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RelativeResourceManager7 - Case M LANGLEY INTERNATIONAL...

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Unformatted text preview: Case M LANGLEY INTERNATIONAL GROWERS, INC. Managing a Small Business Rae André David Langley was the 58—year—old president of Langley International Growers, a New York—based firm with annual sales close to $4 million. Like his father and grandfather before him, Langley grew flowers for distribution to wholesale markets along the eastern coast of the United States. Domestically, he ran about 12 acres of greenhouses, putting the company among the top IO greenhouse Operations in the United States. To compete with flower growers from Latin America, Langley started a subsidiary in Santa Neuva, an island republic in the Caribbean. The following text is based on discussions with him 2 years after he successfully started the. new operation. MANAGING THE INTERNATIONAL START-U P We first became interested in going abroad when we heard about it from one of our competitors. We had decided it might be a good idea to hedge our bets and move to a climate where there is no fuel requirement. So we went down to Santa Neuva to see the competitor’s operation, and we thought he was doing a good job. Sixty percent of the flowers used in the United States today are imported. These flowers are grown with labor at $2 a day, versus what we have to pay at minimum wage, around $3.35 per hour. \X/e thought there was money in it. But establishing yourself in a foreign country is not easy. There are pitfalls. The laws of these governments look like they welcome business coming in. It’s all on the books: The laws are there to help you. The government itself wants you there in a lot of these countries. What they spend nationally on oil alone exceeds the money they get from exports, which constantly puts them in the doghouse internation— ally. They can’t buy anything outside, so they’re constantly in a state of devaluation relative to everybody else. In addition to that, they have an enormous birthrate, which constantly keeps their poverty in place. (You go down there with the idea you’re going to help them out from that standpoint, forget it, because they’re not going to let you do it.) There’s a lot of SOURCE: This case is based on an actual company. Facts have been altered to protect the identity of those involved. Santa Neuva is a fictional country. Reprinted with permission of Rae Andre College of Business Administration, Northeastern University. 533 . 34 STRATEGIC AND OPERATIONAL money to be made if you know how. You go down there and start spending your money, and then, you find out that the laws have to be administered by people, and the people are where the hang—ups come because they don’t obey the law. They circumvent it to their own benefit. In other words, they make it difficult for you for various reasons. The political aims start to disappear in the bureaucracy. For example, we have to import a lot of things into the country because they don‘t have them. Well, they can let that stuff sit down at that dock until some guy clears it. They let our crates of greenhouses sit there for 2 to 3 months. It threw us way back, cost us thousands of dollars. We had importers down there who knew their business. All the paperwork was right, but all that the government guy says is, “I don’t think this is right,” and it gets kicked back and forth. One problem is that a lot of the government income is taxes on imports, so that they’re very strict, particu- larly if it’s an American company that’s shipping. This holdup means that every— body’s benefiting except the poor guy who has to cut the flowers, because they’ve made work for the phone operator and everybody else. You’re constantly check— ing, and checking. It’s a make-work scheme, in any sense of. the word, whether it’s in Detroit or the Caribbean, and they‘re mas— ters at it. A lot of these foreign countries, they don’t operate, they make work. For example, down where we are, the bureaucracy has increased 50% in 4 years— 50‘7/6 more government employees. Going through the airports, there’s a guy who puts the tag on your thing, and there’s a guy who takes it off, 5 feet away. You can tell them your problem, but they don‘t understand the problem of business having to get that money moving that‘s sitting there. They dour realize that they have to collect their taxes and build their country from business. Even answering the phone, the conversa— tions are long, the conversations are flow— ered. They don‘t get to the point, and this, of course, is frustrating if you’re not used to it. And, especially, if you’re paying for a long-distance phone call. It takes them a half hour to say good morning! _ About 6 months ago, we needed this particular type of spreader for an insecti- cide, and I wanted to make sure it was there. We wanted it the following morning, and I wanted it delivered that day. And my secretary is on the phone talking to this guy 25 miles away. He kept saying, “Manama” (tomorrow), and I kept saying, “Ayer” (yesterday). The secretary kept saying, “lVlafiana,” and I kept saying, “Ayer.” Finally, with negotiations back and forth, I got it. So you have to tighten things. They don’t respect you if they know they’re getting away with it, because everybody is watching everybody else. We made that mistake. We were too easy. Of course, these people are very hungry. Their unemployment rate is tremendous. The established rate is 40%, but they don‘t count everybody. If they counted everybody, it’s around 80%. You learn as you go, and you learn from talking to people. They don’t respect softness, and yet they don‘t respect anybody who’s going around shouting and yelling either. You’ve got to have them understand who the boss is. We had a guy who was coming in late all the time, so we gave him a written notice. After you hire him for 3 months, the govern— ment says you own him: It costs you money to let him go. if he’s there for 3 months, you might have to give him another 3 months pay. After a year, you might have to give him another (3 months pay. The guy was late. We gave him the notice. He still was late, so we had to let him go. It didn’t cost us anything. See, if he breaks the company Case .14: Langley International Grmyers, lnc. rules and they’re allowable rules according to the law, then you can get rid of him with— out any pay. But we had to get tougher and tougher and tougher. It’s so easy to be easy because the labor’s cheap. But you have to realize that any time you’re not making money, it’s coming out of capital, so labor’s not cheap then. \We weren’t knowledgeable about the culture. We assumed that they’re like us— sort of like us—if you have the language. That’s the mistake you make. You can hire a Neuvan to run the place, if you’ve got the language yourself, but you have to know the language so well that you get the innuendos, and that’s something none of us have. Very few Americans have that. You could hire a Cuban, Mexican, or a Puerto Rican. but even they do not think like we do. They’re more apt to identify with the person instead of identifying with the problem. They identify with their emo- tions and they think, “Well, poor guy.” We hadn’t taken one dime out of there yet, and we were asked for a raise. They’ll say, “Look at these poor people here. Don’t you think they ought to be given hope?” When we went into the village, there the only means of transportation was the truck that we had bought. Now, almost everybody rides up in a new Honda motor— cycle. The standard of living has gone up. We hired them, and they had 60% unem— ployment in the town, and yet I didn’t give them hope. They’re big on expectations and poor on execution down there. You have to have an American boss, period. All those guys underneath can be Neuvans, but you got to have an American boss because you have to teach those Neuvans how you want it. If you go down there and take their way of doing it, you’ve lost everything you’ve ever bad. There was a lot of petty thieyery when we built the place. A bar down the end of the street was built in the last year since we built. The owner didn’t have a thing before. He’s the guy who plowed our prop— erty and worked the field before we put our greenhouses up. Right after we built, he was able to build himself a bar and a dance hall from similar materials that were used to construct Langley Greenhouses. I call it Langley’s bar. It’s right at the end of our road. I often stop in for a cerveza. All the foreigners do better than we Americans do. Number one, they can bribe the governments. We put strings on our busi— nessmen that are absolutely abominable and then holler that we can’t export anything. Another thing is the gringo approach. The japanese are a new face in there, and they operate a little differently than we do. They always say. “Yes.” \X/e say, “No,” but they say “Yes” and don’t mean it, so it doesn’t hurt as much. It’s a different approach and they’ve sold one hell of a lot of cars. In fact, I have never driven an American car down there. If you want to go buy an American truck, just forget it. We have a little mro—cylinder ,lapanese truck that’s running tip and down those bills for 50 kin/gal. LOCAL OPERATIONS Our manager there came originally from Puerto Rico. I hired him when he was 15 or 16 years old. He has worked for me for 17 years. We usually have about 7500 Puerto Ricans working for us up north. I am like a father to him. He had a child and named it after me. I sent him down, and he’s been as happy as a lark, but that’s Jorge. That’s not every— body. You can’t generalize on jorge. He’s doing a good job. Ofcourse, he lost his first wife because she thought the girls were a little too loose in Santa Neuva. She wasn’t wrong. She walked out on him. I 'JI (.N m don’t know whether he got divorced, but he got married again. To give you just a brief insight into it, we won’t allow him to hire any woman under 40. We don’t want him to be passing his favors out. There’s another reason for that. They’ll come and work for you, but if they get pregnant, you have to give them at least a month off with pay. Sure enough, they’ll come when they’re already pregnant. First thing you know, you have five young ladies pregnant, nobody to do the work, and you’re paying for it. We hired the first secretary, thought she could speak English, and it took me 9 months to get rid of her. I fired her. She couldn’t speak a word of English. “Yes” or “No.” She had the books all fouled up. Pregnant, too. She lied to us about it. She came back and had the kid here. Now, he’s an American citizen. It’s a very loose society. It’s amazing, underneath. On top, if you walk into a bar or a dance hall, you can’t dance with those girls in that bar, unless you know some— body who knows them. But down under— neath . . . it’s a different story. jorge’s getting worse, being down there. He’s forgetting his English, too. He has to think twice. We have three managers and 20 employees. That’s what we call the office help—managers. We have an office man— ager, a pack and ship manager, and an overall manager: These people can all speak Spanish. Then, we have about 12 men and eight women. The women do the bunching. The men do the cutting, they are night watchmen, and all kinds of things. You look in that packing shed down there, and it’s probably identical to this one tip here, only there are no conveyers. God forbid I ever put a conveyer down there because it’ll only work about .3 hours. And that’s when l’m working. The more we check up on them, the more controls we put on them in equipment, the more STRATEGIC AND OPERATIONAL apt they are to say, “This doesn’t work now.” It’s so simple to break a computer. You spit at it or push the wrong damn but— tons and it’s done. We sent down one of the finest little power mowers you can buy. We started it up before it went down. It worked perfectly. It was 8 or 9 months later and three mechanical overhauls before we got that thing working. Last year, I arrived and found 10 or 15 men cutting the fields with machetes. I’m still not sure if that isn’t the cheapest. If you hire them for $2 a day, they’re telling you something. They really are telling you something. You can hire their people, on certain jobs anyway, cheaper than you can use the damned equipment. You won’t see a lot of bookkeeping machines in Santa Neuva. They_use people, and they’ll get it right. They’ll have a calculator, but that’s about the extent of it. You might in a very big American company but not generally. We have parameters for the manager: checklists for his rounds, a checklist for his maintenance, a checklist for his night—man. You must be Specific. You don’t just walk out and say, “Clean.” You’ve got to say, “Clean this table, clean that table, clean this.” Write it down and give to him. If you don’t do that, some of it will be forgotten, and some of it just won’t be done. And then you can’t come in and holler, because the guy will say he didn’t hear you. They’re really sharp this way. You have to be spe- cific. You have to draw it step—by-step or they just won’t do it. If they have a pack— age of cigarettes, the empty packs will go onto the floor, until you tell them, “The next time you do that . . . out. We are not going to have that. This is not the way we’re going to be.” You go to the company next door to ours where he never enforced these things and it’s a dump. It’s not that he doesn’t make money, but it’s a dump, a literal dump. lt’s terrible. Case I4: Langley International (irowvrs, Inc. J! La.) We have the manager take videotape pictures around the plant every week so we see what the plants look like, see what the surroundings look like, and see what the housekeeping looks like. We also have him send all the bills, the bank balances, and the payroll up each week. We have a problem with visitors, too. We have to keep them out. They’ll just drop in and say, “Can I see the place?” and they’ll take up the manager’s time, and they’ll take up the office time. When they get to talking, they’ll talk about their grandfather, their father, their brothers, their sisters, and it’s on your time. So we had to discourage that. \We had to fence the place to keep the horses out, the cows out, and the people out. Just so you can keep control of the flowers. l don’t know if we stopped it. If you have a fence, you have to say, “Don’t crawl over the fence.” A lot of growers don’t do things the way we do them, even up north. I like it written down. I hate verbal orders, unless it’s just a day order. If it’s a long—term deal, it should be written down and put in the policy. “This is what we do, in this way, at this particular time.” We’re known to have the best place in Santa Neuva, and there are a lot of flower growers. In the town, we’re known as operating a very tight ship. THE PRESIDENT’S PERSONAL INVOLVEMENT I’ve spent a lot of hard times down there. When I go down there, I’m alone most of the time. There are many, many nights you’re all alone. There’s no one in the hotel. That’s why I like to take somebody with me to play gin or to go out to eat. You’re just there in the mountains, and you‘re all alone. It’s not a bad hotel as hotels go. lorge has a list he puts in my room for me. I have a toaster, coffee, water, coke. beer, vodka, insecticides, and other stuff, Of course, they haven’t changed the linen in the 3 years we‘ve been going there. They say that you don’t go in the kitchen or you’ll never eat there again. I spray the room for cockroaches and watch them wiggling. In the middle of the night, you hear them. I spray all over the room every time I go out. The hotels are owned by the govern— ment, and they’re rented from the govern— ment. It’s amazing. These beautiful hotels rent for $200 to $300 a month. Anyhow you should see the way they keep it. Terrible. You can’t swim in the swimming pool. It’s green. It’s a beautiful swimming pool, and I know how to tell them to keep it but they won’t. If I were going to be down there a lot, I’d take my own chlorine and fix it. It would only cost $IOO to use the pool the whole time I was there. Probably, they’d give me free drinks out of it, they’d make it up. They just don’t know how to do things. They fool around. \When I was robbed at the hotel, I went to the police station and gave them a list just because I wanted it for the insurance company. Nothing happened. Nobody found anything. I didn’t eat in that hotel for the next 2 months, the next two times I was there. I wouldn’t go in their dining room, because I knew those guys, knew who did it. I was there alone. Somebody had to be watching, and the town is too small not to know the thief and I knew the police knew. I found out the hotel was responsible, but you can’t get blood out of a stone, so I said, “All right, I want a 10% discount rate until this is paid off on my hotel room,” which they went along with. After that they put a guard on me. Every night I have a guard—a private guard. They give him a peso. I-Ie’s sitting right outside my door. I’ve never felt physically afraid, just alone, that’s all. STRATEGIC AND OPERATIONAL I went down to town one night trying to negotiate for this land. Downtown at night looks like a country road. The house lights are on, but there are no street lights. I went down there negotiating with this family right in their house. (The guy who said that he owned the land just pissed me off. I had it all negotiated and later found out we couldn’t get a clear title.) Anyway, I’m sitting there in this house with this family. Nobody can speak English, and I can’t speak Spanish but we’re negotiating. It was this guy and his son, who could speak English a little, and the whole family—his wife and relatives all come in to look at me. Everybody was just staring. All of a sudden, I started to wiggle my ears, and I’ll tell you, they had a hilarious time. My wife was up in the hotel. She was worried I’d disappeared in the middle of the night down in a strange country. I didn’t get home ’til 1 or 2 o’clock in the morning. It’s just a new ball game, and you should detail it right from the beginning. We should have had notelmoks which was my fault. We should have had everything detailed—the duties, the country, the work rules. If I were to do it laws of the now, I would have all this stuff researched, and if we ever expand again, we’ll know what the hell we’re doing. And there’ll be no problem. I spent quite a bit of time down there last june when we were plant— ing, but I should have spent 2 months down there. I did spend practically that much time down there off and on, but I should have been right there and taken over the job of doing it. It’s not the Neuvans’ fault at all. I might lose it if I don’t get down there more. If I were going to do it over again, I wouldn’t invest down there, but if I had to do it, I’d still pick that country. I didn’t make a mistake in the country. We did not do that. It’s probably the best of the lot. They’re more democratic than most. The problem is that poverty does strange things. Poverty will turn those people into almost anything if they don’t get it straight— ened out. That birth rate should be zero right now, but the population is going to double by the year 2000. That’s why their university is a hotbed of Communism. They’ve got all this intelligence and they see the country like it is, and they don’t know what to do. Our government insures us if we’re taken over down there because of riot or insurrection or government acquisition. Otherwise, you couldn’t get any loans. You’ll see people with jobs there, and you wouldn’t believe it. Take the waiters in the hotels. You’ll go down there today and 5 years from now and they’re practically working for nothing. There’s nobody in the hotels from one day to the next. Yet, they’ll be there. They have no place to go. There’s no place to go except the United States and there are 500,000 Neuvans working in the United States. You literally can’t get a plane reservation back to the States during the first 2 wee...
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