
The Shenandoah reaper – Part II
In view of the sluggish sales of his new harvesting equipment. This innovation in financing may have been as monumental as the invention of the reaper. 1964). their fire-arms became legends in western folklore. and although a credit craze did not materialize. A commercial finance industry evolved several years later to provide equipment loans to manufacturers. IH introduced more than 200 models of field planting and harvesting equipment. however. The heart of McCormick’s business.2. 3. Evaluate the strengths and weaknesses of the strategies that led to IH’s success and compare them to what may be done in newer industries. This system made field repairs easy and allowed farmers to replace worn machinery parts. One of the first actions taken by him in his new company was to let farmers use the reapers and pay on credit terms. He encouraged them to think and act independently and many unusual innovations were made. was his line of International Harvester machinery.
Source: Adapted from The Entrepreneurs: An American Adventure (Boston: Enterprise Media. Identify and classify the innovations introduced by McCormick. Cyrus McCormick (real name) founded a company – International Harvester Corporation – with the main objective of facilitating large-scale adoption of the reaper by the farmers. Later McCormick refined his credit policies and introduced installment sales with low down payments and periodic payments. Evaluate the spin-off effects and impact of a simple invention like the reaper on the style and quality of people’s lives. McCormick was an inventor-turned-entrepreneur who recognized the value of marketing. Each item was based on the simple idea that a standard model using interchangeable parts could be produced in large quantities and sold. but he also hired the best people he could find with marketing and engineering talent. Assignment 1. and serviced at very low costs. who used interchangeable parts in his manufacture of fire-arms. many companies such as Kraft and Wells Fargo quickly adopted credit policies. Together. Film No. During 20 years spanning the reconstruction period following the Civil War. and soon had sales offices in every state and territory in the country. the company introduced four-color advertisements and posters. for example. he created brochures to attract customers. 1987). 2. and the Winchester Company quickly followed. and these evolved into mail-out orders that were among the first efforts at direct marketing. Also International Harvester: A History of Invention (Chicago: International Harvester Corporation. The idea was adopted by Samuel Colt. repaired. these were the forerunners of billboards. Later.
evaluate and select sub-contractors for developing and installing the software required for supporting the bank’s operations. In the UK too. that. this epithet gained a lot of legitimacy because of the fact that pensioners really preferred this town for a peaceful life after retirement. Apparently there was a conflict between the thinker and the doer in him. While in India. the poet and philosopher in him still craved for more intellectual pursuits. wherefrom he graduated in 1971 with Chemistry as his main subject of study. the UK and finally California.
. a Citicorp subsidiary based in California. South America. But a career in literature was perceived as slow-moving and non-remunerative compared to those in business and management. he built Citibank’s most successful Asian retail and credit card franchises.12
The Glass Ceiling – Part I
Jayadeva Reddy (not the real name) had an exceptionally bright academic career. and had won a few prizes in poetry writing competitions. Jayadeva was therefore counselled to pursue MBA studies. The sub-contracts that he used to award to software SMEs were in the range of USD 1 to 2 million. Although he did very well in his doctoral studies. as a basis for classroom discussions. India. where he had interest and competence. one of his responsibilities was to identify. In the latter job. which then triggered an entrepreneurial thought in him that he could be the recipient of these contracts rather than the giver. which he did at the Indian Institute of Management Ahmedabad (IIMA). far from the hustle and bustle of the commercial cities of Bombay (Mumbai) and Madras (Chennai) and the scorching heat of the plains. he was instrumental in building the bank’s consumer business. That became a recurring thought especially when he served Citicorp in India also as a Director of Investments in the IT sector. Indeed. apparently. He has also served as Head of the Development Division of Citicorp and Chairman and CEO of Transaction Technologies Inc. Jayadeva therefore was sent to Loyola College. as the country head for consumer banking. Though Bangalore did have a few educational institutions including the renowned Indian Institute of Science (IISc) – which offered only postgraduate and research courses – none of the undergraduate colleges in Bangalore had the facilities and reputation of Bombay or Madras based colleges. Manimala using published materials. was not his passion. as his position gave him opportunities to work in New York. Mathew J. for his graduate studies. Jayadeva held many important portfolios and developed a truly international perspective of the world business scenario. Madras. which led him to take up doctoral studies at the Graduate School of Business (GSB) of the University of Chicago. and finally just before writing his dissertation. Though Jayadeva came out with flying colours in his undergraduate studies of Chemistry. and it was getting constantly reinforced when in contact with his own uncle
Prepared by Prof. he left his doctoral studies to take up a corporate job with Citicorp. the seeker in him was becoming increasingly restless. While a degree from IIMA opened the flood-gates of corporate careers to Jayadeva. For a time he toyed with the idea of specialising in literature/journalism. He was born in 1952 in Bangalore (South India) – then a sleepy little town of mild weather and therefore often called “the pensioners’ paradise”. At Citicorp.
during the late 1990s. Jayadeva was among the top 50 managers of the firm. who constituted Citicorp’s Operating Review Group.13
who ran a successful software firm in India. Citicorp kept on rewarding Jayadeva with periodic promotions in recognition of his excellent performance on whatever task assigned. Later in California. Should he try for an entrepreneurial escape or find solace in writing poems and historical novels. Manimala using published materials. The glass ceiling naturally was invisible but apparently impenetrable. Mathew J. And yet there was a lingering feeling within him that he would never make it to the top 15 who would be steering the company’s destiny. as a basis for classroom discussions. As head of the Development Division. which was indeed a passion for him?
Prepared by Prof.
. he felt himself to be an odd man out because every other person he met there was running his own company! But career considerations have always outweighed entrepreneurial ideas and aspirations.
Today.000 was achieved primarily through a series of acquisitions.000 employees are women. It should also be noted that more than half of these 12. “If they had promoted me. The reputation that I was a person who could be trusted. which included a 25% investment by Bearings Private Equity Partners India Ltd. There were just 2 of us in 1998”. Jerry Rao’s explanation on this was quite edifying.
. Manimala using published materials. “as a favour to this friend”. they did me a favour”. But when the IT industry slowed down.14
The Glass Ceiling – Part II
It was when the perceived glass ceiling (refer Part-I of the case) began to be felt as real that Jaithirth (Jerry) Rao (real name of the protagonist in Part-I) decided to take the entrepreneurial plunge. and so Bearings made a merger proposition to Jerry. as a basis for classroom discussions. ‘No. that call centre started growing gangbusters. a colleague from the same bank. But bad luck struck the fledgling new venture in the year 2001. 100% quarter on quarter. which Jerry added to his company in 1999. Today we are a combined company with a top line of about USD 200 million – USD 60 million from the BPO side and USD 140 million from the IT side. we are a highend IT company. it was the reluctantly added BPO unit that saved the company from folding up. I would have stayed’. We have a total of 12. In December 1998. Implied in this claim is a philosophy of taking one’s employees into confidence and compensating them well for their contribution. purely based on my reputation for trust. “They didn’t. I never used a headhunter. Would you consider a reverse merger where they take you over and you become CEO of the joint company?” Jerry accepted this proposition as an opportunity to scale up his operations and formed MphasiS-BFL in 2000. all the people came through word-of-mouth references. it has become a BPO (Business Process Outsourcing) service provider that handles such tasks as tax returns and equity research. Unlike the first of these acquisitions (BFL). Among the several companies wherein Bearings had made equity investments was a company called BFL in which Bearings had a 52% stake. helped”. when the IT bubble burst. a friend persuaded him to take over a call centre in India. “We were in deep trouble as our growth rates plummeted. The growth of MphasiS-BFL from 2 employees to 12. Asked about his greatest achievement he stated that it is “to be able to attract a lot of very talented people to work with me in a start up that nobody had heard of. It became our engine of growth. who would treat them fairly. Together they raised USD 5 million as start up capital. “The CEO has quit at BFL.000 employees now. and we have a 52% interest there. “these are women who have suddenly become the highest wage earners in their families”. we don’t do grubby stuff like call centres’. Mathew J. said Rao.” Ironically. BFL was in trouble. Soon after the start up. “Initially I said. and according to Jerry. which was
Prepared by Prof. The Bearings connection brought in a further impetus for the growth of MphasiS. “That is when things really took off”. Jerry Rao quit his Citicorp job and founded the software development and consulting company MphasiS in partnership with Jeroen Tas.
It has now become the sixth largest software company in India (which was achieved in just 7 years).15
described as a reverse acquisition). The proposal is to acquire 52% of MphasiS-BFL for USD 380 million. It is indeed another case of reverse acquisition. it sought to acquire MphasiS-BFL. Manimala using published materials. When the software giant. Would it be a desirable move for MphasiS-BFL? Would MphasiS-BFL and Jerry Rao be in control of the company’s affairs after the event?
Prepared by Prof. the subsequent ones were all initiated by MphasiSBFL in order to broaden its product offerings. China. North America and Central America.
. Mathew J. Australia. the company has 10 offices in India including the headquarters in Bangalore besides having offices in Japan. Electronic Data Systems (EDS) wanted to expand its presence in India. Singapore. As of 2005. Europe. as a basis for classroom discussions.
Considering her special competencies in mathematics. her orphan/refugee status once again proved to be a major impediment. which was a parallel institution run by the same management. She was nothing more than a “glorified mathematical clerk. she felt her job was peripheral to the business. Though Sharon had the ambition to pursue her studies in maths beyond the school level. Mathew J. The software services were provided to customers by the ‘unorganized sector’ constituted by freelance
* Prepared by Prof. And yet Sharon decided not to give up. She made a special request for permission to attend maths classes in the nearby boys’ school. Sharon thoroughly enjoyed her hard-won opportunity to learn maths. It was her marriage. particularly so for an orphan girl. Manimala as a basis for class-room discussions
. as the company. focused on the hardware and neglected the software part of it. Sharon recognized that she had some special competencies in Mathematics. BT offered her the position of a “research mathematician”. when she wanted to get back into a job. The right thing for a girl in those days was to pursue liberal arts and humanities in her studies. While she did not enjoy the ICL job much on account of the company’s neglect of the software part. Even though she was working in a computer company. pregnancy and the birth of her soon. The extra time thus available to Sharon was gainfully utilized by her. that was not the reason for her to quit this job. During a nine year period of work at BT. The system was obviously unfair to the girl students who were gifted in maths and science. like many other similar companies. but the job was thoroughly boring. As a student. apparently nobody wanted her! Software was not in much demand in established companies. She took up a job with ICL. Sharon developed proficiency in computer software through her evening courses. Each one of them had a small back-pack and a number for identification tied around his/her neck.000 Jewish refugee children. and Sharon too had the good fortune of getting a shelter and the opportunity to go to school. the largest computer hardware manufacturer in the UK at that time. Orphanages and rescue homes in the UK became houses for these children. She therefore took up a job with the British Telecom. Her request was granted. rather surprisingly! Though it was somewhat uncomfortable to be a lone girl student among several boys.” The BT job was also one of the lowest paid among government jobs. But it offered her a lot of leisure and more holidays than on a private job. After that break. and it was difficult for anyone to change the system. The designation sounded great. whose focus was on the ‘solid stuff’ like the hardware. But the girls’ school where she was studying did not have maths beyond the elementary level. Maths and science were not for them to pursue. There was no research in her job. This gave her an opportunity to move from the ‘boring’ job at BT.16
The Refugee Girl from Germany
In 1939 Sharon Herzlinger (not the real name) crossed over from Germany to the United Kingdom along with about 20. she used her spare time for learning computers. it was not possible for her to do so. which were just becoming popular at that time.
and they were treated as ‘untouchables’ by established organizations. While the sector was growing fast. The large players with their overheads found it difficult to compete with the freelancers. Sharon too had her thoughts on creating her own enterprise. Mathew J. For a field that was changing so fast. there were very few organized players in the sector. who could offer employment to others. Assuming that you were in Sharon’s position. Manimala as a basis for class-room discussions
* Prepared by Prof. such a break is enough to make the professional obsolete. But the greatest stigma on women professionals like Sharon was that they were not in touch with the field for some time. but found that the investment needed for meeting the overheads and the cost of the professionals was formidable! Group Task Discuss Sharon’s situation in groups.17
professionals. what would you have done? Justify your action-plans.
when Dinkarbhai returned from the Middle East to his native town in Gujarat. The textile manufacturers’ association has been making several representations to the government for correcting the ‘anomalies’ in the duty-structure. but by a consideration of his own competencies. Mathew J. The friends cautioned him against doing any business in the textile industry. In this scenario. This has naturally created an artificial advantage for the power-looms. there is apparently no place for a new player. which could produce equally good quality textiles. however. The latter.18
The ‘Unfair’ Excise Policy
During the early 1970s. The textile industry in India was in a recession. whereas the power-looms. The hardest blow was on the composite mills which had to pay excise duty on their products. were exempted. The only competency he could confidently boast of was his ability to accurately discern the quality of yarn. Manimala based on published material. have difficulty in marketing their products. This ability was developed though his experience of having worked with a trading company for about 20 years after his matriculation. after disguising the identity of the person(s) involved
. Can you suggest a way in which he can start a new venture in the area of his competency?
* Prepared by Prof. are small operators and therefore. Assignment Examine the possibility of Dinkar starting a textile business. He soon realized that there was hardly any match between his own competencies and the market conditions. he had ambitions to set up a textile business of his own. The choice of textiles as the area of his potential business was not guided by any analysis of the industry and market. Dinkar spoke to a few friends working in the textile industry to get a clearer picture of the industry scenario. but the government remained firm in their ‘pro-SSI’ policy. and so Dinkar was wondering whether to go ahead with his proposed project. Their argument was that when the quality of the goods is the same it is unfair to have a different dutystructure. beyond which he had not had any opportunity to pursue formal studies.
Two days later Piyush went to the stores to find out about the fortunes of this new venture. In the early 1980s. He thought that the best place to launch a new venture of this kind was Mumbai. each dozen separately packed in paper boxes as was the practice in those days. was placed in stores. The first ‘consignment’ of 50 dozens. Piyush found it a relatively easy task to sell pens.
. after disguising the identity of the person(s) involved.19
The Unwilling Market
Mr Piyush Jain was a salesman with a company in Calcutta. When Piyush was transferred to Chennai to take charge of that region. concerned that there was hardly any variety in designs – the existing manufacturers were not interested in bringing out new designs as they were comfortably settled in their niche markets. He was. Manimala based on published material. and expressed their willingness to promote the new designs if supplied. Mathew J. he got the opportunity to develop a more comprehensive perspective of the market. manufacturing writing instruments. Encouraged by such promise of support. He therefore resigned his job and moved to Mumbai. At Mumbai. He was shocked to find that not a single pen was sold! Assignment Please advise Piyush whether he should go ahead with his new venture. and he got increasingly convinced of the scope for introducing new varieties and designs into this stagnant market. If so what kinds of changes would you suggest in his manufacturing/marketing strategies?
* Prepared by Prof. the commercial capital of the country. when there were very few manufacturers of writing instruments. however. Piyush contacted a few distributors who too agreed with him that there was tremendous scope for new varieties and designs. Piyush commissioned a mould-maker to manufacture 600 pieces of a new design of pen.
He particularly liked the exercises on Achievement Motivation Training (AMT). Arun was inspired by this speaker and decided to start his own venture after his graduation.000/-. Under this scheme. The investment required for the project (as per the project report) was Rs 1 million (10 lakhs). he started looking for partners. Since SIDC had ready-made factory buildings in the industrial estate with road. and ‘machinery’ mainly for making dies and moulds. In one of his courses (Industrial Management) he had some lectures on entrepreneurship delivered by a guest speaker from a reputed national level institute of entrepreneurship (NIE). which implied that Arun had to raise Rs 200. who were available in plenty. the banks would lend 80% of the project cost as term loan. furniture.000/. only three were actively involved in the business. Mathew J. which
* Prepared by Prof. One had a job. which was the number recommended in the project report. which included land at a special price from State Industrial Development Corporation (SIDC). SITCO officials reassured him that FRP is a very simple technology (involving the reinforcement of fibre-glass mat with a mixture of resin and accelerator for as many layers as necessary for getting the required strength). etc) with Fibre-glass Reinforced Plastic (FRP). even though Arun felt that he does not have the required knowledge in the field.000/. thus raising the Rs 200. With their arrival. Arun obtained a project report from SITCO for manufacturing consumer durables (like helmets.20
The ‘Engineered’ Entrepreneur
During the mid-1970s when Arun graduated in Mechanical Engineering from a local engineering college in Kerala. Out of the four partners. power. jobs were scarce even for engineering graduates. particularly because of the facilitative attitude of the various government agencies involved. which he did. roofing sheets. The programme at NIE helped a lot in enhancing his credibility with the government agencies. bathing tubs. Arun found the course to be very useful. water and telephone facilities. The entrepreneur has to raise 20%. and can be easily managed through a few experienced workers. SITCO officials told Arun that money should not be a problem for him because of the low-interest (12%) loans available on SITCO project reports for engineering graduates from the State Financial Corporation (SFC). which showed that he was very high on the Need for Achievement (n-Ach) and therefore has the potential for becoming a successful entrepreneur. who were easily available from among his friends. The faculty from the national institute advised him to join a short course in entrepreneurship offered by NIE. Three of them joined the project with Rs 50. Participants of NIE programme were eligible to get a free project report from the State Industrial and Technical Consultancy Organization (SITCO). As he had difficulty in raising this amount himself.including Arun’s contribution of the same amount. Arun found it to be quite easy. there was no delay in starting the new business. Manimala as a basis for class-room discussions
. In any case. he had to recruit ten workers. building for factory as well as office. as he was a mechanical (not a chemical) engineer. wash-basins.each. there would not be any problem about the knowledge and skills required for the project. Contrary to the general perception about the start-up process. This project was chosen on the advice of SITCO officials about the market potential of these products.
Arun had to take personal loans at high interest rates (24-36%) to meet the company’s interest obligations with the State Financial Corporation. In fact. was essential for creating the network that would support the business in times of need. where the classes would be held in the evenings every working day for three years. Some batches developed small cracks. and so he thought he was the most suitable person to be the Finance Director. and so he said he would be the Marketing Director. by Prof. The only item that showed some movement was helmet.21
kept him away from any formal responsibilities in the new venture. In the meantime he saw an announcement by the local business school about its part-time MBA programme. He then joined the programme. The second partner had a small trading business in another town. Arun. became the Managing Director with responsibilities for the factory and the manufacturing function. Socialization of this kind. as his partners put on him all the responsibility for the poor performance of the company and refused to help in any way. Mathew J Manimala. One of the strategies adopted by Arun to increase the helmet sale was to influence the state government. The third partner was a commerce graduate. Such products were discarded and only the good quality products were sent to various shops for sale as per prior arrangement. but would have the marketing office in his own town rather than at the factory. leaving the manufacturing facilities idle for other products.
* This case was prepared. Indian Institute of Management Bangalore. using the data supplied by an entrepreneur who wishes to remain anonymous
. Taking a clue from this the company started pushing this product. they started blaming him for dragging them into this quagmire and wanted him to pay their money back with interest! Arun was desperately looking for some ways to rescue his venture. often reaching back only in the evening. there was hardly any sale for their products. The products manufactured by the new venture were not consistent in quality. but the revenues were hardly enough to pay even the interest on the term loan. and found some solace in discussing the problems of other companies. as a basis for class discussion. there was some improvement in the helmet sales of the company. through a relative working as the personal secretary to the home minister. he thought. Consequent to the introduction of the ‘helmet-rule’ in the state. to make helmet compulsory for two-wheeler riders in the state. Assignment Discuss the problems of Arun’s venture in your respective groups and suggest strategies for dealing with them. To the utter dismay of the partners. being an engineer and the initiator of the venture. One of his regular chores as the Finance Director was to go to the bank every morning and socialize with the friends of his unemployment days in a near-by club on his way back to the factory.