Abstract
This paper is a case study for Fleet Sheet Company (a Czech-based company). The paper highlights the potential challenges of operating the business in a transition economy and the possible strategies for overcoming these challenges. Similarly, through a SWOT analysis, this paper analyses the company’s strengths, weaknesses, opportunities, and threats.
Through this analysis, this paper proposes the adoption of diversification, joint venture, and product differentiation strategies for overcoming the company’s threats and weaknesses. The transformation of the business from a small enterprise to an international business outlines a key argument for the advancement of these strategies.
Introduction
This paper is a case study of Fleet Sheet Company. The company publishes selected business articles for foreign-based companies in the Czech Republic. This case study comprises of four parts that outline four distinct issues facing Fleet Sheet Company.
They include how to overcome the challenges of operating in a transition economy, how to use the company’s key competencies to achieve international business success, the identification of the right strategies for international business, and how to align the business to exploit the benefits of international entrepreneurship. This paper analyses these issues sequentially as outlined below.
Potential difficulties of starting a business in a transition economy
Starting a business in a transition economy poses serious challenges to entrepreneurs like Erik Best (Fleet Sheet’s founder). Because Czech Republic was a transition economy, it posed significant challenges to new businesses, such as Fleet Sheet. One such challenge was the lack of entrepreneurial skills among the people (Maciejewski, 2002).
Coming from a background of socialism, many people did not have the experiences of starting, or managing, new businesses in a transition economy. This challenge made it difficult for new entrepreneurs to share ideas with other people who may have similar ambitions. This situation forced entrepreneurs to try new businesses without proper research and support from a business savvy standpoint.
This challenge further spread to the recruitment of new employees because companies like Fleet Sheet lacked skilled human capital (Maciejewski, 2002). Indeed, from the lack of an entrepreneurial spirit in transition economies, entrepreneurs, such as Erik Best, suffer from the lack of skilled employees to run their businesses (Cullen, 2011). Therefore, sometimes, they recruit incompetent employees who may mismanage the business.
Unfortunately, the lack of adequate entrepreneurial skills in a transition economy cannot be resolved in the short-term. Ideally, people need to learn entrepreneurial skills in schools and apply the same skills in the business environment to solve this problem (Maciejewski, 2002). Nonetheless, as a short-term measure, small business owners, like Erik Best, could employ people from other economies to support their business growth (Maciejewski, 2002). This measure could however be costly for such businesses.
The lack of a sophisticated legal system to support small and growing businesses is also another challenge associated with transition economies. Erik highlighted this challenge as one problem facing Fleet Sheet Company (Cullen, 2011). He said government bureaucracy inhibited the company’s potential to distribute its products (Cullen, 2011).
Small businesses can confront this challenge through lobbying to increase government sensitization about the need to have a supportive legislative environment for small businesses (Maciejewski, 2002). Legislators therefore need to understand the importance of having this supportive environment by equally understanding how the lack of a sophisticated legal system prevents the growth of small businesses.
SWOT Analysis
This SWOT analysis examines the strengths, weaknesses, opportunities, and threats of the Fleet Sheet Company.
Strengths
A key strength of the Fleet Sheet Company is its pricing strategy. The company offers an affordable and flexible pricing framework that encompasses all types of customers. As explained in the company’s pricing framework, the company charges $0.5 (minimum) and $4 (maximum) per day for its publications (Cullen, 2011). This pricing strategy means that all types of customers can afford the company’s products.
The provision of quality publications is also a key success factor for Fleet Sheet Company because it differentiates it from its competitors. In fact, the company’s main customers are loyal to the company because of its high quality publications (Cullen, 2011). Coupled with the fact that most of these articles are written in English, Fleet Sheet appeals to a niche market of multinational companies that pay a premium for its products.
Weaknesses
Fleet Sheet’s structure as a small company is its greatest weakness. From the lack of a “grand” strategy for growth, there is little room for expanding the company into a big enterprise. This situation stifles the company’s growth.
Opportunities
Fleet Sheet’s opportunities exist in the virtual space. Unexplored potential exists in the company’s entry into the technological world. The introduction of a company website was the first step to exploiting this potential (Cullen, 2011).
However, the company could further exploit the same potential by using feedback from the company’s website to improve its products (Aswathappa, 2010). Furthermore, the company could use the website to market the company’s products to new markets. This strategy would improve the efficacy of the company’s marketing strategy (Aswathappa, 2010).
Threats
Competition is Fleet Sheet’s main threat. About seven new companies compete with Fleet Sheet by offering similar products (Cullen, 2011). The growth of such competition means that the company’s market share would decline.
The spread of the internet and the availability of alternative information also threaten the company’s sustainability (Cullen, 2011). Particularly, the availability of alternative information (published in English) threatens the company’s product strategy because Fleet Sheet thrives on the fact that it offers translated information to its English-speaking customers.
Three strategic moves for Erik Best to consider
Joint Ventures/Mergers
Fleet Sheet should pursue a joint venture, or a merger, strategy to reduce the threat of growing competition (and expand its markets at the same time) (Aswathappa, 2010). Although these strategies may be complex and time-consuming, they would help to reduce competition. For example, a merger with one competitor (preferably the biggest competitor) would reduce the competition in the domestic market and leave little room for other rival companies to succeed (Aswathappa, 2010).
Through this strategy, the company would enjoy economies of scale and make it difficult for its competition to match its dominance (Grubb & Lamb, 2001). However, adopting this strategy in the international market may be difficult because the merger, or joint venture, could result in a cultural clash. A failed merger between BMW and Rover group (in 1994) demonstrates this fear because both companies failed to integrate because of a cultural clash (Grubb & Lamb, 2001). Fleet Sheet should therefore be careful when adopting this strategy.
Diversification
Fleet Sheet could diversify its product range from providing translated articles (only) to providing other products, or services, which align with the company’s core business (Aswathappa, 2010). This strategy would help the company to overcome the fear that increased internet access would render its products obsolete. This strategy would also allow Fleet Sheet to sell more products to its customers (and help the business to grow in the same regard).
The focus on one type of product limits the company’s market, thereby stifling its growth. Through diversification, the company may expand into new markets, thereby supporting its long-term viability (Aswathappa, 2010; Grubb & Lamb, 2001). However, adopting this strategy in a global business environment may pose unique challenges to Fleet Sheet Company. A key challenge would be the lack of sufficient knowledge to understand foreign markets (Aswathappa, 2010).
The lack of adequate knowledge and experience would mainly center on the failure to understand which marketing strategies would work for the foreign markets, and which products are preferred in the new markets. The need for conducting a proper market research is therefore important here.
Product Differentiation
A product differentiation strategy is often useful to companies that provide superior products (Aswathappa, 2010). Fleet Sheet is one such company. This strategy will help the company to differentiate itself from its competitors. Particularly, this strategy will help the company to highlight its high quality publications as the key success factor that differentiates it from other companies.
Using this strategy in the international market, as opposed to the domestic market, poses unique challenges to Fleet Sheet Company because the international market is more saturated and more competitive than the domestic market (Grubb & Lamb, 2001).
Therefore, the company would have a more difficult time differentiating itself from other firms that offer the same product. Nonetheless, for Fleet Sheet Company to succeed, it needs to demonstrate that it can create value for its customers and, at the same time, provide a product that its competitors cannot easily copy.
Benefits international entrepreneurship brings to multinational companies
The benefits of international entrepreneurship are many. However, for Fleet Sheet Company, international entrepreneurship would be beneficial for the company because it would help it to maximize its resources and expand its market.
The concept of resource maximization exists from the premise that Fleet Sheet would exploit the economies of scale associated with operating a global business (Aswathappa, 2010). Similarly, by operating a global business, Fleet Sheet would be able to venture into new countries, thereby expanding its market.
References
Aswathappa, A. (2010). International Business 4E. Noida, IN: Tata McGraw-Hill Education.
Cullen, J. (2011). Multinational Management: A Strategic Approach (5th Edition). Mason, OH: Cengage Learning.
Grubb, T., & Lamb, R. (2001). Capitalize on Merger Chaos: Six Ways to Profit from Your Competitors’ Consolidation and Your Own. New York, NY: Simon and Schuster.
Maciejewski, W. (2002). The Baltic Sea Region: Cultures, Politics, Societies. Hamburg, GE: Baltic University Press.