The Harilela Enterprises: An Indian Business in Hong Kong Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

The Harilela Enterprises: An Indian Business in Hong Kong Case Solution

Introduction:

The Harilelas’ history dates back to 1922 when Naroomal Mirchandani left his hometown Hyderabad (Then British India) and settled in China in search for a better future. However, he returned to India at the passing of his mother. By the time of his arrival, his mother had already been cremated. This personal tradegy prompted him to change his name from Mirchandani to Harilela.

Naroomal Harilela settled as a trader in Canton and established a small company called Duru Star that sold Chinese antiques, amber, jade, embroidered items, and other curios. In 1934, Naroomal moved to Hong Kong with his family. Naroomal and his son started to sell newspapers, soaps, hawked shorts, and daily essentials to British Army. The business improved and in 1937, the family established a small silk shop, their business was short lived as the world engulfed itself in War, at the start of World War II.

In 1945, Harilela and his brother resumed their business with British Army, by selling them household supplies. British Military realized their honesty and hard work and thus, appointed Herilela brothers as their main suppliers. Initially they worked in a small shop but gradually expanded their business by establishing Kowloon Hotel. Through providing high quality and standard material, Harilela brothers were able to attract large number of customers, including tourists. Moreover, the family became the largest importer of British Textiles in Hong Kong. By the end of 1959, Kowloon Hotel was demolished and Herilelas’ established Imperial Hotel in the following year.

During the Korean War and Vietnam War, Harilelas received contracts to make uniforms for the US military. Meanwhile, the successes of Harilelas’ continued as they opened sixty-four clothing houses in Guam, Philippines, Vietnam and other parts of the world, catering to American Armed Forces in the pacific region. The company then began to diversify its business and entered local retail market by establishing retail stores for Women and Men that provided high quality clothes. Furthermore, in 1975, Herilelas opened a hotel in United States by the name of Holiday Inn.

Eventually, the family realized that hotel business was more profitable and decided to opt out of textiles business. While Naroomal focused on the hotel business. Other family members’ business interest diversified. Naroomal’s brother established a different business in a different part of the world.

Problem Statement:

Despite having a successful business, Herilela brothers decided to part ways and that is the main problem in the case. Furthermore, company’s management also had to choose as to whether the company should become a public enterprise and list itself on the stock exchange or not? Moreover, the management also had to choose between current management system and franchising system. The other major concern was how their business will be passed on to the next generation of their family. Since the older generation had successfully built a business empire by focusing on traditional values., Harilelas’ were anxious regarding the continued success of business.

Analysis:

The Hotel business was risky when Holiday Inn Hotel was established, the construction progress was slow, and property prices had crashed. In addition to this, tourism had also declined. Furthermore, the construction and other costs were very high due to which the family had to sell number of properties in order to construct the hotel, including Imperial Hotel. However, when the property prices increased, the family was able to buy back Imperial Hotel.

Furthermore, the Harilela’s brother had several other stakes in various other businesses and had different interests. Hari’s brother had stakes in banks in Singapore and Los Angeles. Moreover, George (Hari’s brother) owned a company that focused on production of toys, watches, and other such items. Moreover, Bob (Naroomal’s fourth brother) was responsible for administration of the overseas offices and ran his own travel agency. Other brothers were involved in import and export businesses and ran Indian cuisine restaurants in Hong Kong. .................

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