lessons learned from eplanet ventures "pakistan: a story of technology, entrepreneurs and global...

7/23/2019 Lessons Learned from eplanet ventures "Pakistan: A Story of Technology, Entrepreneurs and Global Networks"

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MM 5011

Knowledge Management and Innovation

Group Assignment

Pakistan: A Story of Technology, Entrepreneurs and Global Networks

Lessons Learned

Syndicate 2 X.46 (Great Leaders Syndicate)

29111311 Haidir Afesina

29111328 Hendra Winata

29111329 Mita Listyatri

29111338 Andek Prabowo

29111344 Aprian Eka Rahadi

29111384 Chairunnisa Mirhelina N

29111387 Franciscus Xaverius Kresna P

29111393 Agung Indri Pramantyo

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS AND MANAGEMENT

INSTITUT TEKNOLOGI BANDUNG

2012


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Company Overview

ePlanet Ventures, a technology fund based in Silicon Valley founded by Asad Jamal. Asad is a Pakistani with

Bachelor`s degree from the London School of Economics who spent most of his life overseas. He successfully

developed business in the advertising, media, communications and wireless, computing software, consumerinternet, and other market spaces. As a venture capitalist he always look for new horizons.

Objective

To be one of the first venture capital entrants enter Pakistan with its largely untapped market (the growth of

middle class).

Problem

Doubt that Pakistan condition with its mere 60 years old will be sustainable for investor despite of their growing

middle class.

Lesson Learned

Fact#1 Leadership

President Musharaf`s policies appeared to invigorate Pakistan`s economy and stimulate entrepreneurship within

the country regardless of uncertain political future.

Lesson Learned

Country`s leader vision as dealmaker has to put as a consideration before entering the marketLeadership is a vision to build hope, trust and optimism through opportunities for the future (Kouzes and Posner,

2002).

Other Country Experience

Taken from Dubai: A Star in The East by Balakrishnan (2008), it was His Highness Sheikh Mohammed Bin

Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai who has transformed Dubai

into the number one investor destination in its region. Through his visionary leadership made the policy easier

and be trusted for investors to invest in infrastructure and tourism.

Fact#2 GDP

Pakistan, the 6th

most populated country in the world with GDP growth around 7% per year since 2002, had

large market, cost-base and talent, and family connections dominance.

Lesson Learned

Higher GDP means higher buying powerHigh-populated country is an emerging market (Kertajaya, 2002)


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Taken from Markplus Conference 2011, since 2010, Indonesia has becoming the most attractive destination for

foreign investor because of its high rate consumption and huge resources. It can be seen from GDP annual

increment stability followed by the increasing of FDI in end of 2011 (foreign direct investment) i.e. 11.5%

(www.bkpm.co.id). Thus Fontera plans to invest in new Indonesian plant, Honam P builds cement factory for 45

trillion and China with South Korea to invest in straight bridge.

Fact#3 Regulation

According to the World Banks Doing business 2008 report, the country ranked highest in South Asia in

categories such as Starting a Business and Protecting Investors because of its recent policy trends of

liberalization and deregulation (Private Equity and Venture Capital Funds).

Lesson Learned

Good law enforcement attracts investorTo attract FDI, a country needs resources, law enforcement and infrastructure (Salvatore, 2004).


Taken from Hermawan on Marketing by Kertajaya (2002), after its revolution, in 1970 China allowed investor

especially multinational company to start their business by ensuring their safety and promising country politics

and economy sustainability. Thus made China number one for FDI recipients in the world. A company such as

SK-II built and developed its factory in China.

Fact#4 Culture

The culture was still one of family-owned businesses with limited professional management that made trusted

management was hard to come by in Pakistan as the concept of equity and options were new in Pakistan.

Lesson Learned

New concept needs research, patient and collaborate with local business peopleTo introduce new product and concept to the market, the need of local knowledge and influence are needed to

gain people acceptance (Drummond, Ensor and Ashford, 2008).


Taken from Hermawan on Marketing by Kertajaya (2002), Wal-Mart failed its concept in Indonesia in 1998 ashypermarket that offered value of low price with product varieties. They failed to understand the local behavior,

impatient and reluctant to adapt with the business system. Thus Carrefour that came after Wal-Mart was gain

successful time with their understanding of Indonesian system.

Fact#5 Labor

Pakistans talent pool was generally 30-40% cheaper than India and China despite of expensive price of real

estate, unreliable supply of electricity, water and other utilities.

Lesson Learned

Cheap labor is huge resources


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To attract FDI, a country needs resources, law enforcement and infrastructure (Salvatore, 2004).


Taken from Chindia by Engardio (2007), many high-tech and manufacturing multinational companies chose to

build their factory because of the availability of labor. People are low skill so that they need a job despite of

getting low payment. Thus company will save lots of cost. In return, the investment drives China growth.

Fact#6 Costumer Relationship

Besides emerging of middle class in Pakistan, Ayuz ul Haque, Managing Director of ePlanet Ventures said

what we look for in a company in a country like Pakistan is whether the business can survive and sustain itself

in the local market.

Lesson Learned

Local middle class consumptionThe middle class at any country is at the forefront of consumption and leads important business trends

(Drummond, Ensor and Ashford, 2008).


Taken from Markplus Conference 2011, many high tech foreign companies invest and launch their products in

Indonesia because of its middle class high consumption. Steven Koeberle from World Bank said that 7 million

people a year is the expanding rate of emerging middle class. Therefore Honda put Indonesia as their first

priority for their product and their innovation project in Indonesia based on people preferences e.g. Scoopy.

Fact#7 Knowledge Resources

Friends, a sitcom created by Align technologies, was a training tool for employees with Master`s degrees and

who were fluent in English.

Lesson Learned

Knowledge resourcesInvestment in virtual learning software is one of the effective ways to develop knowledge management in the

company regardless of the cost (Collison and Parcel, 2011).

Other Company Experience

Based on Fezi experiences at Hilton Bandung, there was hotel software called Hilton University. The programhas various subjects from leadership, business and language. It created for different levels. The software is

installed on every computer in cafeteria. The language program has become the most famous program for

employees as it accessible at home. It helps the employees to practice both of writing and speaking.

Fact#8 Promotion

For access to markets, YouTube and Scrybe as promotion channel.

Lesson Learned

Internet media as effective promotion tool


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Both of above the line and below the line communication are being used to either build brand awareness or drive

sales (Gauri and Cateora, 2006).


Taken from YouTube and Video Marketing by Jarboe (2009), Tom Dickson, Blendtec founder, throws such

items as marbles, running shoes, glow sticks, golf balls and iPhones into his companys blenders and flips the on

switch. People love these crazy videos so much that Blendtecs YouTube channel has more than 200,000

subscribers. It resulted to the increasing of blentec`s blender products.

Fact#9 Human Capital

In technology space alone, Pakistan universities were producing upwards of 20,000 English-speaking Convent

schools instilled neutral English accents, enabling better communication with their Western counterparts.

Lesson Learned

Human resources developmentIn business world, the readiness of human capital starts with good communication (Mullins, 2007).


Based on Fezi experiences at Hotel Mulia, the company provided English teachers for employees. The courses

are selected specializing in Hotel industries. For managerial level, the company collaborated with The British

Institute to create modules that focus on business skills such as negotiation, contract and presentation.

Fact#10 Organization

OPEN (Organization for Pakistani Entrepreneurs) collaborate with MIT Entrepreneurship Center held the

workshops, seminars and business competition in order to educate Pakistani-based entrepreneurs.

Lesson Learned

Activities to encourage entrepreneurship along with its developmentThe collaboration of industries and academic institutions help to generate and stimulate new start up business

along with to facilitate networking and opportunities to potential investor (Bessant and Tidd, 2011).


Taken from Innovation and Entrepreneurship by Bessant and Tidd (2011), MIT and Standford University had

collaboration to build the academic entrepreneurship. They shared research result along with programdevelopment. They become a bridge to both of entrepreneur and investor.

Analysis

Assad as many other venture capitalists are keen to provide funding for a venture with a proven track record and

strong business plan. Bessant and Tidd (2011) argued that they are typically often requiring some equity or

management involvement in return. Therefore some of them are prepared to go public to fund further growth.


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Bessant and Tidd (2011) stated that studies consistently find that the age of company, educational level of

founders, number of founders and starting capital all have a positive effect on venture success. Therefore the

Authors analyze that the opportunity for ePlanet to expand their business and invest in Pakistan is huge. There

are some considerations that ,the case given such as;

1. The emerging middle class in Pakistan is potentially profitable.Competition: Middle class is attractive to both existing and new players, the competition will be fierce,

and therefore ePlanet need to define their direct competitor and differentiate their offering

Customer : Middle class segment are too big as a target segments, ePlanet need to define a more

specific segment and adapt their offering

2. Find a business model suited to the them for Pakistan (best fit in)Production and operation: improve capabilities in servicing middle class

Marketing and sales: optimizing offline channels and online channels

Post sales operation: build long-term relationship to increase buying power and build loyalty

3. Financial resourcesVenture assets and access to funding e.g. IPO

4. ManagementRecruit people with industry related market or sector experience.

Size of the founding team has important role to bring diverse expertise to the ventures and help for better

decision-making.

Recommendation

Corporate Entrepreneurship

For most companies include ePlanet Ventures that its market already established, a change is costly. This

condition make ePlanet limit its innovation to incremental one. To avoid this condition, ePlanet shall:

a. Developing internal knowledgeCreate external network in Pakistan, such as make ventures, alliance or partnership with existing local

company and supplier that will related to ePlanet Ventures business portfolio

b.

Have the appropriate resources, which covered:i. Decision Making;

Because Pakistan still lack of top management skills, Asad Jamal shoul hire foreigner in the

beginning of his start up business in Pakistan.

ii. Empowered Teams;Employees who work in the company shall empowered and encouraged to improve their

knowledge and skills to both of technical and management skills, especially for local employees.

It is very important to the growth of Pakistani skills for the future in order to support its

sustainability in human capital aspect of local people. Besides, it will also help the government

to produce domestic professional labor.


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iii. Skills and capabilities;In the beginning of business in Pakistan, Asad Jamal shall divide the employee in 2 groups.

First, professional management worker who come from foreigner and local people. Second,

technical expertise from local people. While running the business, local people in management

side is ready to become professional, thus they ready to replace the foreigner accordingly.

iv. Risk Tolerance;Any business always followed by risk. Although many uncertainty from politics, organization,

culture, and human capital in Pakistan, there are some facts that GDP, GNI growth, number of

human capital in IT, number of company in IT would minimize the uncertainty level. Thus Asad

Jamal shall open the new venture in Pakistan.

c. Asad Jamal must understand and analyze his existing strong capability and strategic assets tomake new venture in Pakistan: the one that related to Pakistan condition and also to help improving the

Pakistan condition.

Then Asad Jamal should analyze of the new business in Pakistan through Corporate Venturing that is

one of the Corporate Enterpreneurship types. Corporate Venturing models are:

a. Internal corporate venturingb. Cooperative corporate venturingc. External corporate venturing

Table of comparison Operating System model Vs New venture entities

From the table above, it is clearly said that Venturing Company as the best choice in terms of faster

transformation and flexible environment in order to create or develop new innovation.

The success history came from South Korea-based conglomerate Samsung. It transformed from an

"infotainment" company to a "lifecare" one based on green technology and healthcare. They decided to make

the tranformation as they believe that "lifecare" one based on green technology and healthcare has emerging

market. However, this transformation is big strategic shift and arrived too late to dominate the business portfolio.


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Fortunately, there is a way called Corporate Venturing. Samsung created Samsung Venture Investment

Corporation which bring many investors from different business units in the group, such as Samsung

Electronics.

References

Books:

Balakrishnan, Melodena Stephens (2008) Dubai: A Star in The East, A case study in strategic destination

branding", Journal of Place Management and Development, Vol. 1 Iss: 1, pp.62 - 91

Bessant, John and Tidd Joe (2011)Innovation and Entrepreneurship (2nd

Ed), Chichester: John Wiley & Sons

Collisson, Chris and Parcell, Geoff (2001)Learning to Fly: Practical Lessons from One of The World`s Leading

Knowledge Company, Chichester: Capstone

Engardio, Pete (2007) Chindia: How China and India Revolutionizing Global Business, McGraw Hill

Drummond, Graeme, Ensor, John and Ashford, Ruth (2008) Strategic Marketing (3rd

Ed), Oxford: Butterworth-

Heinemann

Ghauri, P and Cateora, P (2006)International Marketing, New York: McGraw-Hill Education

Jarboe, Greg (2009) YouTube and Video Marketing, Sybex

Kertajaya, Hermawan (2002)Hermawan on Marketing, Jakarta: PT. Gramedia Pustaka Utama

Kouzes, James M and Posner, Barry Z (2002) The Leadership Challenge (3rd

Ed), San Francisco: Josey Bass

Mullins, Laurie J (2007)Management and Organizational Behavior (8th

Ed), Harlow: FT Prentice Hall

Markplus Conference 2011, December 5th, 2011 Ritz Carlton Jakarta

Pierantozzi (2007), Corporate Venturing

Salvatore, Dominic (2004)Managerial Economics in Global Economy (5th

Ed), Thomson Southwestern

Internet:

http://blogs.hbr.org/cs/2011/10/corporate_venturing_rhymes_wit.html (Last accessed 22 Nov. 12 at 1pm)

http://tuta.aalto.fi/fi/tutkimus/strateginen_johtaminen/julkaisut/tyopaperit/backholm_wp_1999_1.pdf (Last

accessed 22 Nov. 12 at 1pm)

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