Student’s name Instructor’s name Class name Date
Aditya Birla Group: Global Vision – Indian Values Aditya Birla Group (ABG) was a US28$ billion worth corporation back in 2008. With the number of over 100,000 employees, business operations were spread all over the world including the wide variety of product and service companies. The product portfolio comprised Aluminum, Copper, Fertilizers, Textiles and Cement, Insulators, Viscose Filament Yarn, Carbon Black, Insurance, Telecommunications and Business Process Outsourcing. Over the years, the ABG approached the methods of strategic alliances and acquiring big producers, adding to the value chain of the business, from metal to downstream products. By entering an international joint venture with NGK Corporation of Japan, the company was expected to open up to global markets and provide access to the latest in product and manufacturing technology. The idea was to exit from that area of business where they couldn’t compete due to a lack of competencies and business strengths. Kumar Mangalam Birla (Chairman of the Group) introduced several organizational and management changes that focus on learning centers, young managers and organizational health surveys. Along with the Aditya Birla Sun awards, this approach resulted in healthy competition among the companies. The growth strategy in this case study is mainly based on the process of acquiring a company to build on strengths or weaknesses of the acquiring company. For instance, Novelis was a leading producer of aluminum sheet and light gauge (thin) rolled products for the construction and industrial markets. Combine that with a Hindalco’s domestic market share of 42 percent in primary aluminum and 63 percent in rolled products (financial year 2006-07), and you can see that going international is a good opportunity to build a very strong position in the US market. K.M.Birla decided to reduce the group’s dependence on fiber based business where its market share was low. Instead he decided to concentrate on non-ferrous metals as there was less competition and Hindalco already had a big presence in the aluminum sector. Also, the acquisition catapulted the group into the Fortune 500 league, three years ahead of the target. General plan for the growth strategy was to consolidate, and ABG did exactly that by acquiring Nifty copper mine in Australia, stepping towards consolidating the raw material base for its smelter in Gujarat. Recognizing the business strengths and investing in the areas of familiar technology and manufacture is the key to success. Creating a partnership with Japanese corporations is always something that one should consider. Japanese are leaders in modern technology and quality management system. To be able to learn from them through a partnership is an opportunity for achieving mutual goals in a best possible way. International joint venture with NGK Corporation of Japan later in 2006 turned into the purchase of equity holding of NGK making the venture its subsidiary. On the other hand, company should always try to foresee global economic downturn in particular industry and act accordingly. Sometimes the competition is strong and the company sees its opportunity for growth elsewhere. Selling the loss making fabric operations does not necessarily mean a bad thing. ABG has added that given the pressures faced by the textile sector as a whole, the challenging market environment in the suiting sector, aggressive competition and operational issues, Grasim had undertaken an extensive techno-commercial evaluation of both its units at Gwalior and Bhiwani. Kumar Mangalam Birla is a chairman of Aditya Birla Group. Mr. Birla took over as Chairman of the Group in 1995, at the age of 28, after the untimely demise of his father. As Chairman, Mr. Birla has taken the Aditya Birla Group to a higher growth trajectory. In the 17 years that he has been at the helm of the Group, he has accelerated growth, built a meritocracy and enhanced stakeholder value. After taking up the change, K.M.Birla decided to consolidate entire group’s companies under one umbrella of the Aditya Birla Group. Many critics were opinion that K.M.Birla would be unable to continue with the successful management of the group. When he took over the company, many were saying that he was too timid and lacking business expertise of his father A.V.Birla. An unapproachable management style and misplaced priorities the result was the investors started selling off their shares. In 1996 the market value of group’s four largest companies Grasim, Indian Rayon, Hindalco & Indo Gulf Fertilizer suddenly decreased by $1billion or 37%. So K.M.Birla took several initiatives to prove his critics wrong. K.M.Birla introduced a retirement policy where he wanted young managers to come in front of the old ones, trying to populate “out of the box” thinking. Once, he said: “People in the group about twice my age when I took over as chairman. I had great respect for them personally, but I also feel the need for change.” My opinion is that young people are more eager to work. They adapt better to the new technology, most of them are open-minded, and with more young managers in the company, the flow of ideas is more consistent. Before K.M.Birla took the chairmanship, the hierarchy in the group was determined by seniority instead of merit. He instituted a performance appraisal system. He decided to implement performance management systems, reviewed compensations and accentuated on training to bring meritocracy - holding of power by people selected on the basis of their ability. Most of the people are more influenced when they are rewarded for their work on the basis of their contribution. “We are a meritocracy. People know wherever they are in the organization they are not lost. If they have merit, then on the basis of that merit alone they will bubble up to the top of the organization." Gyanodaya, The Aditya Birla Institute of Management Learning, was established to strengthen the management capabilities of managers. Any employee who is dedicated to his job will be delighted to have the opportunity to exchange knowledge through the group-wide intranet environment. Also, constant examination of employee satisfaction through, in this case, “The Organizational Health Survey” can sometimes provide surprising results. That is certainly one step closer in becoming one of the preferred employers in Asia. In 1996, the company launched for the first time a corporate identity that would serve a corporate logo. The group selected the rising sun as the logo, which signified optimism and served as a unification symbol for the group. K.M.Birla said, “The new corporate logo helped in bringing various companies of the group together. This helped the organization to reenergize and get started to the path of change”. After that, Aditya Birla Group instituted the Aditya Birla Sun awards, which resulted in information sharing and exchange, also encouraging healthy competition among companies. There are many different opinions on whether it's better to punish or reward employees to influence their work. The example of Aditya Birla Group shows us that it is better to treat employees with respect and allow them to constantly improve. Results will most definitely come.

--------------------------------------------
[ 1 ]. http://en.wikipedia.org/wiki/Business_acquisition
[ 2 ]. http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/Hindalco%20Acquisition%20of%20Novelis.htm
[ 3 ]. Kumar Mangalam Birla, Chairman of Hindalco, in February 2007.
[ 4 ]. http://timesofindia.indiatimes.com/business/india-business/Hindalco-to-acquire-Nifty-copper-mine-in-Australia/articleshow/35377714.cms
[ 5 ]. http://expressindia.indianexpress.com/story_print.php?storyId=38878
[ 6 ]. http://adityabirla.com/about/kumar-mangalam
[ 7 ]. http://www.slideshare.net/salmanagement/case-studyonadityabirlagroup123467945586849921sbanerjee
[ 8 ]. Kumar Mangalam Birla, Chairman of ABG, in 2005
[ 9 ]. Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group
[ 10 ]. Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group