Is Strategic Management a Process, idea or only Intention?

Many people claim that they are implementing strategic management in their organization. Some might speak that they are having ideas in implementing strategic management to their organization; unfortunately, it dies before taking off. It is very crucial to understand why it happened. Why the idea remains as a good intention and never being implemented. Some implemented the strategic management but it diminishes after the takeoff.

I brought you here a case study that we all could share, analyze and make a study on the reason why this particular company had failed in their business despite having good banking facilities and some excellent valued resources.

In 2005, I came across a company of a friend called RCW Sdn Bhd. It is a company having an office in Petaling Jaya and later having its operation office in Padang, Sumatera Barat. The owner is a Pure Science graduate from the US and having a few deep-sea fishing permits which he chartered to a Thailand entrepreneur. On a monthly basis the company had its revenues from this activity. From here the company applied and were granted then being grant by the government an additional 5 Tuna Fishing permits.

Later the MD hired a Japanese to undertake the loan proposal to a bank in Kuala Lumpur and it failed despite the fact that the Japanese are well known for their experience in Tuna Fishing. After several months of failures, the MD later engaged a full-time consultant to resolve this particular issue. The consultant found out that this Japanese expertise is in trading and not in the banking line or tuna fishing.

With a small office and two other personnel; personal assistant to the MD and a clerk, the consultant; Matt made his plan and strategize the situation. Despite of being requested to work alone he did the analysis required on the situation and on RCW. Capitalizing on the strength against the weakness, and opportunity against the threat, Matt manage to have the facility of RM 10 million for RCW to acquire the company 5 tuna fishing vessels within 4 months.

In the initial stage, the MD of RCW had assigned Matt the consultant, to undertake the task to acquire the facility in purchasing the vessels and later to undertake the management of the operation by the Indonesian Tuna Operator who would manage the operations of Tuna fishing of RCW.

Being a high self-confident person that he could manage and having the idea of strategic management, cost-saving, the MD decides that the management of the Indonesian Tuna Fishing Operator could be done by himself while assisted by a young supervisor, and ex-port field executive.

The MD started his work immediately while requesting Matt, the consultant to focus on acquiring next facility to purchase 5 additional vessels at the value of RM30million ringgit.

Matt does his work well for 7 months while the MD assisted by his supervisor manages the Indonesian Tuna Fishing operator and RCW manages to have the additional facilities of RM25 million subject to good management of current tuna fishing. The reason is that the company has no track record but the bank made a statement that the presentation done by Matt was too good to be rejected and furthermore tuna fishing is a high potential growth industry.

On the 8th month RCW has not being able to perform, the company is declining in its income, the loan repayment of the RM 10 million has not been paid regularly and the vessel are docking at fishing jetty in Padang.

The MD again request Matt to undertake the study on what are the probable cause to the poor situation. Matt had his two weeks study on only three areas:

1. Financial

2. Operation Procedures

3. Legal Documentation

Matt visited Padang, study the whole business process, financial process and audit all the legal documentation. He then found out that:

a. From 60% of the fishing time, most vessels are docking at the port

b. The fish scales are irregular and the price are not monitored

c. The project Profit & loss and cash flow are not being updated and studies or managed

d. Underutilized of manpower resources

e. Mismanage of a fund by the MD himself

f. Supply to vessels such as diesel, food, water is not properly managed

g. The debtors and creditors increase more than 30% for every business quarters.

The company later was unable to have a drawdown for the RM25million due to poor performance of the 5 vessel's operation. On the other hand, RCW turns to be on the NPL list. Matt has again been requested to be the consultant to address the new issues in solving the damages done by the company instead of being a consultant to develop RCW.

I hope you like this article "Is Strategic Management a Process, idea or only Intention? "

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