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; through occasionally a comparable production process has also provided sufficient unity of experience and expertise, as well as a common language, to bring companies together. With-out 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.
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. 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 customer – 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 invariably 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?
You can make positive deposits in your own economy every day by reading and listening to powerful, positive, life-changing content and by associating with encouraging and hope-building people.
Zig Ziglar
Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
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Our workforce and our entire economy are strongest when we embrace diversity to its fullest, and that means opening doors of opportunity to everyone and recognizing that the American Dream excludes no one.
Thomas Perez
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Milton Friedman
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Barack Obama
Change, Fact, Happen
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Thomas Perez
To me, it really seems visible today that ethics is not something exterior to the economy, which, as technical matter, could function on its own; rather, ethics is an interior principle of the economy itself, which cannot function if it does not take account of the human values of solidarity and reciprocal responsibility.
Pope Benedict XVI
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Morihei Ueshiba
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Fidel Castro
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Rod Blagojevich
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Bob Schieffer