Strategic Leadership - Murugappa group
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Strategic Leadership - Murugappa group Presentation Transcript

  • 1. Strategy Leadership International Team: Xiang X, Jan E.A.N, Kamil T, Guang L Stefania D V, Charlotte L
  • 2. Agenda Murugappa Group Brief Evolution of Governance (90’s to 2000’s) Main Changes to Maintain Group Efficiency Recommendations for Murugappa
  • 3. A brief overview • Headquartered in Chennai, India. • More than 32,000 employees globally. • Strong alliances with huge international companies. • Business origins dates back to 1900 when Dewan Bahadur Murugappa Chettiar established a money-lending & banking business. • Diversification in the area of business a frequently repeated practice, with products ranging from bicycles to general insurance to fertilizers etc. • Leadership models have changed throughout the times but always a family-run group.
  • 4. Global Presence
  • 5. Ownership structure - Governed by the Murugappa Corporate Board (MCB), headed by A Vellayan as its Executive Chairman. USD 4.4 Billion Conglomerate 28 Businesses in 22 fields
  • 6. Group Structure Fertilizers, pesticides & specialty nutrients Tubes, stripe for industrial and automative Non-life insurance products Abrasive, Refractories, Electro mineral and Industrial Ceramics Financial services High yielding plantation Sugar, neem producer Special Purpose Grinding Machines and tools
  • 7. Leadership Family Tree 4 Generations (From 1884-Now) (The Kartha System)
  • 8. Mission & Strategy  As it is a group so there can’t be a single mission that runs through different companies rather a philosophy that the group basis its business on: it is an extract from: the ancient Indian treatise on wealth creation and governance, the Arthashastra: "The fundamental principle of economic activity is that no man you transact with will lose, then you shall not.“  If one had to define a mission for the group it would basically be to become a global group providing diverse types of high-quality products.  The broader business strategy that has been practiced since the inception of the business is to continue to diversify, capitalizing on any slight opportunity that may be present in the market.
  • 9. Values ‘Treat people with respect and concern; Provide opportunities to learn, contribute and advance; Recognize and reward initiative, innovativeness and creativity
  • 10. Values & Beliefs; Rules • • • • • • • • Adhere to ethical norms in all dealings with share holders, employees, customers, financial institutions and government. Provide value for money to customers through quality products and services. Treat our people with respect and concern,; provide opportunities to learn, contribute and advance; recognize and reward initiate, innovativeness and creativity. Maintain an organizational climate conductive to trust, open communication and team spirit& maintain a style of operations befitting our size, but reflecting moderation and humility. Manage environment effectively for harnessing opportunities. Discharge responsibilities to various sections of society and preserve environment. Grow in an Accelerated manner, consistent with values and beliefs by continuous organization renewal. In addition to that the basic rule for leadership in the family is the Kartha: Family’s elder, male family leader in charge of guiding and choreographing the course of the family. The Kartha would be the oldest male family member.
  • 11. Agenda Murugappa Group Brief Evolution of Governance (90’s to 2000’s) Main Changes to Maintain Group Efficiency Recommendations for Murugappa
  • 12. Main Financials Sales Composition PBT Composition - 2011-2012 EBITDA Growth Achieved: 20% - 2011-2012 Gross Sales: 22314 Crore India Rupees.
  • 13. Decision-making Structure Evolution from 90’s to 2000’s Before 90’s Decision Maker 1990 - 1999 After 2000’s Family Head (AMM) Seven Family Members (CEOs) Non family members (CEOs) 1990 - 1999 Independent finance, HR, Operation, etc. No information sharing and decision communication. Main Business Units “With governance and mentor from BOD”
  • 14. Limits of decision-making structur 1. No flexible in term of decision making (slow process in taking decision) 2. Emotion evolved in business decision 3. Family members are focus on individual business units 4. Limited communication between family members in term of group business 5. Inadequacy of governance in all business units 6. Belonging of the family is the condition to be CEO => not a criteria of performance 7. System of mentor/ the older form the next CEO => no vision from the outside 8. No share of experience 9. No possible to negotiate the process from supplier as a group
  • 15. Governance Structure in 1990 In 1990, start of liberation process and opening Indian economy, Murugappa family decide to become company as group in formal way. Power path Murugappa Corporate Board (MCB) Murugappa Corporate Board (MCB) CEO CFO COO Family Member Consultant Non Family Non Family MV Arunachaiam Role of MCB Increase the exchange ideas, advice and knowledge for their family ownership companies AMM family kartha Career path PARRY’S Confectionery CEO Family CEO Family CEO Family CEO Family CEO Family CEO Family CEO Family President Non Family President Non Family President Non Family President Non Family President Non Family President Non Family President Non Family
  • 16. Governance Structure in 1999 Murugappa Corporate Board (MCB) Murugappa Corporate Board (MCB) 5 Full Time Directors Chairman 3 Part Time Directors Function: External vision from outside VC - Strategy: Algy (Family) Director - HR: Venhy (Family) Director: Reghavan Director: Masti Director: Natalies Director – Technology: Murugu (Family) M V Subbiah (family kartha) Director – Marketing: A Vellayan (Family) Director – Finance: Purtho (Non Family) Role of 5 Directors -Functional responsibility for the group -Mentor CEO -Mentor for young family 5 Family member move to MCB from 7 different companies Non Family CEO: all promoted from within PARRY’S Confectionery CEO CEO CEO Non Family Non Family President Non Family CEO CEO Non Family Non Family Non Family President President President President Non Family Non Family Non Family Non Family Non Family CEO CEO Non Family President President Non Family Non Family
  • 17. Agenda Murugappa Group Brief Evolution of Governance (90’s to 2000’s) Main Changes to Maintain Group Efficiency Recommendations for Murugappa
  • 18. Conflicting risks • MBC and company CEOs: MBC is powerless in decisions making process • Shareholder and MBC: rights and responsibilities are not clear • Family female numbers and male members: opportunity not equal • Company CEOs: fight for resources
  • 19. Decision to prevent risks • Non-family professional manager steps up to Group CEO after Subbiah retire. Build an independent and effective board of directors • Set up shareholder board, separate the rights and responsibility of shareholder board from those of MBC. Establish a Shareholders' Communication system to increase transparency and to maximize shareholder value • Kartha only acts as a leader inside family
  • 20. Agenda Murugappa Group Brief Evolution of Governance (90’s to 2000’s) Main Changes to Maintain Group Efficiency Recommendations for Murugappa
  • 21. Developing a Family Constitution Why is a written constitution necessary? - To minimize the potential conflict the Group might face during generation transaction periods; - To keep the family’s focus on important strategic issues; - To help sustain and grow the Group;
  • 22. Developing a Family Constitution What should the constitution focus on? -The Group’s values and beliefs – as developed in 1987 under the leadership of MV – set to reinforce the family’s input and the kartha’s role; – with regards to business process, customers, employees, stockholders and business ethics; - The Group’s strategic goals – namely the governing structure in charge of setting strategic goals - The Group’s ownership and management by family members – – – – criteria for transition and succession; rules regarding salary, benefits and dividend allocation; decision making; family meetings;
  • 23. Thank you !