1. What strengths allowed Stolt to succeed in its markets? Why did Stolt get into trouble when it did?
Stolt was able to identify the market need and offered services that met the need. Stolt developed a unique design for its vessels, where it was able to transport several consignments in a single vessel. This superior design allowed them to reduce their costs and pass on the benefits realised to their customers by offering cheaper services. Stolt further improved its designs of vessels, which offered better cargo protection giving them a competitive advantage.
Apart from gaining competitive advantage from unique vessel designs, Stolt offshore was also able to leverage the parent company’s brand, knowledge and lender support to expand quickly and succeed in market.
Stolt Offshore planned to transform itself from a North Sea provider of divers and ROVs into a global player providing services in diving, flexible and rigid flow lines and EPIC contracting. In order to achieve this vision Stolt offshore expanded rapidly through acquisition. The rapid expansion and acquisition though increased the revenues and capabilities of Stolt offshore; it had negative impact on profit margins.
The key reasons for getting into trouble were: * Rapid expansion through debt funded acquisitions, poor management, poor cost discipline and failure to integrate the new acquired entities to achieve efficient end to end operations and economies of scale. * Lack of skilled resources to implement right processes for management systems, project bidding, cost monitoring and control meant that there was huge project cost over runs, which in turn impacted Stolt’s profit margins. * Complex matrix structure made the organisation rigid and less effective to managing change. * The decision to enter EPIC service impacted the bottom line of Stolt as it was a very challenging