Case Study On Family Business Management

AFTERSCHOOOL CENTRE FOR SOCIAL ENTREPRENEURSHIP S IVA KAMU V E TE R IN A RY HOS P I TAL ROAD BIKAER 334001 W W W. A F T E R S C H O O O L . T K

C A S E S T U DY O N FA M ILY B U I S NE S S M A N AG E M E N T CASE STUDY FOR THE STUDENTS OF SOCIAL ETREPRENEURSHIP PREPARED BY : DR. T.K. JAIN HONORARY CHIEF MENTOR, AFTERSCHOOOL © : AFTERSCHOOL CAREER GUIDANCE TRUST. NOTE : THE PURPOSE OF THIS CASE STUDY IS NOT TO SHOW THE RIGHT OR WRONG METHOD OF DOING SOMETHING. THE CONTENTS OF THESE CASE STUDIES MAY BE REAL / HYPOTHETICAL THE PURPOSE OF THESE CASE STUDIES IS TO PROMOTE ACADEMIC DISCUSSION AMONG PGPSE PARTICIPANTS OF AFTERSCHOOOL. PGPSE IS THE PROGRAMME TO PROMOTE SOCIAL ENTREPRENEURSHIP THIS PROGRAMME IS AVAILABLE FREE OF COST FOR ANY PERSON WHO WANTS TO PLAY AN IMPACT MAKING ROLE IN SOCIAL TRANSFORMATION.

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Managing joint family is always tricky task. For many people, the family business of Mr. Dugar is an inspirational business. When he had joined his parental business leaving his law practice, he had some dreams of building a joint family business. His dreams came from his parents and grand-mother, who had always emphasized for joint family values. For the last four decades, Mr. Dugar has been busy in diversifying and relocating his business. Traditionally they had their business in Assam, where they had over 5000 regular clients (agricultural farmers) spread out in over 50 villages. Mr. Dugar had a foresight that it would be difficult for them to survive and grow in Assam considering the changing situation. He soon initiated and started business diversification process. The family soon started relocating themselves and they found their ancestral place Bikaner the right location for them. It was the decade of seventies. It was a tough time for business persons in India. I.C. Dugar was mulling over diversification of business from Assam to Bikaner. Closing down an established business is always a tough decision. But today that decision has enabled Mr. Dugar to be able to develop the business empire. While other Marwari firms continued to operate in Assam, Mr. Dugar was the first person at that time to take a decision to quit Assam (before it was too late). Entry into the business of Bikaner grain market (trading had always be a forte of Marwari families) was not easy. Mr. Dugar decided to set up partnership with a small local firm (with high reputation for commitment). The business continued without any profit and the partnership soon ended. The partner wanted to close down the business due to low margins, but Dugar insisted on continuing the business (as he had already prepared himself for long term struggle). He requested his partner to allow him to use the name of partner in the business. Mr. Dugar always based his business on the ideals and values of fair practices. He soon established his identity in Bikaner market also for his values and adherence to honesty and integrity in business deals. The punchline of his business has always been (for over 80 years) Niyat Gel Barkat Hai (a marwari proverb, which means fair intentions and honesty always give you reward). Even today this punchline is boldly written in all prominent places in his office and on all documents as well. Mr. Dugar’s mother had died early and his father married again at later age. Mr. Dugar had step brothers who were almost 20 years younger to him. Mr.

Dugar always considered joint family business as his biggest treasure and always nourished the seeds of a strong family managed business. As his step brothers grew, Mr. Dugar planned out new business ventures for each of the brother. While marwari business family are generally centralized, Mr. Dugar adopted a different style of business here. He insisted that if a family member is forced to work only in the existing business, it would not give him enough chance for creativity and growth. Typically each family member would be groomed for 3-4 years in some existing business and later he would be given an independent business to manage. Family values emphasise joint ownership from childhoon onwards in Dugar’s family. Each member has access to all the resources of the family, at the same time he has no personal property. No person can claim even a room to be his personal property. Each person had full powers and authority to buy / sell property for family and to take any decision. Mr. Dugar reviews all the decisions with his younger brother Mr. Jatan Dugar and formulates broad policy guidelines and guide the family members so that they can take decisions. Entry in Bikaner market was difficult, but later it proved to be a boon. Mr. Dugar soon got reputation for values of honesty and fair dealings in Business. Their firm was working as commission agent. Initially they started with multicommidities, but soon realized that it was not a very profitable venture. They soon changed their business and became commission agent of sugar. As they understood the market of Bikaner, they further changed their business and started dealing in Guar. They always charged higher price in comparison to competitors, but their claim to honesty and integrity enabled them to continue to have good market share. Soon Mr. Dugar entered into manufacturing by purchasing a sick unit of Guar Gum manufacturing. Mr. Dugar realized that most business persons failed in this business due to involvement in speculation. He had formulated guidelines for his team, which include strong wordings against speculation. Many persons were surprised when Mr. Dugar stopped productions in his factory, whenever the market became speculative. While others thought of taking advantage out of this, Mr. Dugar was predicting a collapse of market due to speculative activities. He would then ask his younger brothers (who were managing the factory) to diversity to other family businesses. Soon Mr. Dugar was able to open branches of his business in nearby cities including Jodhpur, Chhattargarh, Nokha etc. As the next generation emerged, Mr. Dugar was busy in planning for their business. Mr. Dugar always planned for 20 years ahead. It looks surprising, but Mr.Dugar prepare minute plans of marriage of family members also for next 10-15 years with estimates of all expenses. The marriage expenditures are also standardized so that it is within a given budget. All family expenses are well planned and business planning is synchronized with projected family expenses.

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Mr. Dugar continues to offer new business units to each of new member in the family. Soon the business diversified into share trading, commodity trading, textiles and other business, with one or two family members independently handling the business unit (with broad policy guidelines of Mr. Dugar). The entire family eats together in one plate (they have a big plate, called thali for that). All the members share their business experiences in the night and Mr. Dugar sits with them and undertakes further planning. Today a few members stay out of Bikaner – some at Jodhpur and some at Surat and some at Nokha. These members periodically visit Bikaner and when they return to home, some other member of family goes there as replacement. Each member can spend unlimited amount out of revenues earned by him in an accounting year, but once the accounting year ends, all money is transferred to the reserve, which is used in building up fixed assets for the family business. There are a few employees in the entire business organizations, even those work are more like family members. Employees are very carefully selected. Preference is given to someone connected in some relation. Only those persons are appointed as employees, who have proved background of integrity, sincerity and fair intentions. Such employees are then converted as almost partners in the business. It is a matter of pride for Mr. Dugar that while other Marwari business families had great difficulties in doing their business in Assam, he was able to diversity the business and enable it to flourish. In spite of old age, Mr. Dugar still spends a great deal of time in business planning and information sharing with his brothers and in value building in the young generation. Mr. Dugar also spares substantial time for social activities. He is an active member on the boards of over a dozen social organization including the biggest private sector school in Bikaner. He is also founder chairman of many of these social institutions. His philanthropic pursuits force him and his younger brother Mr. Jatan to spends a great deal of time to social activities, but these have further contributed to the image of their business. They still lead a simple life with emphasis on religious and spiritual values. However, the decentralized business structure created by them helps them a great deal as they have to intervene only in critical activities and concentrate on policy aspects only.

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