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11/23/2011

Apple polishing in the corporate world

The Tokyo and Osaka stock exchanges are in the final stages of a merger to reemerge as a bigger stock exchange. Merger and acquisition is the magic formula of advanced corporate and business management principals. Corporation seeks quick growth and profits by simply merging and acquiring other corporations. It is swift and instant growth.

When the time frame to show results by top management is reduced to a couple of years, M&A is the quick solution. And short term gain is matched by short term policies and management practices. Corporation intending to do M&A only needs to put its house in order, or appears to be in order. Patch up the leaking holes temporary with stop gap measures, giving it a new coat of paint and hope that the ship will reach the next port intact. The whole ship could be rotting, but as long as it looks good from the outside, and can sail for a while, that is good enough.

The next most important thing to do is to go out quickly to merge or acquire another healthy ship to boost its bottom line before it sinks. What the top honchos forget is that other corporations could also be indulging in the same apple polishing to look good on the outside and waiting for an unsuspecting suitor. The merger could be between two rotten apples hoping to turn into a shiny apple through the copulation.

The old concept of organic growth, which is slow, tedious and a lot of hard work, is shelved permanently by all the MBAs from the top business schools. There is no need to work so hard, the way to real growth. They have no time for such crappy business idea. Too slow and too difficult. Take the short cut, M&A and lo and behold, a bigger corporation with bigger net worth overnight. Everything becomes bigger, bigger risk, bigger problem, bigger cost, and bigger hole. Uh no, economies of scale man!

Do not be awed by the M&As that are going on in the corporate world. It may be the in thing today. It is not necessarily the right thing to do or a good thing. A rotten apple is a rotten apple. It is the equivalent of banks indulging in big time gambling for quick and easy profit. When the fundamentals are unsound, M&A is a short cut for destruction as the resources were assigned to do apple polishing instead of running and building a sound organization. Quickies are in favour just to look good on paper and in the eyes of the unsuspecting and gullible spectators.

Many young people are also looking for such M&As, to marry the scions of a rich family and lo behold, the merger will bring instant wealth, and recognition, to sit in big companies, to run big corporations.

5 comments:

Anonymous said...

The World, like any other thing, has to undergo wear and tear. The faster process of wear and tear is called rot.

A brand new ship will rust and rot like older ships; liked You said, it can be repainted to look good. The only species capable of repainting and remaking rotten stuff to look good is man(kind). And they are betterer at making themselves appear the bestest. It is normal, all the preachings one hears are all but the painted facade that hides the evilness of man.

Just refrain from polishing apples or help to polish them and one should have a guilt free existence. So long as one is not an initiator or acts as an accomplice to sin, feel free and feel happy.

patriot

Anonymous said...

What can we do if the powerful continues to fool the daft.

The knowledgeable continues to fool the foolable.

And they just continue to live happily ever after.

Anonymous said...

Sure, they live life of plenty.
But, to say that they live happily ever after; more often than not they ended up tragically.
There is no guarantee that their successors do not get tainted and are shunned for no fault of their own.

Envy not but seek contentment in propriety.

Anonymous said...

Why need to work hard when you can make money the easier way. The opportunities are all there. Flipping properties, creating toxic instruments from nothing to make fortunes, etc. Even Governments encourage them. Blowing balloons is real easy work. Everybody loves that.

It really is easier, better and faster. No wonder they are getting rid of real hard work in the West. A pattern now followed by those in the East.

Chua Chin Leng aka redbean said...

The smart people make money without having to sweat the small stuff.