Cheung Yan’s firm’s dominance did not really start from nothing. It emerged from his idea of turning waste paper into high quality packaging materials. She knew that most, if not all, businesses that have a sales component in it have to rely on a stable supply of packaging materials in order to release the orders of their customers and that those firms have to look for cheaper packaging material alternatives in order to promote business profitability and sustainability. She capitalized on that idea. It can then be argued that her strategic management strategy is one that is based on evolutionary theory, one that has close connections with competitive strategic thinking. This, according to John Darwin (1996) is a part of the modern paradigm of strategic thinking. The general idea is to make the business as competitive in the industry it is operating in as much as possible. That was practically what Cheung Yan did when she decided to use a revolutionary way to increase the cost-effectiveness and value proposition of the company’s products.
There were numerous challenges that she mentioned Nine Dragons faced during its early years of operation. The biggest challenge so far would be the fact that she and her family was from China and the raw materials and paper making methods and technologies available in the mainland are only capable of producing subpar paper-based packaging products, which is why most businesses in the country would prefer to import them instead of looking for suppliers overseas. Yan was able to take note of the demand and so she decided to setup the business first in the United States where the raw materials and technologies for paper production are higher quality. They then exported to China in order to meet the import demands for paper-based packaging products there. The company grew rapidly and considerably every year until it was able to setup shop domestically (in China) and easily become one of the biggest companies in the country.
There were many rules of thumb (or absolute rules) that Cheung Yan mentioned. One of which would be the company’s commitment to business and environmental sustainability. It can be recalled that in the case, she mentioned how committed the company is to green and low carbon papermaking—which is one of the main reasons why the paper-based products in mainland China at the time were subpar in terms of quality.
The company’s motto was “paper-making can’t do without environmental protection” . This proved to be the backbone of the company’s success because it enabled the company to attract investors and institutional clients. As a result, the company’s sales revenue increased. This led to a proportional improvement in profit values as well.
Over the years, it managed to grow at an unprecedented rate because of their various commitments to quality and sustainability. There are of course other rules of thumb-based strategies that she employed but this one appears to be one of those that made the biggest impact.
Yes, there were numerous evidences of positive feedback in the Nine Dragon’s case study. Positive feedback refers to a process wherein an entity or in this case, a for profit organization, enhances or amplifies the effects of whatever it is doing by continuing to do the strategies and processes that create the effects that it want to intensify or amplify.
Relating it to the Nine Dragon’s case, the company first tested the waters when it decided to first setup shop in the United States—mainly because of the raw materials and production technology edges that the business environment there has over that in China. Yan was able to prove that the demand for paper-based products in China was high and that they are willing to import from other countries as long as product specifications and ideals are met. So, she continued to increase the capacity of and optimize the business in order to meet that demand until they decided to move their key production facilities closer to home for a more cost effective production process.
The narrative that Cheung Yan developed for Nine Dragons is a classic story of modern strategic management and thinking. The modern strategic management and thinking is based on demand and the ability of an entity or an organization to meet it. The modern paradigm of strategic management and thinking is based on rationality and logic.
It is important to note, however, that most effective managers would acknowledge that models or knowledge on which their decisions and actions are based are far from being purely scientific and or rational .
In the Nine Dragons’ case, the narrative was based on how the strategists in the company, as spearheaded by Cheung Yan managed to realize its vision and turn the challenging situations in the industry into a great success story. The individual accomplishments of the company that contributed to its long term success were also highlighted, which is only normal because no successful company is made without the managers having to face some tough challenges in the early stages.
The most difficult question to answer would be Nine Dragons’ strategy for the next five to ten years. There are a lot of things that can happen within this period. The market consumers’ expectations, demands, and ideals may change.
This would require the company to make changes and adapt because otherwise, its competitors would surely eat its market share up. There are two ways to look at this. Is the company aiming for stability or is it going to look for further growth and expansion? The safer option would be to continue looking for further growth and expansion; it is also going to be the more aggressive one.
Part of being able to live up to this strategic management move is to keep adapting so that the company’s market share can continue to go up over the next years. With this, however, Cheung Yan and her management team should be willing to put in more time to develop new production paradigms and technologies to keep up with the changes in the market.
This is something that strategic managers have acknowledged time and again—that focusing too much on rationality and logic would inevitably lead to failure and even and organizational management disaster. Applied to the Nine Dragon’s case, this means that the company cannot afford to rely on just one strategy (e.g. to simply meet the market demands).
It has to have something working in the background if it is to continue growing and expanding. The second principle would be the one that highlighted the advantages of being an intelligent organization, one that is continuously involved in self-modification . In a rapidly changing environment, it makes sense to regularly self-modify because otherwise, the competitors would surely get ahead of the company and that would be the only and final nail in its coffin.
References
Darwin, J. (1996). Dynamic Poise - A New Style of Management Parts I and II. Career Development International, 21-25.
Macintosh, R., & Maclean, D. (2014). Strategic Management: Strategists at Work. Palgrave Macmillan, 184.
