How MBAs get an edge - A Case Study On Zerodha; How a Tech Giant Has Built Itself Around Simplicity

At Bengal Institute of Business Studies, the MBA program for Financial Management has a very practical approach. The students receive a more hands-on learning experience by studying case studies and corporate sessions that are conducted by the college.

The students of BIBS were given a case study on Zerodha and how this tech giant built itself around simplicity. Zerodha is India’s first discount brokerage company to have established itself in the stockbroking industry. Since the time it was founded, the Kamath brothers barely spent anything on advertising costs. Instead their strategy to build their company was to solely focus on the products and ensuring that the end-user has a smooth experience. The growth of the company has been solely on the use of technology and by providing valuable services to consumers.

Since the company does not have any marketing or advertising costs, they have been more focused on creating their brand awareness on platforms like Varsity. So far, this strategy has worked well for Zerodha and the company manages to facilitate at least 5 million orders daily. During the lockdown, owing to the pandemic, while most businesses took a hit, that was not the case with Zerodha. The company reported a 100% month on month growth. 

Since its inception, the company aimed to provide services that were not only technologically advanced, but also cost effective. Kamath felt that there was a requirement for a platform where users could trade online comfortably. He came up with the idea of providing services at a low cost and low commission charges. He understood that many young people were deterred from going into trading since most companies had very high commission rates. 

Nithin Kamath is of the opinion that if we do not spend too much on foreign capital, and invest in Indian companies instead, then it will not be long before India establishes itself as an economically strong country. The founder also believes in word of mouth marketing instead of spending money in trying to advertise or market his company. Quite surprisingly, without spending on any kind of advertisements, the company has still managed to capture a large number of customers based on its simple policies. 

Zerodha has a low-margin and high volume business model. This means that the company charges the dealers with a very minimal amount as the exchanging volume is usually high. The company receives modest amounts from their huge base of customers which ultimately results in a huge income for Zerodha. Also, when compared to other companies, the operational expenses for Zerodha are quite low because of its online design. 

As a startup, Zerodha faced several challenges which are common for every new company trying to establish itself in the corporate world. For instance, being an online trading platform, Zerodha does not have an offline presence which means that they did not have very effective customer service. This was the biggest challenge the company faced. 

Other challenges included technical difficulties that occurred due to heavy trading, there are no stock advisory calls to customers to give them advice about their investments, and also, Zerodha’s top competitors include Kotak Securities, HDFC Securities, and Motilal Oswal among others.

However, it is notable that despite the challenges faced by the company, Zerodha has emerged as one a company with a tremendous market reputation without spending anything on its advertisement costs. An MBA in Financial Management would be useful for students who wish to have a career in this field.

Through the medium of this case study, the students of the Financial Management MBA program at BIBS were able to understand how Zerodha Apple Inc., a tech giant managed to build itself around simplicity and by aiming to provide the best services for their customers instead of spending lots of money on their marketing and advertising. At BIBS, students have a more practical approach to learning which allows them to gain industry experience which prepares them for their future. The college also conducts corporate sessions with prominent business leaders which gives them an edge over other students in other colleges.