Most enterprises struggle for differentiation, but this company is exceptional because its core technology offers such a surfeit of customer benefits. Emergency shelter, strong rooms, durability, flexibility, and environmental conservation, are all rolled into one, going by the external marketing claims of the management. These benefits accrue across the board, from low-cost housing for the poor in Guyana, to luxury dwellings for the rich in the United States. The general business management advice in such situation is that a plethora of competitive advantages can vitiate cash generation. It is prudent to make tough trade-off between segments, and to target one at a time. This focused approach is particularly important for a business that makes cash losses quarter after quarter.
There can be no denying the social relevance of the company’s venture: the luminaries chosen to act as the company’s advisers bear strong testimony to the management’s credentials. However, most investors will want a clear road map to profitable growth, and the company graphs show a brilliant future arising from a dismal financial past, are unclear in terms of strategy. The drivers for success, in each of the market segments that the company is keen to address, differ widely. Endorsements and approvals by bodies such as the Federal Emergency Management Agency (FEMA) and the military, matter most for emergency shelter construction after disasters, while support from construction engineers and architects will determine success in regular housing projects. Only a highly cash-rich corporation can afford to address multiple segments simultaneously.
The capability to deal effectively in steel futures, and transparency in dialog with investors, are common financial planning requirements, regardless of which market segment the management wishes to tackle first. The company should focus in building inventories only to the extent that steel price inflation can justify. It must also build an impeccable track record of meeting statutory reporting deadlines without cases of being forced to submit revised accounts. It is premature for this OTCBB stock to reserve AMEX and NASDAQ symbols at this time. The new CFO should act decisively, and help this company realize the potential of its superb building technology.
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