Home > General > The first role of business is to SURVIVE

The first role of business is to SURVIVE

Six banks risk losing their licenses, borrowers struggling as they fail to pay of US700 million are some of the latest newspaper headlines. At the bottom of the turmoil is an unsteady economy. Businesses borrowed money to recapitalize their businesses and now they are unable to repay the loans that have been made. Most of these borrowers are at risk of losing their homes and assets as all these loans require collateral. In an underperforming market, expectations to boost capacity and increase revenue have not been met. Borrowing money in an unstable economy should be done with caution. Auctioneers are having a field day as they auction assets as companies and individuals fail to pay loans.

Harsh economic environments require frugal and prudent spending. Money borrowed from banks should be used for the reason it was borrowed. A friend of mine remarked upon coming to Zimbabwe that, ‘How come people are saying there is no money in Zimbabwe, look at the cars being driven by people!’ There are some stark contrasts in this nation that cannot really be comprehended. Today’s environment is not the time to be competing with the Jones and buying bigger newer cars. Your car is only new until your neighbor buys a newer one. Directors and CEO’s are running companies into the ground and they really need to be called up on this. Loans to recapitalise companies should be used to recapitalise companies. CEO’s and senior management need to focus on weathering the storm and getting through challenging times. An organisation muct be single minded in its quets for sustainability.

A fresh breed of business people is required. These men and will women will put the company and workers first. They are interested in building companies that endure and in the welfare of their workers. If companies are managed well and finances are managed prudently, companies can weather the storm. CEO’s have been known to go without a salaries so as to show their commitment to achieving the goals of the company. British Airways CEO didn’t take a paycheck home for a while the airline was undergoing financial stress. Success is derived from staff and their attitudes to what needs to be done. Everything starts at the top. The CEO cannot expect workers to go without a salary increase while they continue to increase their salaries.

Organisations should remember that the first role of business is not to make profit, BUT TO SURVIVE. If companies can survive and not go under receivership, this will be a great step ahead, but this requires a complete mindset change and looking at the bigger picture. Build lasting companies that endured time and a company that survive even the harshest environments.

‘There is too much evidence to suggest that behind the brilliance of our world class performers is a comet’s tail of under-performing companies, too many of which are not as good as they thing they are. While 70% of UK companies think they perform at world class level, only 2.3% actually do so, according to an IBM London Business School Study’ Sir Deny’s Henderson, President of the British Quality Foundation, Chairman of Rank Organization.

If British companies are not performing at world class level, what can we certainly say about their African counterparts? There needs to be a shift and change towards excellence and quality in the way we do business in Africa. This involves doing business with integrity, governing our businesses well and striving to be word class. The world is becoming a global village and Zimbabwe cannot continue to do business for Zimbabwe. This is time for radical change, time to shape up or Zimbabwean companies will be pushed out by Chinese companies and Chinese products.

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Categories: General
  1. August 30, 2011 at 1:09 am

    Excellent ideas

  2. September 2, 2011 at 3:55 am

    I never thought of it that way, well put!

  1. September 8, 2011 at 12:51 pm

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