Dream Deferred: The Story of a High-Tech Entrepreneur in a Low-Tech World - Case Study Example

Dream Deferred: The Story of a High-Tech Entrepreneur in a Low-Tech World PART Monique Maddy, an entrepreneur, founded Adesemi as an attempt to guarantee that third world countries had access to inexpensive wireless telecommunications. Having graduated from one of the best business schools in the world, Harvard Business School, she believed that she had what it took to realize her dream and make it a reality. However, just one month after the establishment of Adesemi, it all came crashing down. The company was liquidated, and she was devastated. Nevertheless, she has learnt an invaluable lesson about entrepreneurship especially the launching of companies in developing countries (Maddy 1). 1. The most essential lesson that Maddy learnt from her experience in the third world country was to ensure that a business person was well informed of the market that they were trying to penetrate. This is because surveys done before the actual establishment of the firm often give a very different picture of what the reality of the situation is in the country, in question. As such, she explains that she had underestimated the intricacy and extent of the venture especially in a third world country like Tanzania. If the company was founded in a country that was a little more developed, it may have had higher chances of success (Maddy 5). Firstly, she learns the importance of selecting the best investors in the business. There are two kinds of investors the do-gooders and the do-wellers. The former category is more accessible than the latter; they aim to generate economic growth but are terrified of risks and are deeply entrenched in bureaucracy. This is the wrong kind of investor since at the possible sign of trouble; they flee and are only concerned about recovering their capital, as opposed to the business. Do-wellers are more difficult to locate, but they understand the risk and are more concerned about the business as opposed to profitability. This is an invaluable lesson since the appropriate investors play a big role in the success of the company, in question (Maddy 8). Maddy recognizes the significance of diversity in a firm but as she understood; the dissimilarities in opinion can be strenuous to a CEO. Therefore, a HR manager should be hired to improve tolerance in the business. This would result in a cohesive unit which will benefit the firm immensely. Another lesson that she learnt was that for a business to succeed in the emerging markets, it had to have some local partners who were interested in the long-term success of the business. As a result, the locals will provide valuable input that would develop the business ensuring its success. Finally, for a corporation to succeed in the third world economies, it has to have an investor who is tolerant and farsighted, willing to fund it and endure any problems that may face the firm. This would ensure that the establishment will inevitably become a success regardless of the difficulties it may face along the way. All these lessons that Maddy learnt from the collapse of Adesemi are noteworthy since they meritoriously describe the problems that investors and entrepreneurs in the third world country face. If they are all taken into consideration, but an interested entrepreneur, the business they intend to found will indisputably be successful (Maddy 8). 2. Other companies have taken root in emerging markets and prospered. Such companies include Celtel, Infosys and Royal Dutch/Shell in Russia. This is to mean that these companies must have used alternative strategies compared to Adesemi. Royal Dutch/Shell in Russia had a strategic alliance with the monopoly Gazprom which was a local natural gas producing firm. Having a native business on their side was among the causes for its exemplary performance in Russia. Adesemi did not have any local support from already existing companies in Tanzania. This may have been a contributing factor to its failure since local businesses could provide them with additional information about the Tanzanian market. Celtel is another example of a company that invested in Africa and despite all the problems that it faced, it is a success story. Ibrahim, the founder of the company ensured that they had qualified and experienced people in their board. Such people included Sir Whent, who was the first CEO in Vodafone, Sir Rudge, a top ranking official in British Telecom and Salim Ahmed, who was formerly the Tanzanian prime minister. These board members provided the company with excellent advice that contributed greatly to its merit. Adesemi lacked this level of expertise and as such, it collapsed only a month after its inception. Infosys established in India which is an emerging market as well is an example of success at its best. It was founded by inhabitants of India which meant that they fully understood the intricacies of the company in which they were setting up their business. Therefore, all their decisions were based on their prior knowledge of the industry which facilitated their success in India. Adesemi’s founder did not have enough information about the Tanzanian economy beforehand. As such, after the company’s establishment, the reality of the market set in which the business could not survive. PART II 1. The global market directly affects local markets’ performances. Therefore, companies try to make their decisions in line with the state of the economy; if it is stable or not. During the Mexican crisis, global investors such as Peter Monaco played a significant role. For example Monaco engineered the investment in Mexico by the Scudder Latin American Fund, which helped the economy. Their actions were determined by the fact that the economy at the time was so profitable than in the past. Most investors spent their money on Mexicans assets, and when the valuation of the assets increased, the investors obtained higher returns. As such, this attracted more investors to bet on the economy of Mexico. Another reason they invested in Mexico was that it was the only economy in the world whose government securities yielded so much and were safe, as well (Pill 5). Therefore, this state of continued progress was the determining factor behind the decisions that global investors like Peter Monaco made. Several explanations exist about the crises that occur in the emerging markets. Most of them are based on the influence of the foreign investors on the affected economy. Other explanations were the increase in the interest rates worldwide, the composition of capital inflows and high but varied inflow volumes in modern international markets. All the aforementioned are possibilities of what went wrong in Mexico, but they are all just theories as none of them independently led to the tequila crisis in Mexico. In the case of Mexico, the effect of foreign investors was assumed to be the main cause of the crisis. This is because increased foreign investment seems to be helpful at first, but accumulation of short-term debt in dollar denominations relative to the reserves the country has is a dangerous situation for any business. This is what happened in Mexico since they had too much foreign inflow of capital compared to their reserves which affected their economy resulting in the economic crisis that took place (Pill 12). Another cause of the crisis was assumed to be an attempt to devalue the peso, which is the Mexican currency. The devaluation approach is often taken up in order to propel inflation which on a moderate scale increased economic growth. Risks like economic contagion, debt and currency crises should be addressed in order to ensure global economic stability. Contagion, for example, can be managed by ensuring equitable distribution of resources in the country which minimizes the gulf between the rich and the poor. Debt can be controlled by guaranteeing that restrictions exist on how much money a country can borrow at a time from another country. This will limit the capital flows that if unrestricted often leading to economic meltdowns. In addition to this, the free trade policies adopted should be re-analysed since they also result in debt. The merit of these actions is in the fact that they do not only focus on one aspect of the economy but instead address all possible causes of the economic instability. 2. Shiseido had an early vision of globalization as is seen through its strategies and plans for the future. However, fear of the unknown was probably the main obstacle that the faced. The company being authentically Chinese was afraid of venturing into to their markets like the American or European markets. This was because these alternative markets had other companies that would offer competition to Shiseido. In most cases, foreign companies do not do as well as the local companies in new business. As such, their approach to achieve globalization by infiltration other markets was affected by this risk of failure. Another example of is the use of an expensive ingredient in their high end creams (Jones and Kano et al. 15). This idea was initially turned down since they were not sure if it would succeed as much as it was required to not only to recover the operational costs, but also to make profits. In order to achieve globalization, Shiseido came up with an effective internal strategy. First they wanted to build an unshakeable presence in the Chinese market before they expanded to other countries. Their achieved this through the production of high quality cosmetic products that satisfied the demand in the Chinese market. After this, they went on to penetrate the American and European markets. In this case, they made products suited for these markets and also made acquisitions of local firms in order to boost their reliability in the new markets. Shiseido in the new markets focused on affordable departmental stores like Macy’s which increased their clientele (Jones and Kano et al. 19). This stepwise approach was very effective decision which has ensured Shiseido’s success over the years. Works Cited Jones, Geoffrey, Akiko Kano and Masako Egawa. Making China Beautiful: Shiseido and the China Market. Harvard Business School, 2013. 1-28. E-book. Maddy, Monique. Dream Deferred THE STORY OF A HIGH-TECH ENTREP RENEUR IN A LOW-TECH WORLD. Harvard Business School, 2000. 1-10. E-book. Pill, Huw. Mexico: The Tequila Crisis 1994-1995. Harvard Business School, 2002. 1-24. E-book. Read More