The following information will help you understand a little of Enseer’s own management structure and culture; and how we form different ‘commercial structures’ that bring together and coordinate the multiple resources and diverse personnel required to best accomplish each of our client’s projects.
Enseer’s management system
Enseer operates in a way that allows us to achieve two interconnected management objectives – ‘Centralised Direction’ and ‘Decentralised Implementation’.
Centralised Direction is our term for the moral values, strategic objectives, and business practices that unify Enseer’s Venture Associates whenever they work together on our client’s projects. Our role is to ensure that these values, objectives, and practices are shared and understood by all personnel, in every part and at every level of their operation.
Decentralised Implementation is our method of delivering services, in a way that empowers people in each commercial enterprise at an operational level – giving them the autonomy to constantly organise their activities specifically to increase the client’s growth and profit.
These two interconnected management objectives make every commercial enterprise a market responsive, entrepreneurial business in their own right; accountable to the client, and largely autonomous from Enseer.
Typical Commercial Structures
Typically, Enseer would help a client to create one of the following three commercial structures to implement their project:
- COMMERCIAL UNIT
- PROJECT COMPANY
- JOINT VENTURE ENTITY
A Commercial Unit is the smallest commercial structure or viable resource that Enseer forms on behalf a client to successfully complete a given project. They are used for projects that are either too small or short in duration or do not have the dynamics to warrant forming a full Project Company, with its own Board and Executive staff.
Normally, they are autonomous entities that are owned by the client and they have just enough management personnel to effectively control the strategic factors and resources affecting their own performance and outcomes.
Their assignment may encompass the client’s entire company, or they could simply become a small part of their existing company, or they could be set up totally separate from their company to undertake a whole new enterprise . . . It all depends upon what is most appropriate to the client’s circumstance.
Although they vary in size and duration, typically Commercial Units are small, short-term temporary entities. In certain cases the personnel and resources are provided by the client, although usually all or most of the personnel and resources are sourced externally by Enseer.
A Commercial Unit can even be as small as a single person, who has the expertise to complete the job in say 2-3 months. Or it could be a small team of 20–30 people who work together on a project that may only last a few days. However, in some cases a Commercial Unit could involve 50-100 people for a year or more.
In the case of larger projects that don’t warrant forming a Project Company, the overall project is divided into sub-projects. Each sub-project is assigned its own Commercial Unit. These Commercial Units collectively form what we call a ‘Commercial Group’, which is run by a Group Project Manager who oversees the group, ensuring that the collective resources are effectively shared to the advantage of the project as a whole.
A Project Company (sometimes referred to as a Development Company) is dedicated solely to the Client’s project. It only exists for the duration of the project. It is usually owned by the Client; and can be international in nature.
The location or structure of the Project Company generally depends on the type of project to be undertaken. It could be a corporation, limited liability company, or other legal structure, depending on a number of considerations such as taxation and legal liabilities; as per it’s location.
It is usually governed by the major stakeholders. The board of the project company typically comprises of:
• The owner of the project (or a representative, acting on their behalf) who is usually the Chairperson of the Board
• The Executive Project Manager (who Heads the office of the Project Company, which contains its own CFO, COO and company administrational staff)
• An Executive Member from each of the participating Developers, who hire the multiple contractors required to undertake the work that will complete the project
And, an ENSEER Representative sits on the board as a non-stakeholder (who is the facilitator of the project – on behalf of all the stakeholders).
Once the company is formed, the project begins with the owner releasing the budget funds for the project to the Project Company (usually with Enseer having the control of release); with each of the participating Developers being allocated a share in the company proportionate to their share in the work to be undertaken.
The work is carried out by the Developers, who are usually sourced from within Enseer’s pool of Venture Associates. Typically, they have their own: project management team, sub-contractors, professionals, tradespeople, workers, resources, and intellectual capabilities required to deliver their portion of the project.
At the end of the project, the Project Company’s books balance to zero, with each of the participating Developers being paid-out their agreed share. At which point the Project Company is wound-up, with each of the stakeholders responsible for their own tax obligations arising from their profits.
Normally, our Joint Venture clients fall within two main categories:
• An individual that has invented a new product or service that requires one or more existing companies or corporations to enter into a joint venture with them in order to acquire the resources to effectively produce and deliver their product or service.
• An existing company or corporation that desires to enter into a Joint Venture relationship with other companies or corporations to improve their strategic priorities.
OUR CLIENTS MAIN REASONS FOR FORMING A JOINT VENTURE
They are looking to: build on other company's strengths; spread their costs and risks; and improve their access to financial resources. Also, in most cases they gain the advantage of instantly having extra size, which gives them new economies of scale; as well as gaining instant access to new technologies and customers; and to innovative managerial practices.
They are looking for well-partnered Joint Ventures to be formed, so that all parties are able to move to a position to influence structural evolution of their industry; and thereby pre-empt their competition; and maintain the primary defensive response to any blurring of their industry boundaries. In addition to this, they usually looking to create stronger and more competitive products or services; with better speed to market; and improved agility in the market place, above that of their competitors.
In most cases they look to members of our group to manage the combined resources of the venture partners to either: produce greater ‘Positive Synergies’; develop new technology and skills; and/or build more sustainable diversification.
Enseer’s role is to help the client form the commercial structure that will house the Joint Venture and facilitate its activities – ensuring that the forming, running, and winding down of their Joint Venture are successfully completed.
Usually, that would entail overseeing the following steps:
• Assessing Joint Venture feasibility & viability (weighing the challenges and advantages against the overall rationale of entering a Joint Venture)
• Partner Assessment (analysing suitability for partner selection)
• Strategy Development (bringing into line the alliance objectives of each partner with the overall new Joint Venture strategy)
• Contract Negotiation (defining each partner’s contributions, responsibilities and rewards)
• Formation of the Joint Venture Entity (whether it be a corporation, limited liability company, cluster group, or a simple contracted partnership between the participants)
• Alliance Operation (ensuring each partner’s delivering on commitment)
• Joint Venture Termination (winding down the alliance, if or when required)
• Resource Re-allocation (if required, we help each partner re-adjust their priorities and or re-allocate their resources elsewhere.
Our client’s Joint Venture structures vary in size and duration, such as:
1. Simple agreements, designed just to provide an alignment of products and or services from the different participants, bound only by a contract conditional to mutual benefit. Although simple in nature, often these types of Joint Ventures are between large existing Corporations, looking to expand their enterprise opportunities in an easy way.
2. Joint Venture Clusters, that join local competing businesses, suppliers, and associated industries in a particular field; with the objective of increasing their individual productivity so that they can compete nationally and globally.
3. Joint Venture Companies, usually formed between a local and foreign company in order to complement their local skill sets, while offering the foreign company a greater geographic presence.
4. International Joint Venture Corporations, which are usually large enduring organisations with regionalised subsidiaries and service centres attached.
In some cases, a Client’s project or requirements could warrant a commercial structure that is made up of a combination of multiple Commercial Units, Project Companies, and Joint ventures.