Greg Stamboulidis Case Summary
1) Characterise the development of Greg Stamboulidis’s corporate venturing
In 1985, Greg Stamboulidis bought a small fish company from an old man then named it Stambos. By the time he bought it, the profit margin of that company was low. At that time, Greg focused on providing shark to his customers and he still used the same method as the previous owner : he purchased his fish supplies early in the mornings from the Melbourne markets and kept a narrow business with the profit margins of only 10% - 15%. (1)
Greg had many obstacles: the prices of shark was rising from AUD$3.50 to AUD$9.00 between 1985 and 2005 (2) while shark supply was unstable, a lot of competitors, high labour costs and variability in the quality of product, that’s why Greg had to find some new supplies in order to survive. He chose the “cost leadership strategy which is “an integrated set of actions designed to produce or deliver goods or services at the lowest cost, relative to competitors, with features that are acceptable to customers” (3) to bring his products to customers at the lowest price. Firstly, Greg tried to find shark supplies in Singapore, Philippin and Malaysia because in those countries, they only used shark fins and want to sell the rest of the shark body at acceptable price but …show more content…
the problem was the shark bodies were not gutted. That’s why Greg chose Affrica as the best source of supply. With the price at only AUD$3.00 per kilogram, Affrica gave Stambos the first competitive advantage against the local competitors.
Greg started his supply chain in 1995 by doing business with some smaller suppliers such as Chile and New Zealand in order to strengthen Stambos’s competitive advantage because the unstable politics of Affrica might threat his major source of supply. That was a right move because in 1998, suddenly both South Affrican and New Zealand suppliers terminated their contracts with Stambos. Because of small suppliers all around the world, Stambos could survive but sometimes is had to share supply with competitors due to the growing number of customers. We can see that beside cost-leadership strategy, Greg also used something similar to differentation strategy which is “to produce or deliver goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them” (4)
In 2003, Greg re-established his relationship with the former South Affrican supplier and purchased the product which his competitor could not pay at very good price. He also signed a contract with an Uruguayan supplier at AUD$4.80 per kilogram while Australia wholesale shark prices was increasing to AUD$8.17 per kilogram.
By 2005, the relationships between Stambos and the South American suppliers led to joint ventures and resulting in the purchase of a fishing vessel and the direct control of thei supplies from South America.
At present, Stambos continues to expand its supply chain by finding more suppliers from Brazil, Mexico, India, Iran, Fiji, Brunei, Turkey and others locations (5) to maintain its competitive advantage of high quality products with relative price.
2) Greg might have needed to separate his corporate venturing efforts from his larger traditional organization because: * Greg was a newbie in this kind of business, his business was very small and had low profit. The firm had no competitive advantages over competitors. * Customer’s demand, shark price and the number of competitors in domestic market increased rapidly. * The international supply which was cheaper, would generate profitability.
To separate his corporate venturing efforts from his larger traditional organization, firstly Greg used cost-leadership strategy and bring his products to customers at lower price than his competitors. In order to lower cost, he chose South Africa as his main supply. Secondly, Greg established relationships with many other suppliers around the world. Greg also invested in research and development acitivities because he knew how important the information of international market was. This is known as “exploit, but not to extinction, before you explore” in Stadler’s research (Stadler, 2007) (6). Lately, Greg realized that Stambos’s business depended too much on unstable international environment, so he started to invest in real estate, buying fishing vessels, etc. 3) The major obstacles and problems Greg Stamboulidis faced in creating successful corporate venturing: * Firstly, the international supply which Greg used was affected by external environment such as politics, disasters. For example, the political structure of South Africa was unstable. Moreover, the firm highly depended on the international supply so its strategies were extremely affected by the risks in external environment. * Secondly, depending too much on some main international suppliers resulted in high power of suppliers. When both South Affrica supplier terminated its contracts with Stambos, and New Zealand supplier increased its price, the firm had real problems along with higher demand and increasing in number of customers. Greg had to face the”Bargaining power of suppliers refers to their ability to raise prices and/or reduce the quality of goods and services.” (7) * Thirdly, when Greg began diversifying international supplier, he had to choose those suppliers very carefully because it would affect production cost, quality, transport delays.
To overcome those obstacles, Greg tried very hard and finally found some reliable suppliers in Chile and Uruguay. Greg managed to maintain his greatest advantage which had been low cost product with good quality. He also rapidly responsed to customer’s needs by “supplying filleted and frozen portitions of fish rather than supplying fish that still need processing” (8) like his competitors. Greg carefully research about law and environment of the countries he was doing business. For example, Greg can surpass the unstable political environment of South Africa by transporting his products through Namibia. By focusing on the balanced scorecard including customer, financial, internal business process, learning and growth (9), Greg could overcome Stambos’s obstacles.
4) Greg Stamboulidis’s successful factors are: * Greg could minimize his cost by using international suppliers, therefore, he maximized his profit. * Greg researched his customers and the external environment very carefully, that’s the reason why he could choose the right suppliers. “Selecting the appropriate supplier partner to work with is a crucial step” (10) * Greg avoided illegal business ways and risks. He could avoid political problems of South Africa by transporting products through Namibia. * Greg successfully diversified his supply, so he could overcome the obstacle when South Africa and New Zealand suppliers terminated their contracts. * Greg tried to create tight relationships between Stambos and current partners. He also always looked for new suppliers.
Greg Stamboulidis’s failure factors are: * Stambos could not do anything with the unstable political environment of South Africa. It was dangerous to do business in South Africa. * Weak relationships between Stambos and two main suppliers: South Africa and New Zealand led to unstable supply. The firm could not meet the increasing in demand. * The firm relied too much on the international market. It was very unstable it was pretty hard to make decisions. * Greg agreed to joint venture with a Uruguayan firm, but he chose a proportion of 50% for this investment, so Stambos did not have the right to make important decisions of the joint venture. Therefore, this joint venture could not support his business as expected and was considered as a failure. * When concentrating too much on low cost, Greg forgot the balance between low cost and high risk of the international supply, which led to a hard time when the firm lost 2 main international suppliers. “It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything…” (John Ruskin, 2/8/1819 – 1/20/1900). (11)
5) Comment on what Greg Stamboulidis hoped to gain from the corporate venturing effort and provide examples
By corporating in this venturing, Greg hoped to gain long-term sustainability. With the increase in demand of customers, number of competitors and the unstable domestic supply, Greg had to find international supply with low costs in order to gain competitive advantages in Australia market. Greg had some secure suppliers which would benefit the firm in long-term and helped Stambos stand firmly and continue to expand its business. The way Greg did business can refer to Corporate or Stakeholders Wealth Maximization Model. The purpose of his decisions were developing the firm, not maximizing the profitability. All of Greg’s decisions such as investing in R&D acitivities and real estate were to support the core business of Stambos: the shark business.
In his presentation, Greg also said that beside his business, he hoped to make his family happy.
He said he want to run a business which do not need his presence. In fact, he only spents three or four days per week at work, most of his remaining time he uses it for family. Greg believes the most important thing in his life is his family. “Money is not from a tree” (Greg Stamboulidis) (12) – This was how Greg taught his children about the value of money, how hard he had to work in order to earn money for them to go to school. That is a great way to teach his children about value of money and how to use them effectively. It is a very important lesson for anyone who want to do business in the
future.
(1) Entrepreneurial courage, audacity and genius: Richard J. Pech page 27 (2) Entrepreneurial courage, audacity and genius: Richard J. Pech page 29 (3) Competing for advantage, second edition: Robert E. Hoskisson, Michael A. Hitt, R. Duane Ireland, Jeffrey S. Harrison. 2008 page 135 (4) Competing for advantage, second edition: Robert E. Hoskisson, Michael A. Hitt, R. Duane Ireland, Jeffrey S. Harrison. 2008 page 140 (5) Entrepreneurial courage, audacity and genius: Richard J. Pech page 30 (6) Stadler 2007 (7) Global Strategy: Mike W.Peng 2009 page 41 (8) Entrepreneurial courage, audacity and genius: Richard J. Pech page 29 (9) Balanced Scorecard step by step: maximizing performance and maintaining results: Paul R.Niven 2002 page 14 (10) Handbook of purchasing management, third edition: Chartered Institute of Purchasing & Supply 2002 page 57 (11) John Ruskin (2/8/1891 – 1/20/1900) (12) Greg Stamboulidis
In 1985, Greg Stamboulidis bought a small fish company from an old man then named it Stambos. By the time he bought it, the profit margin of that company was low. At that time, Greg focused on providing shark to his customers and he still used the same method as the previous owner : he purchased his fish supplies early in the mornings from the Melbourne markets and kept a narrow business with the profit margins of only 10% - 15%. (1)
Greg had many obstacles: the prices of shark was rising from AUD$3.50 to AUD$9.00 between 1985 and 2005 (2) while shark supply was unstable, a lot of competitors, high labour costs and variability in the quality of product, that’s why Greg had to find some new supplies in order to survive. He chose the “cost leadership strategy which is “an integrated set of actions designed to produce or deliver goods or services at the lowest cost, relative to competitors, with features that are acceptable to customers” (3) to bring his products to customers at the lowest price. Firstly, Greg tried to find shark supplies in Singapore, Philippin and Malaysia because in those countries, they only used shark fins and want to sell the rest of the shark body at acceptable price but …show more content…
the problem was the shark bodies were not gutted. That’s why Greg chose Affrica as the best source of supply. With the price at only AUD$3.00 per kilogram, Affrica gave Stambos the first competitive advantage against the local competitors.
Greg started his supply chain in 1995 by doing business with some smaller suppliers such as Chile and New Zealand in order to strengthen Stambos’s competitive advantage because the unstable politics of Affrica might threat his major source of supply. That was a right move because in 1998, suddenly both South Affrican and New Zealand suppliers terminated their contracts with Stambos. Because of small suppliers all around the world, Stambos could survive but sometimes is had to share supply with competitors due to the growing number of customers. We can see that beside cost-leadership strategy, Greg also used something similar to differentation strategy which is “to produce or deliver goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them” (4)
In 2003, Greg re-established his relationship with the former South Affrican supplier and purchased the product which his competitor could not pay at very good price. He also signed a contract with an Uruguayan supplier at AUD$4.80 per kilogram while Australia wholesale shark prices was increasing to AUD$8.17 per kilogram.
By 2005, the relationships between Stambos and the South American suppliers led to joint ventures and resulting in the purchase of a fishing vessel and the direct control of thei supplies from South America.
At present, Stambos continues to expand its supply chain by finding more suppliers from Brazil, Mexico, India, Iran, Fiji, Brunei, Turkey and others locations (5) to maintain its competitive advantage of high quality products with relative price.
2) Greg might have needed to separate his corporate venturing efforts from his larger traditional organization because: * Greg was a newbie in this kind of business, his business was very small and had low profit. The firm had no competitive advantages over competitors. * Customer’s demand, shark price and the number of competitors in domestic market increased rapidly. * The international supply which was cheaper, would generate profitability.
To separate his corporate venturing efforts from his larger traditional organization, firstly Greg used cost-leadership strategy and bring his products to customers at lower price than his competitors. In order to lower cost, he chose South Africa as his main supply. Secondly, Greg established relationships with many other suppliers around the world. Greg also invested in research and development acitivities because he knew how important the information of international market was. This is known as “exploit, but not to extinction, before you explore” in Stadler’s research (Stadler, 2007) (6). Lately, Greg realized that Stambos’s business depended too much on unstable international environment, so he started to invest in real estate, buying fishing vessels, etc. 3) The major obstacles and problems Greg Stamboulidis faced in creating successful corporate venturing: * Firstly, the international supply which Greg used was affected by external environment such as politics, disasters. For example, the political structure of South Africa was unstable. Moreover, the firm highly depended on the international supply so its strategies were extremely affected by the risks in external environment. * Secondly, depending too much on some main international suppliers resulted in high power of suppliers. When both South Affrica supplier terminated its contracts with Stambos, and New Zealand supplier increased its price, the firm had real problems along with higher demand and increasing in number of customers. Greg had to face the”Bargaining power of suppliers refers to their ability to raise prices and/or reduce the quality of goods and services.” (7) * Thirdly, when Greg began diversifying international supplier, he had to choose those suppliers very carefully because it would affect production cost, quality, transport delays.
To overcome those obstacles, Greg tried very hard and finally found some reliable suppliers in Chile and Uruguay. Greg managed to maintain his greatest advantage which had been low cost product with good quality. He also rapidly responsed to customer’s needs by “supplying filleted and frozen portitions of fish rather than supplying fish that still need processing” (8) like his competitors. Greg carefully research about law and environment of the countries he was doing business. For example, Greg can surpass the unstable political environment of South Africa by transporting his products through Namibia. By focusing on the balanced scorecard including customer, financial, internal business process, learning and growth (9), Greg could overcome Stambos’s obstacles.
4) Greg Stamboulidis’s successful factors are: * Greg could minimize his cost by using international suppliers, therefore, he maximized his profit. * Greg researched his customers and the external environment very carefully, that’s the reason why he could choose the right suppliers. “Selecting the appropriate supplier partner to work with is a crucial step” (10) * Greg avoided illegal business ways and risks. He could avoid political problems of South Africa by transporting products through Namibia. * Greg successfully diversified his supply, so he could overcome the obstacle when South Africa and New Zealand suppliers terminated their contracts. * Greg tried to create tight relationships between Stambos and current partners. He also always looked for new suppliers.
Greg Stamboulidis’s failure factors are: * Stambos could not do anything with the unstable political environment of South Africa. It was dangerous to do business in South Africa. * Weak relationships between Stambos and two main suppliers: South Africa and New Zealand led to unstable supply. The firm could not meet the increasing in demand. * The firm relied too much on the international market. It was very unstable it was pretty hard to make decisions. * Greg agreed to joint venture with a Uruguayan firm, but he chose a proportion of 50% for this investment, so Stambos did not have the right to make important decisions of the joint venture. Therefore, this joint venture could not support his business as expected and was considered as a failure. * When concentrating too much on low cost, Greg forgot the balance between low cost and high risk of the international supply, which led to a hard time when the firm lost 2 main international suppliers. “It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything…” (John Ruskin, 2/8/1819 – 1/20/1900). (11)
5) Comment on what Greg Stamboulidis hoped to gain from the corporate venturing effort and provide examples
By corporating in this venturing, Greg hoped to gain long-term sustainability. With the increase in demand of customers, number of competitors and the unstable domestic supply, Greg had to find international supply with low costs in order to gain competitive advantages in Australia market. Greg had some secure suppliers which would benefit the firm in long-term and helped Stambos stand firmly and continue to expand its business. The way Greg did business can refer to Corporate or Stakeholders Wealth Maximization Model. The purpose of his decisions were developing the firm, not maximizing the profitability. All of Greg’s decisions such as investing in R&D acitivities and real estate were to support the core business of Stambos: the shark business.
In his presentation, Greg also said that beside his business, he hoped to make his family happy.
He said he want to run a business which do not need his presence. In fact, he only spents three or four days per week at work, most of his remaining time he uses it for family. Greg believes the most important thing in his life is his family. “Money is not from a tree” (Greg Stamboulidis) (12) – This was how Greg taught his children about the value of money, how hard he had to work in order to earn money for them to go to school. That is a great way to teach his children about value of money and how to use them effectively. It is a very important lesson for anyone who want to do business in the
future.
(1) Entrepreneurial courage, audacity and genius: Richard J. Pech page 27 (2) Entrepreneurial courage, audacity and genius: Richard J. Pech page 29 (3) Competing for advantage, second edition: Robert E. Hoskisson, Michael A. Hitt, R. Duane Ireland, Jeffrey S. Harrison. 2008 page 135 (4) Competing for advantage, second edition: Robert E. Hoskisson, Michael A. Hitt, R. Duane Ireland, Jeffrey S. Harrison. 2008 page 140 (5) Entrepreneurial courage, audacity and genius: Richard J. Pech page 30 (6) Stadler 2007 (7) Global Strategy: Mike W.Peng 2009 page 41 (8) Entrepreneurial courage, audacity and genius: Richard J. Pech page 29 (9) Balanced Scorecard step by step: maximizing performance and maintaining results: Paul R.Niven 2002 page 14 (10) Handbook of purchasing management, third edition: Chartered Institute of Purchasing & Supply 2002 page 57 (11) John Ruskin (2/8/1891 – 1/20/1900) (12) Greg Stamboulidis