Paradox in Fop Smith's Company - Case Study Example

In attempting to analyse the given case and critique the contents outlined, it is imperative to give a brief overview of what really a paradox is as a way of gaining a clear understanding of the whole concept. Basically, a paradox is a proposition that is or appears to be contradictory but expresses some measure of truth. This often is a statement or conclusion that seems to be self-contradictory or absurd and often giving conflicting ideas but there would be an element of truth in it. In the given case study, it can be noted that the whole case is paradoxical upon close analysis by paying particular attention to the growth and development of the Smit Company which specialises in a range of ship based services. A brief historical overview of the company, founded in 1842 by Fop Smit, shows that it has a history filled with many remarkable achievements which were mainly inspired by the company’s long-time slogan ‘any job, any sea’. For instance in 1896, Smit was the first company in the world to tow a ship dock overseas, from Rotterdam to Angola, even though there were no suitable ocean-going tugboats available. More recently, it raised the Japanese Vessel which had sunk in deep waters. All these achievements bear testimony that the company has a remarkable success story in its operations. However, what is paradoxical in this case is that those who were responsible for running it had very little interest in doing extensive strategic analysis in their day to day operations. It can be noted that from 1921 to 1980, the period the company was run by two members of the Smit family, first Murk Lels and then Piet Kleyn van Willigen, it witnessed steady, lucrative growth from power to power. Though these had a strong entrepreneurial streak, they did not extensively invest in strategic analyses. In their own view, business was always potentially lucrative when it promised significant sales. They were motivated by the entrepreneurial attitude of ‘get up and go’ which has been the major factor driving the growth of Smith throughout most of the 20th century, leading the company to enter many new foreign markets and new lines of business. This is contrary to the widely held belief during the contemporary times that it is important to first do a strategic analysis of the market to determine if the business would be profitable in the future. A strategic analysis would involve establishing the potential of the business. This would take into consideration the strengths and weaknesses of a new market. After the last member of the family decided to retire, the new management took over the helm and was particularly concerned with restructuring the extensive portfolio of businesses that Lels and Kleyn van Willigen had built up. For instance, they trimmed the corporate portfolio and attempted to achieve more focus by closing down and selling off of many unprofitable business units. While ‘sinking leaky businesses’ went relatively well after their initiative, the main difficulty they faced was that they did not have the intimate industry knowledge to find new growth opportunities. One major disadvantage was that few people had the capability to develop a good business case to justify the huge investments needed to launch a new type of service though they were more concerned with focusing on functions and operations of strategic business units. Upon a close analysis of the above case, it can be noted that what is paradoxical is that business triumphed during the tenure of the Smit family without much extensive analysis. Under certain circumstances, the opposite would be expected where business would not thrive without strategic analysis. This scenario is contradictory in that the opposite is true. On the other hand, after new management took over, they implemented new strategic decisions such as restructuring the business portfolios and selling off unprofitable business units with the aim of improving performance of the business and its profitability. Both missed the experienced sense of entrepreneurial risk-taking that their predecessors had long been able to tap. Moreover, while there were still many ‘can-do’ people in the organization, few had the capability to develop a good business case to justify the huge investments needed to launch a new type of service. It can be noted from the argument above that the opposite happened. They did not achieve the expected goals as they encountered several difficulties especially in penetrating new markets. Instead of getting a positive result from their initiative, the opposite happened which is paradoxical. However, the gap between the areas of tension can be bridged upon following strategies that can help create a positive development. In most cases, business strategies are determined by SWOT analysis. This is an abbreviation of strengths, weaknesses, opportunities as well as threats. Normally, an analysis of these factors often forms a background foundation of testing if any business venture would be viable. In short, this is a simple framework for generating strategic alternative levels from a situation analysis. This approach is either applicable to the corporate level or business unit level where it would seek to test the probable factors that may affect the operations of business. Basically, strength deals with any other aspect of your business that adds value to your business. It can be noted that the Smits had strength in their operations in that they had knowledge about their market and had dedicated team members who had a “can do attitude” which greatly gave the organisation strength. However, the team which came after the Smiths was not very strong in terms of knowledge about the market and the actual job. If this is taken into consideration, a business entity can be transformed into a viable and profitable one. This certainly can be one measure that can be taken to bridge the gap between the two cases outlined. On the other hand, a company is supposed to establish its own likely weaknesses in the market. In most cases, undifferentiated goods and services from competitors and often poor marketing strategies result in the company failing to operate profitably in a competitive market. In both cases, there is need to identify the weaknesses that may affect the operations of an organisation. Whenever a company intends to move into a new market, be it local, regional or global, there is need to test the opportunities available so as to ascertain if that company would be viable and profitable. Moving into a new market require the identification of market segments that are profitable and also manageable in terms of growth. This strategy can be used to bridge the gap in the areas of contention mentioned in the above case study. Penetrating new markets is not an easy task that can be a one day occasion. Instead, there is need for proper planning that would try to establish if the business venture would be viable. More importantly, there is need to try and establish some of the threats that may exist in the market. These often include competitors with more advanced means to distribution channels and those who would be more advanced technologically. The strategy taken by any business would determine its fate in most cases though in some instances these strategies may not yield the desired results. However, it is recommended that the company must not over rely on the SWOT analyses as they are subjective in most cases. They are driven by personal opinions in most cases which may bring about a contrary result to what would be expected. Indeed, to a certain extent, the swot analysis acts as a yardstick in measuring the outcome of the operations of any business but not wholly reliable. In the contemporary times, the marketing strategy is often used in attempting to establish the viability of an organisation in the competitive markets which are characterised by stiff competition in most cases. Discovering what your customers want and making sure you meet their needs takes a lot of work and this can be one sure way of trying to bridge the gaps highlighted in the case. It seems the new management at Smit Company is failing to penetrate new markets. Marketing strategy is very important especially during the contemporary period where it would try to establish how your enterprise would address the competitive market place and how you will implement and support the day to day operations. As a result of the demographic changes, emerging new technology and cultural trends that are characterising the market, it is always recommendable to a marketing strategy. In todays very competitive marketplace a strategy that insures a consistent approach to offering your product or service in a way that will outsell the competition is critical. However, it is also recommended that before establishing the marketing strategy, you must also have a well defined methodology for the day to day process of implementing it. It is of little value to have a strategy if you lack either the resources or the expertise to implement it like in the paradoxical issue of the management team which took over after the Smits. The management after Smit family failed to penetrate the market because they did not have a sound strategy but just people who knew everything with little action. It is always expected that you begin the creation of your strategy by deciding what the overall objective of your enterprise should be. Entrepreneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. That is why a business review or preparation of a strategic plan is a virtual necessity. This may not be a recipe for success, but without it a business is much more likely to fail. A sound plan therefore should serve as a framework for decisions or for securing support and try to stimulate change and become the foundation for the next plan. Over and above, it can be noted that the given case study has two paradoxical situations where the opposite and least expected things happen. In the first case, business was thriving in the absence of a proper strategy. In the second case, business was slumping contrary to the strategy that was put in place to ensure improved performance and growth. However, there is need to take into consideration certain strategies highlighted above as a way of trying to bridge the gap that may exist between the two cases given that they occurred during two different periods of time. In the contemporary period, there is need to establish a sound strategy that would meet the modern competion and technological developments which is a bit different from the period preceding 1988. References What is a Paradox? http://www.wisegeek.com/what-is-a-paradox.htm [Viewed 20 November 2008] Swot analysis: Lesson http://www.marketingteacher.com/Lessons/lesson_swot.htm Swot analysis http://www.netmba.com/strategy/swot/ strategy-SWOT analysis http://tutor2u.net/business/strategy/swot_analysis.htm strategic marketing http://www.lead-edge.co.uk/stratmkt/stratmkt.html Marketing plan http://www.businessplans.org/Market.html Introduction to strategic planning http://www.planware.org/strategicplan.htm Read More