Coatings World - September 2008

Business Corner

STRATEGIES & ANALYSIS
BY PHIL PHILLIPS

CONTRIBUTING EDITOR PHILLIPS@CHEMARKCONSULTING.NET

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Do all global companies routinely take their strategy through the “what-ifs” screens associated with running their business? We are advocating broadening the use of strategy analysis, not just considering singular event strategic impact, but concurrent events both within a company’s control and outside of its control. That is, measuring the good, the OK, and the bad “what-if” scenarios.

Our experience says that most companies do not routinely take their strategy through comprehensive “what-ifs” screens associated with running their business.

My colleague Dan Watson’s August column in the Business Corner talked about the “economic sky falling” and all the concurrent negatives affecting our economy. In the recent past, seemingly simultaneous events have pushed negative front-page headlines. In about every corner of the industries we heretofore have viewed as stalwart bastions of impregnable substance, we see negative news. To mention a few name brand examples, Goodyear, Ford, GM, Chrysler, SAKS, Lowes,

Home Depot and even Wal-Mart, have felt the effects of these debilitating concurrent events.

The U.S. dollar has never before been so weak. With buying power 40% less than the Euro, goods and services today are 40% more than just three years ago. The price of oil and natural gas, which are the bedrocks of our chemicals industry and for which we rely on when purchasing vehicles, household goods, toys, fuel for autos, transportation, housing and commerce, has increased three-fold in the past four years. The mortgage industry crisis has produced record levels of foreclosures. At the same time Wall Street values are falling and performances of majors are short of forecasts with consolidation turmoil throughout. Credit ratings also continue to drop significantly. All these events have occurred in concert with one another and, are very interdependent.

These events are not new to you. They are, however, as a manager of any business, but especially a global one, events you must track separate and in combination and assume they will occur again.