IMPORTANCE

OF BUSINESS FUNDAMENTALS

• NAME A D I T YA P R ATA P G U P TA
• ROLL NO. 2K18/PS/005
• SUBJECT F U N D A M E N TA L S O F M A N A G E M E N T
• PROFESSOR D R . A BH I N AV C H AUD H A RY
• TOPIC I M P O R TA N C E O F B U S I N E S S F U N D A M E N TA L S
 • Introduction
Presentation
• Importance of Strategic Management (Downfall
Overview of Kingfisher airlines)

• Importance of finance management (Collapse of the

Ambani Empire)

• Importance of vision and execution (Rise and fall of

Snapdeal)

• Importance of adaptability (The decline of Blackberry)

• Importance of ethical practices (Free fall of Yes bank)

• Conclusion
Introduction

Business fundamentals are the They provides the motivation,

basics but the most important confidence and a strong base to
part of any business. a company.

There are so many

A business cannot be
fundamentals but we will
successful by ignoring the
discuss only some of them with
business fundamentals.
their respective case studies.
 It serves as
The strategic management
Importance gives direction to the
company.
a coperate defense
mechanism against mistakes
and pitfalls.

of Strategic
Management
It helps organization to
develop core competencies
and competitive advantage.
It prepares
the organisation to face the
future challenges and acts
as a path finder for various
business opportunities.

To guide the company

successfully through all
changes in the environment.
 Kingfisher airlines

• Vijay was the only child of the successful entrepreneur Vittal Mallya. Vittal died suddenly
at 59 and as his only child Vijay inherited everything.

• He transformed UB Group into a multinational company that held more than 50% of
the Indian beer market and was the biggest player in local production of spirits through
United Spirits.

• By 2001 he was selling 26m cases as compared to 2.5 cases in 1995 and by 2001 his
drinks empire became the world’s tenth largest company.
The rise

• As the new Kingfisher beer brand had become global, Mallya claimed himself to be the
“King of the good times”.

• He became the owner of Royal Challengers Bangalore, the IPL team, and owned the
Formula 1 grand prix racing team.

• He worked very well in the liquor market, the market was smooth in functioning and there
were no losses.

• But there was very different scenario in his new business. He launched Kingfisher airlines in
2005 as a “five star hotel in the air”
The Downfall

• As soon as the global recession hit in 2007/8 his business model was in trouble as the
fuel cost increased a lot.

• At that time ,There were so many business for him to do, even then he ran the airline
business himself instead of appointing the officials like CEO and MD.

• And after a long time when he appointed a team then he keep on changing the CEO and
MD very often and never followed any long time strategy.

• The main reason behind the failure of kingfisher airlines was strategic mismanagement.
• Also he misunderstood the customer needs like he provided the luxuries such as
entertainment cabinets, bars and many more which were not needed in domestic flights.

• And at last the unfair fares as compared to other lcc’s made him out of competetion.

• One of the best example of good startegic management in companies is TCS Tata
Consulting Services.
 Finance management is very important
as it helps in controlling the level of
general and administrative expenses by
Importance finding more cost-efficient ways of
running the day-to-day business
of Finance operations.

Management
It also helps in balancing cash-outflow
with cash-inflows

Finance management take care not to

over-invest in fixed assets.
 Reliance and Anil Ambani

• When Dhirubhai Ambani, the father of Mukesh and Anil Ambani, died in 2002 without a will, Mukesh was
made the chairman and Anil the managing director of Reliance Industries, which at that time was a Rs
28,000 crore industry.

• However, trouble began between the brothers and in 2005, the company was split into two. While Anil
took over the telecom, power generation and financial services businesses, Mukesh kept the oil-refining
and petrochemicals businesses. They also signed a non-compete pact until 2010.

• On that day in 2005 anil ambani was teaming in confidence and laid down his plans for telecom
industries.

• After this he entered the entertainment business by acquiring the profitable adlabs entertainment.

• By 2008 anil became the largest multiplex operator with nearly 700 screens.

• He made some very good relations with politicians like amar singh having negative image in the socity.
The Rise

• In 2008 he entered into the infrastructure business. , Meanline he was also bidding
reliance infrastructure for railways and roads.
• In 2008 the market capitalisation of anil flagship telecom company was rs. 1.7 lakh crore.

• The most risky investments he made, were in power and infrastructure. Driven by
cheap capital in the 2000s, a host of businessman including Gautam Adani, Hyderabad-
based businessmen G.M.Rao and the Tata Group were driving huge investments in these
sectors, aggressively bidding for new projects.

• At that time Anil Ambani was the sixth richest person in the world according to Forbes,
with a wealth of $42 billion at that time.
The Downfall

• In between 2008-2014 due to a large number of works done by him the company tooks a lot of debts

• Over the years, In a bid to stay in the game, Anil kept borrowing to grow and expand the business. As
Telecom is a capital-intensive industry so at the end of 2014 he was in debt of 1.7 billion.

• In 2014 there comes the start of downfall. It was the time to pay the debt so he has to sell his asset
reliance ada group.

• After this in 2016 the big blow was given by mukesh ambani by releasing jio which made the reliance
communication to shut down.
• In May 2018 Ericsson claimed that RCom owed it over Rs 1,100 crore in dues. The Supreme
Court at that time, threatened to imprison Anil if he didn’t pay money to Ericsson India in
a month’s time. Here mukesh ambani saved anil by paying his dues.

• Now he also had to sell his stake in reliance idustries which was 13500 crore to pay other
debts. After this he also resigned from post of reliance communication chairman

• In short we can summarise the reasons for his downfall

• Not managing the finances efficiently.
• Cash hungry business i.e. Focussing on earning fast cash.
• Flamboyant nature towards business
• The debt pile up i.e. too much debt affected the functioning of all business in great manner.
Importance of Vision implies the blueprint of the
company future position.
vision
and execution It depicts the organisation aspirations and
provide a glimpse of what
the organisation would like to become in
future.

Execution is primarily an operational

processes.It requires motivation and
leadership skill

Execution basically focuses on efficiency

It requires coordination among the executive

at middle and lower levels
 Snapdeal

• Kunal Bahl and Rohit Bansal started their business venture by the name MoneySaver in
2010, which was an offline daily deal website.

• Snapdeal concentrated on a very different segment of audience, who gave

much importance to the discounts and flash sales.

• The E-commerce market in India is full of cut-throat competition. Amazon and

Flipkart have almost completely monopolized the sector.

• Unlike the U.S and other developed nations, the customers in India concerns more about
price of the product than the time taken for the delivery.
The Rise

• One of its real competition is the Chinese E-commerce giant Club Factory.

• They quickly grew from an offline coupon selling company to the third biggest e-commerce platform in
India

• Finding the investors for a startup in India was a bit more of a challenge back in 2011

• The investments started flooding in after $12 million was funded by Nexus Venture Partners in January
of 2011. It was all an uphill journey from there, A series of funding from $133 million to $105 million was
received from firms such as Kalaari Capital, Intel Capital, and Saama Capital and so on.

• In August of 2015, Snapdeal managed to get an investment from the Alibaba Group as well. This was
indeed a milestone for the firm!
The Downfall

• No vision: The biggest blame for downfall was that the Co-founders Kunal Bahl and Rohit Bansal never
allowed others to participate in decisions or shares.

• Many senior officials left Snapdeal even those with five years of experience there just because of lack of
democracy.

• Poor execution: Snapdeal launched a service named snapdeal gold like amazon prime ,but it cannot be
executed in a good way as it include only the fast delivery and snapdeal never could be profited from this
service.

• No differentiation(USP): Busy building too many warehouses and burning cash, Snapdeal never built any
category as their USP like Flipkart did with fashion and electronics, and Amazon with Prime and Pantry,
they were just retailing.

• Lack of funds in later times.

Importance
of Business environment involves a
lot of stakeholders, either external
or internal to
A firm has to be proactive in
this fastly changing environment
adaptability an organisation.Effect of one
factor leads to change in
to ensure its most
primary organisational objectives
operations of others, thus making i.e. survival,profit and growth
it dynamic in nature.

The one who doesn’t keep the

pace in advanve about the
changing market requirement ,
may face failure.
 Blackberry

• BlackBerry was the producer of the world’s first widely-adopted

premium smartphone brand.

• At its peak, Blackberry owned over 50% of the US and 20% of the
global smartphone market, sold over 50 million devices a year, had its device referred
to as the “CrackBerry”.

• First, a little bit of history. BlackBerry was founded in 1984 and was originally a developer
of connectivity technology like modems and pagers. In 2000, the company introduced its
first mobile phone.
• Over the decade, the BlackBerry became the device of choice in corporate America due
to its enterprise-level security and business functionality.

• Even after the competitive entry of the iPhone in 2007 and Google’s Android OS in 2008,
BlackBerry was certainly not destined for failure. In fact, BlackBerry continued to
dominate the smartphone market through 2010 having 40% market share.
The Downfall

• Slow market reaction to competition(inadaptability) BlackBerry’s leadership initially dismissed

Apple’s touchscreen iPhone, insisting that users preferred their physical keyboard. When the
iPhone sold well, BlackBerry released a touchscreen device,blackberry storm which often
didn’t work properly and was met with bad reviews.

• Focusing on the wrong end market. As Apple and Google made smartphones accessible to
the mass consumer by creating user interfaces and attractive apps, BlackBerry remained
focused on its enterprise customers, their security and connectivity requirements.
• Blackberry neglected the end market that would ultimately become the most important.

• Misunderstanding the smartphone’s value proposition(innovation)

• Being enterprise focused, BlackBerry innovated feature improvements like faster email, better
security, etc.
• In doing so, it missed the value proposition of the smartphone as a platform for personal
productivity and entertainment.
• While Apple and Google built a moat around their third-party app ecosystems.
• BlackBerry’s insistence on first-party development made its devices far inferior.

• Poor execution. Even when it did tried to adapt, BlackBerry couldn’t execute properly. The
launch of the touchscreen Storm in 2008 was a failure. The 2010 release of the Playbook
tablet and its more recent incarnations, like the BlackBerry Priv in 2015, suffered from
ineffective product launches, poor functionality, and higher price.
Importance
of ethical Ethical practices are less of a
practices strategy and more of a
philosophy that informs all
business efforts.
It insures making honest claims
and satisfying the need of
existing customers.
It boosts credibility and trust
,develop brand loyalty,
increases customer retention
,and prompts customers to
spread word about the products
or services you’re marketing.
Whereas unethical practices
,can send wrong signals about
your products and
services, destroy your brand’s
reputation, and possibly lead to
legal problems .
Yes bank

• A remarkable story of ascent, downfall of an Indian Bank whose foundation stone was laid
back in 2003. yes Bank acquired license in 2004 and went to stock exchange in 2005.

• With all the fortunes working in their favour, the Bank's regime was at its highest
point. More corporates investvents, more loans, more interest and a gradual rise in
leadership were all in the limelight.

• For many investors, stock markets is all about volatility. Such volatility seekers are
very happy with short term multi-bagger opportunities. Buying Yes Bank at 45 per share
and selling at 90 will seem like a big achievement for many
• During the unfortunate terrorist attacks of 26/11, YES Bank lost one of its founders,
Ashok Kapoor, a calm and composed individual who complemented his aggressive co-
founder Rana Kapoor.

• After a very long legal battle between ashok’s family and rana kapoor. Rana kapoor got
ownership of yes bank.By the time dispute between them settled, the steel frame of the
Yes Bank had begun creaking.

• A Business Today report says that there are around Rs 35,000 crore of stressed loans,
most of the lendings were done in post-2008 period. Yes Bank gave loans to companies
which were struggling in their businesses.
• Not all loans were good(unethical); some have the potential to turn fortunes upside down. Bad
loans to companies that were already in losses like reliance communication, dhfl group etc.
and the bad investments led to their downfall.

• The same reason that made them successful beacame the reason for their downfall i.e.
boldness, and volatility in decisions.

• In August 2018, the RBI asked the the chief executive Rana Kapoor to quit the bank by
January 31, 2019 when it emerged that he could be the real problem of banking governance
and source of bad loan practices.
 • Fundamentals of any field must be followed to
sustain and grow there.

• In the cut throat fields like business one should

work in very efficient manner keeping in mind all
CONCLSION the external and internal factors of business
environment.

• Execution, vision, management, ethics, adaptability

and innovation are some of the important
fundamentals of business and should be kept in
mind.
Thank you