Growth of Bannari Amman Group — A Family-owned Enterprise
(17 pages of text)
Bannari Amman Group (BAG) was one of the largest industrial conglomerates in South India, with manufacturing, trading, distribution, and financing corporations. Starting as a set of businesses in a family-owned entity, the group now had three publicly listed companies and over 15 family-owned businesses.
The chairman of BAG — the eldest in the family, according to tradition — held a meeting with the unit heads of BAG on January 6, 2011, to discuss their yearly performance and future plans. At the annual meeting, each unit head had to make a presentation on their unit’s performance and provide a detailed business plan.
The chairman wondered if the business heads were capable of handling their units by themselves. Until now, he and his brothers had always been ready to offer guidance. He wondered, “What is the appropriate method of guidance for the new generation of entrepreneurs?” How would the unit heads act to optimize performance of their units? He observed that while the group’s units were independent entities, the businesses complemented each other somewhat. Due to this, the group’s businesses enjoyed an inherent advantage. As he looked at the challenges that the units would face under new leadership in upcoming years, he was aware of the need to develop a common vision across all units. The chairman looked for processes to keep the group synergies in place and identify the businesses that could be strengthened.
Some new business ventures are highly successful while the great majority fail. Past research suggests that many different factors (environmental, organizational, group, individual) influence these outcomes. Here, however, we focus on the role of individual entrepreneurs in new venture success and, in doing so, address a closely related question in the field of entrepreneurship: Why are some entrepreneurs so much more successful than others? A comprehensive answer to this question involves the joint effects of many variables related to entrepreneurs (e.g. their skills, motives, values, actions), a host of environmental and market conditions, and complex interactions between these factors. Despite these complexities, the field of entrepreneurship has long recognized the importance of founding entrepreneurs in new venture creation and success.
This case fits in well in courses on strategy and management practices in small- and medium-sized enterprises. It is suitable for modules on corporate strategy that cover competitive strategy at the business-unit level and corporate strategy at the company level. A discussion on corporate strategy as to which businesses the corporation should operate in and how the corporate office should manage its business units can also provide a useful line of inquiry.
- First-mover advantage.
- The role of leadership in growing businesses and binding units together.
- Management styles of founders and the changes brought in subsequent generations.
- How to choose businesses to grow.
- The business challenges entrepreneurs face in a regulated environment — here, the sugar industry.
India, Tamil Nadu, Large, 2011
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