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Old 8th November 2004 | 15:03
  #16 (permalink)  
Flight Safety
 
Joined: Jan 2001
Posts: 739
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From: Dallas, TX USA
As much as I like Sikorsky, their people, and their products, I do have one concern about them buying out Schweizer and perhaps making an offer for all or part of MD. This concern goes by different names, but it's basically the "morphing of purpose" problem that occurs all too frequently in American business.

Let me illustrate with an example. Here is Texas we have a popular local chain of barbeque restaurants called Spring Creek Barbeque. Their BBQ is excellent, and their bread rolls are to die for.

Let's also say that they make a pretty good steak as well (they don't, but we'll say they do for this example). Then suppose a really large chain of steak houses decides to buy out Spring Creek BBQ, mainly because they like their good steaks.

Now imagine what would happen to Spring Creek BBQ, if the new steak house parent company decided to place most of its interest in the steaks that Spring Creek BBQ makes, and does not show much interest in the excellent BBQ that Spring Creek produces? If the new parent company focuses mainly on steaks (rather than on all of Spring Creek's products), then the process of "morphing" Spring Creek from a BBQ restaurant chain into a steak restaurant chain will have begun, at the expense of Spring Creek and it's BBQ customer base.

One of the most common failings of the "morphing" process, can be illustrated by the fact that Spring Creek BBQ has never demonstrated in the market place that it can be a successful steak house chain, as it has only demonstrated that it can be a successful BBQ chain. Whether the "morphing" process is intentional or unintentional, it can be devastating to the purchased company.

I think you see my point, and this is a VERY common problem in the purchase and aquisition activities of American business. Sikorsky bought Schweizer partly because of it's ability to produce UAVs. As long as Sikorsky does not get Schweizer too focused on UAVs at the expense of its helicopter business, all will be well. The same will go for whoever purchases MD.

Warren Buffett (CEO of Berkshire Hathaway) has always had the right idea about buying other companies. If you decide to buy another company, do NOT take that company's focus away from what it does best. If you buy a company because some part of its operation appeals to you, do not take ANY focus or resourses away from what that company does best. Instead, commit additional resources to growing the specific part of the company that interests you, or you will cripple or destroy that company.
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