Trout Farming in Peru: The Lake Titicaca Decision - Case Study Example

Trout Farming in Peru: The Lake Titicaca Decision The major challenges that Joaquim faced with the initiation of operation at Lake Titicaca While the initial invite to establish operations in Lake Titicaca was good news for Joaquim, he was eventually faced by various challenges in trying to initiate operations there. First, Joaquim was faced with the challenge of huge financial requirement, considering that he realized that the existing fish processing plant could not work, and therefore he needed to establish a new fish processing plant (Wesley, 9). The previous attempts made to commercialize the Lake for fisheries had all failed, and Joaquim realized it was not different for him, considering that the existing fishing plant could not meet the long term needs of PISCIS, and therefore more finances, running to millions of dollars were required to establish a new processing plant (Wesley, 1). Secondly, Joaquim was faced by the challenge of new strategy implementation, which required that he develops a new capability for the PISCIS, to farm Lake Trout, which was completely different from the capability that the company already had in river aquaculture (Wesley, 2). This strategy change also brought along more financial requirements, which then added onto the challenge of financial requirement initially introduced by the need to establish a new processing plant. Thirdly, Joaquim was faced by the threat of entry, posed by the hostility of the local fishermen to outsiders, who considered that the new establishment will compete with them for the local market, while hindering the dream they had of developing their own export capability (Wesley, 2). Finally, the other major threat that Joaquim faced was the threat of unfavorable business environment, which was brought about by the existence of political instability and wave of violence in Peru, the country he would have newly established his business, thus posing the risk of business failure associated with poor external business factors, which impact negatively through affecting the target market which a business seeks to serve, or affecting the economy, such that it is no longer able t support the business favorably (Mulcaster, 68). PISCIS competitive strengths PISCIS competitive strengths are pitched on the fact that; it was the largest trout producer in Peru producing 1200 metric tons annually, while the rest were small-sized firms, whose capacity to produce did not exceed 50 tons annually, with 90% of the firms producing only 2 tons per year. The rest 8% producing between 2 and 50 tons annually, and only 2% were able to produce more than 50 tons per year, where the second competitor produced 200 tons annually, while the third competitor produced only 60 tons per year (Wesley, 5). Thus, according to the size of the company, it was in a position to enjoy the benefit of the economies of scale, which would mean that its costs are distributed over a large production capacity, thus reducing its overall production cost per unit of the market product (Mulcaster, 72). Another PISCIS competitive strength was the fact that the company had sophisticated infrastructural facilities for fish production and preservation, while the rest of the competitors in the same market suffered the shortage of the requisite facilities, with others, especially the individual fishermen lacking the cooling and preservation facilities (Wesley, 3). Infrastructure forms an essential factor in the determination of business success, considering that it is through the access to requisite and essential infrastructural facilities, that a business can be able to meet the market demands (Mulcaster, 71). Further, PISCIS competitive strength also emanated from the fact that it possessed a highly educated and experienced financial analyst who doubled as the manager of the company, whose hands-on-experience was unmatched (Wesley, 3). This is a great strength for the company, considering that educational qualifications in addition to valuable experience define the component of successful business management (Mulcaster, 72). Internationalization is yet another PISCIS competitive strength, considering that it was the only export-oriented company in Peru, with the international business accounting for 75% of the company’s annual revenue by2005 (Wesley, 4). Internationalization is a major strength for any business, considering that going international offers an opportunity for the company to access a wider market, while also drawing international strategies that can enable the business effectively counter the threat of competition (Mulcaster, 70). Finally, the product customized strategy applied by PISCI serves as a major competitive strength, since the company is able to produce approximately five new products annually and to customize them for the markets both locally and internationally, thus managing to beat even international competitors in their own domestic markets (Wesley, 5). This competitive strength can further be harnessed through continued market niche targeting, coupled with the provision of the customized products for such markets niches, which will in turn help to build customer loyalty, and thus beat competition (Mulcaster, 75). How PRA and the SAIS-PISCIS Alliance accelerate production opportunities for PISCIS, and the negative impacts of the relationship The PRA and the SAIS-PISCIS Alliance accelerated production opportunities for PISCIS, through the provision of duty free access market to the USA, meaning that the products that PISCIS produced could now be sold into the USA market without taxation (Wesley, 5). This alliance benefited the PISCIS production in two ways: first, the alliance provided an avenue for reduced cost of the PSICIS products, thus increasing its revenue rate. Secondly, the opening up of a duty-free market was beneficial to PSCIS, since it served to expand the market for the company, meaning that the company could now be able to produce more, due to the fact that it already had a ready market to serve with its products (Mulcaster, 69). Further, the alliance benefited PISCIS production capacity from its initial 200 to 500 metric tons annually, while also providing PISCIS with a further advantage of a new market, considering that it was able to acquire a 135-ton market for exporting SISA trout to Norway, thus increasing its revenues and employment opportunities (Wesley, 6). However, the negative implication of the alliance is that; the alliance between PRA and PISCIS enabled most of the major trout farms to benefit from the export market, and thus they increased their infrastructure and production capacities for trout production, meaning that the level of competition for PISCIS from the trout farms was further heightened (Wesley, 6). The major advantages and disadvantages related to the proposed wholly-owned production facility at Lake Titicaca The major advantages related to the proposed wholly-owned production facility at Lake Titicaca was that; through the establishment of such a facility in the region, the Puno local producers will be provided with a link to the international market, something they did not have access to, owing to the problem of less production, coupled with difficulties in transporting their products (Wesley, 9). Another advantage associated the proposed wholly-owned production facility at Lake Titicaca is that, the establishment would give the local producers access to the very much needed fish production technology that they lacked, as well as providing them with the necessary materials such as high quality trout eggs, which the local producers did not have (Wesley, 9). On the other hand, the major disadvantages associated with the proposed wholly-owned production facility at Lake Titicaca is that; the transportation hurdles involved in the region will need highly bureaucratic procedures or alternatively the use of a very long route covering over 22 hours (Wesley, 9). Both options will increase the cost implication for PISCIS, while also adding to the risk of fish damage, due to the long hours required for transportation. Secondly, PISCIS did not have the required experience, either with the region or with the new large-scale fisheries strategy necessary to accomplish the establishment of the facility in the region, which then posed a danger of business failure (Wesley, 9). Works Cited Mulcaster, W.R. "Three Strategic Frameworks." Business Strategy Series 10.1 (2009): 68-75. Print. Wesley, David. “Trout Farming in Peru: The Lake Titicaca Decision.” Northeastern University, College Of Business Administration, 2006. 1-19. Print. Read More