Threat from Government Intervention

Threat from Government Intervention
Executive Summary
Lorpel venture is facing threat from government intervention and the owners consider three options. The first option was to accept the government's intervention and become one of the city's major donors. The second option was to split the company and operate small firms in different regions. Such would allow them to avoid government intervention. The final option was to move their business operations to a different country that offers a friendly business environment with minimal government interventions. Such a country should offer similar cultural values and economic advantages to their country. Lorpel's business score card indicates that the only challenge facing the business is an unconducive business environment caused by government intervention. This presents a weakness to Lorpel because it will not be able to execute its processes efficiently. The business score card also indicates that the company's strengths include its financial perspective and its availability of raw materials. This has made Lorpel successful in conjunction with good management and strong employees. The company's weaknesses are a high competition rate and potential government intervention. The business scorecard shows that the business also has an opportunity as it has a chance to expand or move into another country at any time. The company's threat is government intervention, which has become a major hindrance in making future plans. If the company had to operate in Belarus, it would need to dispose of a part of its business and operate in different regions. Such a strategy would require the company to have a stable and comprehensive plan. Hence, the best strategy is to move its operations to another country.
Case Analysis
The case study focuses on the Lorpel Partnership, a company facing pressure from the government to participate in developing the city. Two brothers, Victor and Aleksey Kruglov, started a company aiming to sell wood pellets in the European Union countries. Victor lived in the US and had access to capital and different ways of running a successful venture. Therefore, he helped with most of the management issues. On the other hand, Aleksey Kruglov lived in Belarus and understood the local ways of accessing raw materials for their business. He was in charge of running the local operations, which facilitated the business's success. From 2002 to 2007, the business grew rapidly and had seventy-two employees. The brothers had an opportunity to produce their wood pellets at a low cost in Belarus, enabling them to make huge profits from the business (Ivanova & Winn, 2010). However, the company's growth jeopardized its operations in the state-controlled business environment in Belarus (Ivanova & Winn, 2010).. In this area, large companies were considered responsible for developing the city. Therefore, the government regulations would require Lorpel to adhere to certain directives such as exportation procedures and share its revenue with the city authorities. The threat of government intervention would jeopardize the company, so the partners considered three options.
Company’s Structure
The company's structure fits its growth strategy because Victor provides all the information needed to run a successful venture. As well, Aleksey Kruglov understands the local business environment, and this facilitates organizational success. Such explains why the company has grown to the extent that the government considers it one of the leading companies in the industry. The organizational structure also facilitates the partnership's exploitation opportunities, including the distribution of the company's products in several countries. If the company plans to exploit and defend its market position, Lorpel needs to analyze activities within other companies competing with them in the industry. This would enable Lorpel to identify upcoming changes and prepare themselves for competition. Such allows them to maintain a competitive advantage in the industry over time and sustain their profits. Without such an organizational structure, the company's growth would be challenging due to the lack of knowledge of running such a venture. This would lead to the creation of different strategies that would limit the company's growth.
Company Success and Operations
The case study illustrates a partnership that seeks to find an opportunity to expand its business without government intervention. Victor and Aleksey Kruglov were successful in selling wood pellets in the European countries, which motivated them to look for other avenues of expansion to grow their business. The only challenge to the organizational strategy is the government intervention because the brothers consider cutting down operations to remain invisible to the authorities. Lorpel Company has been a successful venture in the last five years due to the management's various business strategies. For instance, capital is one of the factors needed to facilitate the success of any organization. Without capital, it would be challenging for any business to expand its operations (Audretsch & Moog, 2022). Therefore, the company took advantage of the abundant capital that Victor had in his hands. On the other hand, Aleksey has managed the local operations to facilitate their expansion at a low cost. The cost of production is another factor that can highly affect the success of any organization. A high cost of production would force business owners to increase their prices, reducing the demand and limiting the organization's profits. Therefore, Lorpel Partnership took advantage of a low cost which enabled them to sustain high profits because they sold their product at a low price. The raw materials are readily available in Belarus, reducing their manufacturing costs. Another factor that contributed to the company's success is the availability of a ready market. The company has been selling wood pellets to European Nations. Considering the company's growth, it has a ready market that has supported its operations over the last five years. However, the company's performance is on the verge of being jeopardized by the government interventions in Belarus. The government intervention would force the company to carry out certain procedures before exporting their products. Therefore, maintaining a competitive advantage in the business would become difficult in the future if not managed well by the management. The case study illustrates how important it is for businesses to take advantage of their skills and knowledge in the industry because such increases productivity and profitability. The brothers have successfully sold wood pellets in European nations due to their knowledge of running a profitable venture. When making decisions, the management considers how these strategies influence their company's growth (Kaplan & Norton, 2005). Without such considerations, it would be difficult for Lorpel to maintain a competitive edge over time and sustain its business's profitability. The case study illustrates success in industry due to the availability of a ready market, low costs of production, and capital accumulation. The government intervention has affected the company's competitors because the large farms finance city development projects. Such means that Lorpel would eventually become a part of this plan.
Business Scorecard Analysis
Lorpel's operations can be best analyzed using the business score card tool. The business scorecard is effective in analyzing a company's operations because it focuses on the details of management, which helps to gain an insight into the company's performance and therefore anticipate desirable and inappropriate strategies. The tool can be used to evaluate the company's current performance compared to the previous years. It also allows the user to anticipate future profitability if certain strategies are put in place by the management. The business scorecard tool focuses on monitoring and measuring the success of organizational strategies. The Lorpel case study illustrates the effectiveness of the scorecard tool in analyzing organizational performance because it enables users to compare their current performance with that of the previous years. The company's performance has been successful since it started. A balanced scorecard focuses on the customers, business processes, finances, and organizational capacity. When a company lays out strategies to facilitate the smooth functioning of these factors, the chances are high that it will have a balanced scorecard. Therefore, the four perspectives of the business scorecard ought to be considered in all strategy formulations process to facilitate organizational success.
Financial Perspective
The financial perspective is the most important element of the business scorecard. It focuses on measuring the financial results of the organization. The financial perspective uses different techniques and measures to assess profitability, which is critical for analyzing an organization's performance and anticipating future trends (Kaplan & Norton, 2005). Different profitability measures, such as gross profit, operating income, and net income, can be used to evaluate an organization's performance effectively. For instance, to evaluate the success of the Lorpel Partnership, several ratios can be used to analyze its performance over time. Various ways can be used to analyze the current performance of the Lorpel Partnership. For instance, the income statement focuses on measuring the company's performance in terms of sales, expenses, and net profit. The income statement is the most direct information about the company's financial health, which can help users to evaluate an organization's performance and anticipate future trends. The income statements reveal how much money has been accumulated and spent to achieve their goals. Lorpel Partnership has recorded profits since its inception. Profit is categorized as gross profit. Gross profit measures the value of all sales (minor components) and expenses (major components) minus the proportionate cost of goods sold. It is important to note that Lorpel Partnership has recorded positive results in terms of its gross profit because it has been selling the wood pellets at low prices. Lower prices imply higher net income. It can be inferred from this that the management has implemented the correct strategies to enable this business to be successful in its operations.
The balance sheet reflects how much money has been invested in an organization's operations and how much it has earned since operations started. The balance sheet consists of three major components, assets, liabilities, and owner's equity. The current assets section reveals how much money is left in the company that has not yet been used to achieve the company goals. The current liabilities section reveals how much money has been borrowed by the management to run this business (Kaplan & Norton, 1996). On the contrary, the equity section provides information regarding how much money the owners have used to save for this business if it does not generate enough profits to compensate for its losses. The balance sheets provide critical information about different organizational performance aspects, which can help users evaluate an organization's performance and anticipate future trends. In the case of Lorpel Partnership, the balance sheet has been positive since it was founded. The company has record...