Ramesh runs a local bakery in a Tier-II town in Madhya Pradesh. He has an established, loyal local clientele to whom he caters – both in terms of taste and pricing. He also enjoys a special personal relation with most of his customers.

Eventually the town attracts some multinational firms which open facilities there. A substantial section of top management in these branches comprises people who have lived and worked in big cities for most of their lives. Their families too follow and soon, there is a fairly large section of people who are used to frequenting fast food outlets and up-market food joints. At this point, Ramesh receives an offer from a big bakery chain with a huge presence in metros who want to buy out his shop. Financially, it’s a good deal for him but deep down he feels he will be letting his old customers down as the new chain is not likely to cater to their preferences or affordability. So, what could he do?

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"The Satyam episode is a blot on our corporate image,” said Prime Minister Manmohan Singh at the recently held ET Awards. No, this is not an answer to the question that has been raised here, rather perhaps the trigger behind the question. Is it really so? Let us probe a little deep to get better insights into this debate and possible conclusions, if any.

The last two months have given Corporate India its worst shock in history. A fresh scam in a not-so-fresh manner has raised questions over the prevailing standards of Corporate Governance and its monitoring in India. And so have arisen many comparisons – a Satyam Vs. Enron, PWC Vs. A.C. Nielson and Ramalinga Raju Vs. Kenneth Lay. Thus come up the arguments that scams keep happening and are no threats to India Inc., just as an Enron could not do anything to brand USA as a whole. But is it really that simple? The action of World Bank against Wipro and four others is a sign of the potential collateral damage that the Satyam episode can cast on India Inc.

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India has made rapid strides since the economic reforms of 1991 which has resulted in the economy opening up to foreign investment and has created a burgeoning middle class of 300 million people which is expanding at a rapid rate. At the same time, there are certain aspects that haven’t changed at all from the post independence era and an estimated 600 million people still live on 2 dollars a day or less. This clearly shows that India is a land of contrasts and it is important to examine both sides of the coin to get a balanced view of the topic proposed above.

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India is undergoing a transition phase from once being a backward nation to today’s fastest growing economy. The current economic crisis has had its impact on India too. Job-cuts, industrial output slowdown, reduced consumption, lack of trust in money flow are some of the signs. Apart from this, the decreasing demand in the western world has had a huge impact on our exports, IT enabled services, M&A’s and on our domestic industry as well. We do have strong monetary policies in place which have largely isolated us from the recent meltdown. But the heat can still be felt. It’s so because we are no more a closed economy now. When we try to reap the benefits of trading with the world we have to be ready for such repercussions also. But what is more worrisome is the fact that we lack the basic infrastructure and proper fund channelizing processes which can help us stay firm in tough times also. Other developed nations do not face such issues and hence emerge even stronger after such recession.

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“Earth provides enough to satisfy every man's need, but not every man's greed”, were the immortal words of the Mahatma.
The unsustainable consumption patterns across the globe since industrialization are responsible for the predicament that we face today. Although India is one of the fastest growing nations and considering that a sixth of the world’s population lives here, an Indian citizen emits only 10% as compared to his counterpart in the United States. The policies India has undertaken so far can help contain the threat of climate change, but the truth of the matter is that Indian Industry has to take far greater steps if we have to combat the dangers of climate change.

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Mr. Sundarmoorthy was a traditional industrialist involved in the manufacture of coconut oil. He had a very successful business practice in Tuticorin, Tamil Nadu, a harbour town with many huge industrial establishments, a host of leading C&F and logistics companies and a well developed SIPCOT complex.  This had given rise to a large mobile population of technocrats comprising engineers, top management people, technicians, workers, etc. There was also a sizeable population dependent on the sea for their livelihood. Mr. Sundaramoorthy had only one son, Ramesh, who was employed in Chennai. Whenever his son’s family came to their native town, he felt restricted by the lack of choice in toys that he would like to buy for his grandchildren. He had also heard similar complaints from many of his friends. It was, thus, that he decided to start a new business alongside his extremely profitable oil venture and opened a toy shop – the first of its kind in the town – naming it after his grandson: Mukund Toy Paradise. It was a well-stocked shop with traditional domestic and imported toys for children.

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The Problem
Thompson's entered India in 1994, soon after liberalisation assuming that with the opening up of the Indian economy, there would be many an Indian who would love to start the day with their breakfast cereal. It set up a wholly owned subsidiary and invested in a greenfield manufacturing plant for cereals. (When ownership is not shared, then it is a subsidiary which is wholly owned. A greenfield project is when the factory is built from scratch.)

It entered the market with corn flakes supplemented with iron and the fruity rice crispies called fruity hoops. They carried out some  initial trials in Mumbai by offering heavy inducements to the customer to purchase their first pack. No independent market research to corroborate its asumptions was conducted. It decided to  attack the market through a broad base with no clear strategy of market segmentation.

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Argument:

The question of whether management education should be limited to candidates with prior experience in a work place cannot be answered without first answering the more fundamental question, what is the objective (or in MBA-speak, deliverable) of management education? At first glance, it seems irrational to restrict any particular field of education on the basis of something as unconnected from academic merit as age. The proponents of having students without work-ex in management schools argue on a number of planks, the prime one being the freshness of high quality talent just out of premier undergraduate schools, a claim which rests on the premise that being scholastically inclined inherently makes one a good manager.

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Argument for…
When I was first asked to write on this topic, I was a bit sceptical. Taking a stance on such a topic can sometimes be difficult. But what I see and perceive at XLRI and the Corporate World, is that you cannot climb the corporate ladder with mere knowledge as a weapon. If one cannot forge relationships and maintain them, then it is most likely that the person will be left out of the rat race to the top.

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The case
A family-owned company has the father as the Director and the son as the Managing Director. The father is in his 70s and has managed the company for more than three decades, developing long-term relations with his clients. The company is not very prosperous but has done some good work in its field. Now the son has taken over and wants to revive the company and make it more profitable. In doing so, he will have to take some hard decisions that will offend the company’s old clients and friends and also his father. So he dithers and lets the managers take these decisions. The managers, in the meantime, have to report to the father too and he gives them a different set of instructions.

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Issue
An FMCG company, X, acquires another smaller FMCG company, Y. Post-acquisition, some employees of the middle and senior management levels of Y are retained. The MD of X takes pains to emphasise that the acquisition was right for both companies. Four months later, the erstwhile employees of Y find that their roles have not yet been defined. Approaching their senior managers does little to allay their apprehensions. There is a lot of uncertainty in the air and the Y people start looking out for jobs. Meanwhile, employees of the Company X feel that for four months the ‘new recruits’ have done nothing while they have been overburdened with work pertaining to both companies. They speak with their seniors about how unhappy they are.

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