Strategy and Management in the International SME Term Paper

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Strategy and Management in the International SME

From its humble beginnings in the Porirua Harbor, Vega Industries has come to be the world's most reputed navigation lights manufacturer. The state-of-the-art provider of optical and technological lighthouse and beacon solutions have modernized port, harbor and shoreline safety across the world through supply of efficient, dependable and accurate beacons that are capable of functioning automatically through the use of VegaMAC computer system which is the pioneer in the computer monitoring of lighthouse systems. Under the able leadership of managing director John Rochfort, Vega has been looking forward for new and practical processes to meet the world's most challenging requirements of beacons. Having won numerous awards including the prestigious ISO 9001 Quality Management, Vega ably faces competition on the international front. Due to its technological niche, its product have been accepted by various institutions and the company also provided customized solutions to various clients and even in some cases gone 'extra mile' to service its customers. Because of the strong importance on research and design, and understanding the needs of the customer, Vega has built a reputation of a qualitative, competent and frontline supplier of marine beckons globally. Vega has demonstrated to the world that despite New Zealand's small size and relatively geographic isolation, it has the potency of becoming the world leader.

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Term Paper on Strategy and Management in the International SME Assignment

In the navigation lights industry, New Zealand-based Vega Industries Ltd. enjoys a dominant position due to its revolutionary product Physics and Engineering Laboratory -- PEL Sector Light. Vega was founded in 1972 by a Mechanical Engineer who was also a manufacturer of lens and a businessman, to develop and further make PEL Sector Light a commercial success. The credit of originally developing this light goes to Norm Rumsey who was the Head of Optics at the Department of Scientific and Industrial Research -- DSIR. The Vega PEL Sector Light was originally designed for the specific problems encountered during alignment of two lights at a cliff at 'Goa Point' due to lack of physical space to erect the rear light in a 2-station alignment system.

Due to limited prospects in New Zealand market, Vega rapidly moved into the export market. However, due to the pioneering nature of the PEL technology, there was an initial resistance to embrace the new technology since the lighthouse industry is conservative in nature. In order to solve this problem, Vega focused on those exclusive customers who had enough technological abilities to appreciate the product. Through supply of these leading consumers in the first place, Vega improved its reputation and presently supplies majority of the world's precision sector lights. The path to become the market leader has been mixed. Managing Director, John Rochfort's initial years at Vega were marked by ups and downs in the financial front. Through the continuous success of PEL Sector Lights, it was possible by Vega to fund new research and design proposals that have snowballed to facilitate Vega to cross these initial problems.

In the year 1992, Vega took up a major sector lighting that was supposed to operate day and night for the Port Botany, Sydney, close to Sydney Airport. Since this light would fall on the Sydney Airport runaway, every stray light were needed to be contained. Vega did intensive research and experimentation for 10 long years on behalf of the customer and came out with a solution that was accepted. This demonstrated Vega's meticulousness in tackling difficult problems which other companies within the industry tend to overlook. Besides, in one more major project, Vega supplied a set of sector lights for the Terneuzen locks in Belgium which enabled the huge ships using this channel to align themselves and pass the canal which at some period permitted for just a meter clearance on either side of the 40-metre wide lock.

Situation Analysis:

Vega's core competence has been designing and building lights and beacons meant for marine navigation and other visual signal lights. It is this competence that has helped the company to blend optical and electronics technology to build beacons which are capable of operating automatically and controlled through electronic devices. These have immediate application in lighthouses and other costal sites inclusive of offshore buoys. Vega has a lean workforce of just 25 employees who are specialists in optics, mechanical engineering, electronic and electrical design and software engineering. The number of employees has gone up comparatively slowly in spite of the successful growth of the company. John Rochfort, Managing Director made a recommendation during 2001 that there would be an upper cap of 20 employees because of the collective efforts of a number of factors which are (i) company's decision to keep a rigid grip on growth (ii) having a lean workforce structure with the appropriate competencies (iii) the comparatively small size of Vega's preferred market position.

Due to the inherent nature of the navigation lights industry, Vega has been quick to assess the situation that the market would not support exponential growth, but a sustainable growth which will guarantee its feasibility in future. The company has been launching new aids to marine navigation targeted at improving navigation and dependability and lowering the total cost of lifetime ownership to its customers. Exports constitute 90% of the products with the majority of the products being developed for U.S., Canadian, Australian, Swedish, and Danish and Russian markets. This move was prompted by the fact that its domestic market had limited scope. Vega's controlled expansion and development through a strategic style practiced by John to make the company into a successful global company. He has kept the organization lean and maintained a high level of control over every operation of Vega. According to him, keeping a lean structure is essential in an industry which needs high quality products particularly when their operation is protecting lives of passengers in vessels.

Identifying/Isolating Key issue(s):

Vega has a global reputation for being a leader in marine navigation. Several components of the performance of the company have played a key role to this reputation. These are (i) unique knowledge in optics (ii) high quality products (iii) a sincere and innovative approach in fulfilling needs of the customers (iv) strong relationship with the key customers (v) high levels of capability and dependability in implementing projects. The company has been enjoying the status of market leadership from the time the original product the PEL Sector Light was developed. This was an innovative product and because of this it faced market resistance and uncertainty. But the product became an immensely flourishing product, bettered by constant development and sophistication. Vega's standing for accuracy, quality and product strength was proven when it emerged as the sole company to be awarded with the 'design and build' contract during 1990 for the signaling searchlights meant for the ANZAC frigate. The searchlight is so robust that it can bear on onboard explosion and continue operating normally.

Vega's increased level of productivity along with precision has been achieved by means of an initiative towards computer technology comprised by CNC lathes. Shifting from a manual production method to a mechanized system was witnessed as crucial for the future for Vega. The flagship products of Vega are the PEL Sector Light and VRB-25 lighthouse beacons initially produced for the U.S. Coast Guard. Vega has made major investment in product development for quite a number of years. Another key issue has been that as the company had its own in-house technology base it was able to export its finished product to a lot of countries. This was a unique thing in itself because normally it is the major countries that develop new technology and smaller countries purchase it from them. This was a reverse flow of technology and in this case it was a major country like USA who purchased product from Vega. 18.9% of the revenue of the company is contributed to research and development and marketing accounts for a mere 12%.

Increased intensities of research and development permit Vega to take up design work for other industries which is at least one large system project every year annually. The leadership position of the company is due to the unique abilities of John Rochfort who assumed a diversity of roles like managing director, researcher, and production controller, and has been the moving spirit behind the immense success of the company. The leadership position of the company can be witnessed by visiting the marine installations across the world where Vega holds the number one position. Vega has been fulfilling a lot of the challenges faced by systems to produce accurate and reliable results and capable of withstanding hostile environmental conditions. Several of the products manufactured by Vega have been world's number one. The four important products are sector lights, rotating beacons, LED lights and remote monitoring systems.

To make sure that its products are the most practical and dependable within the market, Vega designs and manufactures its own electronic control systems and builds it own circuit board layouts. The key benchmarks achieved are efficiency and saving of space.… [END OF PREVIEW] . . . READ MORE

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