It must be Brexit: Nissan join the blame game club. Or do they?

8th March 2019

Outside Fortress Europe Excerpts
This Global Business Strategy Blog post is based upon unabridged excerpts from Chapter Eight, Implementing Global Business Strategy, in Outside Fortress Europe: Strategies for the Global Market.

Additional commentary reflecting current ‘hot topics’ and global strategic management challenges is presented in the Context and Analysis sections.

 


Context

Vincent, M. (2019, February 4). Nissan’s Sunderland U-turn is all about the EU — but not Brexit. ft.com.

 

Under Expert Panel review…

 


Outside Fortress Europe Excerpt

‘Explanations’ of poor business performance
As he roamed the world seeking inspiration and support for his theory of evolution, Charles Darwin had to suffer the ignominy of squalor at sea and on land and to endure a variety of diseases, only to be branded heretic on his return. This was poor payback for honourable endeavour. Those of us interested in the natural selection of successful commercial organizations are luckier than Darwin. We need only to relax at our desks with the Financial Times or the Wall Street Journal to see the ‘survival of the fittest’ in action. These newspapers provide a communication channel between the chief executive officers (CEOs) of public companies and their sponsors, the investment community. Read one at random and witness corporate evolution in real time.

Over the last few years the annual reporting season has been an embarrassing time for many CEOs and their lieutenants who count the beans and crunch the numbers, the Chief Financial Officers (CFOs). Explaining away poor business performance, low growth or reduced dividends they seek solace in external events and issues which they claim are beyond their control, a trusty ragbag of pass-the-buck factors. The following list offers a sample of genuine examples taken from the Financial Times between March and September 2018 (the author’s interpretative subtext in parentheses):

“We’ve had a bad year because …

  • General economic recession (boohoo)
  • Brexit (we’re leaving)
  • Cost inflation (bloody minimum wage, bloody unions, bloody OPEC etc.)
  • Brexit (we’re staying)
  • Taxes (bloody government)
  • Brexit (we don’t know if we’re staying or leaving)
  • Volatile exchange rates (we don’t have an effective treasury department)
  • Brexit (bloody foreigners)
  • Sluggish demand (bloody customers)
  • Brexit (erm)
  • Fierce competition (it’s not fair, they’re so good at what they do)
  • Brexit (umm)
  • Weather (it was too hot for winter)
  • Brexit (?)
  • Weather (it was too cold for summer)
  • Did we mention Brexit?

but it’s not our fault”.

Interestingly, but unsurprisingly, what we don’t hear the CEOs saying to their investors is, “Oh, and by the way, we’re poor at innovation, strategic marketing, global brand management, supply chain management, blah blah blah!” The reasons are obvious but so are the implications. The factors listed above are not explanations. They are excuses for poor performance and ‘explain’ nothing other than managerial mediocracy.

Consider the first excuse, general economic recession. Recessions are an economic fact of life and have a history which comfortably predates the industrial era. Every recession which there has ever been has had a wide variety of antecedents and consequences. One factor alone has been a constant: they all end! It is the companies who are well-managed throughout the recession which go on to thrive in the upcoming upturn.

The ‘excuses’ listed above are what economists, with their usual candour, describe as exogenous factors, meaning that they are external to a company. Taken at face value, the assertion of mediocre management sounds excessively harsh and it probably is. But what we have witnessed in daily financial reporting by British companies since the 2016 Brexit referendum has strong echoes of those poor performance examples of the early 1990s when we published the EIU commissioned book Inside Fortress Europe: Strategies for the Single Market.

There seems to be a state of stasis and a ‘wait-and-see’ mindset which has barely wavered since the largely unexpected ‘Leave’ vote in the Brexit plebiscite. But ‘waiting and seeing’ is not a good platform upon which to build long-term effective and efficient global business strategy, hence the publication of the academic text Outside Fortress Europe: Strategies for the Global Market and the more accessible and directly applicable BiteSized Fortress Europe Series Volumes.

Volume One, Ten Years That Shook the (Capitalist) World: A Brexit Antidote, profiles the nature of exogenous factors and the strategic and organizational challenges which they create. The four Volumes which follow it provide the principles, frameworks, processes and tools which companies of all sizes and from all sectors can deploy to design and implement successful global business strategies in the context of unprecedented business environment dynamics.

(Please click/tap on the Strategic Management Think Tank tab on the Main Menu for details of these publications).

 

Outside Fortress Europe Excerpt Reference

Egan, C. E., & McKiernan, P. (1993). Inside Fortress Europe: Strategies for the Single Market. London: Addison-Wesley/Economist Intelligence Unit.

 


Analysis

Under Expert Panel review…

 

Analysis informed by…

Economist. (2019, February 16th). Jaguar Land Rover is in a hole mostly of its own making. The Economist.
Vincent, M. (2019, February 4). Nissan’s Sunderland U-turn is all about the EU — but not Brexit. ft.com.
Wallis, W. (2019, February 20). Honda decision stokes anger in Brexit-voting Swindon. ft.com.

 


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All content © Colin Edward Egan, 2019