November 16, 2006

Loosing sight of what the business is really about

In yesterday’s Washington Post business columnist Steven Pearlstein used the experience of car rental giant Hertz to illustrate how the US car markers have been their own worst enemies, “careening from one strategic blunder to another for nearly three decades.”

His article is well worth reading. Here’s Steve’s bottom line:

"The important lesson here, however, isn't about the cravenness of Wall Street investment bankers, or the shrewdness of private equity firms. Rather, it is a lesson about what happens to companies when they lose their focus and rely on game-playing and financial manipulation. While the Big Three were dickering around buying and selling car rental companies, or getting into and out of the defense business and consumer finance, companies like Toyota and Hyundai and Honda were eating away at their market share by delivering great cars and value to customers. And it is that, more than any other factor, that has brought the Big Three to their current crisis and the car guys to Washington."


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