This is the post MICA repot by the Blue team

1. The Harillela Enterprise
An Indian Family Business in Hong Kong
Post-MICA Report
Ali Dhanji
Djalal Lougev
Galina Savitskaya
Haithem Hentati

2. Table of Contents
1) Lead team preperation: .............................................................................................3
A. Debate objectives:.................................................................................................3
B. Leading the debate:................................................................................................3
2) Ice breaker (5min)......................................................................................................5
3) Summarizing the Case and Issues:.............................................................................5
FAMILY ISSUES: ....................................................................................................7
BUSINESS ISSUES: ................................................................................................8
4) The Debate:..............................................................................................................10
Yellow Team v/s Green Team – issue: Should the Harilella Enterprise continue
diversifying into hotels and other new ventures, or stick to what they are best at? 10
Green Team v/s Yellow Team v/s Gold Team – Issue: Did the Harilella family
make decisions based on profit maximization or passion and entrepreneurial spirit?
..................................................................................................................................11
5. Feedback: ................................................................................................................12
Conclusion:...................................................................................................................13
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3. 1) Lead team preperation:
A. Debate objectives:
o We compiled a report, which included all of the main arguments from the
three participating teams. The debate was based around 3 family issues and 3
business issues in the Harillela Enterprise case, with recommendations to
overcome them. However, we found that some teams had left out vital
information or missing pieces, which we noted down and brought up as the
main debate questions. An example of this is the question of intention and
motive, and whether Hari made harsh decisions as an entrepreneurial spirit or
for profit maximization.
o The focal points of the debate were around succession planning, future
strategy and going public, business diversification, corporate governance and
informal policies.
B. Leading the debate:
o A PowerPoint presentation was made to capture all the main issues, and
organize them in a comprehendible fashion.
o Facilitate a good flowing discussion, with amicable comments and critical
thinking.
o Control noise, time and direction of arguments. Also make sure all individuals
participate.
Person Role Responsibility
Ali, Djalal, Galina, Ice-breaker presentation 1. Explain instructions
Haithem of ‘pass the parcel’
2. Conduct the
activity, making
sure of a clear
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4. objective and
controlled
environment – and
keeping it fun!
Djalal, Galina Moderators 1. Share all team’s
arguments.
2. Point out the
conflicting issues,
and unfeasible
recommendations.
3. Ask groups to re-
visit their points
and make changes.
Ali + Djalal Analyst + Questioner 1. Summarize case,
and highlight main
issues.
2. Kick-off debate and
ask questions,
allowing only 5
minutes per issue.
3. Ask probing
questions, which
were not included
in the reports.
Haithem Note taker, feedback 1. Document full
advisor, report head. process.
2. Identify strengths
and weaknesses of
all groups and
individuals.
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5. 3. Provide thorough
feedback.
2) Ice breaker (5min)
Based on the cultures which we had focused on in class; India and China, we thought
it would be interesting to test the cultural knowledge of our class. We prepared
several general knowledge questions about China and India, such as:
- What time zone does India fall in, in regards to GMT?
- How many countries border China?
- What city in India is known as the ‘Diamond city’?
These questions were asked on individual basis, by passing around an object with
Chinese music playing in the background, and stopping the music at random times,
forcing the individual whose possession the object is under to answer the question.
This also allowed us to hand pick the individuals who we thought should participate
more, and they were rewarded with chocolates and sweets. We chose to reward
individuals with big packets of assorted chocolates such as chocolate peanuts, to
facilitate more team-work and sharing, as was the purpose of our ice-breaker.
3) Summarizing the Case and Issues:
As mentioned earlier, the lead team summarized all of the main business and family
issues submitted by the participant groups. To start however, the lead team chose the
summary of the case from the team who wrote it best, the Green Team.
Brief summary of the case:
The Harilela family business started with a small company which sold Chinese
antiques. Unfortunately due to the great depression, the company didn’t last for long.
He then opened another shop in Mongkok, but with WWII, he lost everything once
again.
He and his brothers then became the main suppliers for the army, providing high
quality uniforms for the army. They soon had important retail stores and they soon
bought their first hotel, Imperial hotel.
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6. The brothers diversified the business into a number of properties, expanding their
business and creating a partnership with holiday inn. Despite the financial crises and
the property prices crashing, the Harilela Enterprise Company reached a value of $3.5
billion in 2000.
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7. Family Issue 1 Issue 2 Issue 3
Green Disagreements within family, too many No equal shares/interests in the Informal set of rules to maintain
children, one main decision maker (Hari). group. Potential problem amongst relationships – could potentially lose
R: Concentrate on one family business brothers’ wants/direction. control over members.
instead of diversifying so much. R: Annual meeting to evaluate R: Establish ground rules to gain respect
brothers’ performance, redistribute of boundaries.
shares.
Yellow No clear succession plan No defined formal and informal rules Inefficient decision making process
R: Clear specification of positioning R: Written set of rules R: Schedule and structure of the
meetings and voting should be set.
Voting power should be revised.
Gold No defined formal and informal rules Family too closed, possibly need to Decision making methods (please
split to advance into 2nd generation. elaborate)
R: Currently live all together, 2nd R: Hari made mistakes must consult
Generation needs space. brothers and consultants before making
decisions.
FAMILY ISSUES:
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8. BUSINESS ISSUES:
Business Issue 1 Issue 2 Issue 3
Green Hari reallocated funds to full-hotel Family members losing focus on core Should the company go public? Can this
concentration, despite disagreements with business, and shifting to smaller cause frictions?
brothers / borrowing funds and the selling personal ventures, i.e. Thomson R: Go public due to lack of funds, and to
of Imperial hotel. (merchandising), import/export, etc. expand into new markets.
R: Shifting business sectors (from tailoring R: Periodic meetings to update
to hotels) in a period of growth for the members, and discuss core
former. competence to give it importance.
Yellow Business concentration: the risk is not Non-family partners are not involved Lack of future strategy
spread
R: To include non-family members R: Elaboration of the future strategy.
R: The focus should be shifted to the other with voting rights. External help Revision of franchising, going public and
businesses. Investments in real estate the board structure.
Gold Should the group go public? Should they Current management system – Should the board structure be maintained
cut costs or prices? maintain it or change it? for the future?
R: They should go public to gain access to R: Change to a franchise system for R: Board structure should change, to
capital markets. Focus on hotel business global standards. More suitable for maintain harmony and relations in next
where ‘synergies’ exist. second generation. generations.
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10. 4) The Debate:
After a group meeting and a thorough analysis of the submitted repors, we pointed out
different contradictory and agreeable issues; from which we formed a debate. The
way we structured the debate was different because we allowed individuals to give
their points and represent their teams loosely, in order to make it more flowing, as
opposed to appointing a spokesperson. Most of the ideas were very similar, except for
one main clashing issue between the green and yellow team, which we started the
debate with. This issue was about diversity; followed by motives, and finally
corporate governance.
Yellow Team v/s Green Team – issue: Should the Harilella
Enterprise continue diversifying into hotels and other new
ventures, or stick to what they are best at?
a. The yellow team raised a good point, that diversifying was to spread
risk. An example used was that they could open restaurants in all of
their own hotels, and maybe this could begin a new venture for them.
b. The green team, remained adamant that diversifying would make them
lose focus, as it did in the past. They had suffered too many losses, and
it was best to stick in the hotel business, now that they have invested so
much money into it.
c. The Yellow team rebutted by saying the reason that the Harilella hotels
were a success was due to them diversifying from textiles into hotels,
which has gained them family assets and good will as well.
d. The green team finalized this debate by saying that the Harillela’s had
tried diversifying into smaller business ventures, on an individual
basis, such as buying stakes in Thomson merchandising, or
import/export which were failures and the whole family suffered the
consequences. If diversification is to be done, the Green Team suggest
a formal structure first.
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11. 2) Green Team v/s Gold Team – issue: Informal business
policies, and a grey area between the family and the
business.
a. The green team stated that the family relied on informal sets of rules,
which maintained a harmonious relationship within the family as it was
easy to lose control over the members. The informal rules were
dangerous, and recommended that formal rules should be established
so the members can respect the boundaries and the organization can
run more professionally.
b. The gold team rebutted by saying that formal rules were not viable,
however monthly meetings to keep all the members informed with
issues would be more effective.
c. Eleonora from the green team stated that organizations can only have
informal rules at a certain size, however once they grow beyond ‘small
firm’ status, they must formalize all their policies to increase a
functioning corporate governance system.
d. Yousef from the gold team finalized this debate very well by saying
that family firms seem to lose their flexibility and potential when rules
are formalized. What makes a family firm organic and harmonious are
the informalities, which give the firm a family feel.
Green Team v/s Yellow Team v/s Gold Team – Issue: Did the
Harilella family make decisions based on profit maximization
or passion and entrepreneurial spirit?
e. Sophia from the green team stated that the Harilella enterprise should
continue following their personal interests, and not profit
maximization. They had done this when they bared major losses with
the construction of their hotel; which shows their persistence and long-
term thinking.
f. Shaan from the yellow team agreed with this, however he said that the
family passions should be followed such as opening restaurants instead
of investing in completely independent businesses. He claimed it was
important all the incomes were shared by the family as in the past.
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12. g. The gold team decided to throw in their opinion, which was different
from the rest, claiming that Harilella Enterprise should go public for
future foreign investments. This would help them gain access to capital
markets, and achieve a higher added value. In turn, the dividends paid
out could fund the private businesses that all the individuals seem to
want to partake in, e.g. restaurants, merchandising, etc.
5. Feedback:
Finally, after the debate was over, Haithem gave the groups feedback on their points,
which we have used to make the below table. This table portrays the team’s
contributions:
Issue Team Performance
1. Diversification Yellow team had best argument, that
diversification was the reason for success,
hence it should continue.
2. Corporate Governance Gold team made the best points,
especially by evaluating that Harilella
was too big and interdependent to lay
down formal rules. Monthly meetings
were a better solution, especially with
Yousef’s remark that the firm will lose its
flexibility with formal and strict policies,
and going international will be harder.
3. Motives and Culture Green team made the best argument,
claiming that Harilella’s culture and
motives were to pursue interests and
goals as opposed to only making money.
Sophia also recommended they stick to
their entrepreneurial spirit which had
made them. We found this to be true, and
would be the best recommendation to
give the family.
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13. Conclusion:
From the table above, we concluded that choosing a winning team was impossible for
2 reasons:
1) Each team won 1 debate issue.
2) Too many individuals made good points, which were not included in the
report, which we could not give credit to the teams for.
Overall, the debate was very well controlled and conducted. Our team was very
impressed with the performance of all groups, and their individuals. The only major
problem we noted was that the reports submitted were too short, which a mistake was
made by us, as we only asked for 2 pages maximum, as opposed to the conventional
3.
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