Example research essay topic: Competitive Advantage Commercial Enterprise - 1,977 words

NOTE: Free essay sample provided on this page should be used for references or sample purposes only. The sample essay is available to anyone, so any direct quoting without mentioning the source will be considered plagiarism by schools, colleges and universities that use plagiarism detection software. To get a completely brand-new, plagiarism-free essay, please use our essay writing service.
One click instant price quote

Strategic Global Management 1. General Impression Guajilote Cooperative Forestal appears to be a classic commercial enterprise in underdeveloped country, which is based on cooperative principles. It has come as a result of USAID deploying a new economic assistance strategy in such countries. This program emphasizes on only helping people at initial stage to set up businesses, which are meant to become self-efficient, without requiring an additional financial investments.

It is hard to give an evaluation prospective on Guajilote Cooperative Forestal, as it only appears to be the single profitable enterprise in the area of La Muralla National Park in Olancho province. This, of course, makes it impossible to draw any comparisons with other similar businesses. The forestry, as whole, is not thought to be through its best times right now. An increased number of forest fires, related to global warming and ever-stricter government regulations make this business not as profitable as it used to be even 20 yeas ago. Guajilote Cooperative Forestal operates with fallen mahogany trees and there is a big demand in the world for this material, since it is very rare.

This gives Guajilote cooperative big advantage, as there seems to be very little competition. Yet it also has another side the depletion of mahogany tree resources in the world might lead the governments of many countries to introduce ban on its import. Cooperative is only given permission to gather naturally uprooted trees, which limits its operation to the point when it was being considered, by cooperatives administrator, that leasing even one truck for the transportation might prove to be an excessive luxury. To me, this business venture appears as such that doesnt have an expansion potential. One the most important principle of running a successful commercial enterprise is that it always has to strive staying competitive, whether through continuous investments in expansion or through making its existing operations more profitable, which is accomplished through upgrading the equipment and increasing the efficiency of its employees.

Guajilote Cooperative Forestal is fully dependant on limited natural resource in one particular area of Honduras. Although, according to its business license, Cooperative is supposed to replant trees, it appears very doubtful that itll be able to benefit from it in the next hundred years. Nevertheless, Guajilote was able to come up with steady profit every year and there is no opportunity to make some money can be passed in such countries as Honduras. Cooperative members salary is up to 7 times higher, comparing to what people usually get paid in this area. I think that Guajilote Cooperative Forestal cannot be considered as fully integrated commercial enterprise in the classical sense of this word, because it depends too much on external factors and lacks proper management. 2.

SWOT Guajilote membership consists of 16 people, who reside in the area. Its physical property belongs to all the members. There is one portable hand-sawmill and a few mules, which are used for transporting the trees. Even though business decisions are supposed to be made collegiality, there is only one person who runs the whole operation, using the authoritarian style Santos Munguia. Mahogany trees, after being cut in smaller pieces, are sold to the only distributor in the area Juan Suazo, who pays 7 - 8 temporal pre square foot.

He transports them then to Tegucigalpa and resells them for a big profit. The financial position of Guajilote is best described as stable. In 1998 its commercial revenue was $ 32. 000. There is also a tendency towards increasing Cooperatives profits, as demand for mahogany trees is steadily rising.

Santos Munguia hopes that by the year 2000 Guajilote is going to be able to come up with $ 40. 000 in pure profits. Guajilote retailing capacity is not being fully exploited. There are about 5 companies that buy mahogany trees in Tegucigalpa alone at competitive prices, yet Cooperative is stuck with only one distributor. Besides the fact that Juan Suazo underpays for the material, his limited transportation means also cause the mahogany trees to pile up, while waiting for its turn to be taken to Tegucigalpa. Dealing with only one distributor largely undermines Guajilote's commercial efficiency. The Guajilote's technological level is archaic.

There are two means of transportation it uses: mules and river. It can well afford leasing the truck, but the lack of strategic thinking, on the part of manager, makes it impossible. Cooperatives approach towards increasing the efficiency of its personnel can be defined as inadequate. Many of its employees dont even have an elementary school education not that it needed to haul the logs, yet it impacts Guajilote's on managerial level. People are satisfied with what they get and they dont look to how increase the operational efficiency of their Cooperative, so they can start getting paid more. Guajilote's main goal is to increase its profits, just as it is a goal of every commercial enterprise.

Yet, it appears that Cooperative doesnt have any definite strategy about reaching its goal. If other distributors were invited into the area, Cooperatives profits couldve increased substantially. The main problem here seems to be the fact that Santos Munguia is in collision with Juan Suazo. It is very likely that they simply have a deal that Guajilote wont be rising lumbers price in exchange of Suazo not getting involved in how operation is ran. Although the members of Cooperative are supposed to be getting paid equally, there is no doubt that Munguia keeps bulk of the profits for himself. This enabled him to buy a luxury house recently.

In my opinion, Guajilote has the potential that hasnt been fully used yet. If it could somehow find a way to haul lumber to Tegucigalpa without using a distributor, it could easily double its profits. So far, this enterprise seems to be the least affected by the fact that price for mahogany trees steadily grows. Competitive Advantage The business competitive advantage largely determines its ability to generate excess returns on capital and links the business strategy with fundamental finance and capital markets. Without a competitive advantage, every commercial enterprise has limited economic reason to exist. Guajilote Cooperative Forestal doesnt exploit the competitive advantage it has in the mahogany trees market.

There are handful of forestry companies that are specialized in dealing with these rare trees in the whole world. In Honduras there are only 2 other companies in the same market. Yet, the demand for the furniture made out of this material is tremendous. Cooperatives managers do not deploy an aggressive commercial approach, which could prove to be beneficial in this case. I think it has to do with psychological factor as well. The people in this part of Central America are known to be quite lazy and slow thinking.

It appears that Santos Munguia is well aware that if Cooperative had acquired a truck, it would automatically make Guajilote more competitive. But instead of investing into the future, he simply wants to get all the profits now. If Cooperative hired an American manager, things couldve become different. It be much smarter to simply stockpile this wood until the reliable ways are found to deliver it to where it could be sold at fair price. Also a new approach wouldve been applied to look for fallen trees, instead of just aimlessly roaming through the woods, hoping to find such tree. Guajilote managers failure to exploit Cooperatives competitive advantage accounts for the fact that it is virtually unknown in the world.

There are many companies that would pay 3 times as much for the lumber, if it could only be delivered to the Honduras capital. In my opinion, the only way to make members of Guajilote Cooperative Forestal aware of their Cooperative competitive advantage is to replace Santos Munguia as their administrator. He seems to be the person who only cares about himself. Besides, his educational level will never allow him to become successful manager, even if he sincerely strived for it. Components of the Value Chain Guajilote's value chain appears to be very limited.

Its operations consist of finding the fallen mahogany trees, hauling them over to the sawmill, cutting them in smaller pieces and then delivering it to the distributor, which takes over from there. Finding trees is done manually; Guajilote's members simply walk through the woods and try to find an uprooted tress. They use very little equipment while doing this. There are only a handful of compasses for 16 people.

Their advantage is that they know the area and thats why they dont seem to be too affected by the lack of equipment. The hand-sawmill used by Guajilote is portable, so in many cases it is easier to bring the sawmill to the fallen tree then other way around. The terrain where Cooperative operate is very treacherous, thats why having a portable hand-sawmill is a big plus. The next comes cutting lumber in smaller pieces and its final deliverance to the distributor, whether by hauling them with mules or floating down the river. There no doubt that every element of Guajilote's value chain is equally important for Cooperatives normal functioning. Yet, from operational point of view, members manual labor is the most important, although people are only paid about $ 100 a month.

Maintaining the sawmill is where the bulk of invested finances go. Without it, Cooperatives operations will effectively stop. Just like in every Third World country, equipment is way more valuable then people Strategic Alternatives There are few strategic alternatives that Guajilote Cooperative Forestal might consider. Since there is huge demand on mahogany furniture in the world, Cooperative couldve just restructuralized itself and instead of only selling commodity, it could begin selling furniture.

This would allow Guajilote to go as far as trebling its revenues. The profits might become more increased if there was to be found a way to sell completed products straight to where there is a great demand for them. The problem here is that no members of Cooperative possess carpenter skills. Yet, there are professional carpenters can be found in the area and they will be more than willing to work for Guajilote on contract basis. It is sufficient to say that price for mahogany trees on international market might soon become comparable with price for ivory. It is no secret that these trees are having good chance to be declared an endangered species in near future, which will put an end to Guajilote.

At this point, the smartest thing to do would be trying not to increase profits by simply floating lumber down the river in bigger numbers, but applying a progressive business strategy. It goes without saying that Guajilote's managerial competence would have to be brought up to the appropriate level first. How to do it practically, remains a big question, as there are almost no learning facilities in the area. There are only 50 % of people in Hondurans get high school diploma; especially illiteracy is spread in the rural regions of the country. Honduras has a few seaports, if only Guajilote had acquired a truck, the furniture couldve been getting delivered straight there The lack of strategic thinking on the part of Santos Munguia seems to be the most important problem of Guajilote Cooperative Forestal. Still, even if Cooperatives management remains the same, its dependency on distributor is likely to be reduced, as transportation infrastructure is in the process of constant development in the countries of Central America.

The specifics of Guajilote lies in the fact that its revenues can be substantially increased, but time works against this enterprise. The new business strategy, if it is to be applied on the part of Guajilote, has to be decisive this is exactly the case when saying time is money can be used the best to describe the situation. Bibliography: Noble, N and Hunger, D. Guajilote Cooperative Forestal, Honduras Inter-Hemispheric Education Recourse. Albuquerque. 1993.

Research essay sample on Competitive Advantage Commercial Enterprise