|
View previous topic :: View next topic
|
| Author |
Message |
Nofsdad
Joined: 06 Jul 2003
Posts: 6727
Location: Central CA
|
|
Posted: Sat Aug 09, 2008 3:16 pm Post subject: Is Business Acumen a Substitute For Leadership?
|
|
|
| Quote: |
However, even before the current financial crisis brought on by the sub-prime failures, some fund managers were having difficulty in another area. Those that moved away from their original investment strategies into taking a direct role in not only ownership but also management of organisations, ran into trouble. Is this a case of not “sticking to the knitting”, or a lack of business acumen?
The recent press reports of one such fund manager, give some clues. Edward Lampert, a hedge fund maestro, masterminded the takeover and merger of Sears and Kmart in 2005. It seems that Lampert has found that actually managing an organisation is a bit different to investing in its stock.
Since gaining control of the organisation, Lampert has taken a very hands on approach to management. And that approach has been based on his own expertise (finance), not the expertise of the business - retailing. For example, the key underpinnings of his strategy have been to:
- Raise prices
- Cut capital spending
- Cut marketing budgets |
| Quote: |
| The result? Customer visits and sales are down, and so are profits. Those involved in retail, know that people want an “experience” when they shop. Sure they often want the best price. But they also want to be treated as people (customers) first, not numbers on a balance sheet. Often people buy based on their emotive response to the retail experience and then support their decision with reason and logic, such as price. Sears are not providing this. As was reported in the International Herald Tribune (Tuesday, 29th Jan 2008), “Stores … look shabby next to those of rivals like Target and JC Penny. Dozens of products … were sold out. Much of the commodity merchandise that was in stock was more expensive than nearby competitors. People are simply going elsewhere for their shopping experience. |
Old news yes, but illustrative of the consequences any time someone, even a "genius" tends to overreach themselves and tries to be something they're not. It can be especially damning when you're doing it with other peoples money.
Story here:
|
|
|
Back to top
|
|
allhandsabandonship
Joined: 28 Apr 2005
Posts: 1634
|
|
Posted: Sat Aug 09, 2008 4:46 pm Post subject:
|
|
|
|
It's good to see people figuring it out. In real functional businesses there has to be some concept of reciprocity. In order for the company to make a profit, the customers have to get something in return. You can't just cut everything and expect only the "unprofitable" sales to disappear. Maybe if he had ever worked at a real job, Lampert would have some concept of how things work.
|
|
|
Back to top
|
|
Snurbble
Joined: 10 Aug 2008
Posts: 257
|
|
Posted: Mon Aug 11, 2008 7:49 pm Post subject:
|
|
|
I would argue that if you have good business acumen, you would find good leaders to run your operations.
In the case of my store, the store manager is neither a good leader nor a goodbusinessman (woman actually).
She apparently doesn't understand that having an old product sitting around costs money. Money spent for the product, money for the floor space to display it, money for the new product that is sitting downstair in the stockroom that can't be sold until the old one is gone.
Case in point. As the beginning of the spring we still had a few 07 tractors on the floor. In typical Sears insanity, the price on last years was only $20 less than the '08 was going for. A customer asked if I could get anything more taken off the old one. A reasonable request so I went and asked. "NO! That will eat my margin." F the margin, he didn't buy the 07 or or 08.
I'm sure that everyone has been getting hammered by the "clean sweep." Granted, some of the store are getting pretty shabby and need to be cleaned up to entice customers. My dept. manager was bringing people in a couple hours early to focus on cleaning rather than trying to do it during the business day. That didn't last long. Too much money. So the project ground to a halt in our store. I'm not going to hide in a corner during the day to scrub shelves and let people carry GDO to the cash wrap.
I don't think that Sears has many managers who are leaders or have any business acumen.
|
|
|
Back to top
|
|
Nofsdad
Joined: 06 Jul 2003
Posts: 6727
Location: Central CA
|
|
Posted: Tue Aug 12, 2008 12:24 am Post subject:
|
|
|
Actually, the consensus here appears to be that Eddie has no business acumen either. Eddie does one thing well... getting his hands on other people's money which he then uses to buy companies in trouble and milk them of every asset possible.
This is NOT business acumen and only works when times are good and then only for a finite time period.
|
|
|
Back to top
|
|
allhandsabandonship
Joined: 28 Apr 2005
Posts: 1634
|
|
Posted: Tue Aug 12, 2008 4:14 pm Post subject:
|
|
|
| Nofsdad wrote: |
This is NOT business acumen and only works when times are good and then only for a finite time period. |
It annoys me everytime the media calls the guy a "genius businessman". It's an insult to every honorable businessperson who has ever operated and provided a service to the world, including a lot of the old time management at Sears. Lampert is just a greedy and lucky financial speculator. His experience trading doesn't in any way qualify him to run a company, as he's proving every day with SHC.
|
|
|
Back to top
|
|
|
|