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Professionalism in Family Managed Business – A Case Study on Soujanya Color Pvt. Ltd.*

CASE STUDY, FAMILY BUSINESS
ET Cases - GSMC, 12 Pages
AUTHOR(S) : Dr. Shaila Srivastava, Chairperson of Centre of Excellence in Economic Policy Analysis and Research at K J Somaiya Institute of Management Studies and Research

Case Preview

Professionalism in Family Managed Business – A Case Study on Soujanya Color Pvt. Ltd.

 

Soujanya Color Pvt. Ltd. (SCPL), which was started as family business, attained the position of business leader in its product segment in national market and a serious player in global market. “Quest to make the company a global player acted as a driving force in making this family business into a professional organization” said the CEO, Priya Bhumkar1 . Although, the company was established in 1983, 2004-05 was the year of major shift in company’s strategy. It was the time Indian economy had already set its foot on the path of liberalization and globalization. ‘The world was becoming flat and equal opportunity was available to all competitors’ (Thomas Friedman2). The management decided to take the advantage of market opening up globally and expand the business.

The management faced critical dilemma whether to release family control over business and put the company on the path of professionalization or keep control at the cost of growth of the company. “The vision of the company to be a global player and the opportunities then available in the field was what triggered the crucial decision of transformation of the company”, replied the CEO of the SCPL when asked about “what triggered the decision of transformation from sole proprietorship firm into a private limited company”. The management took major investment decision. Thus, a project was prepared to build the most modern plant employing the best available technology, which would compete with global companies. Subsequently, a new state of the art plant was inaugurated by the company in Navi Mumbai in March 2010.....................

SCPL: Background

Specialty chemicals are defined as a “group of relatively high value, low volume chemicals known for their end use applications and/or performance enhancing properties”. Specialty chemicals provide the required ‘solution’ to meet the customer application needs. In contrast to basic or commodity chemicals, specialty chemicals are recognized for ‘what they do’ and not ‘what they are’. Specialty chemicals provide the required ‘solution’ to meet the customer application needs...........

Evolution of SCPL and the Initial Struggle

SCPL was established in 1983 in the name of Soujanya Enterprises in Thane – Belapur industrial belt by C J Bhumkar7 who was a top-notch technocrat and had a vast experience of paint business. He ventured into this business to make color dispersions for use in paints and allied industries. The company had to face many challenges in its initial stage to carve a niche in the market. The fact was that the company was selling a concept of color dispersion or pre-dispersed colors, which was new to the Indian paint industry at that time...........

Transition of SCPL from Sole Proprietorship to Professionally Managed Company

As the scale of operations of the company grew and the external regulatory environment changed from time to time, the form of the company was altered as appropriate and relevant to its stage of growth from proprietorship to partnership in 2000. The CEO, who was actively involved in her father-in-law’s color dispersion business from the beginning, took a break in between for rearing up her son and in 2004-05, she came back to business............

Management Structure of SCPL and Role of the Key Personnel

The structure of management team changed significantly before and after conversion to private limited company. Till the company was a partnership firm, it followed two-tier team. Top management positions for example, Chairman, CEO and CFO were held by the family members. Hired professional employees occupied senior management and other managerial positions (Exhibit III (a))............

The Products

Coatings perform two major functions “Protection” & “Decoration”. Color and appearance are important in the coatings industry because they provide aesthetic values that customers seek from paints. Color is the most important consideration in many consumer-buying decisions today. Many times customers make a compromise on the technical aspects of the paint in order to find the “color of their choice”.............

Sales and Marketing

SCPL has a well-structured marketing and sales department. Marketing team looks after product management, developing new markets, new customers, and new products. It formulates business strategies and product promotion. Sales team handles sales and customer service. The company adopted a professional approach to product promotion and publicity..............

Business Model and Strategy for Growth

In the words of CEO, “There is not much change in market scenario for Architectural colorants. For Industrial colorants, there has emerged a market need where manufacturers of Industrial Coatings need to service their customers quickly and with color accuracy. This has opened up opportunities to create markets in the industrial coatings sector.”...........

Expansion and Growth Plan

In the words of CEO, “The most outstanding achievement of SCPL would be earning the trust of customers and reputation in the market as a quality supplier of colorants. And the second most important achievement would be building the capability to keep abreast with advancing technology in our field and maintaining our pace of growth.”..............

Exhibits

Exhibit I: SCPL – Profit & Loss Statement

Exhibit II: Sales Performance of SCPL

Exhibit III (a): Old Organogram

Exhibit III (b): New Organogram

Exhibit IV: Products of SCPL

Exhibit V:Advertisement of SCPL

Exhibit VI: SCPL Balance Sheet

Exhibit VII: SCPL Financial Analysis

Teaching Note Preview

Professionalism in Family Managed Business – A Case Study on Soujanya Color Pvt. Ltd.

 

Synopsis

Soujanya Color Pvt. Ltd.(SCPL) is India’s leading producer of color dispersions for coatings industry. The company started on a very small scale in 1983, as a sole proprietorship firm, has been making color dispersions for over 30 years now. Initially, they had to struggle to win the confidence of large customers who raised doubts on their capacity and capability. There were problems in getting credits, arranging working capital and getting trained work force. However, after initial hiccups, business started growing, more and more customers started coming in their fold in so much so that the company had to go for a second manufacturing unit and thereafter put up a third unit. At the beginning of 21st century, the world was becoming flat and the economy was opening up, the family was in a dilemma whether to grab the available global opportunities or let go. After intense thinking and strategizing, it was decided to make the company global and for this, it was thought imperative to professionalize the company. Thus, a seed was sown in the minds of business family to convert the form of the company to private limited, which would enhance the corporate image of the company. This was the turning point for the company.

As the scale of operations of the company grew and the external regulatory environment changed from time to time, the form of the company was altered as appropriate and relevant to its stage of growth from proprietorship to partnership in 2000. Moreover, subsequently the company was converted to a private limited corporate entity in 2008, when the company undertook its major expansion program. After the demise of Mr. C.J. Bhumkar (Founder of SCPL) in 2009, his daughter-in-law Ms. Priya Bhumkar, the CEO, started looking after its entire operations. SCPL adopted a flat management system in which all the functional heads were hired professionals and reporting to CEO. The company consolidated all its operations and moved to a new, much bigger plant in Navi Mumbai in 2010. This plant was stated to be Asia’s biggest color dispersion plant with automated facilities and PLC controlled process to give uniform quality products batch after batch. SCPL is a single largest independent colorant producer in India. The first two years of operation of the new plant was very strenuous for SCPL..........

Expected Learning Outcomes

  • • Analyze the challenges a family run business had to face with respect to its business strategies, organizational structure, talent buildup and technological input in context of professionalizing it while retaining business ownership
  • • Illustrate that an entrepreneur is successful only if he /she is dynamic and receptive to innovations. To discuss how vision of entrepreneur acts as driving force in the growth of the company
  • • Discuss how a family manage business could create its own space and bag sizeable share in the domestic as well as overseas market on the strength of its in house technological input and excellence in quality

 

Case Positioning and Setting

This case study is suitable for MBA and executive training programs. The case study can selectively be used in general management courses of undergraduate programs as it discusses the professionalization as one of the important strategy for the growth of small and medium sized businesses (as most of these businesses are family owned or managed business). The case study also can be used for discussion in the class while explaining modern theories of entrepreneurship1. This case study is intended for use in courses such as:

  • • Family managed business
  • • Entrepreneurship
  • • Strategic decision making for sustainable growth of a business

 

Teaching Plan

In this case study, the major discussion is on the context – specific challenges faced and strategy adopted by the family managed business to remain competitive in changing business environment.........

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Abstract

Soujanya Color Pvt. Ltd. (SCPL) started its business as a sole proprietorship company run by a small family in 1983. SCPL was producing color dispersions for coatings and allied industry. With the growth of the business over the years, family started looking for ways and means to expand and establish themselves in colorant industry. The major shift in company's strategy came in 2004-05 when management decided to take advantage of market opening up globally and expand their business. At this juncture, the management faced critical dilemma whether to release family control over business and put the company on the path of professionalization or retain control and thus limit the growth of the company. This case analyses the challenges faced by SCPL, strategies adopted by them for sustainable growth.



Pedagogical Objectives

  • To analyze the challenges a family run business had to face with respect to its business strategies, organizational structure, talent buildup and technological input in context of professionalizing it while retaining business ownership
  • To illustrate that an entrepreneur is successful only if he/she is dynamic and receptive to innovations
  • To discuss how vision of entrepreneur acts as driving force in the growth of the company
  • To discuss how a family managed business could create its own space and bag sizeable share in the domestic as well as overseas market on the strength of its in house technological input and excellence in quality

Case Positioning and Setting

  • The case study can be used in the Functional areas of management – Strategy & General Management
  • This case is intended for use in courses such as Family managed business, Entrepreneurship


* GSMC 2016, IIM Raipur

This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
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