Strategic Management

(MGT 3054) March 2016

Tutor : Arual Dewi
Topic : Analysis of Rocket Internet
Aishath Shajan Zahir (13036710)
Rosni Nisha Mydin Pitchai (13058185)
Preetha Chinnaiah (09066598)

Table of Contents
1.

Introduction...................................................................................................... 2

2.

Strategic capabilities of Rocket Internet...........................................................3

2.1 Resource-based view..................................................................................... 3
2.2 Activity Mapping............................................................................................ 6
2.3 Strength and Weakness Analysis...................................................................8
2.4 Overall strategic capabilities.........................................................................9

3.

VRIO Analysis for Rocket Internet...................................................................10

4.

Rockets success analysis.............................................................................. 14

5.

Strategic Issues of Rocket.............................................................................. 18

5.1 Internal........................................................................................................ 18
5.2 External....................................................................................................... 19

6 Recommendations for issues............................................................................. 22

6.1 Internal........................................................................................................ 22
6.2 External....................................................................................................... 25
7.

Importance of Samwer brothers and implications of leaving the company....27

8.

Conclusion...................................................................................................... 30

9.

Reference list................................................................................................. 31

1. Introduction

Rocket Internet (herein known as Rocket), is a very successful Berlin

based company that deems its success from being able to churn out new
companies and startups at remarkable speed by adopting successful
business models which have been already employed by other ventures.
The company, despite being an imitator is so far successful and aims to
enhance their success in the future by expanding geographically. However,
every company faces hurdles throughout their success journey and some
overcame it and others could not.
This essays purpose is to study the resources and competencies of the
company and apply the relevant framework in order to determine the
firms strategic capabilities; through it, Rockets capabilities could be
deduced that translates to sustained competitive advantage of the firm.
Next, the success factors and the strategic issues faced by the company
potentially would be identified and thoroughly analysed in order to provide
recommendations on how to deal with the issues. Finally, the triumph of
the companys founders, Samwer Brothers would be considered and the
likely impact of them leaving the company would be scrutinised.

2. Strategic capabilities of Rocket Internet

An organizations competitive position is due to its ability to perform at

a high level in differentiated ways; in short, its strategic success is enabled
by distinctive organizational capabilities. In todays vigorous world,
companies face the constant need to recognise and cultivate new
capabilities to respond to fluctuating customer wants or competitive
threats. Failing to do so can cause the organisation to become outdated
(Chew and Clark, 2016). To identify how Rocket utilises its strategic
capabilities, two theories/frameworks, namely resource-based view and
activity mapping could be used. Strength and weakness would be done to
comprehend further capabilities of Rocket too.
2.1 Resource-based view

This is a model that looks at firms resources to derive its strategic

capabilities from. If a resource exhibits VRIO attributes, the resource
enables the firm to gain and sustain competitive advantage (Jurevicius,
2013).

The table below illustrates Rockets resources and competencies.

Rockets

resources

are

listed

down

to

determine

its

underlying

competencies. Strategic capabilities would be identified. Based on these

two key findings;

Figure 1 Resources and competencies of Rocket

2.2 Activity Mapping

Activity mapping assists in identifying strategic capabilities of Rocket

based on interrelated resources and competencies to determine its
resource bundles, since the resource-based view focuses on competencies
based on resources within its own group, notwithstanding of the
interrelated resources.
The map below depicts the source of the firms success (i.e. being able
to develop companies at remarkable speeds and succeeding in adopting
and integrating successful business models into the local culture). Based
on the above success factors, the inferences are drawn on the underlying
factors that contribute to the success factors such as having ample
resources and adopting only business models that have a successful
history. The map illustrates the identification of the resource bundles by
linking interrelated resources to construe strategic capabilities of Rocket.

Figure 2 Activity Mapping

2.3 Strength and Weakness Analysis

Strength and weaknesses of Rocket are identified below to deduce more
strategic capabilities and to identify strategic issues faced by company
later. The table below shows the framework applied to Rocket;

Figure 3 Strength and weakness analysis

10

1.4 Overall strategic capabilities

Thus, based on the resource based view tool, activity mapping and
strength/weakness, the strategic capabilities of Rocket are:
1. Diverse, specialised and skilful human resources from various
markets
2. Centralised management with effective delegation of venture capital
management
3. Resource and knowledge sharing between all ventures
4. Risk management through adoption of successful business models,
accountability and investment management in venture equity.
5. Branding and reputation of aggressive growth instead of innovation
6. Corporate relationships with other incubators
7. Effective network of international infrastructure and distribution
network
8. Availability of updated technological and other physical resources
9. Financial strength and support
10.
Global presence enabling immediate and low cost venture

3. VRIO Analysis for Rocket Internet

11

VRIO was developed by Barney J.B in 1991 to analyze firms internal

resources and capability. This tool is used to identify whether the internal
resources (strategic capabilities) of Rocket can be a source of constant
competitive advantage. According to the author, the resource should be
valuable, rare, costly to imitate and organized to capture value. If the
organization meets all these requirements, then it will bring sustained
competitive advantage for the company (Barney, 1995).
Based on previous analysis of the strategic capabilities of Rocket, a
VRIO table has been prepared as follows;

12

Figure 4 VRIO table

13

Figure 5 VRIO description (Rothaermal, 2013)

Based on VRIO analysis as shown in the table, which the branding and
reputation (intangible asset) of Rocket. The brand name is one of the
intangible assets that cannot be imitated by other competitors. This is
because brand name carries a valuable momentum since Rocket properly
built it. The brand name will not only will reduce marketing cost, but also
establish a brand name that shows quality, value, service, reliability and
low risk and Rocket

have assets that will make a greater return for

numerous years (Dent and S, 1990). Rocket can capture value from this
capability and it is difficult to be imitated. Hence, this factor will give
Rocket a sustained competitive advantage and the company will perform
above normal for numerous years if the company manages the asset
constantly.

14

The ability of Rockets effective network of international infrastructure

and distribution network and global presence enabling immediate and low
cost venture. Rocket has 50 portfolio companies across more than 50
countries. If compared to other companies, they mostly depend on locallybased venture or joint venture with few foreign countries, but Rocket has
an international network across many countries. (Johnson et al., 2014). For
example,

Rocket

had

signed

contract

with

MTN

one

of

the

telecommunication company in Africa to develop their online company

AIH. (Millicom International Cellular, 2013). According to the CEO of MTN
group, he expressed that they are so pleased to join with Rocket to
develop online venture due to Rockets successful track record of which
will enable the partnership to capture the growth potential in digital media
space. The performance of Rocket across many places and a good
reputation, many companies in different countries has trust towards the
Rocket. This element gives a wider chance for Rocket to have network
globally and low cost venture. This is a rare capability and costly to
imitate. This is considered as a sustained competitive advantage for
Rocket.
The management of Rocket constantly needs to review the value of the
resources. This is because the competitors might be also wanted to
achieve the same competitive advantage. The competitors may replicate
the resources that bring competitive advantage for Rocket where the
resources are no longer rare. Therefore, internal organization of Rocket
should always review and change certain VRIO (resources) accordingly to

15

protect the company source of competitive advantage from being

replicated and maintain sustained competitive advantage.

4. Rockets success analysis

Rocket, founded in 2007 with four employees and two consumer brands
has gone significant changes to achieve its current success since. They
have gone for Initial Public Offering (IPO) in 2014 and it was the largest
European IPO till date and now employs more than 30,000 people in 110
countries (RIAR, 2014). There are many factors that contribute to Rockets
success. In terms of performance, the table below shows the key figure
comparisons for 2013 and 2014. The asset level of Rocket has improved in
2014 mainly due to the acquisitions and financing round increases. The
equity level has improved too, however, in 2014, net income has changed
to a loss (RIAR, 2014). According to Rocket, their ultimate goal is being the
market-leader in the long-term. Currently, market share is considered as a
main yardstick for business profitability (Buzzell, Gale and Sultan, 1975).
When market share increases, profit margin and turnover on investment
would increase too (Prescott, Kohli and Venkatraman, 1986). Market

16

leaders can develop inimitable competitive strategies and charge high

prices than smaller-share businesses (Buzzell, Gale and Sultan, 1975). In
order to achieve this, focus should be in the company growth than the
profitability in the initial years. So they are investing in customer
experience, product portfolio, logistics and infrastructure (RIAR, 2014).
These

investments

have

made

Rocket

well-capitalised

to

launch

companies which would help to achieve market leadership in the future.

Figure 6 Financial Performance of Rocket (RIAR, 2014)

In terms of objective achievement, Rocket major focus to launching ten
new companies annually have been first realized in 2014 (RIAR, 2014).
This was achieved by customizing the company launching processes
through Rocket platform. The Rockets business model is to invest and
build companies capable of capturing substantial market shares rapidly,
which is necessary for long-lasting profitability (RIAR, 2014). They have
standardized steps consisting of localised processes such as customer care
and centralised processing such as functional steps for a new company.
These factors help Rocket to launch companies within a time-frame of 100
days. The Rocket has launched above 25 companies across 100 countries
successfully in their first five years (RIAR, 2014). The Rockets target
market is wide which has a population of 5.4 billion, (75% of the world
population and mobile phone users) (RIAR, 2014). Large-scale operation

17

helps

companies

in

effective

bargaining

and

price

administration

(Venkatraman and Ramanujam, 1986). They are now even entering into
markets which are difficult to develop due to infrastructure dearth. The
bricks-and-mortar retailing in these markets is weak, easing customer
seizure for Rocket. The rocket also watches other trends and developments
such as demographic, lifestyle, etc. in current and new markets for
expansion.
Rocket also builds successful companies; the figure below shows some
main launched companies in Rockets four main sectors divided into
categories (RIAR, 2014). The winning category has companies which have
existed for two years or generate revenue of EUR 50 million. The emerging
stars, are significantly growing companies and the concept consists of
those who have recently been launched (RIAR, 2014). Research has shown
that the companies assuring competitive positions in primary markets are
highly profitable in the future (Buzzell, Gale and Sultan, 1975).

Rocket

achieves this by transferring customer adoption risk into untapped

markets. Rockets access to intercontinental expertise and funding
combined

with

operational

supremacy

enables

them

to

construct

successful mobile and online business model opportunities. The adaptable,

flexible and scalable technology of Rocket also helps them to realize their
goal in target regions. Rocket ensures that business models are connected
and expertise is shared throughout the network. Scholars emphasizes that
firms performance is intensely related to its strategic networks (Gulati et
al., 2000). According to Network Theory, firms with operationally
corresponding networks must grasp the benefits through the network

18

(Dyer and Hatch, 2006). Rocket allows development of network structures

with supra-regional/regional partners and combines Rockets leadership
with regional leaders and strategic partners (RIAR, 2014). Inter-firm
knowledge sharing procedures are considered as one of the super-normal
profit generating capability (Dyer and Signgh, 1998). This creates barriers
for competitors and speeds up the company building process.

Figure 7 Rocket's main brands (RIAR, 2014)

Apart from the aforesaid reasons and the strategic planning of Rocket,
there are other internal and external factors that contribute to the success
of the company too. Internally, Rockets Global venture Development
Programme helps to reach employes usually from consulting or banking
background, entrepreneurial determination and has acquired analytical

19

skills. Thus, the skilled and committed employees act as a sustainable

competitive advantage itself (Pfeffer, 1994). Externally, the smart phone
revolution has increased the internet access and its users. This has helped
the online retailers such as Rocket to exploit new demand across the globe
(RIAR, 2014). Also, most of the markets have younger population, which
enhances the scope for online business models. Moreover, the middleclass in most of the emerging markets is growing, increasing the
consumer-spending potential (Beinhocker, Davis and Mendonca, 2009).
Moreover, Rockets founders were early-birds to the industry. So, they have
experience and knowledge which could be valuable for Rockets success
(RIAR, 2014).

20

5. Strategic Issues of Rocket

5.1 Internal
Strategic issue is the challenges that faced by the company (internal
and external factors) that affect the performance of the entire company.
Rocket is facing several strategic issues in the organization. The company
is currently having loss due to the sales also drop from 2013 and 2014 due
to the absence of big sales affect (2014 Annual Result Presentation, 2015).

Figure 8 Financial Performance of Rocket (RIAR, 2014)

One main issue is that Rocket predominantly copies internet success

stories like eBay and Amazon.com, ranging from online fashion to food
delivery (Thomasson, 2016; Hua, 2014). The company focuses more on
execution than innovation and is criticised for not having original ideas.
When companies do not innovate, they fail to discover current and future
opportunities (Prahalad and Hamel, 2006). The founders would argue that
they are good at execution only. However, in the past, those companies
who clung on to the old business models, referred to as Fat, Dumb and
Happy Syndrome, had failed due to lack of innovation. Moreover, Rocket

21

being faced with a high staff turnover could be due to their imitating
business culture. Innovative culture usually retains staff and enables to
interest skilled employees in the future too (Von Krogh, Ichijo and Nonaka,
2000).
The next issue is that most of the new ideas, concept and business
model are largely shaped in head office in Berlin. This will cause
confusions in the middle and lower as the decisions and strategies are set
at the top. The middle and lower management will have a misaligned
goals and vague responsibility which would affect the execution of the
company policies. Also, Rockets target markets include underdeveloped
markets too (RIAR, 2014). So they could have problems due to inefficient
infrastructure, logistic and legal system which pulls down the overall
efficiency of the business. Rocket also hires local employees from various
backgrounds

and

operates

local

distribution

networks

in

different

channels. Chances are high that the management of a wide task-forces

and network could create complex issues which would affect Rockets
reputation and create chaos in the operation including cultural barrier
issues (RIAR, 2014). Similarly, IT related problems like threats arising due
to external attacking to the system would violate confidentiality of
transactions

and

customer-related

data,

causing

reputational

and

operational impact (Trautman, 2012).

5.2 External
To cogitate external strategic issues Rocket faces, Porters Five Forces
analysis would be used since it assists in evaluating sophisticated

22

competitor dealings in an arranged way (Turnbull, Ford and Cunningham,

1996). It is assumed that the threat of new entry, competitive rivalry and
bargaining power of buyer will have the greatest impact to Rocket.
Therefore, these three forces will be studied;
Firstly, the threat of new entry is very high for Rocket. Rocket can be
imitated by other companies since Rocket also uses the same approach.
The nature of the industry allows easy access to new entrants due to low
barriers to entry such as low set-up costs (Martin, 2014) and not requiring
strategic location for physical store set-up. The industrys low barrier to
entry would allow most current suppliers to sell products directly to
consumers too (Alba et al., 1997). New entrants, changes the competitive
structure of the industry (Caves and Porter, 1977). It could affect the
profitability and market share negatively. Berlin, for instance, is becoming
an established location for venture capital and internet (RIAR, 2014). So,
Rocket is facing competition for getting specialised staff too.

Amazon,

eBay and Alibaba enjoy economies of scale by having a recognisable

brand and a strong supply chain (Ross, 2015). Rocket, being new and
expanding yet has a long way to reach the aforementioned companies.
Therefore, currently, the threat of new rivalry is high and its effect would
be higher for Rocket.
Secondly, the competitive rivalry for Rocket is strong since the ventures
Rocket develops has strong competitors. For instance, FoodPanda, one of
the ventures by Rocket in Malaysia, allows ordering food from various
restaurants by using online service and deliver it to customers (Wie Boon,

23

2015). Dahmakan offers similar services with a few differences (Dah

Makan, 2016). The differentiation is based on the brand loyalty of the
customers. The customers are less loyal to the brands since switching
costs are low (Wie Boon, 2015). They can even choose their favourite
place to order food based on their preferences due to the punctuality of
the food being delivered, the taste of the customers and other factors.
Rocket also faces competition from eBay and Alibaba which are wellestablished. Moreover, the industry is growing really fast. In general, the
Rocket and the ventures face high intensity of competition (Cleverism,
2014) which would impact on their profitability too.
Thirdly, the bargaining power of buyer is high for Rocket since the
online sales are labelled as Business to Consumer B2C. The eCommerce
customers are well-educated and price sensitive (Intrapairot and Srivihok,
2003). Also, the information available online to consumers and the endusers switching cost are potentially lower by internet (Featherman and
Pavlou, 2003). This would possibly upsurge the buyer power. Similar
competitors such as Amazon, are available to consumers. Hence, the
customers might not choose Rocket in case the customers are not
satisfied. When buyers are strong, they could pressure for better services,
wide range of products and customised items too. These types of power
pressures would increase the competitiveness of the industry and narrows
the profit potential for Rocket.

24

For each strategic issue identified above should have a certain degree
of resolution. The resolution should be concerned with reaching a decision
that defines the future direction of Rocket (Cssp.com, 2016).

6. Recommendations for issues

6.1 Internal
Most scholars argue that companies that do not innovate do not last for
long. Rocket is being criticised for being a "copycat". In order to avoid
negative impacts of this on the going-concern of the business, Rocket

25

could innovate to some extent to gain a competitive edge over their

competitors. Amazon, for instance gained the edge by achieving the
supply

chain

dis-intermediation

Therefore,

innovation

is

necessary,

especially in the e-commerce industry. Innovation actually enables

companies to stay a step ahead of competitors. Johnsen (2015) revealed
that in a shifting environment, speed, coverage or size (which is Rocket's
main concentrations) is less relevant. Adapting to the requirements of
customers and technology achievement matters in the long-term. It also
creates a Unique Selling Point for the company which could get a
commercial advantage for Rocket where customers would be willing to pay
high for the company's services. Basically, those fast follower firms which
imitate competitors still requires R&D to get a substantial technology base
for survival (Trott, 2008). The figure below shows the level of research
necessary for Rocket to grow (Trott, 2008). Therefore, Rocket must
innovate to maintain sustainability and growth, either on their own or
through alliances or integration.

Figure 9 Level of research and development required by fast

followers (Trott, 2008)

26

Rocket could also transform the supply-chain management and other

business processes in order to enhance the efficiency of their eCommerce
system (Ross, 2015). For instance, Rocket could develop a system that
constantly observes the marketplace, gathers and analyse feedback,
reports the accurate truth to decision makers. Rocket could also
emphasise on the industry, competitor's behaviour and consistent
development of online services through technology innovation as well.
Rocket needs to be aware about the competitors as they have to keep
their price in check in order to attract buyers (Trefis, 2016) since
customers has an option to choose wide range of products and services
offline and online. Basically, changing the culture to include innovation
would enable management to embrace failure to a certain extent (Fullan,
2014). They understand that failure brings the company closer to success.
So, fostering an innovative culture would reduce the staff turnover
problem too.
In order to solve the problems of communication issues between
management, effective knowledge management should be employed by
departing from traditional hierarchical, multi-division form (M-form)
(Hedlund, 1994). Instead, Rocket should adopt N-form, which requires
grouping of knowledge than divisions and concentrates on heterarchial
structures and economies of depth (Hedlund, 1994). They emphasise the
importance of lower level personnel relative to inter-functional ad interdivisional operations and uses lateral communication. This improves
coordination between Rocket's decision-makers as well as innovation and

27

dynamism. The Figure below shows the difference between N-form and Mform.

Figure 10 Difference between M-form and N-form (Hedlund, 1994)

Afterward, to overcome issues of local distribution systems and

employees in markets, corporate training schemes should be carried out
including an extensive spectrum of international communication than
focusing on one language. Moreover, currently, Rocket is carrying out
polycentric firms where autonomy is provided to the subsidiaries as long
as profit is satisfactory and it is adapted to the local conditions (Lemak and
Bracker, 1988). Instead, Rocket must try to establish geocentric firms
focusing on local and worldwide objectives where each part is providing
unique contributions with its distinctive capabilities (Lemak and Bracker,
1988). This would enhance the optimal consumption of human and
material

resources,

reducing

waste

of

resources

and

improved

understanding of qualified personnel is subsidiaries (Kobrin, 1994). This in

turn could help Rocket to grow effectively in world markets and be
competitive globally. To improve efficiency of the local network, Rocket
must keep trade relationship with experienced, strategic vendors (Sproull,

28

Kiesler and Kiesler, 1992). They could even set up a contact center
technology to incorporate multiple disparate systems to coordinate
information availability in a single interface. Rocket should strengthen the
security system by implementing countermeasures such as to ensure that
the contents are undecipherable to hackers and unauthorised internal
users (Gupta and Singh, 2010).

6.2 External
There are several strategies that Rocket can adopt in order to thwart
the entry of new firms, competitive rivalry and buyer's bargaining power.
They include product differentiation, achieving cost leadership or focusing
onto certain customers in the industry (Fellner, 1949).
To avoid the new entrant threat, Rocket could use differentiation
strategies where they attempt to be unique in a manner which is valued
by the buyer (Porter, 1980). They would be rewarded by the buyers with a
premium price and customer loyalty. Product differentiation would create
barriers to entry by pushing the potential entrants to incur heavy costs
and time to win the customer loyalty (Porter, 1980). This would also
reduce the buyer power since buyers would find less close substitutes for
the service or product. Therefore, the current rivalry would have less
impact since the customers are willing to purchase at a higher price.
Overall, Rocket is making a competitive edge of their own through
differentiation strategy. However, it is only viable if Rocket is able to
differentiate their price at a cost lower than the premium price. Therefore,

29

Rocket should aim to cost proximity or cost parity whereby Rocket must
reduce the costs in other areas.
In order to inhibit competitive rivalry, Rocket could aim to achieve cost
leadership by employing cost minimisation techniques (Porter, 1980).
Currently, the eCommerce market is quite sensitive to price rises (RIAR,
2014). Rocket, therefore, could gradually aim to pursuit economies of scale
where Rocket should explore and find any cost advantages that they could
exploit. Rocket can, for instance, aim to reduce the fraudulent transaction
occurring quantity, use data more efficiently or avoid focusing on multiple
vendors from each location. Also, Rocket could go for a proprietary
technology, which could transform the service development process
structure (Trott, 2008). This requires a high initial spending in R&D;
however, it could reduce the costs in the future. Rocket does not need to
develop the technology by them. It is quite common to acquire technology
via technology transfer from by forming alliances such as licensing, R&D
consortia or innovation networks (Trott, 2008) with others which has an
advantage in technology development.
In order to gain power over the buyers, Rocket could adopt a focused
strategy. In this one, Rocket could carry out market research in the
markets and identify a certain segment, which, possess different needs
(Porter, 1980). Rocket, then attempt to satisfy the segments (niche
markets) need and in doing so would attempt to gain a competitive
advantage in this target segment without regard to whether they could
gain a competitive advantage overall. For instance, Rocket could build an

30

efficient

customer

interacting

management

technology

where

the

customers can provide feedback to Rocket. Rocket then can react to the
customers need and ensure that the one-time purchasers could also be
retained. Moreover, Rocket must ensure that the websites are userfriendly; they can improve the systems to include error-free, easy sales
orders, discount adjustments and convenient order processing and returns.
They should ensure that the logistical systems ensure timely delivery too
(Morgan, 2004) to ensure customers are pleased with them.
Rocket could also include more than one strategy from above to
overcome the three majorly affecting forces. They could also include all;
however, it means that Rocket could not gain competitive advantages that
could come with each strategy (Porter, 1980). However, Rocket could start
by adopting all the strategies and then after sometime focus on one
strategy that help them to achieve their vision.

7. Importance of Samwer brothers and implications of leaving the

company
The Samwer brothers, whose came from ambitious backgrounds
started their business by replicating and introducing a German version of
eBay, Alando. Since, then the trio has been very successful by effectively
combining their expertise across the market.
In the e-commerce industry where innovation is of fundamental
importance, Samwers are not inventors. They see successful concepts in

31

some markets and effectively replicate them for other markets (Li, 2014).
Imitating might be considered less prestigious as compared to innovators.
However, this reduces the required capital, time and the uncertainty in the
industry (Mueller, 1997; Robinson and Min, 2002). Moreover, imitating the
concept successfully is not a simple task; the process of imitation includes
identifying the competitive advantages, which in many cases are in casual
ambiguity, making it difficult to understand (Andersn, 2007). Therefore,
requiring thorough analyses with regard to resources, cost, barriers,
configuration, etc. which actually involves uncertainty too (Porter, 1980;
Lippman and Rumelt, 1982; Barney, 1991 and Schnell, 2004). The fact that
Samwers have had lots of success in imitation shows that the trio has the
capability and proficiency in identifying potentially successful concepts.
Samwers has a vision to nurture and accomplish a greater share of the
internet. They consider themselves as builders of companies who are
willing to reconnoiter extant concepts across the borders (YourStory.com,
2015). They believe in getting things done quickly and acting rapidly to
the available opportunities (YourStory.com,2015). They were the first to
exhibit when money could be made in the German Internet business. Even
Rocket devotes itself in companies which have proprietary technologies
that gives competitive advantages and a manner that allows speed,
scalability, stability, security and standardization of the processes (Miller,
2001). Samwer brothers visionary actually have made the business model
which could be executed flawlessly and achieve ambitious results. Vision
helps the leaders to set priorities and make decisions congruent with the
vision ( Westley and Mintzberg, 1989). They not only commit and resolve,

32

but they are leaders who depend on the right implementation framework
and discipline (Miller, 2001).
If Samwer brothers leave, there would be a change in the
organisational culture. They have been visionary; they know their target
and the strategies to achieve those targets too. Change in organisational
culture is generally difficult to carry out to the new senior management
since the lower-level employees resist to change due to misunderstanding,
uncertainty and poor communication (Klein, 1996). Volkswagen, after
changing the CEO in 2015 is also facing difficulties in shifting the culture to
a collaborative one (Cue, 2015). Generally, employees would find it
difficult to adapt to the strategies of the new management.

Samwer

brothers are an epitome of displaying commitment and confidence which

encourages the whole team to be fixated to the goal. People can usually
follow them without considering effectiveness or efficiency, because it is
convenient. So, alternative processes are rarely even considered since it
becomes a routine.
However, it is questionable whether the departure of Samwer brothers
would be devastating as it seems. Firstly, they have been regarded as
abusing power in certain circumstances, such as throwing a puncture at
the employee, threatening employees through emails and shaming the
employees if they could not answer their questions (The Hustle, 2016).
This shows that they lack the emotional intelligence necessary to
understand others which, however, is important for being effective
leaders. They have adopted quite an autocratic approach which is

33

unethical and outdated (Covey, 1989). The global economy has been
moving to a value-added and service oriented economy (Morin, 2011)
where inter-group and interpersonal relationship matters too. Therefore, a
company willing

for

long-term profit sustainability should

build

relationship with stakeholders such as employees. The critics have argued

that Samwer brothers never try to maintain long-term relationship and
only focus on the current profit too (Eckard et al., 2015). They are not
leading strategically since they have created fear of failure in employees
mind which would stifle their creativity. They consider target-numbers
as the only strategic frame that matters and does not consider situationalforces which impacts the results (Eckard et al., 2015). This abrasive
personality and dominant culture, therefore, are toxic and discouraging for
staff (Luthans, 1998).
Rocket

recently

as

As a result of this, several senior staff had left

well

(YourStory.com,2015).

Currently,

employee

empowerment and delegation has proven to be yielding competitive

advantages

to

organisations

by

being

productive

(Pfeffer,

1995).

Therefore, if Samwer brothers leave, there is a possibility for Rocket to

change

the

organisational

culture

to

more

employee-friendly

environment and achieve competitive advantages. With this combined

with the scalability and flexibility of the industry, would help Rocket to
grow further.

34

8. Conclusion

Rocket, which is currently a successful company, would face many

hurdles if it were to achieve its goal of market leader. At the same time,
Rocket is an imitator operating in a fast growing industry where the rivalry
and potential competitor are growing day by day. Therefore, Rocket must
identify its core-competencies and strategic capabilities and use against
the aforesaid parties and create value for their customers in order to stay
competitive.

Moreover,

they

must

identify

the

likely

threats

and

weaknesses they might face in the future to be contingent. In Rockets

case, most of the issues could be solved using technology due to the
industry Rocket is operating and its current trend of invention. Rocket,
therefore, must make sure that they act to the industry trends in order to
foothold in the industry. In doing so, they must ensure that any strategies
they adopt are creating value for their customers and for themselves as

35

well. Also, they must also take into consideration of the likely changes to
their organisational structures beforehand to ensure that they are dealt
efficiently.

Word count: 4944

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