What determines a business success?
Suppose that in 1972, someone had asked you to pick the five companies that would provide the greatest return to stockholders over the next 20 years. Conventional economic theory would be a guide, so how would you approach the assignment?
In order to create prosperity, the companies we pick should have some sustainable competitive advantage, and something that:
a) distinguishes this organization from others in the business;
b) creates value for the industry it is involved in;
c) provides a service that is not easily copied.
Conservative economic strategy would have us pick the “right” industries as step one.
The 5 strategies for fundamental success would be:
i) difficult entry for new competitors;
ii) a product or service that isn’t easily substituted;
iii) low market power of the buyers;
iv) low market power of the sellers; and
v) cooperation between the competitors.
Economies of scale, patent protection, (a monopoly) and the largest market share would help a good selection process.
What would have been the best business strategy between 1972 and 1992? If we had taken conventional wisdom… and turned it on it’s head… we would have done the BEST!
Here are the results, the top 5 stocks, in reverse order:
Plenum Publishing, (15,689%)
Circuit City, (16,410%)
Tyson Foods, (18,118%)
Walmart, (19,807%)
Southwest Airlines, (21,775%)
Yet; Airlines, Retailing, Food processing, and publishing industries were awash is bankruptcies and massive competition during this time period.
Therefore… what made these five good businesses and what sustained their advantage?
It was not market power, technology, patents, or strategic position…
It was how they handled their work force.
Southwest Airlines whose stock had the best return from 1972-92 certainly didn't get this from economies of scale... it was just 2.5% of the US passenger market. During the first three years of it's history no Southwest planes were ever flown. Southwest exists in spite of regulated and protected markets, as it's competitors sought to keep it from flying at all. They made sure Southwest did not fly out of the Newly constructed Dallas-Fort Worth Int. Airport... resticting it to operating out of the close-in Love Field... thus the first advertising slogan; "Make Love, Not War." THe competitors sought to prevent Soutwest from even flying outside Texas. Southwest became the "Love" airline out of necessaty, not choice.
The point here is do we in Western Canada need a Cooperative marketer for our grains...?
THis is all about our state of mind... If we believe in a NEW CORP. that is to have a place in our every day grain businesses...
Like the Western Hog Exchange... or
Federated Cooperatives;
The NEW (Nutrition Energy and Wheat)CORP. will thrive and prosper!
Suppose that in 1972, someone had asked you to pick the five companies that would provide the greatest return to stockholders over the next 20 years. Conventional economic theory would be a guide, so how would you approach the assignment?
In order to create prosperity, the companies we pick should have some sustainable competitive advantage, and something that:
a) distinguishes this organization from others in the business;
b) creates value for the industry it is involved in;
c) provides a service that is not easily copied.
Conservative economic strategy would have us pick the “right” industries as step one.
The 5 strategies for fundamental success would be:
i) difficult entry for new competitors;
ii) a product or service that isn’t easily substituted;
iii) low market power of the buyers;
iv) low market power of the sellers; and
v) cooperation between the competitors.
Economies of scale, patent protection, (a monopoly) and the largest market share would help a good selection process.
What would have been the best business strategy between 1972 and 1992? If we had taken conventional wisdom… and turned it on it’s head… we would have done the BEST!
Here are the results, the top 5 stocks, in reverse order:
Plenum Publishing, (15,689%)
Circuit City, (16,410%)
Tyson Foods, (18,118%)
Walmart, (19,807%)
Southwest Airlines, (21,775%)
Yet; Airlines, Retailing, Food processing, and publishing industries were awash is bankruptcies and massive competition during this time period.
Therefore… what made these five good businesses and what sustained their advantage?
It was not market power, technology, patents, or strategic position…
It was how they handled their work force.
Southwest Airlines whose stock had the best return from 1972-92 certainly didn't get this from economies of scale... it was just 2.5% of the US passenger market. During the first three years of it's history no Southwest planes were ever flown. Southwest exists in spite of regulated and protected markets, as it's competitors sought to keep it from flying at all. They made sure Southwest did not fly out of the Newly constructed Dallas-Fort Worth Int. Airport... resticting it to operating out of the close-in Love Field... thus the first advertising slogan; "Make Love, Not War." THe competitors sought to prevent Soutwest from even flying outside Texas. Southwest became the "Love" airline out of necessaty, not choice.
The point here is do we in Western Canada need a Cooperative marketer for our grains...?
THis is all about our state of mind... If we believe in a NEW CORP. that is to have a place in our every day grain businesses...
Like the Western Hog Exchange... or
Federated Cooperatives;
The NEW (Nutrition Energy and Wheat)CORP. will thrive and prosper!
Comment