Strategic Management of the Eden Project - Essay Example

Strategic Management The Eden Project Ltd School Strategic Management The Eden Project Ltd Current Strategic Position Background The Eden Project is located at Bodelva, in Cornwall, on the south-west coast of England, and is built in an old china clay mining pit with exhausted natural resources. The reconstructed site represents a vivid combination of house plants, crops and landscapes to communicate its story in a "Living Theatre of Plants and People" (www.edenproject.com). It is operated on a daily bases by the Eden Project Limited - EPL, a company fully owned by the Eden Trust. Today Eden represents an international visitor destination, and a local educational facility. The Eden Project promotes public education and research in flora, fauna and other aspects of the natural environment. The purpose of the project is to establish and maintain this facility in which the world's principal ecosystems are reproduced. The present strategic position of the Eden Project can be defined by those strategy-making elements that define the purpose and the actual strategic outcomes for the company (Thompson et al, 1996). These consist of the business the company is in, its mission and long-term vision; its specific strategic objectives; actual strategy execution and performance evaluation. Mission and Vision Having exciting mission or purpose is what brings people together, stimulates extra effort, and causes people to live the business instead of just coming to work (Pearson, 1992). Today the strategic vision of the company is much different from what was defined back in May 1994 as a "vision" of five glasshouses linked together for a "walk-through" experience, representing world climate region. The business mission at that period was perceived to be a large-scale theme park. Today, after years of successful operations and significant financial and know-how backup, the long-term mission and vision are much more broadly defined, while still bearing the entrepreneurial values from the beginning of the project's creation. The core mission message of the Eden Trust is "passion to make a difference", transforming the physical site and destination into a truly spiritual experience, promoting better understanding of the world, proving that men can actually make environment better. The vision of the Trust extends beyond the Cornwall site and is "the preservation and protection of the world's endangered plants and trees" which is achieved by a network of functioning international partnerships. Objectives The objectives of the Eden Project are primarily charitable. The Trust identifies its purpose as "to promote public education and research in flora, fauna and other aspects of the natural environment". Eden's objectives therefore cover three strategic areas - education, scientific research and tourist attraction. It's the latter that provide the major share of revenues to cover expenses and secure financial stability of the project. Education programmes and research projects are financed by EPL and external donators. Although charitable by purpose, the Eden Project is self-dependent, with annual impact on local business environment amounting to millions of attracted revenues from tourism and education. The profits are utilized by the Eden Trust, and "money raised by the project is used to further charitable aims" (www.edenproject.com). Business Strategy Development To understand what forms the present Eden Project strategy, one needs to cover the long process of its creation. The business initiation process of the Eden Project was one with many difficulties, downturns and opportunistic enterprises. Starting from a restoration project at Heligan for a small group of horticultural professionals, the project bears the entrepreneurial spirit of constant searching for change and improvement. On its way to success, the project underwent many critical periods where its vital existence was seriously questioned. Crises due to insufficient fund raising, painful team formation, lack of experienced leadership and management, frequent changes of vision and purpose are all characteristic to the early stages of the project. The project founders themselves had hard times looking for the best fitting shape of the Eden Project in terms of financing, management and organization. At a certain point, self-motivation and enthusiasm were no longer enough for a large-scale project with big prospective impact on local community and involving millions of pounds for set up. The turning point in the venture was receiving the Millenium Fund in 1999 as the prime funding target. This 5-year long application process that preceded the funding turned the entrepreneurial undertaking in a true business entity, taking the form of a legal Trust. A strategic plan was outlined with different scenarios based on market analysis and forecasts. Projected costs were established and funding targets were identified. Financial and logistics management required structure, clear responsibilities and wise management, so that the interests of the Eden stakeholders were protected. The entrepreneurial Eden team found their way through restructuring and role taking from a single idea to a million-pound project. The need for long-term consistent strategy was visible at all stages of development. Generic Strategy Today Eden's strategic position is straightforward. It's clearly focused on a market niche based on differentiation (Porter, 1980) - plant preservation and education presented in a unique way. Differentiation is achieved through the original idea, the location, and the way the services of education and presentation are offered; through the Millennium Funding back in 1999, the names of famous architects, the notorious history of its development, and the present unmatched futuristic architecture and diverse plant life. Competitive Advantage Strategy making introduces the critical managerial knowledge of how to achieve desired objectives. It is best conceived as a combination of planned actions and on-the-spot adaptive reactions to fresh developing industry and competitive events (Thompson et al, 1996). The Eden creation process was a bright example of a painful and exciting entrepreneurial experience, when project vision was gradually shaped from a local low-budget horticultural undertaking to a large-scale project with significant economic impact on the local business environment, and much wider charitable, educational and environmental implications. The success of Eden's business strategy is found in the attained competitive advantages, in that this symbiosis of charity and business has positioned it as a local and international tourist attraction. According to David Kollat (1972) the best path to competitive advantage is found where a firm has core strengths in one or more of the key requirements for market success. Eden's core strengths lie in the unmatched idea for an innovative scientific and learning institution, dedicated to explaining human dependence on plants in a special and entertaining manner. It is a unique combination of enthusiasm and professionalism, and know-how gained through the long process of Eden creation by the people, running the place today. Stakeholders Business strategy is not shaped in a vacuum. It's dependent on environmental and internal factors that direct the course of day-to-day events, and influence the long-term business development. In its core essence the Eden project is permeated by various influences, being a public-oriented institution rather than a strictly business privately-run enterprise. Although operated by the Eden Project Ltd, the Eden Project is wholly owned by the Eden Trust, a UK registered charitable trust, representing financial interest of local and international institutions. The stakeholders in the Eden Project are all parties that initially participated in the development process of the enterprise. Therefore Eden's strategy should be analyzed within the concept of the community and institutions that have created it. On one hand the EPL has to respond to strict administrative criteria regarding structure, management and strategic direction, and has to sustain an economically viable business to satisfy the requirements of those participating in the matched funding process. The project is also impacted by co-founder's business philosophy, Tim Smit, because it's precisely due to the present CEO's ambitions and attitude toward taking risk that the Eden Project exists today. Both casual observation and formal studies indicate that managers' values and ethical beliefs have important influences on strategy (Andrews, 1987). And Eden is a blazing proof of how one person and a small team can shape the future. Furthermore, the project is expected to continue to deliver economic benefits to local businesses and society. Today, the Eden Project is one of the most successful local undertakings and has huge impact on the local Cornish economy. It is situated in one of the poorest areas within the European Union, with fishing industry, agriculture, and tourism remaining as the driving industries of the local economy. In addition to fund raising, the Eden Project represents an important social factor, securing jobs for more than 800 full-time staff. The project gives the local people the sense of participation and ownership, an amazing achievement they are actually part of. Competition Professor Michael Porter of the Harvard Business School has demonstrated that the state of competition in any industry is influenced by several competitive forces (1980) - competing companies and their strategies, potential entry of new competitors, the bargaining power of suppliers and buyers. Hardly any of these forces can be applied at local level in analyzing Eden's strategic position. Statistical evidence proves that the project is not only of tremendous impact for the local economy, but is also part of the top national tourist attractions, and has international importance. Furthermore, the hardships the Eden founders underwent in their attempts to find proper funding represent enough proof that future large-scale projects matching Eden are hardly possible within this part of the world. This places the Eden project in the advantageous position of single "player" with unmatched strategic scope. The strategy backbones, that help the company attain its strategic position, consist of day-to-day activities in functional areas like education, horticulture, catering, retail, events management etc. that secure the financial independence of the undertaking and deliver charitable aims in a special expressive way. What actually makes Eden's strategy operational, are the people that run the place, and the social networking EPL has established within local community. People Strategy is simply a statement, if it's not supported by people and actions. Eden disposes of an "army" of workers, who "help tell the story" to the fascinated visitors. The whole project employs over 500 full-time employees for its various attraction operations - guides and performers, operations teams, science team, education team, and designers. The end of 2003 came with a wage bill of over 8 million. Qualitative research has shown that the staff professionalism is what makes Eden special. And this is largely thanks to the extensive training programs that made EPL the "Investors in People" award winner in 2003 - rare for a team of 500+ within just two years. In the quieter time of the year the company is engaged in a massive programme of training and development, such as a Further Education programme with Cornwall College, the Delivery Programme for management, PeopleNet and "Power of 7" innovative programs. Suppliers The annual spending with suppliers exceeds 10 million a year, 56% is spent in Cornwall, with nearly three quarters of all expenditures in the South West region. Eden is also in close cooperation with other enterprises, such as the Cornish Horticultural Enterprises, developing plant retail operations and producing genuine returns for growers in the county. Eden has further formed a Commercial Co-operative of 20 growers, growing for Eden and the UK, and has set up a pilot programme for mass mail order through Sutton Seeds. Strategy Evaluation After all the effort put on establishing structure and running a self-sustaining enterprise from bare scratch, the question that has to be answered today is, how well the Eden strategy is performing. While there's merit in evaluating the strategy from a qualitative standpoint, the best evidence comes from studying the company's recent strategic and financial performance (Thompson et al, 1996). Data from the first years since the Eden opening show more than double increase in the number of visitors and collected revenues than were originally planned. The Eden Project is now in the top five paid-for attractions in the UK. Furthermore, assuming a steady state 1.4 million visitors p.a. and modest inflation over the first decade emerges a figure of 1.5 billion of incremental income to the county, and the region. These figures give a straightforward answer regarding Eden success so far, and this is vastly due to the original idea and its unique and vivid execution. 2. The Realistic Objectives Formulated by the Company Unless the organization's long term direction and business mission are translated into measurable performance targets, those statements will end up as nice words, and unrealized dreams of accomplishment. Objectives have to follow the SMART principle (Thompson et al, 1996) meaning simple, measurable, attainable, realistic and time-bounded. The long-term objectives are shaped from Eden's mission and strategic vision. In its core the Eden Project Limited runs a business with commercial sense, aiming to meet high social and environmental expectations. The EPL mission statement is developed around the core message "to make a difference", to found a place to "promote public education and research"; to promote the study and appreciation of flora horticulture and silviculture, also of the environment, and the advancement of renewable energy, biodegradable waste, ecology and conservation, agriculture and protection of the world's endangered plants and trees. This mission is broken down into further strategic objectives in three core areas - education, scientific research, and tourist attraction. The educational niche finds its origins in the Heligan garden undertaking, where plant life education became a central pillar of Heligan's success. The Eden project is concerned with different aspects of education - from science and trade commerce through human development and global connections to biodiversity, food and environment and influences people at different ages and with different backgrounds. Education takes the form of lively presentations by guides and performers; event programmes and workshops; retail and catering of environmentally acceptable products; and schools and lifelong learning programmes (www.edenproject.com). Scientific research finds its implications in joint projects with UK and international research bodies, like the Weston foundation, the Royal Forestry Department of Thailand. Projects co-financed by Eden are related to its business mission and range from conservation and sustainability, to pest control and the Waste Neutral initiative (www.edenproject.com). Visitor attraction is the most visible, and tangible component of the work of the Eden Project Limited. Still, through a range of services - education, horticulture, catering, retail, events etc - the Eden Project represents a fundraising structure, with funds being distributed for charitable purposes. The management's aspirations go beyond the local level limit, striving to make "a global difference". The charitable purpose of the enterprise makes the scope of the EPL vision much broader than what is expected it to achieve for only 4 years of operations. Being a place where the world's flora is carefully preserved makes the vision of "protecting the world's endangered plants and trees" really challenging. In order to be an effective managerial tool, objectives also need to be more specific and measurable. What makes objectives realistic is action, rather than statements. "It ain't what you do; it's the way that you do it; that's what gets results." The best way to identify success criteria for the long-term goals is to break them down into short-term objectives and tasks that have clear and timely outcomes that have to be achieved. Furthermore, as Peter Drucker states, for strategic thinking to permeate organization behaviour, performance targets must be established no only for the organization as a whole, but also for each of the organization's separate businesses, product lines and departments (1974). Eden's strategic role at local and increasingly globalize level promoted by its mission, is sustained by specific plans with identified timelines and budget requirements for operational and financial stability. Although the long-run charitable objectives are hard to measure in terms of people awareness and impact on their future lives, there is a range of clear short-term indicators that help the management identify realistic goals. Measuring success One such measurement is the number of people visiting the site over a specified period of time. And success is at hand - the first two years saw over double the original "best case" forecast. The Project became in the top five paid- for attractions in the UK with 750,000 people visiting the site annually. Another measurement is actual revenues compared against the projected revenues. Acceptable financial performance is a must; otherwise the organization's survival ends up at risk (Thompson et al, 1996). The turnover figures and the number of annual visitors prove that, the EPL is really "making a difference". The visitor figure totals 5 million visitors, 85% of which are on holiday, and 47% claiming that Eden was a major influence in their decision to come to Cornwall. Increasingly globalized operations can be assessed by effectiveness of international partnerships and the real effect those partnerships have against previously specified goals - such as protecting or reintroducing endangered plants. The Eden Project has set up projects and partnerships in seven countries to propagate and protect endangered plants. Beyond the site, the EPL project is becoming increasingly internationalized, making the world-oriented educational and environmental objectives more feasible. Success can also be measured in terms of people's attitudes and declared future actions, as identified by regular quantitative research projects carried amongst over 5,000 visitors 8 times a year. Satisfaction figures account for 97% of all visitors who are "very satisfied" to "satisfied" from their visit and evaluate the Eden Project as being good and improving. Dissatisfaction figures over the years have been kept to 3-4% of visitors. More than 94% of visitors declare that they will recommend the place to their friends and relations. Furthermore, nearly 70% of visitors declare that they will come back to the site, with actual return visits increasing over the years to 10% in 2003. Success is also measured by media coverage, enhancing further public awareness. The Daily Telegraph described the Eden experience as "out of this world", the Times regards it as "a most un-British success story", the House and Garden magazine in New Zealand recommends it as "a global must see", and the New York Times define it as "a miracle". 3. Strategy for Eden Project Ltd for the Next Five Years The strategic planning process involves detailed investigation into present strategic practices and what strategic options the company realistically has, with view to business development. Future is not a mechanical projection of past success, and the Eden Project Limited management team have to find those factors that will be the pillars of Eden's future success. Strategic planning is a powerful managerial tool. Its real value is in the process of strategy formulation and not strategy alone, because the process puts the strategy into context and makes it realistic and believable. In today's world of dynamic changes strategies are developed over short time periods, and are frequently revised to secure competitive position. Eden's future strategy can be derived from an attentive analysis of the factors that comprise the SWOT matrix. Company strengths are used to take advantage of external opportunities, and a strategy is devised to minimize the negative effect of internal weaknesses, and external threats. Below are listed Eden's strength and weaknesses, opportunities and threats, as identified in the text: Strengths Unique business purpose - charity, education and environmental preservation Accumulated know-how and managerial experience People professionalism - secured by trainings Huge social impact - support by national, regional and international organizations Weaknesses Insufficient funding for new undertakings Seasonal dips in visits - weak winter season High cost figures Opportunities Development of educational projects - attract specific target groups Growth stimulated by international markets New site attractions and product development Enlarge Eden's mission from plant-oriented to nature-oriented Vertical integration - with local suppliers to minimize costs Threats Gradual decrease in annual visits - slower growth High regulatory requirements for new projects and high entrance-costs Economic indicators decreasing consumer buying power - high petrol prices, pessimistic expectations for the future - direct negative effect on tourism Future market strategy has to be shaped with view of expected external developments and identified trends. The following strategic options should be considered: Product development Further educational projects can be financed. Education is one sphere that always welcomes financial support and donations. Environmental education is attractive not only to local schools and universities, but also to environmental organizations. Now, that the national curriculum is on the agenda, and educational enrichment programs for teachers and students are devised, it pays to consider the international potential of such a project and possible collaborations with scientific and educational bodies in other countries and continents. Such projects can apply for joint financial support by other governmental and charitable institutions. Further on the Eden site as a product itself can be developed. Additional site locations can be developed and the place can be changed every couple of years. While costs are an important issue here, investing in site renovation and reconstruction will attract those who have already visited the site. This is a hypothesis, subject quantitative research regarding the expected effect of such investments. Develop seasonal attractions. Large part of the Eden site is on the open grounds, thus depending on seasonal changes. Each part of the year makes scenery look different and special and this can be given as reason for return visits by enchanted tourists. Decrease seasonal dips. Data on historical sales prove that, despite the claims that the Eden Project is not a seasonal one, virtually open every day of the year, the winter period of November to January shows a tendency of sharp decrease in site visits, decreasing the number from 50,000-70,000 in August to a minimum of 5,000 in December. Therefore the strategy for the winter period should be carefully reconsidered. Although the Eden management is using this period for its internal training program, further initiatives, targeted as tourist attractions and educational programmes can be started to support the number of tourists throughout the year to an economically profitable level. Growth in specific customer segments The Eden Project approximates a scientific institution trying to promote environmental education to all types of audiences - academic, scientific, technological, commercial and art, people at all ages and of different backgrounds. Making the Eden Project increasingly international will boost growth opportunities and will support the Eden's long term vision of "making global difference". Additional opportunity target are return customers. Research data has proven that after the original boom in 2001, the following two years show a gradual decrease in the total number of visits, meaning the location is visited by fewer people every other year. While already 5 million visits have been counted, and a gradual decrease in visits by local population can be expected, the Eden management has weapons to counteract the effect of this negative tendency. Research has also shown, that 70% of people who have already visited Eden are willing to come back, and statistically the number of returning visitors is actually increasing from 14% in 2002 to 17% in 2003. The Eden management has to find its way to the returning customers and sustain their interest, and hopefully, their active returning. This can be done by active marketing activities, targeting old visitors, and by the introduction of successful projects that sustain interest towards the site. Reorganized financial management policies Annually Eden spends millions of pounds for wages and suppliers. And while this aspect of Eden's operations makes it an important factor in the local business and community, cost restructuring can benefit the other, charitable resource-demanding areas - research and education. Flexible service is important element of the Eden project; still, the large number of the permanent staff is not economically justified during the winter period when visits drop to below 5,000 per month. One option is to employ more part-time workers, in order to avoid unnecessary wage costs. Another alternative is to try to sustain a constant high level of visitor visits, so that present costs are justified. Vertical integration with key suppliers can also benefit Eden in terms of cost reduction. Key for future development of Eden undertakings is financial funding of the projects. Significant funding can be obtained by Eden's own business structures and resources, or by joint ventures with external institutions in key interest areas. More specific programmes that are already on the agenda of Eden's management include (www.edenproject.com): Construction of an Education Centre Further development of the original plan for Eden - design of the third "semi-arid" Student accommodation facilities "Meeting House" construction - a place to hold conferences and seminars Waste Neutral - recycling and disposal of waste, with own purpose-built waste management facility. Further on, to support Eden's increasingly global view, the "plant-oriented" mission can be enlarged to a "nature-oriented" purpose, encompassing nature's flora and fauna, past and future interdependence between man and nature. Who knows, maybe the third "semi-arid" plan will be once again influenced by the entrepreneurial spirit that once transformed a horticultural project into a world leading educational and research centre. And maybe today's impressive "Biomes" in another five years will be one third of the size of the largest nature's scientific and educational institute on earth. References 1. Andrews, K. (1987) The Concept of Corporate Strategy 3rd edition. Homewood, III: Richard D. Irwin, chap. 4 2. Drucker, P. (1974) Management: Tasks, Responsibilities, Practices New York: Harper & Row, p. 100. 3. Eden Project (2005) Eden Project. Published at: http://www.edenproject.com. 4. Kollat, D., Blackwell, R.& Robeson, J. (1972) Strategic Marketing. New York: Holt, Rinehart & Winston, p. 24. 5. Pearson, A. (1992) Corporate Redemption and The Seven Deadly Sins. Harvard Business Review 70, pp 66-68. 6. Porter, M. (1980) Competitive Strategy: Techniques for Analyzing Industries and Competitors New York: Free Press, Chapter 1. 7. Thompson, A. & Strickland, A. (1996) Strategic Management: Concepts & Cases. Ninth Edition. Irwin McGraw-Hill. Read More