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marnixR
Post  Post subject: companies run by accountants  |  Posted: Sat Oct 19, 2013 12:31 pm
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Joined: Thu Aug 04, 2011 8:35 pm
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Location: Cardiff, Wales

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here i'm not having a go at accountancy firms, but at companies whose business is to produce a non-financial product that are being led and whose business plan is driven by the short-term financial vision of an accountant rather than the vision of someone who understands the business they're in and knows what it takes to be successful in it - imo you'll find that the latter type of management have a good understanding of both the manufacturing and the financial aspects of their trade

a case in point : about 20 years ago i used to work for a company called Allied Steel & Wire which mainly produced re-bar and steel wire, and had as its ultimate strategy to be "the lowest cost producer of rebar in the UK" - well that's as may be, but good luck one market penetration from countries like Spain, and later on from the far east started to bite

instead of making sure that amongst their product range there were a few hard-to-make, high-earning products, they went to buy a set of french wire drawers, and in order to fund this sold off their share in Scunthorpe Rod Mill back to British Steel - the latter produced rod for drawing into high quality wire for tyres, a far harder market to penetrate than you run of the mill chicken wire

in the end the words of a recruiter i once talked to proved rather prophetic - he described AS&W as "a company run by accountants who wouldn't know what to do with a metallurgist if their life depended on it"

and so it proved to be

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iNow
Post  Post subject: Re: companies run by accountants  |  Posted: Sat Oct 19, 2013 3:19 pm
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Joined: Thu Aug 04, 2011 11:40 pm
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Location: Austin, Texas

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I wonder if this is more of an issue of "who runs the company" or if instead it's an issue of "who sets the strategy?" Everyone is always trying to shave costs and keep prices low. Lower margins are quite okay if you have enough throughput. The challenge you guys faced is demand went down when others could offer a roughly equivalent product for a lower price. That lowered your throughput, and hence you had to change your strategy. It sounds like whoever set the strategy was a bit short sighted and didn't realize the difficulty of penetrating that new market. I wonder who made that decision, an accountant or someone else who just made a mistake by underplaying the difficulty.

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marnixR
Post  Post subject: Re: companies run by accountants  |  Posted: Sat Oct 19, 2013 3:34 pm
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it's not today's throughput that matters so much as what investments you need to make NOW so that tomorrow's throughput is still healthy - if you leave it to the accountants they will decide on what investment to make purely on the basis of today's cost rather than tomorrow's value for money

so in essence, you can leave the day-to-day finances to the accountants but don't entrust them with the vision for tomorrow

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bunbury
Post  Post subject: Re: companies run by accountants  |  Posted: Sat Oct 19, 2013 3:51 pm
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Joined: Sun Aug 07, 2011 5:55 am
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Many times companies are started by entrepreneurs with a vision to make the best product or an innovative new products and when the company grows and eventually goes public the board is now answerable to the shareholders who only want the stock price to rise and know nothing about the product. In many cases the shareholders don't even know they are shareholders since all they buy is a mutual fund. (Count me in this group.) The original innovator becomes a minority shareholder or gets fired by the board because his or her vision no longer fits the growth targets of the company.


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