An analysis of Corporate Venturing
The Company is mainly operating the shark, and it is owned by Greg Stamboulidis. At the beginning, the Company is a small fish company, and every year it only has low profit margin. After Greg Stamboulidis purchased the company, he carried out a series of positive and correct chain supply strategies to help the company to succeed (Frazelle, 2002). The development of Greg Stamboulidis’ corporate venturing can be divided into three parts, as follow:
1) Greg Stamboulidis subtly found that procurement was the key factor to gain a competitive advantage when the shark’s prices was rising, and shark supply always unstable; in addition, as the Australians always considers the fish as the main staple food, the demands of shark have been always great, but Australian native shark yield was limited; Greg Stamboulidis resolutely determined to find shark supply market abroad to meet the demands of the Australians while reducing their acquisition cost. Cost advantage is expected by each enterprise (Frederking, 2010). Through investigation and analysis of him, finally South Africa had become the main source of shark, and in order to avoid the import policy at Australia, Greg finally succeeded in transporting the shark from South Africa to Australia in various ways. At that time, the cost of purchasing shark in South Africa is almost a half of Australian native cost, and the key step had brought 100 percent profit margins, while his competitors were achieving only 10 percent profit margins by purchasing the local sharks.
The other success factor was that Greg could be able to judge the future status. Greg expected that South Africa's situation was not stable, and his rivals may be using the same tactics against him. Therefore, Greg actively adjusted the direction of corporate venturing that he hard sought the new sources of shark to deal with the potential crisis. As the demands of sharks were continually increasing, local policy constantly limited and the raw materials reduced, the prices of shark continuously increased, by 2007, the wholesale price of locally caught fish has increased at AUD$10.00. At that time, the other Australian fish company quietly established a joint venture with Greg’ South African suppliers to impact on the Stambos Company. However, Greg had already negotiated with other overseas suppliers, such as Chile, Uruguay, Argentina, and so on. These events could not affect Greg’s business, it was luckily that Greg realized that he manage the suppliers and establish good relationship with the suppliers. Establishing partnerships with suppliers is the basis for development of the company (Jones, et. al., 2000). Then, the company was expanding constantly, the profit continuously improved, and the Stambos Company could provide more high quality products to meet the demands of customers.
In the development of Greg Stamboulidis’ corporate venturing, Greg similarly paid attention to low the labor costs; lower labor costs could create more competitive advantage for the company (Flanagan & Gould, 2003). In addition, constant innovation and reform have also brought more profits for the Stambos Company, for example, utilizing abandoned shark body created the new values. By the cooperation with American company, the Stambos Company had the stronger competitiveness. So, people can consider that the Greg Stamboulidis’ corporate venturing is very successful.
Explain how and why he might have needed to separate his corporate venturing efforts from his larger traditional organization.
There are two reasons that Greg might have needed to separate his corporate venturing efforts from his larger traditional organization, as follow:
1) The traditional organization did not have a competitive advantage. Facing the rising wholesale price of shark, escalating labor costs, global policy changes, the Australian government protection policies and the fiercely competitive environment, a company could not survive without of the competitive advantage. So Greg needed to carry out different corporate venturing efforts.
2) Greg wanted to gain more profits. At the beginning, the company was very small, and its profits quite low. So, in order to increase the profits, Greg might have needed to separate his corporate venturing efforts from his larger traditional organization.
Greg mainly adopted three measures to separate his corporate venturing efforts from his larger traditional organization, as follow:
He focused on the procurement link in supply chain. The lower procurement cost would decide the competitiveness of the company at the beginning (LYON, 2006). So he decided to collaborate with the overseas suppliers.
In order to separate his corporate venturing efforts from his larger traditional organization, he decided to outsource much of the labor-intensive stages of the fish processing business to dependable suppliers to achieve lower labor costs.
He paid attention to the value chain management, because value chain management can change the way of competition in modern society (Horvath, 2001).
Provide your perceptions as to the major obstacles and problems Greg Stamboulidis faced in creating successful corporate venturing. Explain how these were overcome.
In creating successful corporate venturing, Greg Stamboulidis faced some obstacles and problems, as follow:
Choosing the overseas suppliers. When the local wholesale price of shark was continuously growing, and the demands of customers were increasing, Greg Stamboulidis was difficult to choose the overseas suppliers at the beginning.
Greg Stamboulidis had done the in-depth analysis and research on overseas suppliers; he found that there were lots of productions of shark in the Singapore, Malaysia, Philippines and South Africa. And through the in-depth analysis and research, he thought that the remainder of the shark body that were not gutted were not acceptable for the Australia market at that time in Singapore, Malaysia and Philippines, and finally he identified that South Africa is the best source of supply.
2) After Greg Stamboulidis identified South Africa as the best source of supply, he found that transporting the sharks from South Africa to Australia was very difficult due to international trade barriers and sanctions. If this issue could not be solved, the corporate venturing would be not successful (Allen, 2006).
The Stambos Company found a legal loop-hole around the political sanctions, and then Greg Stamboulidis decided to firstly ship the sharks to Namibia; and then they would do re-packaging for the sharks; finally the products would be sent on to Australia.
3) In 1998, the South Africa and New Zealand suppliers suddenly ceased, which caused the marked decline in supply. One other Australian company and Greg’s South Africa supplier together established a joint venture company to refuse to export products to the Stambos Company; and the New Zealand supplier was very greedy.
The Stambos Company always actively negotiated with the suppliers around the world, such as India, Mexico, Brazil, Iran, etc; and the company intensified the management of suppliers and tried to establish good relationship with the suppliers. Greg Stamboulidis decided to establish a wide constellation of suppliers to ensure the sustainable competitive advantage of the Stambos Company.
The Stambos Company suffered a fire in 2000, corporate processing capability were completely destroyed for a period.
Greg Stamboulidis quickly rebuilt their facilities and expanded their processing capabilities in order to adapt to the growth. Greg Stamboulidis showed strong leadership skills.
The rising cost of labor affected the competitiveness of the Stambos Company.
Greg Stamboulidis decided to outsource much of the labor-intensive stages of the fish processing business to dependable suppliers in order to low the labor costs. Labor outsourcing is a good choice for labor cost reduction (Deardorff, 2005).
List the key success factors and/or the failure components of Greg Stamboulidis’ corporate venturing efforts
The key success factors of Greg Stamboulidis’ corporate venturing efforts are as follow:
Greg Stamboulidis can identify the vulnerabilities within the company’s value chain.
Greg Stamboulidis found that the lower procurement cost was the key element to gain the competitive advantage at the beginning.
Greg Stamboulidis developed a sustainable strategy.
Greg Stamboulidis has been never excessive dependent on suppliers.
Greg Stamboulidis timely paid attention to adaptation and innovation.
Greg Stamboulidis developed a learning company that could adopt the changes of domestic and overseas business environment (Senge, 1990).
Comment on what Greg Stamboulidis hoped to gain from the corporate venturing effort and provide examples.
The venturing process is the process of enterprise development (Kanter, 1985). Greg Stamboulidis hoped to gain the competitive advantage from the corporate venturing effort. Competitive advantage is the basis for enterprise survival (Hamel & Prahalad, 1996). Facing the rising wholesale price of shark, escalating labor costs, global policy changes, the Australian government protection policies and the fiercely competitive environment, the companies were difficult to survive. In order to survive in this harsh environment, Greg’s Stambos Company must have certain competitive advantage. So by the implementation of the corporate venturing, Greg could ensure that the Stambos Company gained the competitive advantage. For example, through the cooperation with overseas suppliers, Greg could spend quite low cost to gain the high quality products; and through outsourcing much of the labor-intensive stages of the fish processing business, the labor costs declined. Therefore, the Stambos Company gained the competitive advantage in cost.
Greg Stamboulidis hoped to gain generous profits. The pursuit of profit is entrepreneur’s nature (Pollard, 2008). By the implementation of the corporate venturing, the Stambos Company gained the competitive advantage, and the Stambos Company could provide enough of high quality products to meet the demands of customers, then the customer trust and satisfaction would improve, the higher customer trust and satisfaction could bring more customers for the company. Consequently, Greg Stamboulidis would gain generous profits. For example, through the implementation of the corporate venturing, the Stambos Company could gain 100 percent profit margins, while his competitors were achieving only 10 percent profit margins.