Strategy models help Boeing

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I see strong 2nd quarter profits at Boeing,  just after hearing their strategy VP explain their heavy use of strategy models. Their industry model led them not to cut production after a 2009 collapse in orders, in spite of screams from analysts that they should do so to cut costs. Reminds me Airbus used a similar model way back in 96 (also in link above) to spot that a massive jump in orders was fluff, and to ...

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Another dot-com bubble?

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Back in 1999 I got booed for saying the dot-com boom was mostly hot air, after which the NASDAQ dropped from 1000 to 200. The Economist now warns of a 2nd bubble,with private equity and big corporates falling over each other to throw cash at anything web-ish. Many of the new ventures will be great, but most will fail, due to poor understanding of whether business models are viable – which needs a sound system-model of the business.
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German secret of success

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Fascinating Economist article on two recent studies of Germany’s outstanding long-run success. It’s down to their ‘Mittelstand’ mid-sized companies relentless pursuit of apparently boring but lucrative niches, and similar strategies by their larger, but little-known firms. More detail on their strategies in the article and references. Others tell me this is backed up by very strong involvement from bank-investors, rather than disinterested arms-length investors nagged by foolish analysts chasing every quarterly forecast. Not sexy, but rock-solid.

www.strategydynamics.com

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Tyranny of market expectations

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Further to Analysts Getting it Wrong, a set of McKQ articles explain that just meeting investor expectations does nothing to the share price or, therefore, to total shareholder returns. Executives get on a relentless treadmill with every surprise performance requiring still another to boost TSR. It is troubling, then to see one quoted company Strategic Plan start with ‘Our aim is constantly to exceed shareholder expectations‘, which of course is impossible.

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Strategy error by Kraft?

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Kraft foods finally won control of Cadbury with a big £11.9 billion ($19.4b) offer. Warren Buffet, owner of 9% of Kraft, says it’s a bad deal – and he’s rarely wrong. Will Kraft do the usual and try to extract ‘synergies’ by slashing costs, or deliver real value by leveraging the combined resources to drive medium- to long-term growth in cash flows? … and will analysts allow them to do it right?

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