1. Although very different in style and personality, Jack Welsh, Warren Buffett,
ID: 331129 • Letter: 1
Question
1. Although very different in style and personality, Jack Welsh, Warren Buffett, and Richard Branson have imprinted their corporate management philosophies and guiding logics on their respective enterprises. Do all highly diversified enterprises need such unique leaders to be truly successful?
2. Two observable aspects of an enterprise are its tangible performance and persistence (longevity). Intuitively, persistence and high performance would correlate closely. Of course, a high-performance enterprise with a very specific mission to achieve might be disbanded thereafter. However, why do low-performance enterprises persist? Identify some examples and explain their survival.
Answer these two questions. Reconcile them using the textbook readings, personal experience, and research to develop an answer to the questions posed?
Textbook(s)/ISBN:
Pitt, M., & Koufopoulos, D. N. (2012). Essentials of Strategic Management. London: Sage. ISBN: 9781849201872
Magretta, J. (2012). Understanding Michael Porter: The Essential Guide to competition and strategy. Boston, MA: Harvard Business Review Press. ISBN: 9781422160596
Explanation / Answer
1) Do all highly diversified enterprises need such unique leaders to be truly successful?
Unique leaders do contribute to the success of a company ( atleast in the initial years). The unique leaders carry a persona which gets embedded with the companys style of functioning.
For example Steve jobs intense style of working ,imagining and executing impossible tasks , made sure that Apple produce truely revolutionary products. The saga continues even today.
A unique leader sets the following goals for the organisation, and such goals can only be formulated by a unique leader
a) A vision and an eye toward the future, which inspires the co-workers to dream big as well
b) Take educated risks. Development and launching of a new service or product is always risky. Unique leaders believe in their vision so strongly that they are willing to take the risk. For example when Sony launched Walkman under Masaru Ibuka, it was a new product for the market. Yet walkman became a success because of the educated risks taken.
c) The visionaries think in abstraction. An abstract view gives a unique perspective on the issues facing the company and the leaders always comes up with solutions which truly seems radical.
2)why do low-performance enterprises persist? Identify some examples and explain their survival.
A low performance enterprise persit because of one the following reason, or all the reasons.
a) Location specific advantage
This is one of the prime reasons which contribute to the persistance of a enterprise.For example the great lake location of North America is a manufacturing hub. Navigable terrain, water ways and ports provides a unique advantage for production and transport which no other region offers. These advantages would subside the poor performance because competitors in any other region cannot be cost effective in production and transportation of finished goods. Thus loosing the game.
b) Access to exculsive resource
The mining industry is a prime example for this. Natural resources of a country is an asset of a nation i:e it belongs to the government of a country. An area with abundant resource, if allocated to a enterprise , can only be mined by the enterprise. This captive mine would bar the Competition from accessing the same resource and thus giving an advantage for the enterprise.
For example the Bharath Aluminium company, An Indian aluminium company with its own captive mines lingered for nearly 50 years,inspite of poor performance.
c) Governmental subsidies
Government support in terms of Subsidies, capital infusion and favourable laws will help industries to persist. The government support would ensure that enterprises are safe from competition and cushioned from any external instablity
For example IOC ( Indian oil corporation), during the years of high international oil prices was making billions of dollars of loss. Yet inspite of this the company persisted because of cash infusion from the government of India.
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