Business
Magazines: Breeze On Through To The Other
Side
Strategy classes often
look at popular firms at a crossroads and
ask students to formulate a game plan. The
problem is that in most instances, these
cases are outdated. Imagine a group in the
year 2000 being asked to examine Pepsi Co.'s
strategy in the late 1990s! At the time,
the company was dabbling in capital-intensive
restaurants (KFC) and snack products (Frito-Lay)
while trying to catch up to Coca-Cola. After
years of trailing the most popular brand
in the world, by the mid-1990s Pepsi Co.
was contemplating what to do next. Now imagine
if in 2000, a business class is asked to
come up with a plan for Pepsi Co. from 1995
onwards and the choice came down to the
status quo or shedding the capital-intensive
divisions to focus on beverages. Some students
would argue that the firm should keep the
chicken, tacos and chips. Pepsi did this
and its stock continued to fizzle and trail
Coke. Years later, Pepsi finally shed those
assets and focused on beverages. The stock
recovered and analysts jumped on Pepsi Co.
at the expense of Coca-Cola.
While the specifics of
Pepsi Co.'s strategy are irrelevant, what
is important is that anyone that would have
been aware of what was happening in the
industry in 2000 would have known what the
right and wrong strategy was.
The
lesson is that while schoolbooks are great
and irreplaceable, the proof of concept
can be found in business magazines. The
hallowed halls of Academia may provide valuable
lessons, but they are secondary to the hands-on
experience you get on Wall
Street, Madison
Avenue and Main Street. Business magazines
can teach you in the short and mid term
– textbooks in the long term. But
magazines and textbooks are like a recipe
book; you can read it as often as you like
but unless you try to cook yourself (and
accidentally poison a couple of people along
the way), the book is almost useless.
But
beware: some textbooks and magazines like
to permeate myths. Separating fact from
fiction and reality from myth is necessary
in order to come up with conclusions and
make informed decisions. |
