Adesemi Communications International - Case Study Example

? Case Study of Adesemi Communications International Table of Contents Executive Summary Introduction 2 Main Report 4 Conclusion 9 Bibliography 11 Executive Summary This report focuses mainly on analyzing the case of Adesemi Communications International. Specifically, it aims to discuss what caused the organization’s failure, to evaluate the impacts of the country and market conditions on this failure, to understand the significance of social capital and network in entrepreneurship using this case, and to identify what its former founder and CEO essentially learned out of this failure. In this case study, findings suggest that the reason behind the downfall is generally caused by the lack of experience. In particular, reasons of such failure are the cultural misunderstandings among the diverse workforce, the inexperienced and incompetent local business partners, the impatience of the quasi-governments who wanted to have their investments back, and the complete underestimation of the local government owning the national telephone company. Meanwhile, this analysis proposes that the impacts made by the country and market conditions were the most significant factor of the demise of Adesemi. Likewise, the case of Adesemi only shows that the company did not have a good pool of social networks and capitals that could have possibly helped save the company in those periods of crisis. From this experience, Monique Maddy, the CEO and founder of Adesemi, has learned the following insights. Firstly, cultural diversity must be transformed from a weakness to a strength through appointing an HR guru. Secondy, partnerships must be made not out of convenience. Thirdly, start-ups in developing countries should restrain from the type of investors who are just after the gains of the company. Fourthly, a patient and visionary investor with deep pockets willing to shell out money in times of financial crisis to save the company is needed in a third world start. Introduction Monique Maddy, a Harvard University graduate from Africa, dreams of being an entrepreneur. As a matter of fact, she happened to achieve her goal once, when she had established and run her own company in Tanzania, the Adesemi Communications International. Such dream had started when she wanted to set up her own company on an untapped market in a developing country in Africa. It had begun with an aim of transforming and modernizing the information technology sector in Africa. She had achieved this dream through Adesemi via making it possible for the thousands of lower and middle-class Tanzanian families to gain access to affordable wireless communication services. Apart from that, as the company incorporated pagers, voice mails, and wireless pay phones, Adesemi had happened to launch the first fully integrated “virtual” phone system of the world in Tanzania. It is undeniable how successful Maddy was in establishing Adesemi. In addition to that success, the company was even financially successful and had $ 2 million annual revenue. Nonetheless, despite the case that it was on the verge of explosive growth, such success had come to an end when company was forced to shut down. In this regard, the focus of this analysis is mainly on the case of Adesemi Communications International. Specifically, it aims to answer four specific points. Firstly, its objective is to discuss the reason behind the failure of Monique Maddy’s Adesemi Communications International. Secondly, it targets to evaluate the impacts of the country and market conditions on the failure of launching a new innovation. Thirdly, using Adesemi’s case, it intends to understand the significance of social capital and network in entrepreneurship. Lastly, it points to identify what Maddy has essentially learned by the failure of her business venture. On the one hand, to examine Adesemi’s case is of significance for the reason that the learnings that can be obtained from this particular experience can aid the entrepreneurs as well as those who plan to set up their own business in the future, can prompt them what to do and what to avoid in order to ensure the success and stability of their own businesses. Main Report To establish her own company is Monique Maddy’s aspiration. Hammering out her own business plan, she had convinced herself that her business venture must start capitalizing in the developing countries. Based on research, she had found out that her company must start up in Tanzania for the reason that during that period was the time of aggressive privatization of its economy as well as active courting of foreign investors (Maddy, 2000: 7). Through the findings of the research project, she had been very eager to pursue her dream until her dream company materialized in Tanzania. The said country had only 120,000 phone lines that were catering not only its entire 30 million population but also including the businesses. In this case, she had intended to define the low and middle class as her company’s target market. Its establishment had become a success and happened to be even financially successful, having a revenue of $ 2 million every year. Apart from that, as the company incorporated pagers, voice mails, and wireless payphones, Adesemi had happened to launch the first fully integrated “virtual” phone system of the world in Tanzania. During that period, Adesemi Communications International, an American company established in Tanzania, was supposed to eventually cover the developing countries with affordable wireless telecommunications. Nonetheless, even if Adesemi was on the verge of its financial growth, its sixth year of business venture had surprisingly marked the demise of the company. What caused the failure of Adesemi Communications International was manifold; various causes had added up and combined with the complexity of the outcomes, leading to its collapse. For the most part, the general reason behind its downfall is the lack of experience (Maddy, 2000: 8). Meanwhile, many literatures suggested that diversity at the workplace gives an advantage for the company, though only if it is successfully and effectively managed (Black Enterprise, 2001; Cox & Blake, 1991; Phillips, 1992). As an American company, Adesemi’s composition was made up of culturally diverse staffs, though none of them were American (Maddy, 2000: 9). This culturally diverse workplace did not contribute to the effectiveness of the company, but such composition had resulted in cultural misunderstandings contributed to the weakening of the quality of business operations. Allard (2002) suggested that a diverse workforce can possibly result in the following drawbacks such as miscommunication, disagreements, misunderstanding, uncertainty, conflicts, anxiety, unworkable expectations, and other dilemmas. Diversity can produce such feeling of discomfort in an individual part of the workforce that can further lead to lessening the integration and attachment in the company (Jackson, May, & Whitney, 1995: 256). Hence, the cultural misunderstandings in Adesemi were due to the ineffective management of diversity. On the one hand, the factor that further contributed to the downfall of Adesemi is the company’s inexperienced and incompetent business partners. In the setting up of Adesemi, some claimed to be as experienced and competent in the arena of telecommunications. Nevertheless, it is the case that these were just claims, since these local partners could not even help contribute to the success of Adesemi. Internally, this produced internal conflicts that had even surfaced in the public. To prevent the possible worsening of the image of the company, Adesemi had asked for help of another local partner, though such partnership was charged a small stake. Hence, partnership was not made based on experience and competence in the field but was purely of convenience (Maddy, 2000: 10-11). In addition to that, Adesemi’s partnership with its investors was just after the generation of profits (Maddy, 2000: 9). Hence, the investors did not understand the rewards for the risk in the long run (Maddy, 2000: 9). That is to say, at the time that the investors must risk their money for the benefit of the company, the two quasi-governments had been impatient enough and wanted to recoup their investments. These investors did not bother what would happen to the company, but what mattered to them most was their money. Likewise, Adesemi had completely overlooked the strict regulations of the local government parastatals. Due to the fact that having a commissioned arrangement is the industry norm throughout the world, the business model it assumed was built around the idea that Adesemi would be receiving commissions on all calls on the network of the national phone company, the Tanzania Telecommunications Company Limited (TTCL). However, such assumption did not happen. What’s more is that Adesemi also suffered so many licensing problems. On the one hand, it is important to consider the country and market conditions’ impact on the failure of launching this high-tech innovation in Tanzania. Even though Tanzania has been aggressive in privatizing its economy and eagerly courting the foreign investors, its government has strict regulations. For the large part, failure of Adesemi was brought by the underestimation of the strict regulations of Foreign Direct Investment (FDI) and government policies in Tanzania. Apart from that, the competition had materialized when the World Bank offered money on highly concessionary terms to TTCL in setting up its own network of pay phones. Hence, the competition against the government, in particular, versus TTCL was subsidized partially by World Bank (Maddy, 2000). In this regard, these particular country and market conditions had contributed to the downfall of Adesemi. The competition could not survive, with a very strict government being completely against the survival of the Adesemi and World Bank subsidizing the company’s establishment of its own network of pay phones. From the experience of Adesemi, it is undeniably the case that the social capital and network have impacts on business. In this analysis, it could not be denied that Adesemi’s social network was not that strong to support the company. Basically, its pool of social capitals like its partners, investors and other networks could not attend to the needs of the company in the long run. The company’s social resources were just there for temporary needs, and in times of crisis, they had turned their backs on Adesemi. According to Starr and Macmillan (1990: 99), networks are key element of social resources in the business management context because of the aid networks which provide help in times when it is needed most. Apart from that, social networks help to make businesses much easier. Such social connections are varied and include having relationship with suppliers, customers, banks, solicitors, accountants, business support agencies, and others (Curran, Blackburn & Kitching, 1995). In this sort of relationship, trust for its members must develop and must sustain over time, because trust is a key business resource for the competitive advantage of the company (Aldrich & Zimmer, 1986; Honig, 1998; Smith, Wistrich & Haynes, 2001). As an American company based on Tanzania and having investors and partners who were just there for the company because of the financial gains that the company could possibly offer, its pool of social networks could not attend to the long term needs of Adesemi. Trust was not built around these partnerships; they were purely partnerships of convenience. Given that a good pool of social networks can be a competitive advantage of the company, Adesemi’s networks did not offer this to the company. If only Adesemi had a good pool of social networks, especially some political relationship in Tanzania, the company should possibly remedy the licensing problems and commissioning dilemma caused by the government. From the case of Adesemi, Monique Maddy has basically learned four significant points. First, to have a diverse workforce can only be a strength when diversity is handled effectively. It is the case that cultural misunderstandings can arise from the diverse workforce. In this regard, in order for the diverse elements to be integrated and the organization’s human resources to work at the optimum level, these cultural misunderstandings should be addressed. On the sad note, this would consume time and effort as well. Instead of focusing on other dilemmas instead, this internal conflict drained time and energy of the CEO. Due to this, hiring process must also be given attention in which there should be an HR person who should strive hard to improve the internal relations – for example, addressing the cross-cultural conflicts. Second, Maddy realized that in making local business partnership, the local partners should also put at stake their money in investing to the company. Based on the experience of Adesemi, creating partnership without putting any at stake would just result in a partnership of convenience. In addition to that, potential partners must be really examined if they can contribute to the success of the company. Otherwise, the health of the company is put at stake. Third, it is really important to stay away from do-good organizations, investors, and lenders who are just after the generation of revenues when setting up business in developing countries. The do-good type of investors does not understand the concept of emerging market and the rewards from risks in the long run. In this regard, in searching for investors, the do-well sort should be considered, because such organizations understand the risk in business ventures. Likewise, they are committed to the company. Last, it is important to note that when venturing in new business in the developing world, a patient and visionary investor is needed, with deep pockets willing to shell out money in times of financial crisis in order to save the company. So, when Maddy is finally ready to continue her deferred dream, these are her four hard-earned insights as regards setting up business in the third world countries. Conclusion Maddy was almost there attaining her goal of bringing telecommunications to emerging markets in the third world. However, such dream, Adesemi Communications International, had failed. Essentially, setting up a business venture in third world nations needs much experience. Mainly because of the lack of experience, Adesemi had gone wrong. In this analysis of the case of Adesemi, there are four specific reasons for its downfall. First is through the ineffective management of cultural diversity in the workplace. Indeed, diversity did not function to be an advantage of the company because of the cultural misunderstandings that had been aroused in the workplace. Given this, Maddy learned that there must be an appointed an HR guru who would resolve such issues. This appointed HR personnel must work to improve the working relationship of the employees. In this case, cross-cultural conflicts can be avoided. Second is through the inexperienced and incompetent local business partners. It is not appropriate to make partnerships purely for convenience, but it is realized that in making local business partnerships, the local partners should also put at stake their money in investing to the company. Apart from that, partners must also be competent and experienced in the field; otherwise, he or she must be removed. Effectiveness of the company lies in its people; having incompetent and inexperienced partners weakens the institution. Third is through the presence of do-good type of investors. Do-good type of investors does not understand the concept of risk and reward in the long run. This type of investor is just after the generation of revenues from the company. Hence, they should be avoided in setting up businesses in the third world. Instead, the do-well type committed to the business must be searched for making investments. Last is through the strict regulations of the government. The government forms a very hard competition. In this case, Maddy has learned that the government conditions should not be underestimated in such business ventures in the third world countries. Bibliography Aldrich, H. and Zimmer, C. (1986) ‘Entrepreneurship through Social Networks’ In: Sexton, D.L. and Smilor, R.W. (eds.) The Art and Science of Entrepreneurship, 3.24. Cambridge: Ballinger. Allard, M.J. (2002) ‘Theoretical Underpinnings of Diversity’ In: Harvey, C.P. and Allard, M.J. (2nd eds). Understanding and Managing Diversity: Readings, Cases and Exercise. Harlow: Prentice Hall, pp. 3–27. Black Enterprise. (2001). ‘Managing a Multicultural Workforce’ Black Enterprise Magazine. http://findarticles.com/p/articles/mi_m1365/is_12_31/ai_75754166/ [accessed 28 June 2012] Cox, T.H. and Blake, B. (1991). ‘Managing cultural diversity: implications for organisational competitiveness.’ Academy of Management Executive. 5(3), pp. 45–56. Curran, J., Blackburn, R.A. and Kitching, J. (1995) Small Businesses, Networking and Networks: A Literature Review, Policy Survey and Research Agenda. Kingston University: Small Business Research Centre. Honig, B. (1998) ‘What Determines Success? Examining the Human, Financial and Social Capital of Jamaican Microentrepreneurs.’ Journal of Business Venturing 3, pp. 371-394. Jackson, S.E., May, K.E. and Whitney, K.A. (1995). ‘Understanding the Dynamics of Diversity in Decision-Making Teams’ In: Guzzo, R.A. and Salas, E. (eds) Team effectiveness in decision-making in organizations. San Francisco, CA: Jossey-Bass, pp. 204-261. Maddy, M. (2000) ‘Dream deferred: The story of a high – tech entrepreneur in a low – tech world’ Harvard Business Review (May-June), pp. 4-12. Phillips, N. (1992). Managing International Teams. London: Pitman Smith, D., Wistrich, E. and Haynes, A. (2001) Ethnic Minority Business and Social Capital: Contributions to Regeneration. Middlesex University. Starr, J.R. and Macmillan, I.C. (1990) ‘Resource co-optation via social contracting: Resource acquisition strategies for new ventures’ Strategic Management Journal 11 (Summer), pp. 97.-102. Read More