“Rahul Bajaj”- the Traditional Leader Essay
“RAHUL BAJAJ”- THE TRADITIONAL LEADER Often male head of a common family is considered a traditional leader. This could also be the case in a family-owned business, if its director and other leader positions are chosen based on family ties and/or age. Rahul Bajaj is one of the examples of a traditional leader. He is the Chairman of the Bajaj Group, which ranks among the top 10 business houses in India. The Bajaj Group has diversified interests ranging from automobiles, home appliances, lighting, iron and steel, insurance, travel and finance.
Rahul Bajaj is one of India’s most distinguished business leaders and internationally respected for his business acumen and entrepreneurial spirit. The group’s flagship company, Bajaj Auto, is ranked as the world’s fourth largest two- and three- wheeler manufacturer and the Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and South East Asia. Founded in 1926, at the height of India’s movement for independence from the British, the group has an illustrious history.
The integrity, dedication, resourcefulness and determination to succeed which are characteristic of the group today, are often traced back to its birth during those days of relentless devotion to a common cause. Jamnalal Bajaj, founder of the group, was a close confidant and disciple of Mahatma Gandhi. In fact, Gandhiji had adopted him as his son. This close relationship and his deep involvement in the independence movement did not leave Jamnalal Bajaj with much time to spend on his newly launched business venture. His son, Kamalnayan Bajaj, then 27, took over the reigns of business in 1942.
He too was close to Gandhiji and it was only after Independence in 1947, that he was able to give his full attention to the business. Kamalnayan Bajaj not only consolidated the group, but also diversified into various manufacturing activities. The present Chairman of the group, Rahul Bajaj, took charge of the business in 1965. Under his leadership, the turnover of the Bajaj Auto the flagship company has gone up from Rs. 72 million to Rs. 46. 16 billion (USD 936 million), its product portfolio has expanded and the brand has found a global market. Rahul Bajaj comes from the family of Jaman Lal Bajaj.
Rahul is the grandson of Jaman Lal Bajaj, who founded the Bajaj Group. Shishir Bajaj is the brother of Rahul Bajaj. Rahul Bajaj has two sons, Rajiv Bajaj and Sanjiv Bajaj, and daughter Sunaina Kejriwal. His sons Rajiv and Sanjiv Bajaj manage his companies. Rahul Bajaj completed his schooling from Cathedral, a school in Bombay. Then he further pursed his studies from St Stephen’s College, Delhi and Harvard University, USA. He took over control of the Bajaj Group in 1965 and successfully established one of India’s best companies. He established factories at Akurdi and Waluj.
In 1980s Bajaj Auto was India’s topmost scooter making company. After ten years of Bajaj Auto’s success Chetak was launched. Bajaj Auto had to face many challenges with the liberalization of the Indian economy. The slump in the sale of scooters and the downfall of the stock market of 2001 hit the company hard. It was forecast by some business analysts that Bajaj industries would have to shut down soon. But without losing hope Rahul Bajaj with his business expertise re-established the battered company. He established another factory in Chakan, invested in R&D and came up with Bajaj Pulsar Motorcycle.
Bajaj Pulsar is presently a leader in its sector. THE SUCCESS STORY OF RAHUL BAJAJ In the 1970s, India was a socialist state, a land of overarching regulation rather than of opportunity. As a result, there was no entrepreneurship, and businesses couldn’t do a thing without government approval. In this environment, the company, now the world’s fourth-largest maker of motorized scooters, three-wheel vehicles, and motorcycles—India’s most common forms of transportation—was limited to producing just 20,000 units a year. Supply and demand were completely out of sync.
Once they placed their order, customers had to wait ten years to receive it. Finally, Bajaj, whose grandfather had been known as the “fifth son” of Mahatma Gandhi and whose parents and grandparents had spent time in British prisons for the sake of Indian independence, decided to engage in his own form of disobedience. “To lower my costs while improving the price and quality of my products, I needed economies of scale,” he explains. “Ignoring a government regulation, I increased my volume by more than the permitted 25 percent of my licensed capacity.
If I had to go to jail for the excess production of a commodity that most Indians needed, I didn’t mind. ” Bajaj’s antiestablishment views prevailed, and by the beginning of the 1980s, Bajaj Auto had increased its annual production to 172,000 vehicles. Today, with revenues of $1. 5 billion and a market capitalization of $3 billion, the company sells nearly 2 million vehicles per year in India and other developing countries in Africa, Latin America, and Southeast Asia. “Given my family background, I knew I wanted to be a businessman by the time I was about 12,” says Bajaj.
His grandfather had bought a steel mill and started a sugar mill, and in 1945 his father founded Bajaj Auto, now the crown jewel in the Bajaj Group, which numbers almost thirty companies in a variety of industries. Graduating in 1958 from St. Stephen’s College in Delhi with an honors degree in economics, Bajaj underwent on-the-job training for four years at two of the group companies. During that time, he also earned a law degree in Bombay (now Mumbai). By the 1990s, Bajaj Auto faced problems worthy of an HBS case study.
A combination of the company’s ramped-up production and the entry-thanks to some early liberalization measures introduced by the then Prime Minister, Rajiv Gandhi-of Japanese manufacturers such as Honda, Yamaha, and Suzuki changed the dynamics of the marketplace completely. Waiting lists eventually gave way to overcapacity, and a new generation of motorcycles drove the sale of scooters into a downhill skid that bottomed out in 2000-01. “We remained profitable,” notes Bajaj, “because we quickly realized we needed to restructure our product line and increase the productivity of our workforce. Through a technological collaboration with Kawasaki, BAL improved the variety and quality of its motorcycles. The company also altered its supply-chain management, turning to outsourcing for almost every component used on the assembly line and relying on just-in-time deliveries several times a day. “We went through the difficult process of winnowing our major suppliers from 900 to 200, with whom we now work as partners,” Bajaj says. Changes in employee management and training had an enormous impact. It took 22,000 workers to produce 1 million vehicles in 2000, for example, but only half that number to make 1. million four years later. In addition, Bajaj Auto has consistently invested in R&D. The company’s ability to develop products desired by the customer has been an important source of confidence for the future. What has also remained constant throughout Bajaj’s forty years at BAL has been the company’s commitment to corporate social responsibility. Through philanthropic trusts and foundations, Bajaj Auto supports community and rural development in the areas where its workers live, funding efforts, for instance, in primary school education, agriculture, and health care.
As a longtime leader of his country’s business community, Rahul Bajaj is the only top executive to have served two terms as president of the Confederation of Indian Industry, which represents over 5,000 companies from India’s private and public sectors. In that role in 1994-95, he chaired a blue-ribbon committee of twenty CEOs who wrote India’s first report on the principles of good corporate governance-principles that were the forerunners of those later adopted by the Securities and Exchange Board of India and the nation’s stock exchanges.
Bajaj’s expertise in these matters has also been tapped by the New York Stock Exchange, where he serves as a member of its International Advisory Committee. For his contribution to Indian industry, he was awarded the nation’s third-highest civilian honor, the Padma Bhushan, in 2002. Bajaj acknowledges there’s still much he wants to do, particularly as India takes its place as a world economic power. “We still have to address some lingering problems in my country,” he says, “including an inadequate infrastructure, inflexible labor policies, and too much bureaucratic red tape.
But in the long run, India will succeed, since the entrepreneurial spirit and capability of the Indian people is second to none. ” Talking of people Bajaj feels an MBA should have four essential qualities to succeed in the new millennium a. Listen effectively b. Think like an entrepreneur c. Cross functionality. d. Smart work combined with hard work Bajaj’s son Rajiv announced a few days ago that the company will totally hive-off the business that made “hamara Bajaj” a household name and concentrate on emerging as the largest producers of motorbikes in the world. This decision was taken due to the declining demand of scooter in the market.