Hard Times for Detorits's Carmakers

American carmaker's are in great peril these days as the financial crisis has hit so hard and is affecting thousands of people on the main street as well. I read terrible news for these company's in The Economist. Their asstes are depleting very fast and liabilities booming high that their present condition can be figured out from this quote from this article in Economist:

"There are just two broad options: either the federal government steps in to save Ford and GM (Chrysler is probably unsalvageable) or America’s two biggest car firms must seek Chapter 11 bankruptcy protection."

A move to file for bankruptcy protection only means more bankruptcy for the carmakers, says the article.

"Consumer surveys that suggest 80-90% of prospective customers would abandon the products of a carmaker (like Ford, Gm etc) that had filed for bankruptcy protection."

And, they've valid reasons to do so:

"A car is the most expensive purchase many consumers make, and by buying a car they also enter into a long-term contract. Buyers expect their 60,000-mile warranties to be honoured, parts to be kept supplied and their dealers not to have disappeared. Used-car values are also a critical part of the deal. If the firm that made the car has gone bust, it becomes virtually unsellable secondhand."

If an airline company had gone for Chapter 11 bankruptcy protection, mentions the article, they would have been safe, because an airliner customer has business no more than a few weeks with them. Surely, it is for the fittest to survive here. However, the speculation when Congress with give auto industry bailout has come to an end, when on December 10 news came out that both parties have come to an understanding.

Now is the time for carmakers to catch the straw and save their souls, otherwise it will be too late if they miss even a nickel.

Lessons In Entrepreneurship

You don't want to do things entrepreneurs must not do. Perhaps, more than this you don't want to fail. However, if this 'want' be replaced by 'fear, becoming "I don't fear failure", is an essential traits of entrepreneurs. In the following article-link you'll find why fearing not failure is an 'essential' mark of entrepreneurs, and those who do fear are not your peers. Here is the link. 

 Author* lost his major business, and his father told him:   

"You're fortunate to have failed. You now have the opportunity to learn how to turn bad luck into good luck. If you can do that, you'll have a life of more and more good luck."  

 Roberts teaches in this short article that there are three simple immutable things an entrepreneur must stick to:   1) Not to blame (you know it). 2) Make New partners (says, best when you're doomed and you hate them. He says there are good people in perilous moments). 3) Learn from your mistakes. 

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Notes:

* Website: richdad.com. Robert, author of the Rich Dad series of books, is an investor, entrepreneur and educator whose perspectives have changed the way people think about money and investing.

When Established Superiority Isn't everything !!

When Established Superiority Isn't everything !!

Posted By Muhammad Umer Toor, 21-Nov-2008.

Always keep in mind what first paragraph of page # 199, 227 (exhibit 8-7) of Management book [1] states, whenever you're in the business. Even when your organization is touching skies or, worst, in a downturn, and if you cease to bring innovation, cease to find new directions and so on and so fourth - this is a worst pitfall. Becoming best is one thing, and trudging along a constant line is not a safe strategy. Because, whenever you find that everything is going smooth, actually something is going wrong there. This happens mainly with those companies whose tasks demand optimum performance; when everything around them is changing without any notices. What I learnt from Stanely Hainsworth, 'former creative genius behind campaigns for Lego, Nike and Starbacks' [2], is that eternal reconstruction is the price of success for any brand. Editor at Entrepreneur magazine calls it as 'Survival of Fittest' [3]!

The basic idea behind finding new directions or cracking innovation, a necessity of established companies and else, is well explained by Hainsworth, and in his own words:

"Many [companies] wait until a crisis hits and then go through the cycle of
ahiring freeze, cost-cutting and
layoffs. [Refocus] while you're strong, while have the resources and before you
start cutting."[4]

This happens (-unexpected shocks-) mainly becuase of 'market-shifts', customer choices change (like our favorite ice-cream example!), and of course, due to dynamic enviornment, generally. [5] Doing something ahead of hard times isn't at all a weak idea. It's an expert view as well as well-researched thesis. (To quote you one more example). According to a research done [6] on the four common causes of growth stall, two majors reasons given for growth stalls confirm Hainsworth point of view.

One big reason, according to HBR [7], is that 'innocvation management breaks'. Second, because 'company lacks a strong talent bench'. [8]

Once, I asked a senior student of criminal psychology, "What is the remedy for a criminal-minded person?" And, his reply, which I found quite witty, was, "You shouldn't be criminal in the first place." 'That's the best strategy', he whispered to me without even whispering! And, business studies are no exceptions!

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Notes:

[1] Page 199 (Chapter # 7), Ist paragraph states the successful plans are not likely to work in changed situations. Whereas page 227 (exhibit 8-7) (Chapter # 8) urges the need for creating strategic flexibility, i.e, it consists of: monitoring and measuring results; gaining fresh perspectives and ideas outside organizations; sharing negative information and learning from the mistakes; while making strategic decisions, having multiple alternatives. (From: Management, 9th Ed., by S. P. Robbins& M. Coulter.)

[2] Quote from Entrepreneur, November 2008, article, INSGHIT "Survival of the Fittest,' by Lindsay Holloway.

[3] Quote from Entrepreneur, November 2008, article, INSGHIT "Survival of the Fittest,' by Lindsay Holloway, Pg. # 33.

[4] Quote from Entrepreneur, November 2008, article, INSGHIT "Survival of the Fittest,' by Lindsay Holloway, Pg. # 33.

[5] Quote from Entrepreneur, November 2008, article, INSGHIT "Survival of the Fittest,' by Lindsay Holloway, Pg. # 33.

[6] When Growth Stalls, by Mathhew S. Olson, Derek van Bever, and Seth Verry, HBR (Harvard Business Review), OnPoint, Fall 2008, Article Published Originally March 2008.

[7] Excerpt from HBR (Harvard Business Review), OnPoint, Fall 2008, When Growth Stalls, from Idea in Brief coulmn, Pg. # 33, Article Published Originally March 2008.

[8] It is further explained in the article, (OnPoint, Fall 2008, When Growth Stalls, from Idea in Brief coulmn, Pg. # 33, Article Published Originally March 2008) as:

"The firm has few executives and staff with strategy-execution capabilities."