Corporate euthanasia


Holden, SPC, Alcoa, Caltex oil, and all the other industrial enterprises that are currently going out of business or leaving the country are doing so because they failed to keep up with the evolution of technology and management practice. Whilst labour costs, the $A, oligopoly control of retail supply chains, limited scale of the domestic market, and all the other reasons that are trotted out have played an important role, the underlying presence is a corporate failure to evolve in the face of these changes.

Well, SPC is not out of business, just. Woolworths have sent them a lifeline, but it is motivated by self interest, not benevolence, as they suddenly realised that without SPC, they had no local supply of canned fruit, adding uncertainty, inventory, 3 months lead time, and transaction costs to a supply chain where they had lost all leverage. They have also done a similar deal on supplies of milk, as they recognised, perhaps belatedly that they were killing their own supply chains.

Now the handouts have stopped, we are undergoing the corporate version of Euthanasia in manufacturing.

Painful, but unavoidable commercial evolution if you take the long view.

Governments seem to have made the choice (with some politically expedient exceptions like Cadburys) between retaining by subsidy an industry or enterprise that has no economically sustainable business model, simply to maintain jobs, and letting it die by cutting off the supply of taxpayer cash. This is not to make light of the emotional and financial challenges this places on the displaced families, particularly in regional towns that find their biggest employer closing.

There are many lessons for us all in this current flurry of corporate euthanasia, perhaps even the beginnings of a national strategy? Certainly, the space left will open up opportunities for others, innovative smaller businesses  that use technology and agility to add value their larger less agile predecessors could not.



About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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1 Response to Corporate euthanasia

  1. Pingback: FMCG conga line rides again | StrategyAudit

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