The Stambos Company began as a small fish company owned by Greg Stamboulidis. Greg bought the company from an old man in 1985 which he later named Stambos a named which he derived from his surname. Fish is the main staple food in Australia with most of the fish being consumed being the shark. By the time Greg was purchasing this company, it had low profit margin. Greg concentrated on providing shark to his customers and at the initial stages he employed the tactics which the previous owner of this company had employed.
He also wanted to ensure that the business was being reliable to its customers thus creating dependability. During this period also, the prices of shark was rising while shark supply was constantly fluctuating. Competition was also rising and also cost of labour was increasing which necessitated a different approach. The dynamism of the fish industry in terms of competition for raw materials as well as customers, high labour costs and increasing prices of sharks made Greg to look supply outlets outside Australia.
Outsourcing raw materials was vital in ensuring competitiveness of the Stambos Company. To ensure constant supply of sharks, Greg formed partnership with different fisheries outside Australia. In Australia during the early 1990s, the price of shark was continually rising while the supply of shark was on the decline as a result of over exploitation and government policies which were restricting fishing activities. Importation of fish was thus important if Stambos Company was to be competitive and profitable.
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Supply chain was the main solution to the dynamism in the fishing industry in the 1990s and also a vital tool for ensuring differentiation in the industry. This also formed Stambos Company competitive advantage in this industry. To ensure differentiation in terms of pricing of products to customers, Stambos Company formed partnership with South African fisheries for consistent supply of fish at lower prices. This was made possible especially due to the political instability in South Africa which created loopholes for international trade (Sovereign, n.
d). Chain supply is one of the trickiest strategies of ensuring differentiation as it may necessitate constant switching between suppliers and this was the case even with Greg. One of the major reasons why it was important to switch suppliers is to ensure that the company was purchasing at the best lowest possible. Overdependence on one supplier may make the supplier to raise their cost of suppliers thus reducing profitability. Competition for the same suppliers was also another reason which necessitated switching of suppliers.
Competing for the same supplier leads to an increase in the cost of goods thus lowering the profitability of a company. Switching to suppliers offering lower prices before the competitors switch is one way of gaining a competitive edge which Greg widely employed (Brady, 2007). Speed is a vital component in ensuring that chain supply is successful. Greg was employing chain supply management and as such speed had to be maintained always. Chain supply management involves exploiting an opportunity before competitors realize it. For Greg and Stambos Company to succeed, speed was important.
Also, this industry was marked by dynamism ranging from government restrictive policies, price fluctuations as well as supply fluctuations. To ensure reliability, dependability and profitability, the company had to ensure that it was identifying potential suppliers early enough and switch suppliers as quickly as need would be. Speed was also vital in ensuring that Stambos Company was able to take any advantage of any arising opportunities thus ensuring survival (Jespersen & Skjott-Larsen, 2005). Obstacles faced by Greg while operating Stambos Company
Like all growing businesses, Stambos Company was faced with several problems during the expanding phases. One of the major obstacles that face newly established or expanding companies is competition for customers and also for raw materials in cases of manufacturing companies. Dynamism of the market as well as government regulations also poses major threats to the development and growth of an industry. Both internal and external environment exert pressure to a business which may hinder effective growth and profitability. One of the major obstacles that faced Greg while establishing Stambos Company is low supply of flake or shark fish.
By the time Greg purchased the business, shark supply had gone down in Australia due to over exploitation and also government policies which were restricting fishing practices. Majoring only in shark products, Greg was thus facing problems of lack of sufficient supply of shark which could reduce the company’s dependability by customers. Also, the cost of shark was increasing rapidly in Australia owing to the low supply of the flake. To overcome this problem, Greg sought to import shark from other areas thus not relying on the local production.
He formed an alliance with South African fisheries who were supplying shark to him at relatively low costs. South African fisheries were underexploited which ensured a continuous supply of shark for Greg and the prices were also relatively low and stable. This solved the problem of low local production and competition for the shark that was being experienced in Australia. Stambos Company was also able to sell its products at relatively lower prices which were more stable unlike other similar companies thus attracting more customers thus increasing its competitiveness (Dess, Lumpkin & Taylor, 2004).
Another problem that faced Greg during the establishment of the business was competition for supplies of shark. After establishing partnership with the South African fisheries, one of Stambos Company competitors also established links with the same fisheries company which made Greg’s partnership to be cut off. This greatly affected the supplies of shark to Stambos Company which made some of its customers shift to its competitors. During this period also, New Zealand which was also supplying shark to Greg raised its prices since they were the only suppliers to the Stambos Company.
This was a double blow to the Stambos especially because they happened simultaneously. To counter this problem, Greg established other links with Chile and also Guyana. This ensured a stable supply of sharks to Stambos Company especially because these two new suppliers were reliable. They were also selling the sharks at relatively low costs which helped the company to gain back its price reputation, reliability and also quality which forced out the competitors who had threatened to outdo the company (Ross, 1997).
Despite the challenges that Greg faced while developing stages, he did several things which contributed greatly to the success of the Stambos Company. Greg was using strategic management to ensure that his business was thriving in the dynamic and competitive environment in which it was operating in. any business applying strategic management; innovation and creativity are vital tools to ensure differentiation and diversity. To respond to the opportunities which were arising in the market, Greg diversified the company’s products by producing closely related products which included hotdogs, calamari rings and other products derived from fish.
By diversifying the company’s products, Greg was able to create new demands for the company’s products as well as creating, new markets and demands for the products. This was a major factor which contributed to the rapid growth of the company as well as an increase in the sales. Diversification of products also helped in improving the competitive advantage of the company’s products. Another success factors which greatly contributed to the growth of the Stambos Company was the fact that Greg was able to convince his suppliers to prepare some of the products.
Strategic management calls for good relationship with the suppliers. Where suppliers feel that they are dignified and treated as part of the company, they are more likely to be committed and loyal to a business or entity. This strategy worked for Greg and through the good relationship he had developed between his company and that of the suppliers, he was able to convince the suppliers to especially those in southern America to batter and fillet the flakes before exporting them to Stambos Company.
This reduced greatly the cost of performing these tasks by the Stambos Company. In Australia, the cost of labour was high than in southern America and other supplier companies outside Australia. Reduction of cost of production for the Stambos Company helped in ensuring cost stability and a reduction in prices of processed or finished products. This helped in increasing customers’ dependability by increasing the reliability and continuous availability of the fish products (Lambert, 2008).
Improving the processing capability was also another major growth factor that led to the rapid growth of the Stambos Company. Most of the competitors were purchasing the medium sized sharks to ensure profitability. Small sharks were considered uneconomical while damaged shark were not desirable since they usually shrinks which may lead to huge losses for a company. Through improved processing capability, the Stambos Company was able to process both the small and damaged sharks which increased the supply options for the company thus increasing the competitive advantage of the company.
Any firm with prospects of growth should ensure that it upgrades its production process so as to take advantage of the market opportunities. Improved capabilities also help a business to take advantage of an opportunity which the competitors are unable to grab (Trombly, 2000). Quick adaptability to changes is also another success factor which has contributed greatly to the success of the company. Change is inevitable in any organization especially in an environment which is dynamic and volatile.
The time a company takes before adapting to changes in an environment determines the overall success of a company. The Stambos Company is faced with dynamism, rivalry and competition which make quick measure to be undertaken to ensure that the competitive advantage of the company is not destroyed. Through the growth and development period, the company is faced by stiff competition especially for supplies which have necessitate the maintenance of good supplier relationship as well as establishment of different supply partners and joint ventures.
By ensuring that the company has several suppliers; this enabled the Stambos Company to maintain a steady flow of its products at relatively low and steady price than that of the competitors (Zuckerman, 2002). Strategic management and value chain management are the main strategies that Greg employed in ensuring that the company grew to be the most competitive and profitable company in the industry. In value chain management, the company explored different supply channels and used them to gain a competitive edge in the market.
Instead of concentrating on Australian fisheries where shark prices were fluctuating and increasing rapidly, the company was outsourcing most of its shark from the global waters where the prices were low and the supply of shark was in plenty. Maintaining good supplier relationship, price differentiation and ensuring diversity are some of the ways that the company adopted a strategic management’s approach in its functions. Strategic management theory requires innovation and creativity which ensures diversity, differentiation and competitiveness.
Customer management is also another important supply chain management strategy that Greg used in running the company. By improving the quality of the company’s products, this helped in creating brand loyalty thus high sales and ensuring the company’s growth. Reference: Brady, S. (2007): Importance of Supply Chain Management. Retrieved on 31st March 2009 from, http://theprofessornotes. com/archives/232. Dess, G. G. , Lumpkin, G. T. & Taylor M. L. (2004): Strategic Management: Creating Competitive Advantages.
ISBN 0072952423, Published by McGraw Hill Professional Greenleaf, G. , Donelon, D. & Jensen, J. (n. d): Supply Chain Management. Retrieved on 31st March 2009 from, http://www. gmaonline. org/publications/docs/supplychain2. pdf. Jespersen, B. D. & Skjott-Larsen, T. (2005): Supply chain management: in theory and practice. ISBN 8763001527, Published by Copenhagen Business School Press DK Joyce, P. & Woods, A. (2001): Strategic Management: A Fresh Approach to Developing Skills, Knowledge and Creativity. ISBN 0749435836, Published by Kogan Page Publishers
Lambert, D. M. (2008): Supply Chain Management: Processes, Partnerships, Performance. ISBN 097599493X, Published by Supply Chain Management Inst Ross, D. F. (1997): Competing Through Supply Chain Management: Creating Market-winning Strategies through Supply Chain Partnerships. ISBN 0412137216, Published by Springer Sovereign, R. (n. d): Importance of Supply Chain Management in Modern Businesses. Retrieved on 31st March 2009 from, http://ezinearticles. com/? Importance-of-Supply-Chain-Management-in-Modern-Businesses&id=1240176.
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