Small Business Management of OBO - Case Study Example

Introduction OBO was founded in 1992 by Simon Barnett and his wife Fiona. OBO is the leading manufacturer of protective equipment for hockey goal keepers. It exports its products to 55 countries. It operates in a niche market but is a profitable company. This is primarily because of its CEO who likes to be called the Team Captain. Simon Barnett is a visionary entrepreneur who is exceptionally dedicated and committed to trying new things and improving the overall business. His self confidence and his company philosophy of 'we can do anything', has lead to significant progress in his business. Within three years (1997-2000), profits increased by 350%. OBO is Simon's third business venture and he has learnt considerably from each undertaking. Simon invests heavily on research and development which fuels his desire to improve his existing products and to develop new ones. He has also kept up with the changing technology and offers a website that encourages customer focus groups, gives playing tips, product information and also sells the product online. Simon believes that consumer market research is essential in product development. At present, OBO has a very strong distribution network and a formidable brand value. SWOT Analysis Internal Environment OBO is a strong company and has a far sighted CEO Simon Barnett, who has over a 20 year experience, ranging from manufacturing table tennis table to selling and distributing hockey equipment for Ishan. Eventually however, he also went into production and specialized in making protective hockey equipment for goalies. Simon is an ambitious individual, a visionary leader who believes in managing by setting his own examples. He is a creative person who invests heavily on product research. Simon is of the opinion that it is important to bring changes in the product so that it seems fashionable as well as useful to the customer. His sound distribution networks and brand value has made OBO the market leader in its industry. Simon holds a strong relationship with his agents and also with his customers. He encourages his customers to express their opinions and ensures that new products are made keeping in mind the customers' changing needs. Moreover, OBO gives a lot of attention to product quality which is their key competitive advantage. Although OBO operates in a niche market, it is still a big name. It is doing well in the market and had a profit of $450,000 in the year 2000. However, if OBO decides to step into a new market of making cricket equipment it will be big change for the company. This 'big change' brings with it a lot of risk. Simon's financing policy has always been to avoid bank loans. He prefers to reinvest his retained earnings. For a venture as huge as cricketing equipment, heavy investment will be needed and with Simon's current policy this can be a huge gamble. OBO has limited staff and a new venture would certainly mean expanding the personnel base. Apart from this, Simon depends very strongly on 2 key personnel. Simon acts as a facilitator and the manufacturing and designing sides are looked after by two men. Such excessive reliance can be dangerous as even if one of them quits, Simon can be in big trouble. Although Simon has ample experience in business, a cricket venture will still be a new area. The requirements of cricketing equipment will be very different from hockey as the two games vary greatly in the way they are played. External Environment In terms of opportunities, there are many. OBO operates in a niche market and in comparison cricket will offer a bigger market. For hockey a team would at a maximum need 2-3 pairs of protective pads, but for cricket, all the batsmen will need pads along with the wicket keeper. If OBO is able to manufacture pads that are lighter and allow players more speed and agility then there will certainly be a lot of scope of the product. Also cricket is a game that is more popular all over the world and is played by many countries at a national level. With time, OBO can also expand towards manufacturing other protective equipment for cricket like helmets, gloves etc. Despite all this, it must be kept in mind that for this venture, OBO already faces competition. The Indian market has already been captured by another company. This means that OBO will face stiff competition in the Indian Sub continent. This is ironic because cricket is a hugely popular sport and this region (India, Pakistan, Sri Lanka and Bangladesh) is a massive market. In areas like helmets and gloves, OBO could face competition from giants like Nike, Slazenger etc. Keeping all these factors in mind, we must also take into consideration few other aspects. Manufacturing for a niche market versus manufacturing for a big market would not only require more funds but also capacity constraints must be looked into. The case does not state anything in this regard. Simon might need to open another production facility. He would need to hire more people and overall expansion would be needed. Also, the case does not mention any succession plan. Who will be in charge after Simon and would that individual be willing to expand the overall business in such a manner Would he want to enter into such a risky venture Would he be able to pull it off From my perspective, the SWOT analysis seems good for OBO. At the time the case was written, OBO's products seem to be the cash cow for the company. OBO is a market leader and the market growth rate seems to be low. It is generating a stable cash flow and can easily cover existing expenses. From the Product Life Cycle aspect, OBO's products appear to be in the latter part of the growth stage and at the brink of entering the maturity stage. This is emphasized by the distribution being intense for OBO, the product features aim to differentiate themselves from competition and the sales growth rate seems to be slow. If Simon only concentrates on capturing the rest of the niche market, eventually its business will stagnate. Seeing, Simon's ambitious nature, he would not just want to enjoy stable cash flows. He would want to bring changes which will not be possible once the product enters the decline stage. As the product enters the maturity stage, Simon needs to think about expanding his business and using his expertise in a field much similar to hockey. Although this new endeavor poses a lot of risk, Simon's entrepreneurial capabilities and smart thinking can help him in entering this new market. He will need to dwell into market research and product research, but entering a new area at this stage seems like a good idea. Already Simon has established a brand name and if he introduces this new concept of cricket pads in the South Pacific he can get a first mover advantage initially. Simon Barnett-entrepreneur or manager Simon Barnett is working as the CEO of his business. True, his main motive could be high profits (which is why he wants to expand and try out new things), but he manufactures a novel product of superior quality and his approach of continuous improvement using customer feedback is what sets his aside. He is innovative and gives a lot importance to enhancing brand value. He is highly ambitious and wants to continue to grow. As according to Carland (1984), Simon works as according to a long term strategy. The main reason why he gave up Ishan was because the company was not bringing in the right changes in the product that the customers wanted. Simon's strategy of making a product with superb quality and giving the customer precisely what he wants has been the key to his success. Had Simon been a small business owner/manager, he would be satisfied with the way OBO was already working. He would not even consider the option of expanding into cricket gear. Simon's company is a market leader and it heavily engages in innovative marketing practices (Carland 1984). Simon has a vision that enabled him to identify the need of making mobile table tennis tables. It was this vision due to which he realized his potential was a lot more than just making these tables and thus he eventually sold his table tennis business and bought the license for Ishan and within two years made this brand the finest in New Zealand. Although Simon and his wife are 50% partners in this business, it would be a discredit to call him a manager rather than an entrepreneur. He did not restrict his market to New Zealand and also exports it to many countries. This is his core business and not a part time venture taken up as a hobby. It is true that Simon left his education to pursue his business but what started as a small table tennis business grew to become an enterprise. So, in short we can say that initially Simon started as an owner/manager but his abilities, talent and faith in himself made him rise to an entrepreneur. HR Issues OBO is a market leader, but still directly employs very few people. One of the key concerns is that the case does not mention any succession plan. A business so proficient, a leader so visionary-it is strange that he has not trained anyone as his second-in-command. The undertaking of any future expansionary plans depends heavily on the management style of Simon's successor. Moreover, Simon depends too much on a few key personnel. This strong dependence can be a recipe for disaster. Simon relied heavily on sub contracting since production was done by Michael O'Donnell and designs were undertaken by Rob Whitfield. If OBO intends to expand into cricketing gear it needs to enlarge its HR base and become a little more organized. Human Resource is a very vital resource for any organization may it be large or small, but it is important to have enough people on board so that everyone has adequate work to do and not be over burdened by work at the same time. Conclusion At the time the case was written, OBO was a strong company, and was doing a lot to keep its customer base satisfied. It had revolutionalized the art of protecting goal keepers in hockey. It went a step ahead of its competitors by providing a superior product. All enhancements made to the product were done after keen consideration of what the customers wanted. Despite operating in a niche market, it was the market leader, a trend setter in its industry. Armed with its strong sales team (of agents), market knowledge and ample experience OBO can venture into a new sport-cricket. Cricket offers a bigger market and thus promises higher profits. Simon can use his knowledge of the hockey market and apply it to cricket. In order to take up this new venture, Simon will have to increase its HR base, choose between expanding its production facility or sub contracting production and invest heavily in product development and marketing. It is true that these actions bring with them a great deal of risk, but a new venture is always a gamble. However, a person of Simon's caliber who would only take calculated risks; can make it work. Bibliography Allen Kathleen, Entrepreneurship and Small Business Management. Mcgraw Hill Series Armstrong Scott, Brodie Roderick, (1994). Effects of Portfolio Planning Methods on Decision Making: Experimental Results. International Journal of Research in Marketing, 11, 73-84 O'Connor John (Feb, 2005). Doing more with less: small business decision making at the front end. The Risk Management Association (RMA) Journal. Retrieved September 29, 2007, from find articles website: http://findarticles.com/p/articles/mi_m0ITW/is_5_87/ai_n15375249 Palumbo Fred, O Hara Bradley, Herbig Paul (1994). Total Quality and the Human Resource Professional. Journal: Training for Quality, 2(1), 29-34 Piekkari Rebecca,Vaara Eero, Tienari Janne, Sntti Risto, (2005). Integration or disintegration Human Resource implications. The International Journal of Human Resource Management, 16(3), 330-344 Thompson A., Strickland J. Strategic Management: Concept and cases. Eleventh Edition. McGraw Hill Series Read More