Introduction
The initial stage of establishing a business and seeing it grow to a successful venture is very demanding and it requires surviving the initial startup hurdles. Successful startups have evaded many entrepreneurs and in the process, many of them have ended up closing shop after only a few years in operation.
This is the reason why Klofsten developed an idea that would help startups self evaluate their progress and seize their business strength and chances of survival. Klofsten called this idea the Business Platform and argued that for any startup to survive, it must attain a business platform (Davidsson & Klofsten 2003).
Such a platform would help the businesses tackle and overcome startup vulnerabilities. Klofsten (1998) continues to explain that even though the business platform may not necessarily guarantee survival of the business, its achievement is very crucial for the growth of a company. Therefore business platform is not the ultimate goal in any company’s development but is nonetheless vital for success (Bell & Mason 1991).
This platform can be used in new technology based small firms (NTSFs) as a tool to help them do a self- diagnosis on their developmental needs and strategies. It distinguishes between goals and tools for business growth (Yencken & Gillin 2006). Therefore it is a very useful tool in evaluating Wallia Sports, a new technology based small firm dealing with sports technology, developmental needs and opportunities in the sports technology market.
Wallia Sports
Wallia sports in a company that deals with the development and marketing of sports technologies and goods such as the digital tachometer. This is a new invention for use with modern gym equipment or rowing boats. The other product that Wallia sports have developed is the stepometer, a device designed for use by amateur runners. The company is owned by Digitech and a few other stakeholders, with Digitech holding the majority shares and control.
The company was established after an extensive market survey on the necessity for its products. The investors contributed a lot of capital during the years of operation of the company. However, there were no commensurate returns with the company registering a partly £62,000 return on its fourth year after establishment despite a £625,000 initial capital injection. Eventually the company folded due to a number of reasons, most of which can be summarized using Klofsten’s business platform model
Wallia Sport strengths for growth
Despite the fact that the company did not grow to its full potential, it had several growth opportunities. Davidson and Klofsten (2003) argue that any successful start up must have the relevant and fully qualified staffs to help the company develop products and services that are relevant to the market.
As a result, the staff helps the company attain market competency. Such staff must not only have the relevant academic qualification and credentials but also the relevant experience and skills. Lack of business skills among the staff is a big impediment for the company’s growth (Davis, Vladica & Berkowitz 2008).
In its attainment of a business platform, Wallia Sports assembled a versatile team of experts in all fields who had the necessary qualifications in both academia and business skills. They had vast experience in the field of sports technology management as well as in starting up of new businesses. Furthermore the team complemented each other in terms of knowledge.
The company’s experience was drawn from both individual and corporate background such as Digitech (founding firm) and Venture Capital in starting and running small business. The board of management which had vast knowledge and experience in marketing was also included, as well as a host of other individuals with diverse knowledge and business experience. This rich base of knowledge and expertise set the company up for effective competition with its peers in the sports technology market.
At inception, Wallia Sports had a very rich source of equity and capital for investment. Ability to access investment capital means that the company was ready for investment. The investment readiness of the company had the potential to attract credible investors (Mason & Harrison 2004).
Several firms, such as European venture, capital companies, Digitech, Anglo Sports Retail and a US Investment Fund injected capital in excess of ÂŁ625,000 over the first three years of existence. Such investment readiness was also boasted by the fact that the company had the relevant expertise in human personnel.
The company also had a very strong driving force in the early stages of its existence. The founders not only had a strong desire to create employment but also were driven by the need to create and build a successful company.
That is why the company hired experienced and qualified staff and equity partners. Digitech also made consistent efforts to create a successful business and was committed to the company’s present and future growth. Moreover, the company felt the need to develop more than one income generating opportunity (Yenckin & Gillian 2006; Klofsten 1998).
The company thus developed two sports technology equipment, the tachometer and stepometer. Everyone at the company including the capital investors, management board and industrial firms, was committed to making the company a successful business venture with keen attention to future prospects. Equity holders had made significant in investment capital and were interested in making sufficient returns on their investment.
The organization had taken the necessary steps towards conducting market research for its products with the intention of commercializing them. The idea was to develop products that had a niche over the competing products in the market (Klofsten 1998; Hindle & Yenckin 2004).
The tachometer was a revolution and the newest sports technologies application to rowing. The researchers and judges from the University of Oxford found out the product had very unique technological advantages that would have made the commercialization of the product a worthwhile venture. In order to ensure that the products were commercially viable the company invested a lot of money and time in market research before rolling out the business.
The company had also aimed at achieving a business platform by taking the necessary steps towards establishing and marking out potential customers and market niche. This is achieved through several steps. They include gathering information through research. The resultant market intelligence generates valuable insight into potential market and possible competition.
Other than this the organization should be supplied with the relevant personnel experts in sales and marketing as well as experienced leadership (Yenckien & Gillian; Klofsten 1998). In addition, a clear and profitable market niche for products and services had to be identified. This also includes qualifying the market potential and creating contacts with the market (Klofste 1998). As such, the company had included some of the most competent marketers as part of the board of directors’ team.
After a thorough market research, Wallia Sports identified a potential market in TechnoGym and Puma, two large corporations that would have given the company a large customer base. The company also calculated sales for its two products and the results were impressive. Market intelligence for the company comes from its own internally conducted research and supplemented by market intelligence from the inventors and researchers of the two products at the University of Oxford.
The company has achieved the four main elements of competitiveness. The four are qualified experienced human capital, a founder (Digitech) who had the management knowledge in this business, vast industry knowledge by the founder on the industry and the ability to attract capital from potential and experienced investors and equity firms (Gummesson 2002; Westhead, Wright & Ucbasaran 2001).
On these four variables the company attained a commendable score on achieving a business platform for sustainable growth and competitiveness in the sports technology market and as such had a very good opportunity for growth.
Wallia business development needs and opportunities
The company had made the expected progress in the first years of existence. Despite the fact that the company had achieved commendable business plat form then, it still ended up winding up ten years after it was established. This is due to a number of potential opportunities for growth and development that the company had but did not utilize. Some of the weaknesses occurred in product development, relations establishment, and company management and ownership which led the company to lose focus.
There are other opportunities that influence a company’s strategy which in turn has an effect on a company’s organizational structure (Williamson 1984). Williamson further notes that there is a difference in ownership and management structures between large firms and small firms especially startups.
In the small firms ownership and management are rarely separated while in large corporations the management is distanced from ownership. This is due to the complexities that arise from these two issues. Business ownership and management affects to a large extent other variables such as business objectives, the overall business practices, and marketing of products.
The reason for the success of big corporations is their ability to separate the two (Beaver 2003). The genesis of Wallia Sports had been its inability to separate management and ownership. The company was owned and management by its majority shareholders, led by Digitech its founder.
It also had successive changes in equity holders and managers for the short period it existed and as such the company did not achieve operational consistency. The management and ownership structure led to several disagreements over the running of the company. This resulted in several equity holders, investors, managers and relationship officers to walk out before any meaningful gain was made on business.
Other than management and ownership vulnerabilities, the company failed to establish a credible business platform in relation to both the internal and external partners.
For successful growth and development a company must establish sufficient relationship with customers (Klofsten 1998). Maintaining worthy relationships has a long- term positive effect and helps a firm plan and eliminates the risk of running out of business (Gummesson 2002). Out of the eight relationships that Wallia sport created none of them was customer oriented.
As such the company did not have a direct contact with the clients, a major shortcoming in its growth strategy. The firm did not also go beyond defining the potential users. The only worthy relationship the company created was with financiers and this kind of relationship does not address growth and development issues (Westhead, Wright & Ucbasaran 2001)
Wallia Sports set out to market two distinct products, which had the potential for commercialization. The two products were the company’s main focus for the entire duration of its existence. For a company to attain a business platform it must develop prototypes of products and services, test them against the market and make sure that the products meets customer approval before commercialization (Klofsten 1998; Klofsten 2005).
Wallia’s weakness is that it started to market a product that it had not tasted on potential users. There was no prototype of the tachometer and the stepometer up until the ninth year and by then, the company was beyond redemption. Therefore the firm did not have a finished product for sale. As such the products were met with a lot of customer dissatisfaction.
Conclusion
The company had very good opportunities for growth and development from the onset. It had attained a considerable level of business platform by way of achieving the four valuable elements of profitable establishment: human capital, market and industry knowledge, committed founder and the ability to attract capital. These were significant milestones for the company. However there are other opportunities that the company encountered but the firm failed to recognize these opportunities.
The firm had an opportunity to create valuable customer relationships with clients for profitable growth but did not. Instead of the company developing prototypes of its products, it ended up marketing products that ha not been tested on market suitability. This led to low sales and eventual collapse. As such the company did not utilize opportunities available to attain full business platform, which would have helped it to survive.
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