Small enterprises in Cyprus and internationally face significant challenges in structuring key strategic management tasks. Core requirements, such as business planning or financial forecasting around strategic objectives, are difficult to define in an era of limited consumer spending and rising costs. Keeping track of wider objectives, including sustainability and corporate social responsibility, can be even more difficult.
The iBlue Project aims to support small enterprises in the Mediterranean yachting sector adapt and integrate key strategic objectives in sustainability, environmental management, and corporate social responsibility.
Supported by the EU Interreg-Med Programme, the iBlue Project has developed a 3-Pillar Business Model for use by small- and medium-enterprises. This Model adds important strategic objectives and metrics for sustainability and social awareness to three existing analytical tools:
The Business Canvas Model
The Resources-Processes-Value Framework
The Influencing Forces Model
These provide a good framework with which small companies can assess their current situation and understand how environmental and social awareness link into their wider business strategy and competitive advantage.
In Cyprus, Navigator was commissioned by the Cyprus Chamber of Commerce and Industry to implement the 3 PBM Model in a small enterprise in the boat-building sector. This is one of the last companies still operating in Cyprus, with production of approximately 15 boats per year in previous years.
Our experience in applying the 3 PBM in Cyprus shows that the competitive and regulatory environment for small firms is becoming even more difficult. Regulatory costs are rising while price competition is increasing. Consumer disposable income is falling, and in the boatbuilding sector, small boats are now considered a luxury item, not an ordinary item, as they were only ten years ago.
In this environment, small enterprises in the boatbuilding sector must make the transition to a strategic management model, which is often very different from former methods of doing business.
This includes:
A crystal-clear focus on true production and overhead costs;
Strong cash flow management and accounts receivables management;
A focus on differentiation;
A focus on kaizen: continual improvement and development;
A focus on lean manufacturing and business model innovation in order to reduce fixed production costs;
A focus on value migration: developing different products and services that relate to the wider product and customer lifecycles;
A constant exploration for new markets and sources of customer demand, primarily through regional exports;
Managing the relationship between economies of scale and customization;
Consistent use of corporate websites, social media (particularly Youtube, Facebook, Instagram and Pinterest), and email news programmes to drive customer engagement and distributor network involvement.
While it would be comforting to think that the wider market environment will improve, we believe that all indications point to a more challenging context. This is due to rising input costs (electricity, property, staff), falling consumer disposable income and higher competition, primarily through imports. Companies in Cyprus also face increasingly absurd regulatory requirements that threaten to strangle small business.
We are also at a late stage in the current economic cycle and face the increasing likelihood of another synchronized economic downturn.
It is dramatically apparent that given this conjuncture, the break-even point for small boatbuilders is rising every year.
This is not a particularly new situation, but the magnitude of the present competitive situation is truly different from previous economic cycles.
For further information on our work in strategic analysis and restructuring, please Contact Us.