Business scalability

issues of traditional
Indian business
houses and
businesses
A CONCEPT NOTE AND REFLECTION
MANISH SAHOO
KUNAL GAURAV
SAPTARSHI BASU
“Challenge is the mother of
success. ‘Business is war’ .”

- J A PA N E S E B U S I N E S S Q U O T E
The glass ceiling
Only three Indian companies from the private sector has made it to the fortune 500 list, they being
Reliance industries, Rajesh exports and Tata group. The first two belonged to the Gujarati community
while the last belonged to the Parsis. Marwaris as a business community belongs to the shekhawati
regions of the Rajasthan and were traders in the Rajput kingdom era they constitute 42% of the
billionaires in India yet they don’t have a single group which can reach the fortune 500 list, despite
owning the largest number of start-ups
FORTUNE 500 COS BY COUNTRY
FORTUNE 500 COS BY COUNTRY
 Rise and the fall of India Inc – where we are coming
from, where we are, and where we are going

1. Rise of the Indian Janapads where early agrarian cities coalesced together to form megacities and the Hindu
social structure develops into caste based division of labour leading to growth and efficient systems and led to
formation of large walled cities which traded with each other till the bronze age collapse.

2. India was the leader of the globalised world order by the end of bronze age, we had the reserve current of minted
gold coins we were the head of the trading order of precious metals like zinc and luxury crafted items.

3. In the Vedic era, the use of fire was ritualised, all known knowledge was codified, iron age gave cheap hard
usable implements, we had vast standing armies which lead to vast empires instead of city states, by that time we
saw the first attack from invaders in form of Greeks from Mesopotamia and then Bactria.

4. Vast landed empires gave rise to collective might of the state and the kind would make available vast fleet of
trading vessel and sponsored the shipbuilding through tax revenue, along with the treasury coffers temples
became vast repository of wealth and social life, trading guild set up trading banks in temples.
Rise and the fall of India Inc – where we are coming
from, where we are, and where we are going

5. Various text like the Rig Veda was formulated to give the earliest concept of the maritime insurance and the limitation of
liability of the traders the rise of cooperative system with the King providing the fleet and the ships and tackles traders
coming with crew and doing the voyage and temples and state providing the seed capital for trading and purchasing the
commodities. This made an extremely robust business machine with unparalleled efficiency making the general populous
prosperous.

6. Islamic invasion stared at the decline of the last emperor of the golden period which is the Gupta period, King Harsha, the
invaders were barbaric , brutal, uncivilised, nomadic Arabs who has scan regards of civilised world orders were basically
blood thirsty bandits with religious fanatism to the core. These bandits uprooted societies through genocidal butchery, and
ethnic cleansing, dispersed the productive web of craftsmen, artisan, and weavers and producers. They destroyed the
temples looted and plundered them , which were the main banks financing the overseas trade machine the basis of
prosperity.

7. The plunder and genocide which would follow each conquest by the Turkey and Arabic invaders totally destroy the social
fabric and structure which was holding together vast territories of conquered lands and would lead to capital flight, and
mass Migration of artisans, craftsmen, traders’ money lenders and accountants ship Builders and entire supply chain.
 Rise and the fall of India Inc – where we are coming
from, where we are, and where we are going

8. Inhuman taxation practices both exploitative and racially discriminative purely triggered by religious hatred by the
invading ruling class such as “jizya” and “kharja” today to break the spirit and belief in subjugate the population
ultimately lead to the depopulation of the Hinterland and disruption of the trade chain system; which had been Honed to
a well-oiled machine by century is a practice and accumulated knowledge.

9. The iconoclastic rulers with little knowledge of Administration and capability for civil construction would engage mostly
in looting and demolition of hundreds and thousands temples in order to destroy the Hindu faith, which they so much
detested as it was different from their religious practice, this undid the very foundation of Indian business machine
because since the ancient times the temples had evolved from being a place of worship and spiritual practice to centre of
Administration art culture and most importantly depositor of wealth, treasury coffers and first established banking
systems.

10. Ancient trading gilds had huge sway over the population as the controlled both the centres of spiritual practice as well as
the centres of business administration. Things came to ahead when the last glorious king of the Chauhan dynasty feel to
an Afghani invader looter my name of Muhammad Ghori and his established Islamic caliphate in Delhi in 1193 AD
Rise and the fall of India Inc – where we are coming
from, where we are, and where we are going
11. Five such dispersed community which was scattered and spread out throughout the country in search of refuge from persecution and
annihilation from these invaders were: -
1. The Marwari's from the fall of Rajput kingdom.
2. The Parsi's from the fall of Persian Empire
3. The Gujarati from the fall of ruling Solanki's and Gujarati Kings following destruction of Somnath Temple and
4. The Sikhs and Punjabi's from the fall of Sikh empire.
5. Sindhis from the fall of Sindhi king Daher and beginning of the Islamic conquest .
12. India has a long tradition of entrepreneurial communities, each having its own culture. Entrepreneurship is the attitude of mind to seek
opportunities, take calculated risks, derive benefits by setting up a venture comprises of many activities involved in conception, creation and
running an enterprise. India is multi-cultural, multi-linguistic and multi-religious country. Individual follow the value systems which
originated from their respective religion, demography, creed and community. Each community has an inherent system with which individuals
within community shares meanings. This may be termed as a unique characteristic of a particular community that differentiates individuals of
one community from the individuals of other community. For example, Jain, Marwari, Gujarati, Sindhis, and Chettiar are dominating in
trading and finance businesses, Punjabis are leading in the engineering, manufacturing, automobiles and transportation sectors whereas
Shetty’s are Hoteliers. Parsis are leaders in the big industries viz. Godrej, Tata, Wadia, Zunzunwala. In fact, Parsi is world’s smallest ethnic
community, but their contribution to entrepreneurship in India has been much greater. They have been called as pioneers of modern India.
13. Caste/region/language—or religion-based business communities—prevailed for centuries in India before the advent of colonial rule. The
colonists catalyzed disruptions in traditional trading patterns, as well as shifted economic power to colonial masters..
TRADITIONAL BUSINESS
COMMUNITIES
Rise and the fall of India Inc – where we are coming
from, where we are, and where we are going

14. British rule led to the considerable decline of old family firms and, in turn, introduced new methods of banking, managing agencies,
and chambers of commerce that fluidly connected the Indian subcontinent to the global economic order. The new players in business
were both foreign and local.
15. Traditional business communities like Sindhis and Chettiars reorganized their operational structures and mechanisms, and others
worked with the British as mediators and administrators (dobash: interpreters, banians: traders and middlemen), and also invested in
trade and commerce. Expansion of internal markets and profitable Chinese trade, particularly in cotton and later opium, led to the
flourishing of Indian business and the emergence of the Indian private business class by the beginning of the twentieth century.
16. Caste-based or occupational culture became the socio-economic system leading to self-sufficient village economy. The Britishers
destroyed the self-sufficient Indian economy. The history of Indian entrepreneurship was emerged from its culture, customs and
traditions. However, still some communities in India emerged out of all odds as a successful entrepreneurial community viz. Jain,
Marwaris, Gujaratis, Punjabis and Chettiars. Palanpuri Jains" Kothari posited that close-knit community with a collective sense of
identity with common myths of origin and religious and social practices made them world’s leading diamond traders Religious
practices by signalling solidarity and facilitating face-to-face interaction enabled Palampur Jains to promote trust and co-operation
and raise themselves as world's largest diamond merchants.
17. Many of Indian entrepreneurs came from hard-working, humble beginnings and created local and global conglomerates which have
become giant corporates as a family business. Among other communities, Punjabis, Chettiars, and Maharashtrians have also shown
their entrepreneurial zeal working with integrity with one’s own culture bestows more success and satisfaction. The backdrop of
society and culture, individuals are influenced by core belief of religion. Religiosity has been considered to representing cultural
component in the society.
Rise and the fall of India Inc – where we are coming
from, where we are, and where we are going

18. India has a long tradition of entrepreneurial communities, each having its own culture. Entrepreneurship is the attitude of mind to seek
opportunities, take calculated risks, derive benefits by setting up a venture comprises of many activities involved in conception, creation
and running an enterprise. India is multi-cultural, multi-linguistic and multi-religious country. Individual follow the value systems
which originated from their respective religion, demography, creed and community.
19. Each community has an inherent system with which individuals within community shares meanings. This may be termed as a unique
characteristic of a particular community that differentiates individuals of one community from the individuals of other community. For
example, Jain, Marwari, Gujarati, Sindhis, and Chettiar are dominating in trading and finance businesses, Punjabis are leading in the
engineering, manufacturing, automobiles and transportation sectors whereas Shetty’s are Hoteliers. Parsis are leaders in the big
industries viz. Godrej, Tata, Wadia, Zunzunwala. In fact, Parsi is world’s smallest ethnic community, but their contribution to
entrepreneurship in India has been much greater. They have been called as pioneers of modern India.
20. The post-Independence era (post-1947) presented a new political climate for Indian business. There was growing antipathy toward
capitalistic freedom (often synonymized with colonialism) and private enterprise that was fuelled by the “socialistic” mindset of Nehru,
the first Indian prime minister. He favoured government control of the economy, structured economic planning, and the dominance of
the public sector, but allowed a mixed economic model without eradicating the private sector. With the regulatory acts of 1951 and
1956, the government could determine location of industries, quantities, production, price, and distribution of products. Thus began the
era of the “license raj” for the next fifty years, where control by the government set the dominant narrative of Indian business. Nehru
was inspired by the Soviet model and economic practices of Communist China
Rise and the fall of India Inc – where we are coming
from, where we are, and where we are going

21. Regulations became more severe during Indira Gandhi’s (Nehru’s daughter) governments (1966–1977, 1980–1984). She nationalized
major banks (1969), and introduced restrictive trade acts (1969) and foreign exchange regulations (1973). In her governments, the
number of foreign firms rapidly declined, public-sector undertakings expanded, and fewer private businesses were created than in earlier
post-Independence governments. With some exceptions, Indian big business did not suffer too badly during the “license raj” period.
22. There were advantages of the large domestic market, freedom from foreign domination and market controls, the acquisition of retreating
foreign companies, and opportunities for floating new ventures. Many indigenous business houses acquired flourishing, mostly British
expatriate companies as the owners made hasty retreat with the political and economic changes. Also emerging were new names who
started from scratch and flourished, like that of Dhirubhai Ambani, founder of Reliance Industries, who started in the textile sector but
later ventured into petrochemicals, communications, and many diverse sectors.
23. Rajiv Gandhi, who assumed the office of prime minister in 1984, nourished visions of creating technological changes in India. There
was already growing disillusionment with the public sector, lesser apathy toward the private sector, and a greater realization of the
necessity of economic reforms. However, not much changed in the 1980s except in the telecommunications sector, which was
transformed by the Centre for Development of Telematics (C-DOT) under the visionary technocrat Sam Pitroda and his team of software
professionals. The major turnaround took place with the assumption of office of PM Narasimha Rao in 1991 after the untimely death of
Rajiv Gandhi.
24. Rao had the advantage of moving beyond the burden of the Gandhis’ socialistic legacy. Much as there was an ideological acceptability
of the necessity of reforms, it was actually triggered by the country’s acute current account deficit in 1990. At one point, India’s foreign
exchange reserves fell to a cash equivalent of two weeks’ imports. Rao appointed Dr. Manmohan Singh, a Cambridge-trained economist,
who succeeded Rao (2004–2014) as his finance minister, to the surprise of many. The Rao–Singh team created history and reversed the
country’s fortunes. The new industrial deregulation, delicensing, and export-oriented policies did away with the “license raj” and opened
new horizons for private enterprises.
Rise and the fall of India Inc – where we are coming
from, where we are, and where we are going
25. The reforms changed the Indian business environment completely. Many first-generation entrepreneurs took progressive steps away
from traditional caste-based lineages. They were largely driven by opportunities of entrepreneurship, the increased benefits accrued
from their individual educations, and the potential of technology dramatically improving business operations. Economic liberalization
facilitated the process by linking this progression with globalization. Indian businessmen had to rethink and reorganize their business
models to be competitive with the rest of the world and to confront the foreign companies making inroads into the Indian market.
Family-run firms restructured and consolidated their businesses, closed down unprofitable units, cleaned their balance sheets, and/or
diversified into new areas.
26. The new sectors that flourished were pharmaceuticals, automobiles, and communications technology-based industries (information
technology, telecommunications, etc.). The groundwork had been laid in the 1980s, but 1990s liberalization mobilized their takeoff on
a different scale and magnitude.
27. Market liberalization led to an influx of foreign investors who were quick to realize the market potential and cheap labor advantages of
India. In the field of automobiles, one of the earliest entrants was the South Korean firm Daewoo Motors in a fifty-fifty joint venture
(JV) with DCM Toyota. Others such as Hyundai, Mitsubishi, Honda, General Motors, Ford, and Mercedes-Benz soon followed,
injecting technical and manufacturing skills into the sector. It forced the indigenous carmakers to launch new and modernized models,
like Tata Motors did with Indica and Tata Safari (SUV model). Indian consumers began to be exposed to different choices, and market
competition led to greater affordability.
28. With the allowance of private investments into the traditional public sector, industries like telecommunications, electronic media, and
civil aviation benefited greatly. The revolution in the telecom sector was reflected in the spectacular growth of cellular phone services.
Big domestic players got involved—Aditya Birla Group (Idea), Tatas (Tata Indicom), and Ambanis (Reliance Communications)—
forming JVs with the likes of Ericson, Motorola, Nokia, and Hutchinson.
Rise and the fall of India Inc – where we are coming
from, where we are, and where we are going

29. The 1990s was the watershed decade for these revolutionary changes. Indian business suddenly took off with a new outburst of energy
and enthusiasm in the 1990s that was unprecedented in the post-Independence era.
30. In the 1990s, India made a transition from an inward-looking democratic socialist economy that often-discouraged international
trade/investment and allowed private business but overregulated it to a set of market reforms that brought in foreign investments,
connected India to the global market, and created opportunities for Indian companies to venture abroad. A large range of actors, both in
formal (regulated by government policies) and informal sectors (unstructured markets, not monitored by government regulations)
juggled to secure their own niches in new waves of policy changes, globalization trends, and competition from foreign investments.
31. While the 1990s provided major groundwork for entrepreneurial development, the twenty-first century witnessed Indian companies
scaling new heights in diverse trajectories. One significant characteristic of the new decade was the visibility and progression of Indian
multinational enterprises (MNEs) and Indian business leaders on a global stage. Between 2000 and 2009, 437 Indian MNEs spent more
than US $70 billion on 976 acquisitions. Indian firms were aggressively accessing overseas markets, natural resources, technologies,
and skills.
32. Competition from foreign direct investment into the Indian market also provided a push to Indian firms to venture abroad, mobilizing
integration of the Indian market with the global economy. Most of the outgoing Indian firms used mergers and acquisitions (M&A) and/
or joint ventures rather than investing in green field ventures (building from the ground up) in order to get quicker global recognition.
While the majority of these investments entered developed markets, such as the UK, Germany, Switzerland, and USA, to access
technology and skills (around 83 percent), Indian firms also targeted emerging markets in Africa, Latin America, CIS countries, and
other developing countries (approximately 17 percent). These ventures gave rise to global business leaders with commendable
entrepreneurial capabilities.
Rise and the fall of India Inc – where we are coming
from, where we are, and where we are going
33. India’s upward development curve jumpstarted the service sector, encouraged entrepreneurship and innovation, created global business leaders,
and institutionalized the jugaad phenomenon, a unique Indian characteristic that motivated Indians to struggle and prosper
34. One of the important features of the contemporary Indian economy is the public–private partnership (PPP). The industrialists, who had been
shunned in the post-1947 era, were now encouraged to work along with the government in the post-Reform period. In 2013, PM Manmohan
Singh talked about his belief that government and business should be partners in writing the history of development.
35. Post-2014, there have been steps taken by the Modi government to promote digitalization, start-ups, and the manufacturing sector in several
initiatives with the private sector. For example, government collaboration with Tata Consultancy Services to create a digital platform for Indian
passport services has benefited over 150 million Indians. Similarly, the Adani Group was chosen to operate several Indian airports. The PPP plays
an important part in several infrastructure projects and the health care sector, too
36. The start-up journey in India had been inspired by Indian technology firms in Silicon Valley, along with the growth of the internet, the dotcom
boom, and the availability of funds through venture capitalists. Without physically investing in a space (as in a manufacturing unit) to set up an
enterprise or using the social capital of traditional business networks, these businessmen have created their enterprises by linking sources to the
needs of consumers. These companies have revolutionized the concept of traditional Indian enterprise and business acumen, similar to that of
America but with unique Indian characteristics
37. The new-age Indian entrepreneurs were also facilitated by the process of digitization, which has led to platforms for the creation of companies
such as Paytm, OlaCab, Flipkart, and Zomato. OlaCab, India’s most popular online cab aggregator at present, does not own their own cabs or
employ drivers, but makes business by connecting users to drivers with a technological platform through a cellphone application. Digitization is
closely related to the rising “start-up culture” in India.
38. The Indian start-up ecosystem is one of the largest in the world and grew from 7,000 in 2008 to 50,000 in 2018. The founders are usually skilled
enterprising students, engineers, and/or management graduates between twenty and forty years old.
The insecurities that get
in my way, and the fears
that cripple me, and
certain habits that drag
me down.
BAD HABBITS (INDIAN
BUSINESS OWNERS)
lack of hands-on- experience and domain knowledge over time
having a complacent mindset with limited desires of expansion
realising the worth of money focus on cost – cutting than revenue growth miserly behaviour,
authoritarian dominance inability to delegate, Trust Deficit and Micromanagement
making choices based on copying successful and proven model
style of planning is whimsical and driven by tactical intent and no strategic vision
Inability for promoting a value system and positive work culture
Talent Retention and Compensation Discrepancy
Inadequate Planning and Decision-Making Delays
Lack of Structured Processes and Accountability.
Self-Centric Focus and Employee Neglect.
Emulation Over Innovation
 a) Lack of hands-on-experience and
domain knowledge over time
Most promoters don't even know that what is the valuation of the company and how it can be calculated

Most of these companies are basically not having a vision for the next 10 years. They Don’t have a forecasting or a
proper plan to mitigate all possible future challenges.
The promoters are unaware of the current situation of their organization.

They have no passion for the company and don’t put in that much effort to design process flow etc because to
them the company is a money earning venture, they have no passions for emotions attached to the brand
organizations or product, that is why they don’t invest enough to teach their next generation leaders the basics of
the trade they are in.
Most of them are not aware of the business intelligence of their competitors, or the business climate and changing
customer preferences, they don’t invest in any studies.
 b) Having a complacent mindset with
limited desires of expansion
the moment they achieve financial stability and set an amount of personal wealth and prosperity they lose track of the fact
that there is a difference between personal and corporate finance, taking out money from business and corporate accounts
personal aggrandizement.
Many of the businesses started in India are basically to earn a good livelihood rather than establishing a world class product
or a world class company with very good culture that being the main reason most of this so-called Indian business
community are short sighted.
Most of the time the business either being transfer from the last generation to the next generation as a lively hood for a
comparatively good lifestyle in Indian society most of these businesses are kind of self-employment rather than creating a
organization to serve the nation or humanity.
Similar drive for corporate growth and hunger for excellence and scrupulous financial hygiene and integrity has been
unseen in the business community in India at large that is the reason that India lacks the presence of Mega corporations’
wealth groups which are the main base of the Japanese corporate sector.
 c) Realising the worth of money focus on cost –
cutting than revenue growth miserly behaviour
A clear goal to expand the family business economically by focussing on cost cutting rather than on revenue growth.
A clear goal to expand the family business economically by focusing on cost cutting rather than on revenue growth.
Some promoters are there with the motive of making their organization a professional one, but as soon as the money
comes into the picture for the cost; frugality is of virtue, miserliness is not!
This is a realization which has never dawned on the Indian businessman when he himself once a good line decent life for
his immediate family; he has scant regard for the Welfare of his employees.
Most of the time business owners feels the business belongs to him and everyone here just to serve them and make sure
that all the employees work to earn for them. There is very less adherence to the process they put in place, or most of them
don’t put any process simply buy or copy and off-the shelf manuals from others in the market or from a consultant just for
the sake of getting the certification for fulfilling certain clients QRs etc.
d) Authoritarian dominance inability to delegate,
Trust Deficit and Micromanagement
They frequently make key decisions and double-check all of their employees to ensure that they completed
important jobs. The basic concept of an Indian businessman is that he knows everything and anything associated
with his business and his field of operation and this obstinate feeling is generated from the fact that he has been able
to make certain amount of money.
Means some of them tend to be uncouth domineering and bossy. The tendency to administer by rule of the thumb is
so deeply ingrained most of these businessmen are extremely autocratic in their conductor of business and the
affairs of the company there is a very famous saying for this kind of people "it is my way or the highway".
This kind of Administration by use of fear leads to poor worker motivation and has a toll on the mental health of
the managers and employees. Such companies find the extremely difficult to attract and retain talented individual
who have less tolerance for abusive working atmosphere and humiliating treatment meet out by the business owner
at his whims and creases.
 e) Making choices based on copying
successful and proven model
Indian Businessman and business community people are risk averse creatures, they do not want to put their money
in any risk but at the same time expect high profits and returns by walking down the beaten path.
Like expert copycats they just like to emulate successful business models which has worked and import their
policy and systems without developing in Engineering the standard operating procedure suited best to the process to
which is corporation is tied to.
You will seldom see an Indian Businessman trying to invest into domestic research and development is on unique
product something is for fathers in the ancient world were known for.
Sometimes in order to go for market expansion a businessman has to investing strategies like marketing branding
visibility projects positionings etc. however, the common Indian businessman who does not think beyond the
marginal profit or finds it difficult to invest in innovative solutions.
f) Style of planning is whimsical and driven by
tactical intent and no strategic vision
The lack of training in strategy and business and its administration makes such business owners ill-equipped to
carry out PEST or aur SWOT Analysis.
Since they are themselves heavily involved in the day-to-day operations due to their interfering nature they
seldom get time to collect analyze and generate data to do strategic planning.
Another symptom which has been in the first generation entrepreneur turning to Indian businessman and the fact
that they try to do everything by themselves and unable to delegate and trust effectively
this businessman and not businessman in the true sense of the word they are just self-employed this situation
create some myopic vision because the business leader is overwhelmed by over tactical and immediate issues
leaving no energy formulae strategic direction strategic thinking and strategic planning
g) Inability for promoting a value system
and positive work culture
Schemes are tricks are really bad which involves:
 Fake promises
 Delay in increment/appraisals
 Fewer holidays/day-offs to employees
 Calling them on the day-offs
 Meetings and projects without actions plans and so on.

The main aim of the senior management to make sure that as soon as possible the new joiners’ start
earning for them, There's no buffer time is kept for the learning or understanding of the work flow.
This these makes a hardworking employee to learn a lot and average employee struggling with day-
to-day task and below average person is being removed from the job.
h) Talent Retention and Compensation
Discrepancy
One crucial aspect hindering Indian businessmen's growth is the challenge of retaining top talent.
Indian companies often witness rapid employee growth, where capable individuals quickly climb the
corporate ladder. However, these skilled employees are prone to leaving for better compensation
packages elsewhere. Employers often struggle to match the remuneration with their employees'
capabilities, leading to talent drain and hindering organizational growth.
i) Inadequate Planning and Decision-
Making Delays
Another noteworthy aspect is the perspective towards employees' role within the company. Indian
businessmen sometimes fail to recognize that employees are the driving force behind revenue generation.
This perspective is skewed when employees bring in substantial revenue (e.g., INR 10) but are
compensated significantly lower (e.g., INR 3), leading to dissatisfaction and potential attrition.
j) Lack of Structured Processes and
Accountability
Another noteworthy aspect is the perspective towards employees' role within the company. Indian
businessmen sometimes fail to recognize that employees are the driving force behind revenue
generation. This perspective is skewed when employees bring in substantial revenue (e.g., INR 10) but
are compensated significantly lower (e.g., INR 3), leading to dissatisfaction and potential attrition.
k) Self-Centric Focus and Employee
Neglect
Indian businessmen's tendency to overlook employee contributions and suppress innovative ideas poses a
significant challenge. Instead of acknowledging and rewarding valuable input from employees, some
employers take credit for their ideas, creating a demotivating environment. Moreover, the preference for
hiring less assertive individuals can stifle innovation and hinder organizational progress.

A critical differentiation lies in leadership styles, where Indian businessmen often adopt a boss-
centric approach rather than fostering leadership qualities. A leader inspires, innovates, and
motivates employees, whereas a boss merely manages them. This distinction impacts employee
engagement, productivity, and ultimately, organizational growth.
l) Emulation Over Innovation
The propensity of Indian businessmen to mimic foreign business models rather than leveraging indigenous
creativity is another factor hampering growth. Innovation often takes a backseat when companies prioritize
imitation over originality, limiting their potential for breakthroughs and sustainable competitive
advantages.
 Curious case of Haldiram’s- a
validatory case study
1) Haldiram's family is not from a restaurant background. They have learnt from the customers. The customers have taught them how to manage the
restaurants. They didn't have any restaurant; they don't have any professional degree or anything relating to the restaurant business.
2) Haldiram's don't have any defined vision as such. professionalism is still missing
3) There is no system as such. Pankaj is responsible for the Gurgaon project. They are implementing all the systems there which they could not
implement fully at the Mathura Road facility.
4) Haldiram's don't want to dish out a lot of franchisees and expand very fast.
5) Haldiram's don't want to go far from Delhi so in order to have maintain control and face the initial problems more effectively.
6) Like today, they manage each and every outlet personally.
7) They are not bringing any professional input yet to try and help with this system creation part because their job is more labor intensive and they
know their people better than any external agency.
8) "there is no chef on whom I can depend on who will control the quality of our products and since, it's a manual work, there are chances of getting
the quality upside down. So, you have to have the knowledge otherwise they can fool you."
9) At present Haldiram's are researching the technology; the way it is done and then they are going to experiment it by freezing the products and
discover the shelf life of the Indian products when frozen.
10) Haldiram's are not going to do lot of advertisement. They have their own distributors. They will be distributing through them and it will be a very
low-key kind of promotion simply because they don't have budgets.
 JAPANESE WISDOM
IF YOU DO NOT ENTER THE TIGER’S CAVE, YOU WILL NOT CATCH ITS CUB

THERE HAS NEVER BEEN A GREAT INDIVIDUAL WHO DID NOT HAVE ORDINARY PEOPLE AT THEIR SIDE

HAVING TAKEN THE TIME TO THINK, VENTURE TO ACT. ONCE YOU’VE DONE SO, STOP THINKING.

HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.

BEAUTIFUL FLOWERS DO NOT BEAR GOOD FRUIT.

ROWING HARDER DOESN’T HELP IF THE BOAT IS HEADED IN THE WRONG DIRECTION.

ANALYSIS IS THE CRITICAL STARTING POINT OF STRATEGIC THINKING.

THE STRATEGIST’S METHOD IS VERY SIMPLY TO CHALLENGE THE PREVAILING ASSUMPTIONS WITH A
SINGLE QUESTION: WHY?

THE SOLE PURPOSE OF STRATEGIC PLANNING IS TO ENABLE THE COMPANY TO GAIN, AS

EFFECTIVELY AS POSSIBLE, A SUSTAINABLE EDGE OVER ITS COMPETITORS.

IN JAPAN, ORGANIZATIONS AND PEOPLE IN THE ORGANIZATION ARE SYNONYMOUS

 Global business trends
big-sized companies, venture capitalists, and global consulting firms are largely driving today’s economy;

strategic alliances, and mergers and acquisitions are taking place as devices to counteract competition;

virtualization of organizations is being resorted to in a big way to help promote a larger degree of cooperation even amongst competitors so as to
attempt more effective organizational survival;
the incidence of customization in manufacturing as well as services sectors operations is increasing;

product lifecycles are becoming shorter resulting in constant need for research and innovations;

bureaucratic organization structures are being dismantled to expedite decision-making for more effective tapping of business opportunities;

the lines separating different businesses are getting blurred as technology and markets have been converging fast, giving rise to new opportunities
for growth.
corporates are searching for appropriate talent which can be expected to deliver high degree of performance under rapidly changing conditions; and

effective people-management and change management strategies are being evolved to cope with the emergent realities.
Global business trends
Scalability
Scalability is the ability of a startup to grow and meet increasing demand. It refers to a company's capability to increase
revenue, users, data storage, or other key metrics without being limited by resources or operational constraints.

Assessing scalability is crucial for startups for several reasons:

1. It indicates whether the startup can grow sustainably over time. Many startups fail because they cannot scale up
effectively.

2. It shows investors that the business has potential for expansion. Funding is easier to obtain when scalability is
demonstrated.

3. It helps founders identify any constraints or bottlenecks before they become major issues. Proactively addressing
scalability ahead of time enables smooth growth.

4. It enables startups to plan for future needs in terms of team, technology, operations, marketing, etc. Preparing for
scale from the beginning allows startups to capitalize on opportunities
 1. Market Size
a) Evaluating the total addressable market (TAM) is crucial when assessing the scalability of a startup. This helps determine if there is sufficient
demand for the startup's offering and room to grow.

b) When evaluating market size, founders should consider:

c) The broader industry landscape and market trends. Is this a growing and vibrant industry with upside potential? Or is it stagnant or declining?
Growing markets tend to offer more opportunities.

d) Size of the target customer segment. How many potential customers exist that fit the target user profile? The larger the potential customer base,
the greater opportunity to scale.

e) Geographic scope. Is this a local, regional, national or global opportunity? The broader the geographic scope, the larger the addressable market.

f) Adjacent markets. Could the offering expand into related market segments or new geographies over time? This increases the total available
market.

g) Market growth rate. Rapidly growing markets offer more scalability than slow growth markets. Evaluate historic and projected growth rates.

h) Founders should research market reports, economic data, industry growth projections, demographic trends, competitive intelligence and other
quantitative data to properly size the market opportunity. A large, growing TAM indicates greater possibilities to scale. But a small, niche
market can also support a sustainable startup if executed well.
2. Competition
1. Direct Competitors

2. Indirect Competitors

“Without competitors there would be no need for strategy.”

Direct Competitors
Direct competitors offer similar products or services and target the same customer segments. You need to
closely study their product features, marketing messaging, pricing models, market share and growth
strategy. This will help you differentiate your offering and messaging and find your niche USP. Some key
questions to ask regarding direct competitors: -
What value proposition are they offering to customers? Is there a gap you can fill?
What marketing channels work best for them? Can you use other channels to reach customers?
Do they have exclusive partnerships or advantages you need to overcome?
How quickly are they growing? What can you learn from their scaling playbook?
 Indirect Competitors
Indirect competitors fulfill the same customer need but in a different way. Evaluating indirect competitors is
important to understand the alternatives customers have and the weaknesses in those alternatives you can
capitalize on to create the value the customers are craving for but not achieving despite being willing to pay the
price.

Some perspectives on indirect competitors:

What frustrations do customers have with current alternatives? How can you delight them?

What complementary services can you offer to win over customers?

How are their business models or cost structures different from yours?

By benchmarking both direct and indirect competition, businesses can craft a unique value proposition and go-
to-market strategy. Adapting quickly as the competitive landscape evolves is also crucial to scale successfully.
 3. Business Model
Key aspects to analyze include: -

1. Revenue streams: How does the startup make money now and how could it monetize in the future? Common models include
transaction fees, subscriptions, advertising, etc. Consider diversity and recurrence of revenue.

2. Cost structure: What are the major costs to operate the business? Are there economies of scale? Can costs be reduced over
time?

3. Margins: Given the revenue streams and costs, what are the gross and net margins? How do margins evolve as the company
scales?

4. Market dynamics: Is the market large and fast-growing? Does the model exploit network effects? How might the competitive
landscape change?

5. Defensibility: Is the business model easy to replicate? Does the startup have unique assets or partnerships that provide a
sustainable competitive advantage?

6. Scalability: How does the unit economics look as the company grows? Can the model support rapid expansion without
compromising quality or profitability?
 4. Funding
Once capital requirements are estimated, founders need to explore funding options. The major options include:
Venture Capital: Pitch to VCs for raising a Series A or B round. This offers larger capital injection but requires giving up
equity and board seats.
Debt Financing: Consider venture debt, bank loans, credit lines etc. This avoids dilution but the startup needs a strong
financial track record.
Crowdfunding: Platforms like Kickstarter or AngelList enable raising smaller amounts from a large pool of investors.

Grants and Accelerators: Government and nonprofit grants related to innovation, impact investing or sustainability may
provide capital. Accelerator programs also offer cash for equity.
Bootstrapping: Reinvest revenue, reduce costs and grow organically without outside funding. But growth is slower.

Initial public offering (IPO): Once the startup achieves substantial revenue and growth, it can go public and raise larger
capital via markets.
 Funding
Some key questions to consider:

1. How much funding has the startup raised so far? What was it used for?

2. What are the next 3-6-12 month goals and how much capital will be needed to get there? Make detailed projections.

3. Is more production capacity or inventory required? What is the capex?

4. How quickly does the startup need to scale engineering, product and marketing teams? What is the hiring plan and salary
costs?

5. What are the costs involved in technological improvements or platform migration needed to scale?

6. How soon does the startup plan to expand to new geographies? What regulatory, marketing and operational costs are
involved?
 5. Team
1. Management experience scaling a business: The founders and key executives should have experience rapidly growing a business to
a large scale. If the management team has only worked at small companies, they may not have the needed skills for expansion. We
need to look for leaders who have taken previous companies through periods of high growth or major expansion into new markets.

2. Technical capabilities: Does the startup have strong engineers and technology leadership who can build systems to support growth?
As the userbase and workload expands, the product needs to be able to handle it through excellent infrastructure and code. Assess if
the tech team demonstrates these abilities.

3. Business capabilities: Marketing, sales, finance and other key business functions need to effectively scale up. Evaluate if the startup
has strong talent in these areas or gaps that need to be filled to enable growth. With expansion, the needs in business domains increase
dramatically.

4. Ability to hire: Rapidly hiring talented people across functions is crucial during growth stages. Ensure the startup has access to talent
pools and the ability to attract top candidates. The management team needs relationships and experience building teams quickly.

5. Advisors and board: Seasoned advisors and investors can guide businesses through growth challenges. Assess if the startup has
advisors with experience scaling companies and board members with diverse expertise and networks to tap into.
 6. Technology

A few key aspects to examine:

1. Is the core technology built on a scalable framework? For example, using cloud infrastructure instead of on-premise servers. This allows easy
expansion of computing resources.

2. How modular is the codebase? Tightly coupled code makes scaling much harder. A modular, service-oriented architecture is preferred.

3. Load testing needs to be done continuously to find and fix bottlenecks. As traffic increases, new issues in the code can emerge under heavy load.

4. Automation tools should be used extensively. Automated deployments, monitoring, logging etc help manage scale better. Manual processes don't scale.

5. Redundancy should be built in wherever possible. Critical components must have backups so that failure of one doesn't bring everything down.

6. Data architectures need to be evaluated. Databases should follow common scaling patterns like sharding, replication etc. Caching layers are also
useful.

7. The tech architecture is usually the biggest hurdle or enabler for businesses aiming to scale upwards. Investors will look closely at whether the core
technology will allow the business to reach 10x or 100x scale. A scalable platform provides a solid foundation on top of which other business
processes can be built out.
 7. Operations
Some key aspects to analyze include:

1. Supply chain management - Are there any supplier dependencies or inventory challenges? How well are procurement, logistics and
fulfillment managed?

2. Manufacturing capacity - If the startup produces physical products, can manufacturing be scaled up smoothly? Or will new facilities
and equipment be needed?

3. Service delivery - How well can customer service, technical support and other operations be expanded along with increased demand?

4. Technology infrastructure - Do IT systems have capacity to handle increased traffic and data storage needs? Can they handle peak
loads smoothly? Is the technology stack scalable?

5. Business processes - Are internal systems and workflows optimized? Are there unnecessary complexities and bureaucracies?

6. Cost structure - How will operating costs evolve with scale? Are there economies or diseconomies of scale?

7. Quality control - Can product/service quality be maintained with rapid growth?

 8. Risks
Scaling a business comes with many risks that need to be managed properly. Here are some of the key risks that businesses face when trying to scale:

Regulatory risks - As businesses scale into new markets and jurisdictions, they need to comply with various regulations. Any regulatory changes or new rules can
impact the startup's operations, costs and ability to expand. Businesses need robust legal and compliance teams to stay on top of regulatory risks.

Competition risks - The startup landscape is highly competitive. As businesses gain traction, large incumbents, deep-pocketed competitors and other well-funded
businesses may try to enter the market. Businesses need strategies to defend against new competitive threats.

Technological risks - Businesses relying on new, unproven technologies have inherent technology risks. As businesses scale, tech limitations may become apparent.
There are risks of bugs, performance issues, security flaws, etc. Proper testing, infrastructure and processes are needed to manage tech risks.

Execution risks - Fast scaling requires excellent execution. Operational gaps, execution issues and poor strategic decisions can prevent effective scaling. Businesses
must ensure they have the right team and processes for flawless execution.

Funding risks - Raising adequate funding for scaling is crucial but not guaranteed. Businesses face risks of running out of cash, inability to raise more funds and
undesirable funding terms. Businesses should manage cash burn, have backup plans and build strong investor relationships.

Team risks - Scaling requires expanding the team rapidly while maintaining culture and quality. There are team risks like lack of key skills, poor hiring choices,
culture dilution and lack of cohesion. Robust people management processes are essential.

Proactively identifying and mitigating these risks is key for successfully scaling up businesses. Founders need contingency plans to tackle potential issues that may
arise. With diligent risk management and adaptable strategies, businesses can build resilience and increase their chances of successful scaling.
 “PEST” ANALYSIS
P – POLITICAL
E – ECONIMIC
S – SOCIAL
T – TECHNOLOGICAL
ANALYIS for strategic planning and understanding business environment
Political Factors (P) Economic Factors (E)
 ecological/environmental issues home economy situation
 current legislation home market  home economy trends
 future legislation  overseas economies and trends
 international legislation  general taxation issues
 regulatory bodies and processes  taxation specific to product/services
 government policies  seasonality/weather issues
 government term and change  market and trade cycles
 trading policies  specific industry factors
 funding, grants and initiatives  market routes and distribution trends
 home market lobbying/pressure groups  customer/end-user drivers
 international pressure groups  interest and exchange rates
 wars and conflicts  international trade/monetary issues
Social Factors (S) Technology Factors (T)
 lifestyle trends  competing technology development
 demographics  research funding
 consumer attitudes and opinions  associated/dependent technologies
 media views  replacement technology/solutions
 law changes affecting social factors  maturity of technology
 brand, company, technology image  training maturity and capacity
 consumer buying patterns  information and communications
 fashion and role models  consumer buying mechanisms/technology
 major events and influences  technology legislation
 buying access and trends  innovation potential
 ethnic/religious factors  technology access, licensing, patents
 advertising and publicity  intellectual property issues
 ethical issues  global communications
 Lack of national business philosophy suited to
Indian conditions and absence of thought leaders

1. The usual perception in the minds of many observers both in India and abroad is that India is a low-cost producer. This does not explain
fully the current interest in India from a global business perspective. Moreover, if it is a pure low-cost producer, this advantage is not
sustainable in the long haul as many other countries are also emerging as low-cost producers.

2. India’s export basket now consists of a lot of value- added goods which means that the country is becoming more competitive in terms
of its industrial products. As the industry is doing very well today, there is likely to be no setback to the economy’s growth rate of 7 per
cent to 8 per cent in 2006-2007 and 2007-2008. The key factor that will determine the sustainability of this economic growth rate
depends on how much the country is able to invest in infrastructure.

3. India today has 600 million voters and the country has been through a five-yearly round of elections. With a population of one billion,
the country harbours enormous disparities. Close to 40 per cent of the population live below the poverty line and 47 per cent of the
children in the age group of 0-5 years who live below the poverty line suffer from malnutrition.

4. The growth pattern of India’s economy over the decade has been, what is called, a ‘jobless growth.’ We are very competitive; we have
very good economic growth but we have not created jobs for the vast majority of people. Our political reforms have fallen short of the
economy and, unless they move together, one will hurt the other and the growth is not sustainable
 Lack of national business philosophy suited to
Indian conditions and absence of thought leaders

5. Today, over 60 per cent of the money borrowed by the Indian government goes towards satisfying consumption needs of the government
leaving very little money behind to spend on capital expenditure. India ranks high on the corruption index. We have not yet found a way
of containing corruption in our bureaucracy and political system. Corruption in India is getting into the civic life as well.

6. Economy and society are in the course of the third industrial revolution, which has led to the emergence of the knowledge economy. In
order to be successful in today’s business environment, companies have to come out of the mindsets of the industrial economy and fully
grasp the impact of the factors that drive the knowledge economy.

7. Indian entrepreneurship, innovation, and business firms have gone through a plethora of changes, particularly in the last three decades.
The most significant change is the result of national government policies that had the effect of moving away from postcolonial
Nehruvian socialism and creating a climate for more economic freedom for entrepreneurs and private businesses.

8. In spite of a number of world-class companies and a surging tradition of innovation, India only ranked 68th in the Global
Entrepreneurship Index ranking in 2018 (score: 28.4). The main reasons are persisting high costs of setting up businesses, multiple
regulatory authorities, rigid labor markets, and a dearth of skilled labour.
 Lack of national business philosophy suited to
Indian conditions and absence of thought leaders

9. While some characteristics of entrepreneurship have been prominent, the growth model cannot be neatly structured because of the heterogeneity
of the Indian economy. The informal sector plays a big role in the success story; it accounts for more than 90 percent of enterprises, more than 80
percent in employment generation, and around 50 percent of the GDP. It functions with interesting coexistence of traditional methods and
business operations, along with disruptive technologies, e.g., giving the option of e-wallets to consumers but not making it mandatory. Jugaad,
may have motivated innovation strategies from primary levels of the economy in an attempt to find solutions to everyday problems, thus leading
India to excel in start-up ideas.

10. Small businesses play a vital role in the economy. Think of the luxurious car that you see on the roads daily. The final product is the outcome of
many small businesses that are integral parts that help the engine to run. It is these millions of small industries that get you the dream car. It has
been seen that 65-75% of the innovation comes from small business industries.

11. There are huge number of Research Institute under the structures like CSIR DSIR etc India Today Boasts of the third largest pool of scientists in
the world, but the innovative index of our research and productization of our research output is extremely compared to western institutions do
they may not have formal structures like ours and States sponsored scientists doing directed research to find solution to national problems.
Though the research infrastructure and network office institution exists the policy framework of hanging out this research output or Technology
which is home grown and find tuning this technology through a learning curve and then exposing it to the market forces for maturing it has
product has been vastly lacking
Foreign business thought leaders

Lee Genichi Kaoru Ishikawa Kenichi

Iacocca Taguchi Ohmae

Philip cosby William Edwards Abraham Maslow Bob Burg

Deming
Foreign business thought leaders
 Absence of Indian
business thought
leaders !!!
I T I S L A M E N TA B L E T H AT T H O U G H O U R C O U N T R Y H A S P R O D U C E D T H E C E O O F T H E T O P A M E R I C A N F I R M S A N D
M A N Y O F T H E K N O W L E D G E W O R K E R S W O R K I N G I N E L I T E O R G A N I Z AT I O N S L I K E T H E M E G A C O R P O R AT I O N S O F
U S A , A N D I N T E R N AT I O N A L LY W E M A K E T H E L A R G E S T D I A S P O R A O F M A N A G E R S I N VA R I O U S M U LT I N AT I O N A L
C O M PA N I E S ; W E H AV E S T I L L N O T B E E N A B L E T O P R O D U C E A S I N G L E T H O U G H T L E A D E R A N D B U S I N E S S
T H E O R I S T O F T H E C A PA B I L I T Y O F L E E I A C O C C A , TA G U C H I O R K E N I C H I O H M AY E . T H E R E H AV E B E E N F E W S PA R K S
O F G E N I U S L I K E J R D TATA , N A R AYA N M U R T H Y, N A N D A N N I L E K A N I .
Social stigma of wealth and cultural
aspirations of Indian Business class
While they are various awards celebrating social work, literary work, art work, and even entertainment
do it may or may not be relevant to the country is national policy of objectives, the celebration of
businessman as the primary growth engine of the economy and creator of wealth and prosperity is far
less and few, creating and atmosphere which is deficient in motivation of enterprise and focusing of
national resources for a whole of country approach towards business efficacy and excellence efficacy.

Our businessman in the same manner do not strive to become Global giants, and Resort to charitable
work and other social incentive programs taking their focus away from the core business activity to
avoid the hawkeyed ogling at their accumulated wealth.
 Why business can’t productize the research
work when will the brain drain stop?

1. INDIA is now one of the major knowledge producers of the world, ranking among the top five countries in total research output with an extensive
institutional network for knowledge creation.

2. The institutional set-up for research and development (R&D) in India comprises a diverse set of institutions, including universities, Government
departments, research laboratories, private sector institutions, etc. These institutions are spread across 28 states and 8 Union Territories (UTs) and
vary in their individual structures and approaches towards their shared goals.

3. Indian Institutes of Technology (IITs), National Institutes of Technology (NITs), Indian Institutes of Science Education and Research (IISERs),
Indian Council of Agricultural Research (ICAR), Indian Institute of Management (IIMs), private universities, Indian Medical Institutions, All
India Institute of Medical Sciences (AIIMS) and research-intensive higher education institutions.

4. In terms of proportionate share in the national research output, Tamil Nadu contributes 17.67% followed by Maharashtra with 16.38%. Other
major contributors include Delhi (14.29%), West Bengal (13.94%), Karnataka (12.79%) and Uttar Pradesh (12.14%).

5. After Independence, the Government established large public funded R&D institutions in the country. Prominent among them were the institutions
established under the Council of Scientific and Industrial Research (CSIR) across the country for carrying out research activities aimed at solving
the burning issues of the nascent manufacturing industries, both public and private in various sectors. In the subsequent years, a large repository of
knowledge and innovations emanating from these R&D institutions required an organisational set-up to transfer them to the industry.
 Why business can’t productize the research
work when will the brain drain stop?
6. India’s contribution to the total global research and development expenditure is about 2.8 per cent. In terms of its own GDP, in the past decade,
India has nearly spent a consistent 0.6-0.7 per cent on research and development. This is in stark comparison to the United State of America’s
2.8 per cent and Korea’s 4.2 per cent.
7. India has focused on the latter end of the TRL (Technology Readiness Level) scale. This is evident from a blooming startup ecosystem. A key
component for any nation’s science and technology strategy is how it promotes technology transfer like it is done in other developed countries
8. In India, there is an urgent need to put systems and measures in place for efficient transfer of technology from the laboratory to the market and
commercialize this technology, In such a scenario, where the majority of the country’s R&D activities are done by public research
organizations, which are removed from the commercial arms of the economy, the need to translate that research into commercial products and
services becomes imperative.
9. Some of the challenges in innovation and translating laboratory science to the market are:
 Mindset of researchers
 Disconnect from societal problems
 Finding people for the right technology commercialization
 Finding the money
 Why business can’t productize the research
work when will the brain drain stop?
In India, the following practice of technology commercialisation based on the
Fraunhofer model could be utilised: -

I. Create a new powerful autonomous society / institute / company with

complete focus on applied research and development (technology from
concept to commercialisation).

II. Decide area of focus based on immediate and near-future needs of the Indian
society.

III. Create specialised scientific R&D institutes across India under this society.

IV. Set-up groups or alliances for collaboration of these institutes working in

similar areas.

V. Focus revenue models on profit generation contract through research with

companies / industries and public institutions, and IPR.

VI. Have successful competent scientists, entrepreneurs, industrialists on board.

Hire the best scientists, engineering and medical graduates from India and
abroad.

VII. Create an academia Industry interface.

 Way to become “Viswa-guru” -
“shashakt bharat- sambridh bahrat”
The Achieve an organization should have the following elements that impact the success of strategic planning
and execution: -
1. A Strong Company Philosophy and Culture:
2. Long-Term Staff Development and Employment:
3. Consensus in Decisions
4. Generalist Employees
5. Concern for the Happiness and Well-Being of Workers
6. Informal Control with Formalized Measures
7. Individual Responsibility
8. A strong company philosophy and culture
9. Long-term staff development and employment
10. Consensus in decisions
11. Individual responsibility
 Way to become “Viswa-guru” -
“shashakt bharat- sambridh bahrat”
12. Strong communication
13. Listening
14. Empowerment
15. Performance management