The Harilela Enterprises: An Indian Business in Hong Kong Case Solution
Furthermore, Hari intentionally pursued Â a contract management system that provided more flexibility to change general managers and have full control on management. In addition, it allowed the company to learn and seek best practices from global competitors. Whereas, Hariâ€™s brothers were inclined to pursue a franchising system that required more innovation and constant monitoring of their competition. Therefore, they preferred franchising system as it could enhance companyâ€™s revenue by saving 1.5 to 2 percent of revenue fees. Therefore, the difference in interests and focus of Harilelaâ€™ brothers in different businesses contributed to difficulties in running the common family business. Therefore, the brothers decided to conduct business separately. Furthermore, Hariâ€™s son Aron wanted to grow the family business through his generation in a waythat would have ensured continued success of the business.
The main strength of Harilela enterprises is that it has a vast exposure to Asian markets and has established strong relationships in such markets, which allowed them to expand their business legacy. Furthermore, Harilelaâ€™s employees are loyal with the company and have been affiliated with the company for a long time. Moreover, the company established a strong brand reputation in the market and has diversified their business in other areas. Moreover, Hariâ€™s brother successfully ran their personal businesses by focusing and adopting family norms.
Â The major weakness of their family run business is that the members of the family have established different businesses and have stakes in other companies worldwide, due to which everyone has their own interests. Due to which they are unable to focus on the common family business. Furthermore, decision-making is not systematic and agreeable. This caused Hariâ€™s brothers to back out from family business.
By making itself public, the company can obtain funding for its business. Furthermore, if the family members focus on the common family business, then they can insure the success of the company. Lastly, they also have the option of expanding further in the European Market to increase profitability and revenues.
The successive generation of Harilelaâ€™s family is involved in separately owned businesses and has established hotels and restaurants that are in competition with Hariâ€™s Hotel business. Furthermore, the new generation has its own views and perceptions. That make it difficult for the business to succeed.
From the following analysis, it has been determined that the business might reduce its profit levels due to high inflation rate in an economy and could cause to decrease the shares holderâ€™s interest by allowing the dominating partners to expel other owners out of the business and control the entire operations through repurchase of their shares.
From the expected economic consequences, the succession plan would not be implemented through the high currency devaluation and not allow every sibling of the owners to start his/her own business. Therefore, from the following economic crisis, it would be hard to predict that the new businesses might not be successful in the future due to higher inflation rate and reduced shareholderâ€™s benefit.
In the event of the economic crises, there might be a need to increase the cash to support the operations of the company. Therefore, the minority partner might be required to make additional investment in the business. Thus, the ratio of partnership will be affected. Moreover, there might be a situation that the minority partner offer to sell off its stake. In this situation, the dominating partner might purchase the stake form that minority stakeholder and this will increase its decision power in the company.
With the more power in the company, with more stake, the dominating partners in this economic crises might impact the decision of the other stakeholderâ€™s and make them become less critical ofÂ havein a non-family owner in future.
Recommendation:Â Â Â Â Â Â Â
After evaluation and analyzing the case, it is recommended that the company should adopt a contract management system in order to have flexibility in business and to avoid complications. Furthermore, the family members should focus on the common family business to ensure the success of the business and to avoid differences. The family should rely on a single-family business rather than diversity in to various other businesses. Moreover, ground rules and regulations should be established so that each family member would remain in their limits. In addition, the company should go public in order to get a greater access in the capital market and to expand in several other markets. Since a lack of capital hinders companyâ€™s growth and success. Furthermore, in order to maintain the equal equity of family members in the business, the company should organize and arrange annual meetings to evaluate each family memberâ€™s performance and involvement (participation) in the company and thus increase and decrease shares accordingly.`………………
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