In 1951, with a different national scenario from the current one, a time of import substitution as a consequence of the Argentine agro-export crisis, a leadership in industrial growth was outlined, especially in the textile sector, since it not only constituted a broad sector imports, but their replacement was relatively easy, there was a raw material (wool, cotton) and a state policy that protected this type of industries. This industrial expansion was carried out on the basis of the use of capital already installed, with little investment in technological advances.
Thus, the three Barny brothers arrive, with their textile factory dedicated to “making men's suits”.
In its beginnings it was a small factory with very few workers, with clearly familiar characteristics, which surely were faithful witnesses to the exhaustion of the import substitution process that the industry suffered in 1952 as a consequence of the lack of inputs, re-equipment and the stagnation of the demand. Later comes the penetration of international capital, giving rise to a very dynamic industrialization process, due to the growth of world industry and trade.
Perhaps taking advantage of this context, Barny begins a first stage, where the number one company was Brother Issac, who surely had the vision of the industry, the other brother was dedicated to the maintenance of the plant and the third did almost no activity..
A highly centralized structure was visualized; Issac was the president and he had to supervise all the activities that were carried out and he did not delegate the decision making.
Later, the company grew and became a limited company. Thus, children, nephews, sons-in-law, wives, etc., were incorporated into it.
The directive cupola was conformed by the members of the family, but always with the intervention of Jacobo in each activity to carry out. For this reason, Isacc is identified as the founder entrepreneur of the company.
From the beginning, this company does not seem to have a clear departmentalization, a division of tasks, and there was no definition of the roles of each of the brothers.
Towards 1987, thirty-six years after its inception, the company moved to the plant located at Avenida Salta at 500 in the City of Buenos Aires, built especially for this purpose.
The crisis of the 1980s determined the end of an era in Argentina, characterized by high state intervention in the economy, large macroeconomic imbalances, and continued economic and social deterioration.
During the period 1991-1996 then, there was a massive inflow of capital, driven by the combination of high interest rates in pesos, a fixed exchange rate, financial liberalization and, above all, a recovery in the demand for money. A favorable situation for the opening of imports, which will result in the deterioration of the Argentine textile industry.
By this time, 400 employees came to work at Barny producing 400 suits per day.
Its market was quite wide throughout the country and abroad. The market segment was with high-income characteristics, given the quality of the garment, being its most important clients Cristian Dior, Cacharel, Alain Delon, Port Said. These brands provided them with exclusive fabrics and designs. They also owned a boutique in the factory for sale to the public.
Inflation will play a role in favor of currency appreciation, which, combined with abrupt and turbulent trade liberalization, eroded competitiveness. Regarding domestic and foreign investment, they were oriented towards company purchases and restructuring; to a lesser extent to the construction of new plants.
Thus, in 1996 the Barny brothers made the decision to acquire state-of-the-art machinery in Germany.
This robot cut 6,000 suits per day and in order to enter the machine into the company, they had to remove the entire front of the fourth floor and lift it with a crane, the oldest employees report.
The structure of the building was six stories: on the sixth was the dining room, on the fifth pants and special suits were made, in the fourth it was cut, in the third the bags came out, in the second the iron and in the first it worked the administration.
By the 90s this textile promised to be a leader in the national industry. The workers were very satisfied since, in addition to receiving the salary at term, they received a basket ticket, attendance awards, and each month a television raffle as part of an efficient social assistance system for employees.
But this company would not escape the policies applied in Argentina in the 1990s that led to a bubble led by indebtedness, privatizations, deregulation, and trade liberalization, and which never led precisely to development.
Thus, the Barny brothers had little vision of the future, since importation, high internal costs and a growing unemployment rate considerably reduced the consumption of their products.
As a consequence of this he suffers from deep indebtedness, the impossibility of meeting his short-term commitments, having to resort to cashing checks at the money tables with the usurious interest that they entail.
But also, in addition to all this, he suffered an internal family crisis of power, leadership and money. With little sense of teamwork and lack of ethical family values, "they stole from each other."
Isacc, begins to feel dejected by his relatives, since the employees commented on the robberies and he never took any action in this regard.
Employees say they once discovered three suits instead of just one on a hanger.
Very soon the impossibility of being able to afford the workers' salaries arrives. Isacc told them that if it were up to him, he would invest money in the company, but that his relatives did not want to contribute anything.
Barny SA closed for a time and activities continued under the name of Cetrex Argentina. There is no exact date for this transformation.
The workers, mostly women, begin to receive weekly vouchers of $ 5 and layoffs come.
Even the textile industry union asked for the bankruptcy of Cetrex Argentina SA for union debts.
Already looming on the eve of 2001, a stage of uncertainty, political instability, rising unemployment, closure of industries, capital flight, devaluation of the peso and the announcement of the corralito and corralón, which ended with the uprising of the Argentine people who told him " enough ”with the famous“ cacerolazo ”to the government of Fernando de La Rúa.
Thus, when the radical president leaves the presidency, leaving through the roof of the Casa Rosada, paradoxically 48 hours before these events, the Barny brothers also leave the company and since then no one has seen them again.
Chronicle of an announced take...
The Barny textile has been taken since December 18, 2001. the owners decided to escape, after a strong discussion between the company's senior staff and a commission of delegates.
In their demand for the payment of salaries and without reaching a logical agreement, the Barny brothers left the meeting one by one, the last to leave were the managers who left, promising the next day to resume the discussion.
That night the workshop owners stayed to sleep as a measure of pressure, without imagining that the owners would never return.
On December 19 the state of siege was decreed. On December 20 they had a working hearing, but once there they confirmed that the meeting was suspended on the eve of the cacerolazo. Outside there was sun and tear gas and some employees were lost in the raid.
Since many of them did not have money to return to their homes, they stayed at the plant. By then the campus had already been reduced to 115 employees.
At first, all they wanted was to push for wages. But the days passed and they did not achieve their goal.
Later the neighborhood assemblies were in charge of spreading the situation of Barny.
In January they agreed that it was best to start selling the stock and producing.
Of the 115 employees, currently only 56 remain, they continue to work on demand or in series to supply the boutique that continues to operate.
They underwent police raids to evict them from the factory, but they resisted until the judge decreed a counter order, for them to stay. However, they are still suffering from eviction attempts by usurping the building.
Today they charge $ 150 a week and they never leave the factory, they remain 24 hours a day making guards. They make 100 suits per week, pay for the services and keep the surplus.
Decisions are made by assemblies, each has a role. The board of directors only deals with procedures.
They do not have a legal figure yet to carry out their activities. They want the final expropriation of the company, but the legislature offers a two-year expropriation. Nor do they want to form a cooperative.
His proposal is for the company to become state-owned, to guarantee wages and payment of salary debts, with workers' control of production, to ask for safety and hygiene.
At the moment they are receiving help from the Mothers of Plaza de Mayo through the university of said organism. Its representatives are instructing employees, training them to assume leadership roles, since the assembly system for making business decisions is not viable.
Through the association called Rebeldy and Hope, created by the Mothers of Plaza de Mayo, these employees will be able to invoice, meet their tax obligations and have current accounts with the Banks. In addition, they also have the legal advice of CEPRO.
However, they decided that they do not want to be owners, they do not want to take so much responsibility in the midst of so much crisis, the only thing they want is to maintain the source of work and collect their salary.
They have a strong connotation of a politically mobilized group, actively participating in all acts of protest that exist, a circumstance that reduces their hours of work. No one considers that they have a boss and therefore nobody can demand anything from them.
Currently the situation of the company is the request for preventive bankruptcy, the owners reappeared in November 2002, through a lawyer at a conciliation hearing in the Ministry of Labor, they presented a rescue plan for the firm, requesting the eviction of the workers, the suspension without pay for sixty days from the employees and promise that after that period they would return to work. The proposal was rejected, so the taking and production is still the responsibility of the workers.
The mission
Isacc probably had a mission, it would only be necessary to ask him: What was the reason why he entered this business? But we have not had the opportunity to speak with Isacc, so according to the evolution of the company, we can say that presumably the mission of the business was to satisfy the needs of consumers with high-quality clothing, with exclusive designs and adapting them to different times or fads of the market.
The vision
The vision is not always clear, even for the number one company, Jacobo was probably not clear about his central purpose or clear vision of the desired future. The vision is a coherent idea that goes beyond product or market life cycles, fads, technological advances and we believe that this company did not have a clearly defined vision.
Many companies that arise from personal ventures frequently suffer from the “we have arrived syndrome”, after reaching a stage they remain stagnant, since they have reached the desired future and do not realize that they must go in search of other desired futures.
It is very likely that this happened to the company in the 90s. Or it is also probable that Isacc has not been able to transmit its vision of the future to the rest of the organization.
The objectives
BUSINESS OBJECTIVES: we can say that at some point the company had business objectives, since in addition to manufacturing men's suits, they began to manufacture women's suits and incorporated the resale of shirts, pullovers, ties, which they acquired from other manufacturers. In addition they also grew in the national and international market share.
SUPPORT OBJECTIVES: We do not believe that they have had support objectives, since they have not reflected on their weaknesses to turn them into strengths. If they had, they would be on the market today.
BREAKING OBJECTIVES: At some point they have seen the need to diversify the product, and they also diversified the form of distribution, which in the first instance was wholesale and then they installed a boutique for retail sale.
STRUCTURE OBJECTIVES: they never had structural objectives, since they were not clear about the assignment of tasks, nor did they reflect on the ideal personnel to carry them out, incorporating how much relative they wanted to be in the company.
The products
- Men's SuitsMen's OvercoatMen's Vests and VestsLadies SuitsSale of Shirts, Sweaters, Ties
Organizational culture
Since culture is the consequence of the global attitude of all the individuals in the organization and its analysis is based on the parameters of vision and action.
We consider that this company presented a routine culture, at least in its beginnings with very little vision, little action, maximum centralization and inadequate departmentalization and exclusive control by the president. Since Isacc himself had to control everything, he almost never devoted himself to planning or making strategic decisions, since he did not take time.
As the company grew and the tasks diversified, it was able to have a bureaucratic culture. Jacobo's inability to delegate decision-making and the high degree of centralization of power leads him to increase control, establishing control rules and procedures that become bureaucratic.
BUSINESS ACTION
In addition we must mention some of the characteristics that the company had for being a family SME:
FIRST STAGE
Excessive centralization
Direction and management concentrated on the founding partner, which in this case is Isacc
Lack of planning
Confusion of the actors to carry out their roles: since there were three partners and Isacc was the president, the second brother was dedicated to the maintenance of the plant and the third never appeared.
SECOND STAGE
Management activities are beginning to differentiate, except that in this company the management leadership was made up of all the relatives without distinction of suitability for the position to be performed.
However, it never went to a third stage, falling within the statistic that only 5% of companies reach the third stage. Family relationships turned into a strong conflict due to the opposition of interests and ethical values, thus facing each other.
The structure
In its first beginnings, the company had a fairly flat, highly centralized structure, had low complexity, little formalization of procedures.
As it grew and the tasks became more complex, Isacc never had the capacity to decentralize power, and as a consequence, it became highly formalized and inflexible, generating coordination, control and communication problems.
Thus, soon a kingdom structure can be visualized, which pursuing the objective of organizing, ends up paralyzing the company.
Looking for a competitive Brukman strategy…..
Competitors: Analysis of Amplified Competition
I have not been able to obtain too much information about its competitors, but we cannot ignore that the import of the 90s was shrinking the textile sector and also in clothing manufacturing.
It also had a wide national and international market and its products were of high quality for high-income people.
There is also no information about substitute products and suppliers.
Hard entry barriers
Capital requirements: at the end of the crisis, he found himself with a reduced profit margin, which prevented him from earning income and meeting his commitments.
Product differentiation: high differentiation of your products for being of excellent quality and for a select audience.
Soft type entry barriers
Little training in human resources
Little general management training
The exit barriers
Specialized assets: investments in 6-story infrastructure and state-of-the-art machines
Strategic interrelations: they achieved a corporate transformation with Cetrex Argentina, only it was a rescue measure in its last stages.
Emotional barrier: the trajectory of a family SME.
This analysis must be dynamic and forward-looking. However, we will define the strengths and threats before 2001 based on these five competitive forces.
SWOT ANALYSIS
STRENGTHS
Customers with recognized brands and high income
Start-up company
Last generation technology
OPPORTUNITIES
The conquest of other foreign segments due to the devaluation
WEAKNESSES
Strong indebtedness
Excessive centralization
Family conflict of interest
Lack of strategic planning
THREATS
Bankruptcy
Impossibility of obtaining credits
Low national demand as a result of the crisis
Analyzing the entry barriers I can say that this company had low entry barriers and high exit barriers, when this happens there is a low profitability and a high risk in the business.
Probably a generic strategy of the company has been to be the total leader in differentiation for the entire market, since its products were of high quality.
- CAUSES THAT DETERMINED THE CRISIS
Endogenous factors
Excessive centralization that makes delegation impossible in decision making.
Kingdom structure with uncompromising formal authority, which was complemented by a kingdom culture, where there is a clear fragmentation of powers, interests, needs and different objectives among family members.
Lack of planning both in the short and long term, which entails the impossibility of formulating a clear and explicit strategy for the entire organization.
Lack of future vision or impossibility of transmitting the vision to the entire organization
Lack of definition in the performance of roles, mainly among the three owners, partners and brothers.
Recruitment of family members to occupy hierarchical positions, which were established as the company grew, without considering the suitability or professionalism to fill them.
Conflict by opposition of interests between the different members of the family.
Lack of in-depth analysis of business costs.
Lack of an analysis of the return on investment when making the decision to acquire new technologies.
High indebtedness, which could not be faced due to the illiquidity generated by the drop in sales, the increase in the internal cost, the importation and the incorporation of latest generation technologies.
Impossibility of applying foresight techniques to anticipate future events, prevent threats and detect opportunities.
Exogenous factors
Decreased demand for the product
Impossibility of competing with import prices in the 1990s
Impossibility of obtaining long-term credits
Loss of purchasing power in 2001
Unemployment around 25%
Delays in payments and collections generated by the stoppage of the industry and breakdown of the financial sector.
Emergence of a social sector of new unemployed, who in the face of the country's economic crisis, decided to take over the companies and expanded with a domino effect throughout the territory.
Bankruptcy petition by the textile industry union, due to delayed payments.
Bankruptcy request by various creditors.
- RECOMMENDATIONS TO ACHIEVE THE ORGANIZATION'S SURVIVAL WITH THE MOST POSSIBLE SUCCESS
My analysis of recommendations is divided into two different moments that this company has gone through.
Firstly, I present the recommendations and measures that the Barny brothers should have taken before leaving the factory in December 2001. And in a second instance, I present the recommendations to be adopted by the workers who have taken over the factory from that same date until today.
- BEFORE DECEMBER 2001
The company began its crisis in the years 1996 - 1997 and by that time Isacc had to implement some short-term measures to quickly change the direction of the company and other long-term measures, since some aspects are so ingrained that they are difficult to change.:
- Short-term measures
Hire an expert strategic planning managment.
Plan the purchase of new technology, making an in-depth analysis of the return on investment and the probability of covering the debt by generating genuine funds.
Faded by importation, it could implement second brands, manufacturing other quality products for another type of market, trying to gain other segments not yet exploited.
Buy raw materials abroad, since the import was favorable due to convertibility.
Incorporate into the company the "import of fabrics and textile raw materials" and market in the country to companies that could not import.
Already in 2001, achieve financial relief for the company through long-term refinancing of the debts incurred.
Interrupting the payment of taxes, given the crisis that was looming at the time, the financing terms could be lengthened and the possibility of entering future moratoriums.
Plan strategic alliances with suppliers, agreeing long-term financing in exchange for using their raw material.
Achieve manufacturing agreements with companies that generate high soft entry barriers, that is, manufacture exclusively for renowned companies.
Give participation in the company to the suppliers with whom it has contracted debt, without losing control of the decisions.
Reduce the infrastructure of the company, since by then the 6 floors of it were not necessary, and thus by selling part of the assets, it could generate income by covering short-term debts that would allow it to continue operating.
Resign the profit margin for a time, since the infrastructure costs were high.
Upon devaluation, it would be favored to compete abroad, seeking only foreign clients and closing the national distribution that would generate losses.
- Long-term measures
Establish a clear vision of the business with an approach to business strategies and find a way to make it explicit.
Get the motivation of the entire organization to go from a bureaucratic and routine culture to an entrepreneurial one, but believe that this is necessary.
Assignment of the method of small achievements for the rest of the managers, establishing short-term goals and easy execution.
Change the centralized structure of the company for a slightly more decentralized structure, which facilitates decision-making.
Take preventative control measures about employee theft comments from their relatives.
Create a culture of teamwork and collaboration of all family members.
Promote product differentiation, the continuous search for new niches, and create an emphasis on customer service.
Establish an incentive and reward system for those who promote excellence and innovation.
Incorporate an anticipatory and prospective attitude.
But this company, far from having taken measures similar to those given, falls into internal debt, leaving the plant in December 2001, the date on which it was taken by the workers to this day.
- ACTION TO BE TAKEN AFTER DECEMBER 2001
In the first place, these workers must achieve the expropriation of the company, something that has not yet happened, since the Ministry of Labor proposed an expropriation for two years and they have not accepted.
Then, they must adopt a legal form to be able to carry out the activities and thus be able to pay the corresponding taxes, obtain credits to continue manufacturing, have their retirement contributions and a social work. This legal form can be a cooperative or another legal topology established by law.
If they stay with the company, they must change their culture and adopt true corporate leadership roles, since the system of making decisions by assembly takes a long time and is therefore not viable.
They must establish a governing body that makes strategic decisions.
The owners could achieve the return of the company, taking charge of the workers' salaries and guaranteeing their continued employment, in turn using all the available hardware to merge with another textile that has a high investment in soft and needs infrastructure to expand markets.
CONCLUSIONS
The chronology of the Barny company makes me reflect that it has belonged to a context of high political-economic turbulence. From 1950 to the present, it has been an eyewitness to the economic crises that our country has undergone.
It has endured devaluations, external indebtedness, inflation, de facto governments, falling purchasing power, privatization of state companies, unemployment.
In the 90s, Barny believed he was touching the sky, imagining becoming a glory of the national industry, the time of the famous currency convertibility plan.
However, it is soon hurt by the opening of imports, excessive internal costs and a debt for the acquisition of new technologies and the impossibility of meeting commitments made with creditors and employees.
With characteristics of a typical family SME, far from being able to resolve the conflict of interests between family members, burdened by growth and excessive centralization, with the impossibility of defining their vision and strategic planning, appropriate to a context that Raising permanent uncertainty, Barny envisions the new millennium with an internal crisis that is very difficult to manage.
Barny was one of the many companies that could not escape the economic and political crisis that Argentina suffered in 2002.
This is how the country's crisis brought unemployment, hunger, poverty, indigence, injustice, deterioration of education, thus emerging new protest movements such as the "piqueteros", "the workers 'pole", "the workers' party", who fight by carrying out protests, marches, roadblocks, popular pots.
Emerging from here, the takeover of companies that have stopped working, that many of them have become cooperatives and are currently operating as part of a sustainable solution to this crisis.
But Barny, far from becoming a successful cooperative, its workers do not have the vision of entrepreneurs, they do not want to take entrepreneurial risks and they seek to nationalize the company but with workers' control of production.
They are also politically mobilized, so they participate in any protests against the government.
There is a long way to go until we see Barny again as in the 90s, this implies a strong cultural change for these workers so that they can direct it as true entrepreneurs, taking it again from the owners who have abandoned it and demand its return without to have offered a worthy proposal for these workers to this day and finally a change in the political, economic and social direction of this new Argentina is necessary, which we have to live and in a certain way we all feel a little victim, a little guilty and a little hostage.
REFERENCE BIBLIOGRAPHY
HERMIDA, SERRA AND KASTIKA, "ADMINISTRATION AND STRATEGY", 1992, EDICIONES MACCHI.
NOCHTEFF, HUGO, "THE ARGENTINE EXPERIENCE: DEVELOPMENT OR SUCCESSION OF BUBBLES", 1998, BUENOS AIRES.
INTERNET PAGES: www.clarin.com.ar, www.pagina12.com.ar, www.cimac.com.ar, www.rebelion.org.
Title: "CASE COMPANY: BARNY SA"
Contributed by: Claudia V. Moreno
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