Engineering and Environmental Solutions: the growth conundrum

Learning outcomes After studying and analyzing this case, students will be able to evaluate the strategic alternatives for growth for a small entrepreneurial business in an emerging market, analyze the trade-offs between maintaining continuity and change in the growth strategy adopted by an organization and synthesize an appropriate growth strategy for managing the trade-off between continuity and change in an organization. Case overview/synopsis It was late April 2022, and Mohammad Hamza – the founder and marketing head of Engineering & Environmental Solutions (E&E Solutions) – disconnected the call of his sales manager. His mind was fixated on how to craft the strategy for the next phase of the company’s growth. The deadline for their biggest tender was at the end of May 2022. Should he commit all the company’s reserves to this project or pursue global markets? Launched in 2015, E&E Solutions had come a long way from being a start-up with just one product to a full-blown manufacturer and environmental monitoring equipment service provider. Growing pollution and strictness in compliance propelled the demand for environmental monitoring equipment in India, poised to reach 342m by 2025. E&E Solutions leveraged its technological capabilities in Internet of Things and sensors producing low-cost monitoring equipment to gain an edge in an evolving market and bootstrapped its way to almost 5m annual turnover in 2021. However, the last review meeting brought many concerns for the next growth phase. E&E Solutions had so far focused on the domestic market, catering to the demands of private as well as government clients. A significant cause for concern had been the small order size of private players, averaging 2, 000 and a lower net margin of 8%. Moreover, the company had been missing out on opportunities to bid for large government contracts owing to stringent bidding credentials required (such as turnover of at least 50%–80% of the project value and previous similar order experience with a range of at least 70% of the project value). Furthermore, the COVID-19 pandemic had stalled their efforts to tap a promising global environmental monitoring market (predicted to be 44bn by 2030). As Hamza and his team sat in their board room for a discussion, they had two alternatives. Either continue focusing on the domestic market, especially the big government contracts (more than 12m order size) or explore the markets in other emerging economies with demand for similar products (such as Middle East and North Africa region) more aggressively. Hamza was, however, wondering if they could do both, for he knew that to qualify for big government contracts, they needed to scale up. He was also getting restless after missing his target of reaching 20m in five years, especially since India’s ecosystem for start-ups and the small business sector had witnessed favorable policies and support from the government. He started pondering how to leverage his organization’s strengths and continuities to achieve the required pace and scale of change. His thoughts wandered around dividing the cash reserves of 500, 000 to fuel growth without reducing the R&D budget. After all, R&D has been E&E Solutions’ forte since its inception and has been pivotal in creating its differentiation. Complexity academic level This case study can be used for core strategic management course at the undergraduate and graduate level of management programs. It can also be used in advanced strategy courses like strategic change, entrepreneurship and small business management offered in MBA programs. Supplementary materials Teaching notes are available for educators only. Subject code CSS 11: Strategy