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The Moon Group: Entrepreneurship and Innovation Case Study

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Updated: May 5th, 2021

What is the crisis facing Moon Group? How did it happen? Is there any creative idea opportunity you see for the group?

According to the case study, the crisis has manifested itself in several different dimensions. To be more precise, the Moon Group did not have a particular area of focus, and the management was ineffective. In addition, the group needed to make an emphasis on improving the quality of commodities and the processes such as technology but the stress was made on the quantity rather than quality. Apart from that, the enterprise did not orient at creating a cultural challenge. It should be noted that the group had a lack of focus almost from the beginning. As it was mentioned, when it grew to 24000 employees, it was producing multiple products such as fabricating steel, fertilizers, plastic, cement products, and so on (Sandhu & Arif, 2017). Moreover, they were also manufacturing drilling equipment and trading in different countries and even continents. Therefore, the decision of the top leadership to continue leading other businesses apart from construction side was the critical point that designated the emergence of crisis. An idea opportunity for the group is to develop a strategy with a distinct focus on one or several conjoint areas and make quality improvements in technology processes to ensure that customer complaints are addressed and managed.

Moon Group’s decision to buy the cement factory was an example of vertical integration. Was their decision wise? How do you view the decision?

It is worth noting that vertical integration is one of the alternatives to growth strategy, which can provide the company with external growth. However, it should be used when an enterprise plans to increase sales by penetrating into markets that have not previously been developed (Sandhu & Arif, 2017). From this point of view, this strategy had the potential to become effective; however, the management did not take into account a number of factors. Vertical integration is most advantageous in rapidly developing segments of the economy, with rapidly evolving and changing technologies and with the product life cycle is at the development stage. This integration was supposed to help reduce transaction costs. Nevertheless, vertical integration should involve the merger of enterprises united by a single goal of activity, engaged in production at different stages of the technological process, and at successive stages of product realization in order to establish control over them through one firm. As a result, vertical integration has led to the weakening of the current situation due to the transition to new industries. Notably, new structural processes in the company have led to more complicated management and control, which also led to increased costs.

What should have MG done differently, if any?

It should be noted that one of the critical problems described in the case was the staff turnover (Sandhu & Arif, 2017). Instead of vertical integration, redistribution of resources, and wide dispersion in products, the group should have focused on turning the staff into a competitive advantage of the company. To do this, it was necessary to increase the engagement of employees in reaching the end results jointly (qualitative improvement of products), to develop the staff’s desire to contribute to the achievement of high organizational performance and culture, and develop their competence that was necessary for the enterprise. In addition, the company needed to organize rationally the work of employees, build the organizational commitment, and ensure optimal communication between employees and departments due to the fact that each unit had different representations on the company’s prospects and delegated the information to the management level based on their isolated conclusions. Therefore, it can be assumed that in order to become the leader among the emerging competitors, the company needed to use human resources more efficiently by increasing the involvement of personnel in solving organizational problems.

How do you view Abdullah and Sisi? What was their management style?

It is rather difficult to evaluate the management styles employed by Abdullah and Sisi due to the fact the case provided rather general descriptions of their strategies and techniques. Nonetheless, it is possible to assume that each of them displayed mixed management and leadership styles. For instance, the situation when the company intended to purchase the cement factory has revealed that the two leaders lacked coordination. Mr. Abdulla was the initiator of venturing into the arrangement leaving Mr. Sisi out of decision-making (Sandhu & Arif, 2017). It means that the first leader had certain features of autocratic and chaotic management style. In comparison to Mr. Abdulla, Mr. Sisi was a democratic manager who tried to reconsider the various opportunities and perspectives prior to making any particular decision. Apart from that, he tried to consider the point of view of the workforce as some of the decisions were based on their perceptions. Mr. Abdulla was the opposite and rushed decision-making being pushy and too self-assured.

Are the returns isolated incidents, symptomatic of a poor innovative culture, lack of accountability, mis-allocation of resources or indicative of a bigger issue?

The returns are the compilation of all the mentioned factors, which are isolated incidents, poor innovative culture, lack of accountability and coordination, and misallocation of resources. However, altogether these factors are indicative of a bigger issue, which concerns the management level. It should be emphasized that the decision to remain in six different industries without a particular area of focus has led the company to inappropriate resource allocation and customer complaints about the commodities (Sandhu & Arif, 2017). In addition, the workforce was experiencing problems due to various reasons such as economic and legal setting, lack of expertise, and insufficient coordination from the side of management. Apart from that, the economic factors described in the case have also predetermined the returns. To be able to maneuver, the management should have employed transformational leadership instead of remaining rigid. Therefore, the company did not tailor the customers’ requirements, the staff was not directed and supervised the way it should be, and the senior management lacked coordination and collaboration since the decisions were not made based on a mutual agreement.

How do you view MG’s approach to innovation? Can it be sustainable?

It is crucial to note that initially, the innovative activity of the company was based on the propensity of entrepreneurs-innovators to take risks (in particular, in the case of one of the managers) (Sandhu & Arif, 2017). With the successful implementation, the pioneering enterprise should have received almost monopoly profits, and the innovation should be gradually spread. However, the fall in the rate of profits did not stimulate the enterprise and had the opposite effect. From this point of view, it cannot be stated that the group’s approach to innovation was sustainable. To have a sustainable approach to innovation, the group should expand its transparency and learning principles. Apart from that, their approach to innovation did not stimulate the company for greater corporate social responsibility and eco-efficiency. To become sustainable in terms of approach to innovation, the enterprise needs to place emphasis on technology selection and use. In addition, it needs to refine the management issues to transform their framework in operational and effective one. Following this approach, the company will be able to ensure a sustainable approach to innovation.

Reference

Sandhu, M. A., & Arif, J. (2017). Moon Group. Al Ain, UAE: College of Business and Economics.

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IvyPanda. (2021) 'The Moon Group: Entrepreneurship and Innovation'. 5 May.

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