Monday, 8 August 2011

Rural urban Continuum – A perspective-by Nadim Jafri, Munish Alagh and Siddhartha Saxena

Having a few interesting Professor Friends is an enriching and exciting experience. And if one of the Professors happens to be a Post Doctoral Fellow from a prestigious Institute like IIMA, you would not have asked for more. I am a first generator entrepreneur (Nadeem Jafri – Managing Partner, Hearty Mart) and I have always cherished such valued interactions. This blog is a small story of one such interactions of mine with my elite friend and Professor Dr. Munish Alagh (Post Doctoral Fellow IIMA, CMA area) at IIMA along with academic associate(OB area, IIMA) Siddharth. 
It was a warm afternoon and I was called to meet them in one of the plush cabins of the faculty wing of IIMA. I was asked to sit beside them and was getting prepared to be grilled by my knowledgeable counterparts.
“Rural Urban Continuum has always fascinated me”. Said Sidharth. Thus he announced that my interview had begun. Sidharth claimed that his initial interest in the subject was developed after he went through a column written by Dr. Y.K.Alagh, another eminent Economist and authority on the subject. And his further interactions and discussions with Dr. Munish Alagh added fuel to the fire. He wanted to really work on the subject now. His entire interview with me was hence in the light of ‘Rural Urban Continuum’.
Before my actual interview started, Siddharth felt it was important for me to understand the concept and hence he briefed me about the subject. As per Siddharth the term “Rural-Urban-Continuum” is very different from “Ruralisation” but most of the people mistake it for one. May be theoretically it can be understood as Ruralisation but it lacks proper definition and when we look in a broader sense we need to look at the terms as ‘Rural Areas’ and ‘Urban Areas’.
A distinction between rural and urban areas is not always possible in a single definition that is applicable to all countries or even to different areas in a country. Ideally, the useful definition of an urban area is in terms of level of infrastructure, availability of civic amenities, and proportions of land uses as well as conventional factors like density of population and pro-portion of non agricultural work force.

Though the divide in population is large between Urban and Rural, the demands are almost of the identical nature. Those days are a foregone era where Roti, Kapda and Makan were the convention associated with Rural Area and Car/Bikes/Refrigerators were representing Urban status. Things have changed for good now. Depopulation of rural areas in favour of urban counterparts is a well-known feature of many modern societies. In fact people leaving their countryside has shown the rural areas in a bad light; not capable of providing necessary sustenance like jobs, education opportunities to their folks. Furthermore, out-migration reduces the ability of the rural societies to serve the needs of those remaining, as population decline empties these societies of vital human resources such as labour supply (Aasbrenn, 1989). On the other hand, new trends of counter-urbanization, which have become prominent in some societies (Boyle et al., 1998), are interpreted as signs of renewed viability of rural areas and may promise a new and brighter future for the countryside (Stockdale, 2004).

Thus the general trend is to see out-migration as a problem for rural societies while in-migration is seen as positive for the countryside. Population change in rural areas therefore becomes a social barometer that monitors the health of the rural. (Acta Sociologica * March 2006 * Vol 49(1): 47-49). We will be talking about this changing Scenario by quoting Hearty Mart example which is taking steps to overcome this divide and change the rules of the game forever.

 Hearty Mart –
About Hearty Mart we all know as the same was discussed and written in the previous blog ( economics.html). Here, the story would be seen in a different light discussing various mechanisms, diversification and few business as well as legal questions pertaining to the franchise model and few insights on market reputation and operations. We will also touch upon the issues of contracts, rural market as a necessity, opportunism v/s social development – Context, Diversification and Resource constraint thesis and its impact on Hearty Mart.
Opportunism or Social Context – As an Entrepreneur I do look for profits in various transactions but that is not the sole motive always.  I believe that if my venture can bring in positive change, without certain efforts fetching me monies, I would be equally satisfied. I strive in this direction not only through Hearty Mart but also through developing and creating new ventures which benefit people and the community and also help maintain my business. For example we have floated a firm named Hearty Mart Farm Services, wherein we provide easy and free access to information to farming community by way of lectures and get-togethers in their villages. In these lectures they are educated about the benefits of organic farming and tips are given to them free of cost to increase their farm yields without increasing the input costs. This has benefitted both of us - farmers get good returns and increase on their yields and we get a supply chain formation which helps me in sustaining my different ventures. The trust within the community has helped me in this area.
Contracts- When contracts are made formal and legal, the people get repulsed and they don’t show any interest in such associations. We have countered this by not making any legal contract with our franchise partners; since most of them are from the community we trust them and they trust us. Our contracts are either on plain paper or letter heads signed by both the parties. It ensures that we both the parties should honour the written word of the contract without legally binding each other. Thus our Customer-Client Relations are further strengthened and my experience up till now is very motivating.
Quality – Since we are not legally bound, the readers might feel that then Quality at the franchises may not be upto the mark, but that is not the case and in fact the franchise partners are equally concerned about the brand Hearty Mart and they shun the substandard products. Products which are sold through our franchises are standardized and Quality is maintained. We conduct surprise visits once in two months to further ensure that Quality standards are adhered to.
Rural Environment-  Rural environment  is very essential for  Hearty Mart’s growth as per the last blog ( and the certain issues would be pointed out in resource-constraint thesis also (Siddharth would cover the same in his next blog), that Hearty Mart as Hybrid Franchise Model came into pictures as I (Nadeem) did not want to invest my complete monies in Hearty mart and the reason were obvious as it had its own repercussions:
·        If I alone had to invest in all the property and development of infrastructure of the store, it would have taken my business a lot of time to break even. Thus promoting a franchisee model was one of the better options.

·        Money would have been blocked for longer period in this case.
Hence the franchise model made more business viability. May be the autonomy was lost and also the control to a certain extent but in the bargain the trust in the community helped business expansion and reduction in risk; even the breakeven could be achieved faster with the franchise model. It also negated the implications of changing real estate scenario on my business.
Thus the Rural environment was the only market where it could have flourished; as open new market means negligible competition. It further reinforces our point Rural market, is of course now as attractive as urban market for various businesses.

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