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“ Small things are best. Grief and unrest To rank and wealth are given ” (from ‘Little Lady’s Album’)
June seemed to have shown everyone that sometimes there is greatness in smallness.
Have you noticed how none of the big countries (Germany, France, Italy and England ) qualified for Euro 2004 semi-finals? Instead, all the surviving four represent small nations: Portugal, the Czech republic, Greece and Holland. I bet you failed to notice how the ‘big boys’ fared throughout the tournament. Figo was replaced by young Postiga who scored with only a few minutes play left. The game suddenly turned round and Portugal beat England. Beckham failed two penalty kicks and fudged all the close-range direct freekicks, purportedly his ‘speciality’ for which he earns the millions. In contrast young Rooney scores four times and would have probably managed to cruise England through if he hadn’t been seriously injured early in the game.
Would you say that France’s Zidane was anything like his usual self when they were beaten by Greece? Milan Baros, only 22, hardly made the news during the English premiership season, but made such an impact on the Czech republic’s success, scoring more goals than anyone else (so far).
More importantly, the search in the EU for Prodi’s successor as president of the European Commission made the rounds only in Belgium, Luxembourg and, finally, in Portugal - all small countries. As I write, the Portuguese Prime Minister landed the EU’s chief executive’s job. Furthermore, the Irish presidency has been acclaimed by all as the most effective and productive for years. Undoubtedly, a great contrast with its predecessor, arid Italy.
Here in Malta I encountered an interesting episode last week which proves that, like David on Goliath, small can sometimes beat big international competitors. During the course of my work I came across two pyrotechnicians who had just returned from New Zealand where they spent six weeks teaching and training the Maoris to manufacture ground fireworks for their ‘Matakiri’ annual festival of celebrations. The newspaper cuttings I read and video clips I saw named them ‘Maltese irdieden’ for lack of a better description in English.
The New Zealand Tourist Board featured them in their attractive brochure of activities. There was even a Maltese flag hoisted in the park where the whole twenty minutes of fireworks display took place. The three ‘irdieden’ lasted four minutes: the result was described as ‘uniquely spectacular’ by the Public Dreams Trust reporter. The Maltese duo won the contract in competition with short-listed Mexico, after eliminating representatives of suchlike giants as USA, Canada and others. And yet there was no place at all for them in Malta’s recent EU membership celebrations! Would you believe it? As is often the case with us, we prefer (and pay good money to) the foreigner simply because we consider ourselves as being too small to compete with anyone else. “We are all amateurs” a Prime Minister often said in my presence during the years I had to work closely with Castille. He attributed this to the smallness of the nation and, at that time, our insularity.
Maybe in politics he was right. I could never understand politicos anyway. But I do understand business sense and can state from experience that smallness at times makes for higher profitability. It is a natural, indeed imperative, for a healthy business to grow and expand with a view to becoming more efficient and thus compete better in the global environment we are having to operate in.
The trouble is that often firms tend to grow much too rapidly and breach the barrier of optimal size without realising, in their quest for immediate profits, that they may be overinvesting and entering into commitments which they can hardly honour when they attain a certain size.
This week I had reason to advise a small hotelier against expanding for fear that the satisfactory return on his current investment could well turn negative by the time more rooms were added. That very same day a summarised financial report was published in the newspapers on Malta’s largest hotel and its perennial losses. It seemed to have convinced him, although the urge to grow bigger remained.
His counter-argument was another report by the Malta Communications Authority stating that the communications sector’s profitability over the last four years was twice that of the national average. This latter, incidentally, takes into account the high profitability of the financial services sector. I had to explain that it was the market’s growth expectations which really mattered and, of course, the degree of competition therein, especially considering the relatively huge capital outlay of most players which constituted a barrier to new entrants. Unlike hotels and catering establishments in general.
The classic case in my experience was the ‘Rolls Razor’ washing machine saga in Britain some forty years ago. The brainchild of marketing mogul John Bloom, the sale of his washing machines depended heavily on national advertising combined with door salesmen demonstrating their performance and even leaving a sample for some days to enable the housewife to assess their functionality and reliability. The price was much cheaper than that obtaining in the conventional retail outlets for renowned brands. Bloom’s machines were made in Holland. They were as good any other make; my mother-in-law had had one for three years by the time Bloom became so famous that he was invited to be the guest speaker at an LSE’s ‘ Tuesday Seminar’ for which one needed to book an advance ticket to be admitted.
Sales and profits were rocketing. Bloom had delivery warehouses strategically all over Britain. By ordering in large bulk, he was able to sell a good product cheaply and make super profits. Inside seven years, multimillionare Bloom was declared bankrupt. He simply refused to grow slowly and steadily for fear that a competitor might enter ‘his’ market. The liquidator found thousands of unsold machines in every warehouse: he had ordered much too many for comfort, ignoring the possibility that the other brands might decide to reduce their prices. Which they did.
His millions were made whilst he was small. He didn’t know where and when to stop growing.
Suddenly, I am reminded of the BICAL ‘empire’ in the seventies, the current Price Club saga, and ........ .
PS In contrast to the Mdina restaurant’s prices I mentioned last week, may I now quote from the bill of an equally-classed restaurant in Ta’ Xbiex where I specifically ordered exactly the same items, viz. Merlot wine Lm 3.95 (cx. 7.15), table water 95c (cx. 120 ), soup 1.70 (cx. 3.00), fish + vegetables 6.00 (cx. 7.00), no cover charge (cx. 50c), beautiful view of the marina and excellent service.
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