case for tutor beth

Company: Armstrong Agencies Ltd. Size: Medium Industry: Logistics Business Activity: Wholesale and retail trade Type of Entity: Private Company Number of Employees: 25 to 500 Country: Barbados Headquarters: Barbados Yearly Revenue: $1 million to $25 million Gender: Male Subject: Human Resource Management, International Business

Andy Armstrong - Issue: What is an important issue that your company is currently facing?  Hi my name is Andy Armstrong. I am CEO of Armstrong Agencies Ltd., a distributor in Barbados. We have an individual who had a stellar record as a sales representative. He was a fantastic sales representative, a high energy individual. We promoted him to be a trade supervisor. We are having a lot of problems with him relating both to his subordinates and his superior. We are at the stage where we have to make a decision. What should we do?

Andy Armstrong - Cause: What caused this issue to arise and why is it important? It is important to try to balance what is best for the product line and ultimately the company. Ultimately we want to do what will have the best long term impact on the sales and profitability of this product. So we are balancing on the one hand a person who is an A-type personality, who is very driven and will push to get things done but who will step on a lot of toes in the meantime. The other option is to get someone who is a little more laid back, a bit more focused on keeping the harmony in the team but who will then probably need a bit more nudging from top management to keep up the intensity.

Andy Armstrong - Q1: Can you tell us a bit about yourself and your career path to date? My name is Andy Armstrong. I am the CEO of Armstrong Agencies Limited, which is a Barbadian based and owned importer, wholesaler, distributer, and marketer of fast-moving consumer product goods. I was educated in Barbados up until the age of 18 and then I went to university in Canada and got my degree from the Ivey Business School. Then I worked in England and Canada for a while before returning to Barbados to join what was our family business at that time. Andy Armstrong - Q2: Can you describe a typical workday for yourself? I usually get to the office around 7:30 in the morning. I usually spend the first little while planning my day. If there is anything urgent that I need to do, I will do that when it is quiet. Most other people come in around 8 o'clock. Then I will spend the first hour to two hours basically walking around making sure that people are on track for their day, having impromptu meetings. I am primarily responsible for the sales and marketing end of things, so I will be talking to the sales teams to make sure they know what their plans are for the week and that they are following through. Andy Armstrong - Q3: Can you describe your role in the organization?  My official title is Marketing Director but being a family business, there is myself who is in charge of marketing, I have a brother who is in charge of finance, and then our dad is actually the chairman who takes a more hands-off role. We also have two companies. There is Armstrong Agencies, which is the parent company, and then we have a fully owned subsidiary, AMG Agencies, who does similar products. It is a company we bought out years before and we decided to keep them separate, so if we had conflicting lines we could put them in the separate companies. My brother has primary responsibility for that company and I have primary responsibility for the one I am with. In essence, I am probably General Manager of everything for that company. Andy Armstrong - Q4: Can you describe your leadership style? Try to be very empowering. This is probably a natural inclination to try and give as much autonomy and responsibility to the people under me as possible. Also, this has been forced even more upon me in the last four years because the last four years I have been very involved in the Barbados Chamber of Commerce and Industry. Two years as Senior Vice President, coming up to the end of the second year as President. So it has meant that I have had to spend a lot of time out of the office. In fact, next week I am having lunch with the Governor General of Canada, so those kinds of little perks come with it, but a lot of meetings with government and other businesses. So, that means that at least half of my time is not spent on my own business, currently. It has forced the people who work for me, or given them the opportunity, to do more. Andy Armstrong - Q5: What does good performance mean for you in your position? Ultimately, good performance is if the company turns a profit and what we would consider a decent profit of investment. Now, in early 2012, in Barbados, we are probably still in the fourth year of a recession. I know North America is coming out of it but we are still pretty much stuck in that recession. For most companies, turning a profit has been very difficult over the past four years and we are not an exception. So, keeping the company going in the short term is very important. Motivating the staff to keep them excited, that is another big thing. Performance for me is really when we get the staff and everyone buying and doing what we should be doing. Ultimately, as I said, that should be leading to profit. Andy Armstrong - Q6: What does your organization do and how is it different? We import fast moving consumer packaged goods. Everything from snacks and confectionary, cereals, non-alcoholic beverages, some over the counter medicines, and so on. We import those, we warehouse them, we distribute them, and we sell them and deliver them to retail outlets. Then we also put in place marketing programs- advertising and promotion and so on- to help move them off the shelves. So we are not totally unique in Barbados but what we do is offer that complete service. So a manufacturer or supplier from outside of Barbados can really look to us to be an extension of their company. We do everything they would want to do if they were in the market. Andy Armstrong - Q7: How is your company structured or organized? We have a Chairman, and then we have the two lead Directors: myself and my brother. Following on that, on our side we have a whole sales structure and four Sales Managers and their teams. Then we have sales support, which does all of the billing, and receivables, and another section that has to do with logistics, like warehousing and delivery. Those three key functional areas would be under different people. Andy Armstrong - Q8: Can you describe any key events that occurred either in your life or that of the organization that were crucial to success over time?  When I returned to Barbados back in the Eighties, it was to join the family business. Things went quite well for a while, but then the extended family- there were people who wanted to go in different directions. So then in 1993, I actually split off and with my father we formed a different company, and it was a reasonably amicable split from the other side of the family. Then we brought my brother to join us. We changed quite a bit but it allowed us to focus on things that we really wanted to focus on and the other part- the cousins- focused on areas they felt more comfortable with. It seems to have worked out well for both sides, both companies separately, have done better than the one company together. Andy Armstrong - Q9: Who are the customers of your company and why do they buy it products or services? Primarily, we are service and retailers, so everything from the big chain supermarkets and the cost clubs, right down to single door village shops. The reason the retailers would buy from us is because we offer a good product that gives them a good turnover on which they can make a good profit. We offer credit in a lot of cases, so they can buy the product from us a number of times and turn it over before they have even paid us, so we actually act as a financier. We offer the service if there is anything going wrong with the product we will take it back. We just offer a good variety of products. For them to try to deal directly with the big manufacturers would be very, very difficult. In fact, they would end up just picking and choosing a few, but not having the variety of products they could offer. Andy Armstrong - Q10: Can you describe the industry within which your company operates and how it is changing? Over the years it has evolved from quite a lot of people doing a similar kind of thing to what we are doing, to generally fewer. The ones that are still left have tended to consolidate, or get bigger, or specialize one way or another. Some of them are vertically integrated; some of them are now parts of big conglomerates. In addition to having an importer and distributer, they are now part of a group that owns supermarkets or retailers, which gives them some obvious advantages. On the other hand, it is a very easy business to get into. Basically, if you had an interesting product, you could bring in a container and go out there in your little van and start selling it, and once you had a good relationship with the stores you would get in there. I do not know that you would succeed in the short term but there is nothing to stop you from getting into that business. We always have a new competitor coming in. The new competitors tend to- the first thing they try to do is compete on price. They always try to get in there cheaper and that is how they get their foot in the door. Usually that is not sustainable so if they are going to be there for the long term then they need to offer something else apart from price because there is always someone who is going to come and undercut you. If all you are going to sell on is price then you cannot be there for the long term. Andy Armstrong - Q11: How do firms compete within this industry? They might vertically integrate, so they might own their own retailers and then they can control the retailer to some point and make sure the retailer carries their products. A lot of them will compete on price as well. But usually there are more synergies, particularly if we- and we do a bit- sell in hotels and restaurants. Hotels and restaurants really do not want to deal with a lot of different people, they would much rather deal with a handful of suppliers and each of them would have a wide variety of products. That is what they will try to do: widen out their portfolio as well. Andy Armstrong - Q12: How are companies in the industry dependent upon others for their success and what are some of the action that can be taken to reduce these dependencies?  If you are importing products that are not your own, you are very dependent on your supplier. We always try to have a really good relationship with the supplier but things can change. The company may get bought out by someone else and sometimes it is even as simple as a personnel change, a new area manager. I do find that new people just want to change something up and you have to work through that. Sometimes, through no fault of your own, your supplier gets bought out by a different company who may already have a supplier within our country and they just switch the line from you. That has happened with most companies within our business at one time or another. Sometimes you win, sometimes you lose, and so what you try to do is not put all of your eggs in one basket. If there is one, and I know it is a great concept to really focus on one business and do it well, which we try to do but you cannot, in our business, focus on one because if that one goes tomorrow then you are out of business and because it is so easy to terminate those relationships. The supplier has no obligation to help you with any of your sunk costs, the costs for employees. If that happens, the company is obligated to pay compensation to all employees up to three weeks a year for every year they have worked for you. Andy Armstrong - Q13: What is the role of government or regulators in this industry?  In our particular industry, retail and distribution, it is not highly regulated. When you import products the government will make sure that you are paying the correct duty and they have inspectors who will make sure that you are meeting quality standards and labeling standards. We do have some products that are on mark up control. These are particular products. This was introduced four years ago when we went into recession, just before actually, when commodity prices were going through the roof. It is a mechanism the government put in place to try to control prices of items like flour, rice, pasta; basic commodities. So we are only allowed a certain mark up. They will come and check to make sure that you are not making more than the allowable mark up. Andy Armstrong - Q14: What big issues will companies in your industry be dealing with over the next five years? I think, as I touched on before, it is going to be that temptation for suppliers to bypass companies like ourselves. Particularly as we have seen, as foreign owned companies have come in, who may just be a branch of a much larger multi-national company, and they already have a relationship with our supplier, let us say in North America. They do not understand- or want to understand- why they should buy through a local distributer. They want to be able to source it directly in Miami or wherever, usually at a lower price. The trouble with that is if the suppliers cherry pick some of those big accounts and go direct to them, then it makes it much more difficult for us to maintain the sort of investment you need to maintain good service to the rest of the market. Certainly, if they are cherry picking the big accounts, it is hard for you to justify sharing costs on advertising and promotion, which is generally what we do. Andy Armstrong - Q15: Can you offer some fast facts about your company? Sixty employees. We have seven trucks that do what we could call a 'route to market', which is they go out and sell and deliver. Then we have a fleet of about nine independent contractors who own their own trucks and they will do deliveries to stores for us as well. Our warehouse is 20,000 square feet and then our office area is about 6,000 square feet. A medium sized company for our country probably considered small by international standards. Andy Armstrong - Q16: Can you describe the business culture of Barbados? A small society, Barbados is about 300,000 people. Relationships are very important so it is not only who you know but it is important that people now you and feel comfortable about doing business with you, so that is important. We tend to be quite conservative, so it is hard to push change through. Generally we have a good way of life in Barbados. Generally low crime, laid back way of life but when you want to make changes; there is always a push back. They say, 'Why change things? Things are really good'. That part of things can be very challenging sometimes. Andy Armstrong - Q17: If you could, is there any part of the culture of Barbados that you would change? It would be that; that people would somehow realize that without losing what you have, you have to be willing to change and keep things fresh. When people fail in business- currently if you are a failed entrepreneur, unlike in North America where people celebrate your bravery and look forward to you next venture, down here if you have failed then it is a real blot on your career and it would be very hard for someone to back you to go again. So we need to be more appreciative of people being brave enough to try new things and if they fail, then encourage them to go again. Andy Armstrong - Q18: How might future leaders be identified? When we see in the company or the chamber, what always strikes you are the people who you feel are going to go far and are the ones if you have something they are always the first person to put their hand up and say, 'I am willing. Let me give it a try' or, 'I will do that'. They get excited about trying new things. Even from that young age you will have people saying, 'Well, you know I am going to have to work two hours extra if I work on that, so I hope you are paying me time and a half'. You quickly know that those are the kinds of people who always see themselves as employees whereas the other ones who are keen to take on challenges are the ones you could groom to become leaders because they are the ones who get excited about change and making things happen. Andy Armstrong - Q19: How does your organization deal with failure? You try to learn what you can from them. It is always difficult to let go because if it is a project that you and other people have been working on, you have a lot of emotional attachment to the project. You still feel it is a great project and you want to keep going on it but at some point it becomes pretty obvious that it is not going to work how you wanted it to work. You have to have the courage to stop it before the situation forces you to stop it. But then you try to look at why did it not work. Was there something wrong with the concept? Did we market it wrong? Was it just really not the market? You really try to do an analysis. Try to take the positives from it and try to look for the next project to get the team excited again going forward. Andy Armstrong - Q20: What is the role of contracts in business in Barbados? We are still very much a 'hand-shake' society. Certainly, we do have contracts and certainly when you are dealing with international suppliers it is becoming increasing that they want to have a contract with you. We understand that so we go along with that. We have recently had a local retailer, which is a branch of a multi-national corporation, and they are very keen to sign contracts with all of their vendors. No one, really, in the industry has ever signed a contract with a retailer. That has actually created quite a bit of a stir locally. It is one area in which the local businesses come together because the local distributers have formed a group through the Chamber of Commerce and have negotiated with this retailer. The first thing is we do not need a contract, we just shake hands and keep going and their thing is, we need to have a contract because that is what we do. It is not that there is anything particularly- there are a couple of clauses we would probably have to strike out of the contract but most of it is very innocuous. Even so, most of the distributers are very against signing the contract because they feel you should not have to. Andy Armstrong - Q21: Can you comment on the Barbados Chamber of Commerce? I always think it is really good to try to do something for the business community instead of being focused just on your own industry. So from your personal point of view, it has been great because you start to realize- even in a small society- there is a lot more to business than just your segment that you compete in. Since being involved in the Chamber, I have just realized how diverse business- even within this country- is. But what is important for being involved in that is; if you have issues, particularly with government agencies, and you try to solve them on your own, you will often get two things: you will get the run around or, if you are too strident, you will be victimized next time you come there. If you go through a trade organization, like the Chamber of Commerce, we can lobby on your behalf. We are almost like a trade union so then it is difficult to victimize a whole body. I think that there is strength in numbers. There are a lot of common issues that businesses will have but even if you have a specific issue, it is often better to have the back up of an organization behind you.