Ensuring Family and Business Continuity at India’s GMR Group
By Kavil Ramachandran, John Ward, Sachin Waiker, Rachna Jha
Ivey Publishing | December 2011
Ivey Publishing | December 2011
DOI
www.iveycases.com/ProductView.aspx?id=51823
Citation
Ramachandran, Kavil., Ward, John., Waiker, Sachin., Jha, Rachna. Ensuring Family and Business Continuity at India’s GMR Group Ivey Publishing www.iveycases.com/ProductView.aspx?id=51823.
Copyright
Ivey Publishing, 2011
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Abstract
Most family businesses do not survive beyond two or three generations. One of the main reasons for the short life span of family businesses is due to the lack of governance mechanisms in the family. With better family governance, business development becomes a more enjoyable journey and ensures continuity of the business across generations. This case is about an Indian family business, GMR Group, which was established a quarter century ago, and by 2010 became one of the major diversified infrastructure organizations in the country with large-scale interests in infrastructure (energy, roads and airports) and manufacturing (agri-business, mainly sugar). Since its founding, the Group has come a long way, from an independent proprietary enterprise to a family-owned holding corporation with several companies under its control, along with external stakeholders. The growth of the group has been led by the entrepreneurial zeal and organizational capabilities of its founder G.M Rao. Having seen many family businesses breaking up for want of adequate governance mechanisms, Rao led the way for the writing of his family's constitution with the help of several experts. The entire family spent many hours, and after several rounds of iteration created and signed a constitution in 2007. The writing process of the constitution, and the policies and processes developed were optimal for maximizing GMR's performance and the family's well-being in current and future generations. The case captures the essential processes and output of writing a family constitution.Learning Objective:This is primarily a case history that discusses the journey of an entrepreneur with small beginnings who establishes a large infrastructure corporation within a short period of time. The case captures the processes followed by the entrepreneur and his family in developing multiple instruments for family governance. Hence, the case can be used to understand the processes typically followed by business families to develop family governance using several structures, systems and processes. The case can be used in any course on family business particularly with focus on family governance and/or family entrepreneurship. Since this is a case history with no major problem for the protagonist to solve, the recommended class strategy would be to understand the context and process followed by the family in building family governance.