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  LEADERSHIP & MANAGEMENT.

Selected by Zeeshan Ahmed Khan
Oct 31 - Nov 13, 2005

COMMON CORE OF UNITY

There has to be a 'common culture' or at least a 'cultural affinity.'

Successful diversification by acquisition, like all successful diversification, requires a common core of unity. The two businesses must have in common either markets or technology, though occasionally a comparable production process has also provided sufficient unity of experience and expertise, as well as a common language, to bring companies together. Without such a core of unity, diversification, especially by acquisition, never works; financial ties alone are insufficient.

One example is a big French company that has been built by acquiring producers of all kinds of luxury goods: champagne and high-fashion designers, very expensive watches and perfumes and handmade shoes. It looks like the worst kind of conglomerate. The products have seemingly nothing in common. But all of them are being bought by customers for the same reason, which of course, is not utility or price. Instead people buy them because they are 'status'. What all the acquisitions of this successful acquirer have in common is their customers' values. Champagne is being sold quite differently from high fashion. But it is being bought for much the same reason.

ACTION POINT: In any acquisition, make sure there is a common culture or a cultural affinity between the two entities.

THE FRONTIERS OF MANAGEMENT

RESPECT FOR THE BUSINESS AND ITS VALUES

The acquisition must be a "temperamental fit."

No acquisition works unless the people in the acquiring company have respect for the product, the markets, and the customers of the company they acquire. Though many large pharmaceutical companies have acquired cosmetic firms, none has made a great success of it. Pharmacologists and biochemists are 'serious' people concerned with health and disease. Lipsticks and lipstick users are frivolous to them. By the same token, few of the big television networks and other entertainment companies have made a go of the book publishers they bought. Books are not 'media', and neither book buyers nor authors- a book publisher's two customers-bear any resemblance to what the Nielsen rating means by 'audience'. Sooner or later, usually sooner, a business requires a decision. People who do not respect or feel comfortable with the business, its products, and its users in variably make the wrong decision.

ACTION POINT: Take an acquisition with which you are familiar. Was there a temperamental fit between the two companies? How did the companies respect, or fail to respect, each other's business?

THE FRONTIERS OF MANAGEMENT

BUSINESS WISDOM

"Creative advertising guidelines:

a) Break the pattern.
b) Position the product clearly and competitively.
c) Reflect the character of the product.
d) Appeal to both heart and head.
e) Generate trust.
f) Speak with one voice."
USP NEEDHAM, Australian advertising agency.

"Ambition is a hard task-master."

"The greatest compliment a writer can have; to know that he has a written a thing so truly that people not only believe that it happened but that it happened to them."
A.B. 'BANJO' PATERSON, Australian journalist and editor.

"The knowledge of courtesy and good manners is a very necessary study."
MICHEL DE MONTAIGNE, French essayist.

"Yesterday seniority signified status. Today creativity drives status."
DENIS WAITLEY, Lecturer and author.

"Only the customers and customers alone will pay our costs and provide our profits. So, we have to conduct all business planning from customer's point of view."
JAN CARLZON, Swedish business leader.

"If in doubt, leave it out."
ANON

"Nothing is more difficult, and therefore more precious, than to be able to decide."
NAPOLEON BONAPARTE, Emperor of France(1804-14/15)

"The majority of those who fail and come to grief do so through neglecting the apparently insignificant details."
JAMES ALLEN, American theologian and author.

"Patience is a necessary ingredient of genius."
BENJAMIN DISRAELI, British statesman.

 
 

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