Southern Implant is a highly successful company manufacturing dental implants. As of writing this case study, it has existed for over thirty years and has gained significant international influence in this healthcare field. The managing director of the company, Graham Blackbeard, had overcome many organizational and managerial risks during his career. This paper aims to assess these risks and related vulnerabilities of the management of Southern Implants and the prospects of establishing a processing plant in the US and Portugal.
Entrepreneurship is the collective of psychological, social, and business skills that enables a person to succeed in starting a business. These attributes are innovative thinking, a creative approach to solving problems, a tolerance for failure, and proper risk assessment. A business venture is a difficult undertaking because it includes building the foundation of a company that does not have a one hundred percent guarantee of giving back profits. Any entrepreneur is bound to stumble into problems, and Blackbeard was not an exception. Moore and Matthee (2020) describe the challenges that Blackbeard faced: “national, industrial, customer, and organizational considerations as well as currency and political risks, regulations, customer diversification, upskilling, and quality manufacturing tools and processes” (p. 1). These risks arose from the context of the company’s conception in a developing country – South Africa.
Blackbeard established the company in 1992 when the global dental implant market was still an uncontested territory. His innovative thinking and experience working in the field of biomedical engineering allowed him to see a future in this sphere. However, there were some risks associated with establishing a new company in South Africa. A lack of manufacturing infrastructure in the country led to increased costs at the initial stages of starting a company. Testing had to be done in other countries; auditors also needed to be flown to South Africa from abroad. Moreover, the products manufactured by the company could not be sold abroad because of certain standards. These are the Food and Drug Administration (FDA) standards for America, the British Standards Institute and the CE mark for European countries and the UK, and many more. Another issue arose with broad-based Black economic empowerment (B-BBEE). The company did not fit their criteria, “which rendered Southern Implants unqualified for tenders at local hospitals and government agencies in general” (Moore & Matthee, 2020, p. 8). These issues were unique to a company based in a developing country.
The creative problem-solving ability of Blackbeard mitigated challenges such as these. Instead of flying products overseas to be tested, the founder decided to bring all aspects of production in-house. Testing, audits, direct correspondence with the FDA and other government bodies, and cleaning rooms were transferred in-house, ensuring the quality of the product and a good reputation among customers. The trained personnel of the company did all the manufacturing. Moore and Matthee (2020) write: “the current plan was for Southern Implants to buy the equipment, train the staff, and develop its own ability to certify work areas” (p. 6). This plan was effective because of Blackbeard’s ability to overcome failures and problems, which is a key attribute of successful entrepreneurship (Kapepa & Vuuren, J, 2019). His principles and standards to which he held the company and himself also aided in managing organizational and managerial risks. One of these principles was building relationships with customers and employees.
Relationships with employees were incredibly influential, as Blackbeard’s leadership style encouraged employees to stay in the company not because of financial profits but because of the company itself. Fostering a good environment and creating a stable staff base ensured the quality of the biomedical implants but also the longevity of the company. Relationships with clinicians from around the globe, which brought both parties profits and increased Southern Implants’ range of products.
These difficulties and managerial challenges were overcome with time; however, the company still faces certain risk-related vulnerabilities that may negatively impact the Southern Implants’ growth. The first is the continuing problems of the establishment of the company. Customs are a continuing issue because it obligates manufacturers from overseas to label the product according to the language of the receiving country. “For example, some products that were shipped to Italy were blocked because the Italian word for implant (i.e., implante) was required, and were sent back for repacking and relabeling,” state Moore and Matthee (2020, p. 8). This issue with customs caused Southern Implants to hold higher stocks of products to be able to deliver them to clients in time. This severely impacted the company’s ability to compete with other manufacturers.
Another problem is the transfer of staff between international borders to different offices. Moore and Matthee (2020) quote Blackbeard: “It had been virtually impossible to transfer people from here” (p. 7). The United States is recently becoming more and more protectionist, which means they are less likely to accept companies from abroad (Williams, 2019). These transfer issues have also can affect the company’s competitiveness. The African Growth and Opportunity Act (AGOA) is a piece of government legislation that greatly helped Southern Implants expand abroad. However, the act is set to expire in 2025, leaving the company with a time limit to find new ways to continue its growth overseas. Blackbeard believes that a suitable solution would be to invest in a processing plant abroad. His main options are the United States and Portugal.
To examine this opportunity for expansion, it is necessary to understand the criteria upon which Blackbeard makes risk-minimizing decisions. The founder’s criteria and hopes for the new processing plant are quality, ease of transfer, and long-term costs of establishing the plant. Moore and Matthee (2020) explain that “the short-term cost of establishing the plant was not his primary consideration” (p. 8). The United States provides a profitable opportunity, and “the American market represented an annual growth rate of 60 percent for the company” (Moore & Matthee, 2020, p. 8). However, with the recent issues of transferring staff and protectionist policies, it is evident that the United States’ biomedical market is becoming harder to penetrate. Furthermore, wages and health insurance costs are significantly higher in America than in any other European country. If Blackbeard decides to establish a processing plant there, he will have to do it before the African Growth and Opportunity Act expires and spend more in the long term on workers’ salaries.
In comparison, Portugal has many benefits to establishing a processing plant. They are located in a more suitable time zone in relation to South Africa; they have lower wages and lower health insurance costs. Furthermore, according to Moore and Matthee (2020), Portugal offers tax incentives that benefit entrepreneurs – an opportunity for businesses from abroad, such as Southern Implants, to invest there. Following Blackbeard’s criteria, it is evident that Portugal is the more suitable option.
This paper provided a detailed explanation of the risk-managing processes of Southern Implants. It examined the problems the company faced from being based in a developing country, such as the lack of manufacturing infrastructure in South Africa, testing, audits, and customs. The solution to these organizational difficulties was bringing manufacturing in-house and establishing connections with overseas clinicians, employees, and clients. Furthermore, this paper examined the current risks to the company’s growth while providing evidence for the claim that establishing a processing plant in Portugal would be more efficient than in the United States.
References
Moore, A., & Matthee, M. (2020). Southern Implants: Designing and manufacturing dental implants to the world. [Case]. Ivey Business School Foundation.
Kapepa, O., & Vuuren, J. (2019). The importance of tolerance for failure and risk-taking among insurance firms in hyperinflationary Zimbabwe. The Southern African Journal of Entrepreneurship and Small Business Management, 11(1), a142.
Williams, N. (2019). The resilience of protectionism in US trade policy. Boston University Law Review, 99, 683-719.