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Case study Analysis: OBO Corporation

Introduction

OBO is a hockey equipment manufacturing company which is based in Palmerston North, New Zealand. Despite its relatively small size, the company has risen to become the global market leader in the field of hockey goalkeeping equipment. According to the recent statistics, OBO's products are currently being exported to 35 countries (Learning Hub). Its core business entails designing, making and selling of hockey playing equipment, especially those that protects and enhances goalkeepers' performance.

Company's History, Development, and Growth

From its beginning, OBO has been majorly owned by Barnett and his wife Fiona, together with six staff members who had some shares in the company. Other records show that10% of the business was owned by a passive investor who never worked in the firm but offered strategic advice and governance to the company (Leberman, Collins & Trenberth, 2006).

By 1994, OBO started exporting hockey equipment products to Australia and Europe (OBO, 2012). This was immediately followed by OBO brand export to other countries like Argentina, South Africa, the United States and Japan. However, the small size of the company made every staff member to specialize in only one area of its operations.

Whereas Barnett acted as the gate between the market and the product design, Michael Lewis had the role of monitoring the market as well as working with the company agents in managing the supply and demand of these products. Efficient management of the company's office work was done by Joan Perrin, an office manager (OBO, 2012). For the sake of high quality products, the company preferred Rob Whitfield to be an independent contractor to deal with detailed design activities. Before he started his Tomorrow Today NZ Limited, which traded under OBO Goal Keeping in 1992, Barnett had been importing various sports equipment, including those of hockey (Leberman, Collins & Trenberth, 2006).

Following this Barnett's innovative and entrepreneurial mind that he has demonstrated since the 1970s, he was able to ensure steady growth of the OBO Company (OBO, 2012). He first showed his entrepreneurial potential in the 1970s when he set up a table-tennis business. He sold this table-tennis business in 1985 to launch a bigger business of importing and distributing Ihsan brand of hockey equipment. After obtaining the New Zealand license, he was occupied with the import and distribution business up to 1992, when he launched OBO business (Leberman, Collins & Trenberth, 2006).

In 2004, OBO became an independent manufacturer and moved to its own factory. As such, it increased its productivity by operating twenty four hours a day. This move enabled it to manufacture numerous products lines, estimated at 50 different products whose qualities were very high (Luciano, 2005). The pressure to increase its productivity consequently resulted to the increase of its staff. The production team, for instance, had twenty (20) employees, with ten of them working in the production and warehousing departments. The other ten were working in soft-goods manufacturing.

Despite this continuous growth, OBO had a number of challenges on its way. More conspicuous was the high price of the raw materials. Christchurch, the OBO's sole supplier of closed-cell foam at that time, was more expensive compared to the overseas markets. The freight alone accounted for four percent (4%) of the company's total costs (Schermerhorn, 2010). If the company had bought the raw materials from overseas, it would have probably spent just two-thirds of the buying price from Christchurch suppliers.

However, this high cost could be considered negligible since the raw materials were of high quality and Christchurch proved to be a reliable source. The OBO management could rely on it for timely delivery of the raw materials that assured marketers of quality products to their customers. Consequently, the company continued to invest in new production facilities to compete effectively against the producers of the same products from Palmerston North, Asia and Czech Republic. At that moment, Czech Republic supplied helmets while other stitched products came from Palmerston North and Asia (Jenkins, 2003).

Afterwards, Barnett sported an opportunity to advance his design and make better product than that which was being delivered into the international market. His experience in importing and distributing sports equipment blended perfectly with the insights he got at Massey University, where he was a marketing lecturer (Learning Hub). This helped him to come up with the exact equipment that was needed in the hockey market. He strived to meet the consumer demands by consulting different experts in hockey goalkeeping, a group that represented his identified market segment.

The aggressive marketing and sound quality control practices helped the company succeed against all the challenges that came its way. From 2004, OBO experienced a fairly stable annual turnover growth due to the brand revision of all its products and their strengthened distribution (Luciano, 2005). By 2008, the company's annual turnover growth reached twenty two percent (22%).

According to Luciano (2005), OBO's strength was in its products' capability, design capability and their branding. The superiority and global market dominance of OBO products were first displayed in 1996 during the Atlanta Olympics. The goalkeepers of the women's Olympic hockey team that won gold medal were wearing OBO pads (Jenkins, 2003). The team`s victory could have been attributed to the better equipment they had over other teams. This was a major boost in the global marketing of the OBO products. This boost was later confirmed in 1998 when OBO Company reached $ 1 million in export sales and consequent winning of TradeNZ award.

Meeting the previously unmet consumer demands gave Barnett and the entire OBO a sharp competitive edge over all the players in this industry. Experts, such as Hilton Munroe, helped Barnett and OBO to develop an all-sufficient product array for the international market while harnessing technology to enhance professionalism in such product designs. Such experts helped to ascertain the exact products that hockey goalkeepers were looking for.

The originality and cost effectiveness of OBO's products saw it overtake veteran players in this field, such as Coopers and Gray (Leberman, Collins & Trenberth, 2006). While these two players supplied the market with cricket gear or ice hockey, OBO adopted technology to produce cost effective hockey equipment to fill the inadequacy of the gear. As opposed to OBO's products, the Gray and Coopers' gear could not suit the game's requirement completely. It is against this background that OBO gained the hockey market dominance it is enjoying today.

Company's Strengths and Weaknesses

Since its inception, OBO has experienced tremendous growth and some challenges due to the strengths and weaknesses that have been present within it. The most conspicuous strength in this company is the high quality of its workforce. In their research to ascertain the value of human capital in an organization, Memon and his colleagues reported that human capital is a source of organizations' competitive advantage (Memon, Mangi & Rohra, 2009). Despite the smaller number of OBO's workforce, they demonstrate higher level of competencies in their skills, experience, education, capacity and potentials.

The competitors of OBO have failed to employ people with equal or better capabilities. Simon Barnett, for instance, has been a talented entrepreneur whose passion is to continuously identify and exploit business opportunities. From mere criticism that he heard from his friends about the poor quality of goal keeping equipment used in 1992 Olympic hockey final, Barnett sported an opportunity to venture into goal keeping market.

After having realized the vulnerability of hockey goalkeepers, OBO sought to protect them from hazards that may result into broken legs, blindness, and punctured ribs among other casualties that are likely to occur to poorly protected hockey player. The strength of these products lies in their ability to provide maximum protection to the goalkeeper without limiting his or her natural body movements. All these protective gear products, such as leg guards, chest pads, kickers, padded shorts, helmets, gloves and arm guards, were made of light but strong foam (Jenkins, 2003). In order to ensure flexibility and natural movement of the player, the equipment was heat-bond instead of being glued. All is done to meet the requirements by the players of durability and unrestricted movement.

Barnett's relentless innovation and determination has moved OBO from one level to a better level. Barnett together with other OBO stakeholders is committed to the idea that the only way for this company is to move forward. His sound knowledge in international marketing and experience in sports business have been invaluable factors for the company's success. He took care about the setting of the company's strategic directions, management of its relationship with the agents, marketing, and guidance of the company's vision and culture (Hill & Jones, 2010). Other stakeholders such as Rob Whitfield, Michael Lewis and Joan Perrin, who worked as a team, were playing other equally important roles in order to keep the company at the top of its game.

In line with the current trends in global business operations, OBO's better use of technology has given it a further push ahead of its competitors. Technology has provided it with efficient and better ways of designing and developing a full range of products for its local and international markets (Oakland, 1989). Whereas other manufacturers of hockey equipment rely on the traditionally established product designs, OBO exploits technological capabilities to design and produce products that meet the current market demands.

The exploitation of internet technology to Design Company's website and interactive forums has enabled OBO management to receive real time response from the end users of the products. It is the power of information that has shaped the quality of OBO's products over its competitors. Total quality management practice requires any manufacturer to understand the nature of consumer demands before designing and producing a product that would meet the identified demands (Charantimath, 2003).

In a technologically related aspect, OBO's Research and Development initiative has contributed to its production and marketing strengths. While analyzing the report on the Research and Development in the United States' manufacturing companies, Ward and Langjahr (2008) emphasized the need for any US manufacturers to focus their research and development in the areas that are most likely to give them economic benefits, if they are to remain competitive in the global market. OBO got the concept behind this principle and has made it part of its production policy. As the company strives to actualize the Mutton-birds' song, "A Thing Well Made", research and development have been the driving force (Luciano, 2005).

The last and equally important strength of OBO Corporation is the reliable supplier of high quality raw materials. Even though Christchurch's closed-cell foam was expensive as compared to international suppliers, it was reliable and of high quality. Shim and his colleagues pointed out that having a reliable supplier of quality raw materials is a positive step towards ensuring smooth production processes (Shim, Siegel & Dauber, 2008). They advocated for proper inventory management asserting that reliable supply minimizes the amount spent on inventory in every manufacturing stage and retain cost effective production volume to improve the company's cash flow and profitability (Shim, Siegel & Dauber, 2008). As such, OBO's quality products and market dominance can be attributed to the reliability of Christchurch suppliers.

As much as OBO may boast of the above strengths, it also has a number of weaknesses that should not be left unchecked. On the top of this list is the over specialization in most aspects of this company (Shim, Siegel & Dauber, 2008). First to mention is specialized nature of its products and business. In addition to its specialization in the manufacturing of hockey equipment, the company went further down to concentrate on the goalkeeping equipment. Secondly, over the years the company has relied on Christchurch as the sole supplier of its raw materials without proper plan for an alternative source of these raw materials. Lastly, the company's workforce nurtured to focus on specific operations of the company, with minimal or no experience and knowledge on other aspects of the business.

The company also suffers from the issue of centralized production of its products. Despite the fact that OBO has been seeking global market dominance, most of its manufacturing activities are based in Palmerston North, New Zealand. As such, all its marketing agents in the international markets have to rely on efficient ordering and export of these products.

On contrary to the norm of most successful organizations, it is very unfortunate to note that OBO Corporation has no proper leadership structure. Even though the company`s employees have been given specific roles to play, they do not have clear reporting procedures and communication channel. Consequently, the company lacks formal decision making procedures in any of its major operations such as marketing and production. The lack of well-defined protocol may hinder accountability and monitoring (Schermerhorn, 2010).