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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
Case-let 1*
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 18December 1 1996, pp. 184-185.
d) Computer manufactures at that time were concentrating on large volume/large value sales. One of the segments that was neglected at that time was the educational and scientific research institutions. Developing sales in this segment could be a business opportunity, but there is a risk of the developed market slipping away into the hands of large players. e) Networking of computers within the organization was not very common at that time. Companies were not very convinced about the advantages of networking; so there were difficulties in creating a business opportunity from this situation, even though the scope for such work is fairly large. 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. The latter was also prepared to provide part of the initial capital required. There were, however, some complaints that the equipment manufactured by him had quality and reliability problems. g) The most important problems being encountered by the aspiring entrepreneur, according to his own perception, are the following: (i) his own lack of expertise in his field of interest; (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); (iii) shortage of funds and/or investor partners with the right competencies. Under these circumstances, Nagesh is thinking hard for a way out to fulfil his aspiration to be an entrepreneur in his chosen field. You are required to suggest innovative, implementable and cost-effective solutions to his problems. Prepare a detailed plan for the start-up, specifying the choices to be made at each stage and justifying those choices.
* Prepared by Mathew J. Manimala based on an enterprise report in Business India, November 18December 1 1996, pp. 184-185.
Case-let 2*
* Prepared by Prof. 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. He is keen on starting his own business. Advise him on the practical and cost-effective ways in which he can achieve his goal.
* Prepared by Prof. Mathew J. Manimala based on the information supplied by an aspiring entrepreneur who wishes to remain anonymous.
Case-let 3*
(ii)
The opportunities provided by these problems were also correspondingly large. The market for software products and services was largely unexploited and growing very fast. Even though there was enough scope for a few large players in the software segment, 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. Hence a via-media organizational solution was to be found. Shirleys answer to this problem situation was to create and co-ordinate a consortium of freelance women programmers, each operating from her own home. These professionals were registered with the company as panel members, not as employees. The companys job was to get business and allocate it to the panel members based on their interest and availability.
The initial size of the company was 12 freelancers working for it on a retainership arrangement. Even though they were supported to be freelancers operating from their own houses, some of them had to be given the space to sit and to work, which was given at Shirleys own house. It was not a very pleasant existence at all in the initial years, as Shirley recollects: In our tiny cottage, I had one woman working in a spare bedroom, two more in the living room, with the files piled on top of the piano, and the baby and me at the dinning room table. It was pretty much like hell. In spite of its hardships in the initial years, Freelance Programmers grew fast because of its cost-effective and flexible organization. Compared to individual freelancers, it had a variety of competencies to offer and the capability of taking up larger projects because of
the large number of professionals available to it. However, since these professionals were retained as panel members operating from their own houses, the company had very little overheads in terms of office space and equipment. There was also no commitment of salaries for the panel members, who were paid only if they were given work. 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. By 1970, it had over 100 people working with it and had operations in two foreign countries, Denmark and the Netherlands. It could manage the severe recession of the early 70s only because of its flexibility and low overhead costs. When the recession eliminated a few other competitors, the company expanded its activities further offering its products and services to three major sectors, Financial, Commercial, and Public Sector. Its operation spread to many more countries including the US. By 1984 the company became the 20th largest computer consulting firm in the UK with a market-share of 1.5% (the largest one had a share of 4%). By the early 1990s, its turnover crossed 1.5 million with a staff strength of more than 800. Growth has brought with it some problems as well. The investment needs of the company was growing fast. While the profitability was good, internal accumulation was not sufficient for meeting the expansion needs of the company. The name Freelance Programmers was becoming a deterrent to a few large clients, who saw a lack of professionalism implied in the name. The all-female employment policy was not helpful in hiring the best talents, especially in areas where there were skill shortages. Besides, the home-bound nature of its panel members came in the way of organizing discussions, testing, trouble-shooting, etc at the customers premises. Working from home had its other disadvantages too. There is hardly any spontaneous interaction and knowledge-sharing among professionals. Even when some professionals wanted to hold discussions with others particularly on complex issues relating to large projects, it was not possible because people were not available at one place at a fixed time. Many professionals had career ambitions, even though they have joined the company as panel members. When some were given organizational responsibilities out of the exigencies of work, others became unhappy about it.
* Prepared by Prof. Mathew J. Manimala based on published material, after disguising the identity of the person(s) involved.
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. Others were given routine and uninteresting work. Since the nature of work also had a bearing on the remuneration, there was widespread unhappiness about work allotment as well.
The company board is meeting this evening to discuss these and various other issues. Could you please advise the board on the future course of action for Freelance Programmers?
* Prepared by Prof. Mathew J. Manimala based on published material, after disguising the identity of the person(s) involved.
Case-let 4*
Irregular Supplies
It was the early 1930s, when a physician-turned textile trader in rural Karnataka found his business getting interrupted for want of regular supplies of cloth from the weavers. When he enquired with the weavers about the reason for their irregularity, he was told that there was no working capital available to them. 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. Local moneylenders used to charge very high rates of interest; borrowing at those rates had ruined some weavers in the past. The weavers therefore have developed a habit of working intermittently as and when their own money from sales came in. The trader therefore had to find a way to ensure uninterrupted supply of goods in his shop, without which his own business was not viable. He thought of bringing the goods from Bombay, but found that the process would be very expensive and time-consuming, as the area did not have any direct road/rail links with Bombay. Besides, the transporters were not at all reliable. Assignment Examine the courses of action available to the trader under the above circumstances. What are your recommendations?
* Prepared by Prof. Mathew J. Manimala based on published material, after disguising the identity of the person(s) involved.
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Case-let 5*
Source: Adapted from The Entrepreneurs: An American Adventure (Boston: Enterprise Media, 1987), Film No.2. Also International Harvester: A History of Invention (Chicago: International Harvester Corporation, 1964).
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Case-let 6*
Source: Adapted from The Entrepreneurs: An American Adventure (Boston: Enterprise Media, 1987), Film No.2. Also International Harvester: A History of Invention (Chicago: International Harvester Corporation, 1964).
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Case-let 7*
Prepared by Prof. Mathew J. Manimala using published materials, as a basis for classroom discussions.
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who ran a successful software firm in India. Later in California, during the late 1990s, 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. Citicorp kept on rewarding Jayadeva with periodic promotions in recognition of his excellent performance on whatever task assigned. As head of the Development Division, Jayadeva was among the top 50 managers of the firm, who constituted Citicorps Operating Review Group. And yet there was a lingering feeling within him that he would never make it to the top 15 who would be steering the companys destiny. The glass ceiling naturally was invisible but apparently impenetrable. Should he try for an entrepreneurial escape or find solace in writing poems and historical novels, which was indeed a passion for him?
Prepared by Prof. Mathew J. Manimala using published materials, as a basis for classroom discussions.
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Case-let 8*
Prepared by Prof. Mathew J. Manimala using published materials, as a basis for classroom discussions.
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described as a reverse acquisition), the subsequent ones were all initiated by MphasiSBFL in order to broaden its product offerings. It has now become the sixth largest software company in India (which was achieved in just 7 years). As of 2005, the company has 10 offices in India including the headquarters in Bangalore besides having offices in Japan, China, Singapore, Australia, Europe, North America and Central America. When the software giant, Electronic Data Systems (EDS) wanted to expand its presence in India, it sought to acquire MphasiS-BFL. The proposal is to acquire 52% of MphasiS-BFL for USD 380 million. It is indeed another case of reverse acquisition. Would it be a desirable move for MphasiS-BFL? Would MphasiS-BFL and Jerry Rao be in control of the companys affairs after the event?
Prepared by Prof. Mathew J. Manimala using published materials, as a basis for classroom discussions.
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Case-let 9*
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professionals. While the sector was growing fast, there were very few organized players in the sector, who could offer employment to others. The large players with their overheads found it difficult to compete with the freelancers. But the greatest stigma on women professionals like Sharon was that they were not in touch with the field for some time. For a field that was changing so fast, such a break is enough to make the professional obsolete, and they were treated as untouchables by established organizations. Sharon too had her thoughts on creating her own enterprise, but found that the investment needed for meeting the overheads and the cost of the professionals was formidable! Group Task Discuss Sharons situation in groups. Assuming that you were in Sharons position, what would you have done? Justify your action-plans.
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Case-let 10*
* Prepared by Prof. Mathew J. Manimala based on published material, after disguising the identity of the person(s) involved
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Case-let 11*
* Prepared by Prof. Mathew J. Manimala based on published material, after disguising the identity of the person(s) involved.
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Case-let 12*
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kept him away from any formal responsibilities in the new venture. Arun, being an engineer and the initiator of the venture, became the Managing Director with responsibilities for the factory and the manufacturing function. The second partner had a small trading business in another town, and so he said he would be the Marketing Director, but would have the marketing office in his own town rather than at the factory. The third partner was a commerce graduate, and so he thought he was the most suitable person to be the Finance Director. 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, often reaching back only in the evening. Socialization of this kind, he thought, was essential for creating the network that would support the business in times of need. The products manufactured by the new venture were not consistent in quality. Some batches developed small cracks. Such products were discarded and only the good quality products were sent to various shops for sale as per prior arrangement. To the utter dismay of the partners, there was hardly any sale for their products. The only item that showed some movement was helmet. Taking a clue from this the company started pushing this product, leaving the manufacturing facilities idle for other products. One of the strategies adopted by Arun to increase the helmet sale was to influence the state government, through a relative working as the personal secretary to the home minister, to make helmet compulsory for two-wheeler riders in the state. Consequent to the introduction of the helmet-rule in the state, there was some improvement in the helmet sales of the company, but the revenues were hardly enough to pay even the interest on the term loan. Arun had to take personal loans at high interest rates (24-36%) to meet the companys interest obligations with the State Financial Corporation, as his partners put on him all the responsibility for the poor performance of the company and refused to help in any way. In fact, 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. In the meantime he saw an announcement by the local business school about its part-time MBA programme, where the classes would be held in the evenings every working day for three years. He then joined the programme, and found some solace in discussing the problems of other companies. Assignment Discuss the problems of Aruns venture in your respective groups and suggest strategies for dealing with them.
* This case was prepared, as a basis for class discussion, by Prof. Mathew J Manimala, Indian Institute of Management Bangalore, using the data supplied by an entrepreneur who wishes to remain anonymous