Arthashastra (अर्थशास्त्रम्)

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Arthashastra (अर्थशास्त्रम्) was given by Kautilya, who was the political pholosopher and guide for Chandragupta Maurya during the Mauryan era. Arthashastra is a moolamantra not only for political governance but also a guptamantra for corporate management governance. The veracity of application to Kautilya's Arthashastra ranges to limitless boundaries of knowledge and learning from medicine to education to philosophy and even to contemporary management sciences. The preaching and mandates of Kautilya elevate human thinking to act beyond his sixth sense involving cognitive, affective and motor domains necessary to gain complete control over management of self and institutions.

Introduction

Please see this link to access the samskrita moolam for Kautilya's Arthashastra

Arthashastra and Contemporary Management Theories

Glimpses of health and medicine in the mauryan empire Dr. D. V. Subba Reddy, - pp79,

Thus human personality (maharaja) must manifest multi-dimensional adaptive roles at different times by demonstrating extraordinary intuition, self control, vision, accurate prediction, confidence in decisions taken, combating venom attacks etc. Such qualities are no differently to be enumerated by a successful management expert.

The king is a ruler of the kingdom (a corporate leader) and as a decision maker has to be secretive about his war strategies (incubating new product developments) at the same time be offensive and defensive with enemies (corporate rivalry and competition) as the threat perception may be ensuring his survival despite enemy attacks (presence of substitutes and complementary products and disruptive technologies). Such preaching are of the nature of Gupta Mantra.

In economics, industrial organization or industrial economy is a field that builds on the theory of the firm by examining the structure of (and, therefore, the boundaries between) firms and markets. Industrial organization is not a perfectly competitive model, due to real-world complications such as transaction costs, information asymmetry and inaccessibility (limited), and barriers to entry of new firms which obviously make it an imperfect competition. It analyzes determinants of firm and market organization and behavior as between competition and monopoly, including that of government actions. Government actions are governed by a legal system of the country. Extending the Arthashastra philosophy, be it a nation or modern age business entity, the framework of industry, market or firms is governed by an over-arching legal system.

The central force of a political architecture is its legal system and the king is a protector and preserver of the law but most definitely not its creator which means his power is sanctioned and limited by law. Be the powers vested, the actions of CEOs of companies are governed by the Companies Act , Income Tax Act, SEBI Regulations, and the likes of these. When no confidence motions (equivalent to dethroning a king) are passed against CEOs in the U.S, his kingship is challenged, by the board of directors, for non-performance. These consists of forces that affect the company, customers and profitability much against how it was envisioned. This establishes the temporal sovereignty of the CEO where the Varjasva Takat (Ultimate power) of the power owner is called into question resulting in dethroning the leader. Recent real-life corporate citations are available to corroborate this. This proves the temporal sovereign status of the corporate leader.

Corporate Competition, Competitive Forces and Rivalry While Arthashastra can be considered a bible describing the methodology of supreme governance in a political architecture, such tenets can be applied to corporate governance too. Michael .E. Porter has suggested competition from rival firms to be the biggest force attacking business as much as rival forces have the ability to ruin kingdoms cited in portions of the Arthashastra dossier.(Shamashastry 7/614). In 1979 a professor from Harvard, Michael E. Porter was the first to study Organizational Economics in the context of competition and published his maiden framework ' Porter's Five Forces of Competition' in Harvard Business Review. According to Porter these 5 forces affect the competition within an industry which makes it either attractive or unattractive (vulnerability) in terms of its profitability. The bargaining power of buyers, bargaining power of suppliers, the threat of new entrants and the threat of substitutes are 4 environmental factors that effect competitive rivalry in business. Hence industry attractiveness according to Porter is a function of competing rivalry among firms (Causation) and profitability (Effectuating). Porter's five-forces framework is based on the structure–conduct–performance paradigm in industrial organizational economics. It can be applied to address a diverse range of business challenges such as helping non-profitable businesses become more profitable to helping governments stabilize industries that are in a state of disequilibrium.

The structure–conduct–performance (SCP) paradigm, first published by economists Edward Chamberlin and Joan Robinson in 1933, and developed by Joe S. Bain is a model in Industrial Organization Economics which offers a causal explanation for firm performance through economic conduct on incomplete markets.

According to the structure–conduct–performance paradigm, the market environment has a direct, short-term impact on the market structure. The market structure then has a direct influence on the firm's economic conduct, which in turn affects its market performance. Hence a cause and effect relationship may occur or a reverse effect may occur such that market performance may impact conduct and structure, or conduct may affect the market structure. Also, the external legal or political interventions affect the market framework and by extension, the structure, conduct and performance of the market.

Creating a B-Line Leader/ Corporate Succession Plan /Successor Most corporate houses lack a sound legacy in leadership though the forefathers may have given birth to a legacy. The newer generation and their thought process do not sync with the value systems and organization culture resulting in conflicting views while decision making on matters relating to policy creation, execution, employee-employer relationship, administrative inefficiency and ultimately financial losses. The new blood introduced in the corporate vein obviously lacks expertise, competence and wisdom to learn and earn on whatever has been created, protected and preserved thus far. To enable successive generations to carry out the responsibilities of running a business empire with the same grit, ingenuity, and crafty intelligence demands i. Identifying such a capable body and mind ii. Constant training of such a body and mind, iii Finally creating emotional and psychological immunity to business and personal adversaries so that the mind and body of the individual (SS pp 89/108) is well prepared to take up the associated challenges during one's corporate engagements.

Corporate Vision:

Offensive and Defensive Strategies Corporate aggressive strategies are sometimes surgical and this mostly happens during a disruptive innovation.

Covert and Overt strategies

Brand Building and Immortality A few corporate brands are immortal especially the ones like Lifebuoy, Lipitor, Digene antacid, Dettol, Colgate and likewise. The creation of such brands give a competitive edge to companies irrespective of the new arrival of substitutes or complementary products or new technologies. Such products due to their credible and stable performance, dethrone the status of any competing brand attempting to fragment the consumer base.

New Product Development and Incubation