Avari Group: Organizational Values and Crisis Leadership

AHMAR NAEEM
L14-5215
SECTION A
______________________________________________
Avari Group: Organizational Values and Crisis
Leadership
1. Case summary: Review of the case
The Avari group started its journey almost immediately after Pakistan came
into existence in 1947. Starting from a small hotel in Karachi, the group by
2010 owned and operated one three-star and two five-star hotels in Pakistan.
By 2010, an international standard five-star, all-suite 417-room hotel was
being constructed in Islamabad which was scheduled for a 2013 launch. The
Avari Group continued to expand by venturing into the air travel business as
well. Avari Travel Agencies (ATA) had acted as the general sales agents for
American Airlines and Canadian Airlines International in Pakistan for the past
twenty and twenty-three years, respectively. Spencer Pakistan was another
brand owned by the Group. It had been operating since 1948 as a holding
and real estate management company, owning a number of properties in
Karachi.
Byram D. Avari was the 1st Chairman of the Avari Group. He initially bought
the Bristol Hotel from an English couple in 1948 by mortgaging his wifes
jewelry, his own life insurance policy and borrowing money from friends. The
success of Bristol made Dinshaw realize the potential for high-class hotels in
Karachi. Benefiting from the slump in property prices after the partition of
the subcontinent, he was able to buy a cheap piece of land in Karachi to
build the Beach Luxury Hotel. Beach Luxury was home to many innovations
and was the first in Pakistan to serve buffet style dinners to its guests and
also the first to serve Chinese food in the country. He made one of the most
critical business decisions of his career, that is, the purchase of Nedous Hotel
in Lahore through the highest bid ever made in the history of property
auctions, that is, PKR 12.15 million. The new project was named Park Luxury
Hotel. While the Lahore Hilton was being developed, he came up with the
idea of constructing Avari Towers in Karachi. The first challenge faced by the
new
venture
was
the
decline
in
the
demand
for
five-star
hotel
accommodations in Pakistan. To cope with this issue, he decided to develop

150,000 sq. feet of office and shopping space around Avari Towers and
named it Avari Plaza. The plaza was able to attract offices of many
multinational corporations and airlines. He was known to be a visionary and
could foresee where the money and opportunity was. He gave special
importance
to
successor
development
and
always
emphasized
the
importance of giving complete independence to the upcoming generations of

managers. In his words: Rules are meant for donkeys and mules and
children of schools.
Byram Avari joined his fathers business after doing his MBA from IBAKarachi. He started by working at the lowest level. His first assignment was
as a potato peeler in the hotel kitchen. He then moved on to working as the
Personal Assistant (PA) to the General Manager, Beach Luxury. He was then
appointed as the Managing Director and continued in this position until his
fathers demise at which time he became Chairman and Chief Executive. The
president of Hilton International once compared the father and son as
follows: Dinshaw is an old man with a young thought; while his son is a
young man with conservative thought. Like his father, Byram also
considered trust and independence the key features of succession planning.
Dinshaw formally joined the business in 1990 and Xerxes followed in 1991.
During the first two years, all three of them used to sit on one large table,
where they would share every piece of information with each other. Xerxes
started dealing with financials, budgeting, tax, new project development and
renovations at their hotels, while Dinshaw looked after the marketing,
operations (the GMs reported to him), Information Technology. According to
Dinshaw, they never had any job descriptions. They had developed most of
the managerial and business skills while working on the job and most
importantly, their father had been the best coach and mentor for them.
Inspiration points
Energy and passion to achieve more.

Great attention to opportunities
Risk taker
Innovations
Critical decision making
Visionary personality
Opportunity seeker
Young thought
Flexible approach
Diversification
Venturing
No dictatorship
Employee welfare, employee retention,
employee growth
Strategic issues are more pressing than operational issues
Succession planning
Firm belief in God and philosophy that Whatever happens, happens
employee
development,
for the best
2. Value driven?
Conventional Approach to Business
The objective of a business is to maximize profits. Efficiency and profits are
the most important measures of success. Concerns for the welfare of
employees, the environment, or local communities are externalities of

secondary importance (Y.Choi & R.Gray, 2011).
Values centered Approach to business

Values centered entrepreneurs subjected to be good as well as do well by
simultaneously making profit plus environmental and social goals (Y.Choi &
R.Gray, 2011). They build profitable companies while also contributing to the
greater good of society. Values-centered entrepreneurs operate with a
fundamentally different view of the role of business. They believe that
business is deeply rooted in society and has multidimensional responsibility
to it. They believe in self-interest but also understand that business must be
part of the solution to societys ills (Y.Choi & R.Gray, 2011). Values-centered
entrepreneurs have, in effect, adopted for themselves a higher standard of
ethics and conduct. Values-centered entrepreneurs are similar to social
entrepreneurs, who have received a great deal of recognition in recent
years (Y.Choi & R.Gray, 2011). Social entrepreneurs are commonly defined as
a broad category of entrepreneurs who found and manage non-profit or forprofit organizations to serve specific social purposes or causes. Valuescentered entrepreneurs, on the other hand, conceive and run profit-making
companies with an added social/environmental mission; but, they are first
and foremost subject to market discipline. Main points of value centered are:
Is Avari is value centered?

In my point of view, Avari is a value centered organization. They saw their
business as a family-owned enterprise, managed in compliance with
corporate rules with an extremely professional organizational culture. The
core values depicted a deep spiritual side of the business leaders with a
strong focus on social development. They are doing well and growing in their
business because they are doing well with employees and they didnt do
anything harmful for the society. And their business is integrated with their
personal values. They allow their employees to exercise his/her beliefs and
matters of heart. They practice ethical because they have set themselves a
different and higher measure of success. They are not only doing well for its
shareholders but also doing well for its stakeholders. Avari family business as
a true family business, based on the core values of caring, honesty and
respect for others, encouragement for diversity and sharing their wealth with
their employees. As Dinshaw stated, Treat everyone how you would like to
be treated. Byram had a very flexible approach towards his employees
because his father used to say to him: We look after the poor because we
were once poor too.
So from above discussion I found Avari a value centered business.
3. The Way Forward

Different options are available for the Avari to resolve the problem:
1. Whether they provide retirement to the old employees and revise their
core values.
2. Whether they cut off the salaries of the employees for the time being
to cope up this situation.
For me 2nd option is better for them. As previously described situation in
Pakistans nuclear tests in 1999 preceded a painful slump in the hotel
business, combined with a hike in import prices. Many hotels underwent
major downsizing in that period; however, Avari Group decided not to follow
suit. They announced a salary cut across the board at all managerial levels,
which were welcomed by the employees after they were taken into
confidence about the circumstances. The situation improved in a matter of
three months and the group rewarded its management staff by giving special
bonuses on top of the compensation for salary cuts.
So same solution could be applied here, employees can be taken in to
confidence. They can announce salary cut for all the employees. By doing so,
they will not lose their loyal and talented employees. If they revise the core
values and provide the retirement than this will create bad image of Avari to
employees and as well as to the competitors. There might be a chance that
the employees are hired by the competitors. So for me the 2 nd option is
better and employees must do this for their organization.
Bibliography
Y.Choi, D. & R.Gray, E., 2011. Build a cohesive dedicated organziation. In:
Value centred Entrepreneurs and Their Companies. New York: Routlege, pp.
68-72.
Y.Choi, D. & R.Gray, E., 2011. Concluding Thoughts. In: Value Driven
Entrepreneurs and Their Comapnies. New York: Routlege, p. 139.
Y.Choi, D. & R.Gray, E., 2011. Introduction. In: Values Centered Entrepreneurs
and Their Companies. New York: Routlege, p. 3.
Y.Choi, D. & R.Gray, E., 2011. The Value centred entrepreneurship. In: Values
Centred Entrepreneurs and Their Company. New York: Roudlege, pp. 10-12.

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AHMAR NAEEM

accommodations in Pakistan. To cope with this issue, he decided to develop

importance of giving complete independence to the upcoming generations of

Energy and passion to achieve more.

for the best

employees, the environment, or local communities are externalities of

Values centered Approach to business

Is Avari is value centered?

3. The Way Forward

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