The Economic Times daily newspaper is available online now.

    B-schools like IIMs, XLRI and ISB using Vijay Mallya debt fiasco as learning curve for future managers

    Synopsis

    The saga has provided rich material for discussions of ethics, corporate governance, brand management, entrepreneurship and families at schools.

    ET Bureau
    MUMBAI|NEW DELHI: Shirt sleeves to shirt sleeves is what management schools call the theory that fortunes are made by the first generation, built up by the second and frittered away by the third.

    Given Vijay Mallya’s current debt travails, there is much discussion about this and other matters in India’s business schools, especially since he’s only the second generation.

    The saga has provided rich material for discussions of ethics, corporate governance, brand management, entrepreneurship and families at schools such as the Indian Institutes of Management (IIMs) and elsewhere, according to several faculty members.

    “The Vijay Mallya case could most certainly be the subject of a case study,” said Debashis Chatterjee, professor at IIM Lucknow. “It should be a subject of discussion in classes on strategy across business schools and the IIMs are no exception.

    It's about the downfall of a high-profile brand and there's an ethical connotation as well.” Teachers at IIM Bangalore, Lucknow and Indore, the Xavier School of Management (XLRI) in Jamshedpur, the Indian School of Business (ISB) in Hyderabad and Management Development Institute (MDI) in Gurgaon are using the Mallya matter to explain various facets of business and lessons that future managers should learn from.

    Banks are seeking the return of Rs 9,000 crore in overdue loans and interest from Mallya-promoted Kingfisher Airlines.

    Professors said they are relying on secondary sources such as news reports during class discussions. “This is a live case study for us and we have to build our arguments based on limited resources.

    A similar ‘live’ case study discussed earlier was during Satyam,” said Kavil Ramachandran, executive director, Thomas Schmidheiny Centre for Family Enterprise, ISB. Ramachandran said he used the issue to discuss the topic of entrepreneurship in family businesses.

    The Satyam scandal broke when founder B Ramalinga Raju admitted in 2009 to overstating earnings. At IIM Bangalore, discussions are focused on a broad definition of corporate governance.

    Organisations need to balance the interest of five stakeholders—customers, owners, employees, suppliers and society — for consistent high performance. “In this case, the customers were ‘pampered’ with an excessive focus on metrics relevant to them at the cost of other stakeholders,” said Abhoy Ojha, who teaches organisational behaviour and human resources management at the institute.

    “It also leads to discussion on the obsession in many companies to meet the interests of ‘owners’ at the cost of other stakeholders.”

    Juggling of unrelated businesses such as airlines and liquor and competence required can inform topics such as strategic thinking and implementation, said some teachers. MDI students were taught the subject with Mallya cited as an example.

    “While in the alcohol industry, profit margin could be 50%, in an airline industry it would be 2%. You have to work with a different mindset,” said Veeresh Sharma, professor of strategic management at MDI. Another lesson is checking on companies before accepting jobs.

    “Do not join just because the salary is high. The company’s performance and image need to be filtered by the students first,” said Sunil Varughese, chief brand and sustainability officer at XLRI. Mallya companies were prominent recruiters at business schools at one time. Depending on the outcome of cases against Mallya, these may become material for an “ethics or a law course,” said Rishikesha T Krishnan, director of IIM Indore.

    “In the meantime, main lessons that can be learnt from (Kingfisher Airlines’) failure are the limits to which you can defy economic logic of an industry. We are teaching that already when we teach the airline industry case.”


    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more

    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more
    The Economic Times

    Stories you might be interested in