Firms Operating in Different Countries - Essay Example

? Assignment Case Analysis on Firms X and Y The business environment around us has been evolving and expanding into a rapid of competitionand growth. Most firms around the world have been able to establish themselves only because of the hard work, perseverance as well as business and marketing strategies that they have been able to apply. Every enterprise helps in forming the backbone of the economy that it has been developed in; just like profits and large turnovers help an economy to boom and develop, losses and stagnancy contribute to an economy facing a downturn or depression in the long run. A business environment consists of a number of factors that help a firm to grow and develop as well as subsequently witness a decline in the same; these factors may be ranging from socio-cultural and political to economical, legal, ethical as well as technological aspects. There are a number of key factors that help a firm to meet its organisational needs and most of them depend on these. All these factors coupled together help a firm either meet or fade away from reaching its goals. Thus, it is imperative for every business manager to be able to mark out the various factors within the environment and use it to the opportunity of the firm and not let it hinder the process of meeting the desired results. The political factors within a business environment consist of the kind of government that has established itself in the respective economy and the way it lets the economy operate. Adhering to government rules and regulations is vital for each and every enterprise in order to grow and develop within the economy. If the political environment is not stable enough, then the enterprise might have to face restrictions on growth and development and undergo obstacles. Thus, the government should be able to let the firm take its own decisions and thus decentralise a certain amount of power in terms of corporate significance. Ethical issues are most often talked about by people because these are on the basis of what individuals deem is moral in society. Most enterprises need to be ethical in order to be able to survive. This is because customers are the main reason because of which firms run, and if they see that firms are not being ethical in terms of demand and supply of products and materials, they will not indulge in making purchases. Business ethics thus need to be followed in terms of keeping the employees happy and satisfied as well as meeting each and every need of the customer without causing much harm or damage to the environment. Economic issues crop up due to the rise and fall of the economy that the enterprise persists within. His refers to the demand and supply of products within the economy. Since every economy depends heavily on these two main factors, firms must ensure that their customers are being supplied with the demand that they require. If not, then firms might face a downturn and have to shut down on their production scales as they will not be able to cover their costs and expenses. Finally, every management within an enterprise also has to take measures in order to understand the legal aspects of the business environment. This refers to the laws laid down as per which businesses can establish and run themselves. This forms a very important aspect of any firm within an economy because a firm may fall into trouble due to dealing with illegal activities and products. In a nutshell, the various aspects of the four factors within the business environment has been talked about within this paper with the help of two firms that are experiencing them. Two firms named Firm X (Amarchand and Mangaldas) and Firm Y (Clifford Chance) have been hypothetically created for the purpose of this paper... This paper helps to position a strong and in depth analysis of these two firms on the basis of the business environment that they are surviving within. It helps to present the political, ethical, economical as well as legal aspects that both the firms are subject to. This paper also helps to provide an analysis on the similarities as well as differences of the two firms on the basis of these aspects of their business environments with respect to each other, as well as on an individual basis. In depth analysis between AmarchandMangaldas(India) and Clifford Chance(U.K). In this paper, the two firms will be compared on political, ethical, economical and legal differences and the impact of these parameters on their management decision making. To start with, a brief background on the two firms.  Clifford Chance, came into being in 1987, when Clifford Turner and Coward Chance’s firm came together to form a LLP( Limited Liability Partnership). Neither Clifford Turner’s form nor Coward Chances firm, were doing well before, but there merger brought about a revolution in the law firm industry. Together, they started a thriving practice, focusing mainly on corporate clients. During the first year the firm was not doing that well and there feedback on the client satisfaction was really low, but in the following year the firm reviewed its management procedures and soon the firm at captured the 29th rank, in the International Law Firms ranking. In 1999, Clifford Chance merged with Frankfurt based law firm Punder, Volhard, Weber &Axster, and American Firm Rogers & Wells. Today the firm boasts 32 offices in over 20 countries, and employs more than 5000 lawyers all over the world. The firms estimated worth is ?1.197 Billion, and profits per equity partner are valued at ?933,000. The firm specializes in Mergers and Accusations laws, real estate and property laws, litigation capital market and corporate laws. The law firm is also a part of the coveted ‘Magic Circle’. After the merger of two of the largest firms in U.K, Clifford Chance became a mega firm in the country. Due to its rapid and aggressive growth strategy, the firm soon was able to spread its offices all over the world and came to be known as a quality firm. The firm functions on a strict management system, i.e. the firm is run by its own management team headed by the managing director, Tony Reeves. The management team is responsible for running the managerial functions and the expansion policies of the firm. The business end and the client management of the firm are also looked after by the management team. Clifford Chance employs lawyers and researchers as there think tank. The junior associates and litigating lawyers are not given much of an opportunity for client interaction, and they function according to the assignments handed to them by the senior associates. The senior partners and associates of the firm are responsible for handling and interacting with the clients. The firm boasts of a very strong PR team which is responsible for the business end of the company. For the most part the firm has a very established client base, because of its popularity and global presence. Clifford Chance has also of late, started outsourcing its research work to various offices, for example in India. The Indian operation of Clifford Chance is typically a LPO (Legal Process Outsourcing), where in their 240 employee unit does the research work outsourced from various offices of the firm and returns the results. This is a fresh approach adopted by the firm in order to expand its business all over the world. (Clifford Chance: Success Story) AmarchandMangaldas was founded by AmarchandShroff in 1917. The firm started off as a small family firm, but later graduated into a major Indian firm in the 1980’s and 1990’s under the leadership of Suresh Shroff, the founder’s son. Although during the early phase, the firm faced competition from well established firms such as Mulla and Mulla and Crawford and Bayley. In today’s times, AmarchandMangaldas has emerged has one of the leading firms in the country. Today, the firm’s worth is over 100 million dollars and employs over 500 lawyers in five offices in the country, namely Mumbai, Delhi, Hyderabad, Kolkata and Bangalore. AmarchandMangaldas is essentially a partnership and follows the equity partnership model. Currently the firm is headed by the two sons of Suresh Shroff. The elder son, ShardulShroff handles the Delhi and Kolkata firm and Cyril Shroff handles the Mumbai firm. (Shloka, Nath) The two brothers have a distinct style of handling the firm and that reflects in the revenue generation pattern of the two sects of the firm. The firm is known to handle big business houses of India, such Reliance Industries, Tata Group and so on. The firm mainly deals with the Mergers and Acquisitions, Litigation, Corporate law and Capital Market. The Mumbai firm and the Delhi firm is in a different management system and that’s what differentiates the two firms. Some interpret this as a sort of sibling rivalry in the firm. The junior associates of the firm are not given the freedom of interacting with the clients, and therefore all the interaction is handled by the senior partners and senior associates of the firm. The junior associates are limited to do the clerical work at the firm and menial research work. The reason for the success and fast growth of AmarchandMangaldas has been its strong client base and corporate management style, which was not to be seen in the other law firms of the time. (Shloka, Nath) The firms are divided in their working, while the Delhi firm follows the nine-hydra management system, the Mumbai firm follows the COO (Chief Operations Officer) heading the 7 departments that handle the various operations of the firm. This difference in management divides the client base into distinct groups, who do not approach the other branch of the firm and are restricted to procuring advice from their original branch. The firm also follows a distinctive approach when it comes to litigation and practice. The firm, mainly in Mumbai and Kolkata, plays the role of Solicitors merely. In other words, the firm does not send its in-house lawyers to contest the cases of its client, but instead passes the cases to established counsels who practice in the respective courts. The firm in this case merely acts as mediator between the clients and the counsels, and receives its commission for its services. This sort of an approach really stunts the growth of the firm in the litigation area. Besides this the firm gives advices to its clients and charges for the same. Though it can’t be said that the firm is purely a solicitor firm, as it does litigate in various other branches. (Indian Law Firms) Therefore, an initial look at the two firms revel that the firma are more or less in the same footing and do not have much of a difference, expect the size and reach of their operations. Both firms, are Limited Liability Partnerships, both firms have separate management for the smooth functioning of the firm. All the power of client interaction is vested in the senior associates and seniors partners. In other words, both the firms have top heavy approach of management. But when we look at the size and stature of the firms, we notice that both the firms have a very distinct pattern of growth. Clifford Chance on the one hand, does lay emphasis on the client satisfaction and rapid expansion, and these are the key elements among others which lead to phenomenal growth of the firm. AmarchandMangaldas has not been able to grow in the same capacity as Clifford Chance, but in the Indian Scenario, it has done immensely well. But there growth was also based partially on the fact that they divided there operation so distinctively. This serves as both a boon as well as a bane to the firm. AmarchandMangaldas became the first firm to bring the corporate style management to a law firm, and this attracted the client base. On the other hand, Clifford Chance followed the age old formula, that is, if two firms who are good at what they do there are bleak chances that the firms will fail. Both the giants collaborated and joined their client base, which was the key to the unprecedented successes of the firm. Another reason for the success of Clifford Chance which differentiates it from AmarchandMangaldas, was the fact they maintained an uniform management system throughout all its offices and hence the client felt at ease to approach any of its 27 offices in 20 countries, especially the multinational countries, and this in turn increased its client base exponentially. When the economic structures of both the firms are contrasted, they are significantly different. First significant difference is that Clifford Chance is a much bigger firm when it comes to capital earnings and profits. Clifford Chance is valued at ?1.197 Billion, whereas AmarchandMangaldas is valued at USD 100 million. This difference can be primarily understood as the scope of the market that the two firms have tapped. To start with, Clifford Chance has a capital share which is not just limited to the United Kingdom. Clifford Chance has extended its operation to 20 countries and has a wide range of 27 offices. This provides a larger base to the firm earn profits from various sources. When we look at AmarchandMangaldas, it has limited its operations to just India, and has only ventured out to only 5 Indian cities. But considering the scale at which the Indian firm has progressed and captured the law firm market, it only fitting to say that, AmarchandMangaldas has done substantially well. (Clifford Chance Awards and Success) When we contract the firm with the other Indian firms, then we would clearly notice that while the other firms are still following the old partnership management system, Amarchand has gone ahead and introduced the corporate management system. Clifford Chance on the other hand has exploited the globalization and liberalization of the market and has gone ahead and expanded exponentially to various other global markets. This has helped the firm in expanding in an unprecedented manner and tap into the niche market of global legal consulting. Clifford Chance has from the very beginning followed the separate management system, where in the business end of the company is separate from the knowledge end of it, and therefore both the departments have been able to flourish in isolation, and this has enabled Clifford Chance to provide top quality legal advice, while keeping a clean and efficient management machinery. Similarity wise both firms are Limited Liability Partnerships, but with a difference. Amarchand over the years has expanded its partnership and has been able to build a hugely profitable firm, but still the majority of the control still remains in the hands of Cyril and ShardualShroff. The other senior partners have been made a part of the profits of the company, but the substantial management of the company still remains in the family, therefore limiting the scope of the firm to a family run initiative. And because the other senior partners are not given as much power and control, fresh new ventures and expansion are not brought to the table, and this leads to the stagnation of the firm. This indeed has led to the stunted growth of the firm globally as well as to the other cities of the country. Now, if we look at Clifford Chance, then we will notice that, Clifford Chance has gone ahead and given power and equal weight age to all its partners. Therefore the original partners do not hold the key to the management of the firm. This means that the power and management decision of the firm is limited to a few hands, and this in turn means that more number of minds is working towards the expansion of the firm. Therefore, the management end of the firm, tirelessly work towards exploring global markets, and a group of dedicated individuals were able to contribute towards the global expansion of the firm. In the instance of Clifford Chance’s expansion to Australia, the expert hired by the firm were able to gauge that since the similarity of laws between Australia and U.K were striking, it would be a good idea to expand to the country. This move came in as a boon to the firm, as the lawyers trained in U.K laws were easily able to set up a firm in Australia, with the help local Australian lawyers. The firm adopted a similar growth strategy in other European and Asian countries. (Clifford Chance Reviews) This kind of freedom to the management and to the senior partners and associates was the key for the firm vigorous expansion. The firm was able to divide into various departments, without the control vested into single hands. This kind of a freedom allowed various departments to explore and understand various markets, without the pressure of having to report to a single management all the time. Also a keen contrast of the management strategies will explain the glaring differences between the two firms. To start with AmarchandMangaldas, the firm is visibly divided into two sects. One is run by ShardulShroff in Delhi, and this firm works in the nine-hydya system. So to say, that the firm is divided into departments and therefore each department is reports to the partner. There is disparity in how support functions are run under the two brothers. Shardul Shroff has a nine-headed hydra system, with different chiefs for everything from corporate communication to library management. Cyril, meanwhile, has a chief operating officer from London and seven administrative heads report to her. The COO in turn reports to Cyril who handles strategy. Delhi has hired Cliff Challon, an Australian HR consultant in change management and Mumbai is similarly advised by professor Ashish Nanda from Harvard Law School. This form of management is distinct only to the Delhi firm and again ends up giving too much power and control to the partner, without whose permission the other departments cannot function. (Ganz, Kian) This seriously stunts the growth of the firm. The departments are not given the autonomy to explore into new categories and markets and this is the chief reason Amarchand has not been able to expand much either in the country or abroad. On the other hand, having two cultures wasn’t complicated enough; there are also the two-engines of growth theory. Cyril Shroff uses many variations, including the “two pilot” theory and the “two-wheels-of-a -bicycle” theory. So one engine, pilot or wheel (take your pick) is the family: The Shroffs. The other is the professional lawyers working for the firm. On this, the two brothers agree completely. They believe that the family presence allows for a greater appetite for risk and clients feel a sense of stability and comfort in the perception of continuity. At the same time it is crucial to promote a managerial class of able professionals who also have a stake in the firm’s success. The clear divide in the firm has gone ahead and affected the client base if the firm and also the way the firm deals with new cases. A rift between the partners of the firms and management is always seen as bad for business and this has been the case for AmarchandMangaldas. This is where Clifford Chance is able to score Brownie points and rise up to the occasion of serving the client first. The client feels securing about the uniformity in the functioning of the firm all over the world and therefore has a more extended client base all over the world. (Firm Profile) Therefore, if we look in conclusion, we will see that Clifford Chance scores high on all points which a law firm should keep in mind in order to succeed and do well. The management at Clifford Chance is giving the right amount of freedom to expand and explore. The new partners are given the freedom to explore new avenues for the benefit of the firm. The associates are given the freedom to intact with the clients and provide them with a better result, and all this combined makes it easier for Clifford Chance to grow vertically. Amarchand although a pioneer, in the new management techniques, has to loosen the family grip on the firm, and allow the partners and management to function freely. This will allow the firm to grow vertically and horizontally and touch the untapped markets of India as well as the world. Amarchand mangaldas has the potential to grow into a huge firm, but only if the abovementioned changes are brought about. Therefore, it is apt to say that Amarchand Mangaldas has succeeded in the Indian market, but in order to succeed globally, it has to adopt more liberal views. References Shloka, Nath. (2010). India's Biggest In Law, Amarchand Mangaldas. Retrieved from Business.in Shloka, Nath. (2010) What's brewing at Amarchand and Mangaldas?. Retrieved from moneycontrol.com, Forbes India. Clifford Chance: Success Story. NLYTE Software. Retrieved from nlyte.com Clifford Chance Awards and Success. Retrieved from Cliffordchance.com Clifford Chance-US-LLP. Retrieved from http://www.vault.com/wps/portal/usa/.../Clifford-Chance-US-LLP?...413 Clifford Chance Reviews. Glassdoor.com Retrieved from http://www.glassdoor.com/Reviews/Clifford-Chance-Reviews-E9361.htm Firm Profile. Amarchand & Mangaldas & Suresh A Shroff & Co. Retrieved from Who’s Who Legal.com Ganz, Kian. (2011) Amarchand Mangaldas. Retrieved from Legallyindia.com Indian Law Firms. Amarchand Mangaldas. Retrieved from RSG-India.com   Read More