Lessons from success and bust stories: Sharp of Japan

Every generation needs a revolution - an entrepreneurial revolution

Please find enclosed a link to the video on the decline of Sharp, its huge losses incurred in the latter years and its acquisition by Foxconn a Taiwanese subcontractor.

20 year fall of Sharp company

Lessons that I learned:  (How about you)

1.   It does not mean that if you are 40 years old, or 100 years old as Sharp, you can not fail.  You can still fail.

2.  It debunks the superiority of  Japanese management.   We can be superior too.  Or at least strive to be good.   Our bad maintenance of the park, and not 100% interment brings us closer to losing our business.  We are not asking people to manufacture high tech products, only regular cleaning and grass cutting, and we can not do this well

3.   The cost reduction alternative:

      1.  Buy or make decision

      2.  Offshoring outsourcing

      Making your own products does not mean its cheaper.  If it is made cheaper in Taiwan or

      or Chna go for it.  Sellers of carbon wheels and bike frame have it done in Taiwan which the         charge only for $200 per; whereas it would cost them $500 if they make it Europe or US.

      One such manufacturer American Classic could not compete and had to close shop

       because they were uncompetitive.

      Sharp continued to pursue its plans of local manufacturing despite the fact that land

      and materials is expensive in Japan  Labor which costs about P100,000 in Japan per month

      can be had for a max of say P14,000 in PHL.   Rather than building a plant, Sharp should 

       have opted for this course of action.  Trouble is they built another plant

4.  Innovation is temporary

    You gain leadership by innovating only temporarily.  It has to be defended and protected.

     You cant win a war or a game, you have to have a high winning average.   If innovation is

    the name of the game, it has to be continuous process.  Kaizen

    You must work hard on basics too:   5s tpm, (maintenance)

   You must keep watch too on the pace of innovation of competitors.  They are not sleeping

   

    Complacency is the enemy of innovation.   Sharp could have been complacent because of 

     their past successes in:   mechanical pencil, dyneradio, calculator, TV sets, LCD display

5.  Financial management:

    1.  No huge cap ex for a single product.  It has to be portfolio approach.  Let a hundred

         flowers bloom.  You are not sure of outcome of how you grow you flowers.  Set limits

         as we have seen in our own General Policies  No huge bet do not bet the farm 

         on single product.  

    2.  If it rains open an umbrella.  If you fail to make it in a quarter, ACT, DO                    SOMETHING

          Solve the problem.  Do it now.  Not later Not tomorrow.  Do it now

6.  Role of top management

     It is the duty of those who lead to learn good management practices.    The new president

     and chairman are partially responsible for the decline for the wrong decision.   We strive to

     stay on the business, "Give capable and intelligent direction in the management of the

     business because you cant afford to make such huge mistake that could mean the

     downfall of the company

     Thus:

     1.  Study the history of the past practices especially those that are documented on 

          how the past managers navigated the difficulties.

     2.  Study the current mistakes of contemporary mistakes of modern managers and how

         you can steer clear of their mistakes

     3.  Sharpen your critical thinking and improve your problem solving skills They can

          never be taught

7. Purpose driven organization;

   1.  The vision and mission statements define the purpose of the company.   We have out-

         lined this as part of memorialization business.  

 

Without a purpose, life is motion without meaning, activity without direction and events without reason. Without a purpose life is trivial, petty, and pointless.”

― Rick Warren, The Purpose Driven Life: What on Earth Am I Here for?

  2.  We have determined that:

      1.  We used to sell plots for cheap so that we can offer our more              gp services.

          (Are we achieving this??)

       2 Businesses that are supposed to supplement our revenues and that are supposed

          to boost our sales and collection  are not being sold and offered.   Something is

          very wrong.  This is the height of mismanagement

     

Attachments area

Preview YouTube video The 20 Year Fall of Japan's Sharp Corporation

The 20 Year Fall of Japan's Sharp Corporation

Dealing with inflation at micro, personal level

Every generation needs a revolution - an entrepreneurial revolution

We all seem to be engrossed in inflation and seem to be like an animal crossing a highway and blinded by the headlight of the incoming vehicle and we are frozen into inaction.   Inflation is a result of interplay of factors among which are monetary and fiscal policies that are beyond our scope.  Our main concern is how to eke out a living in such a challenging times 

Inflation could be big word and we may be at a loss on how to navigate ourselves through such maze

What can you do in period of inflation?

1.  Tighten your belt.  Spend less, do a lot of substitution;

2.   Be entrepreneurial.  If you were engaged in side hustle, think of  more;

3.   Do your own backyard  green revolution   The DA has launched one   DA green revolution

 Be a survivalists'

      1.  Grow chicken for meat and eggs

      2.  Grow your veggies.   

BSP closes another rural bank

Every generation needs a revolution - an entrepreneurial revolution

The news that BSP closed down another troubled rura bank in Zambales made me recall the brief stint I had as a rural banker.

1.  In 1976 at the urging of my mother, I resigned from my lucrative job to be an AM of a rural bank where she was a cashier.  I had no background in finance nor in banking much less rural banking.   To make up for that weakness:   I enrolled in MBA, meticulously reviewed RA 720 (the Rural Bank Act) the CB manual of regulations, and all the related financing programs of CB (still CB at that time)

In due time, we had new programs for masagana 99, and the Babuyan, programs applicable to the town where the rural bank is located.   The fund generation was prepped up by the Tipid Program  being promoted as school.  This worked well with my work experience being a promo man at Pharma

After a year the performance of the RB yielded positive results as the PNL doubled and so with the deposits.   

I encouraged the towns folk to go for OFW jobs and invited classmates from MBA to talk about such opportunities

But my action did not ring well with the stockholders and board who said that I was their town (they are not from this town) responsible for keeping the bank alive. But I saw poor quality loans from the said now MM municipality and many ever green loans.   I convinced my parents to sell out our shares and agreed to put our local rural bank

2.   In 1977 we organized an SLA and by this time my knowledge of organization and the banking business was much better   I studied well the SLA history in the states.   I set up my system on how to run an SLA   In the seniors training program for SLA execs, this post ended one of the lecturer and many other SLA execs from Central Luzon visited our small office in this town.

In that short stint, this post had this achievements:

1.  Had 3 branches in 5 years;

2.  Had been involved in BIR tax collections (that beefed up our PNL)

3   Became No 2 bank in NHMFC mortgage origination.

4.  We attracted the attention of Housing officials that they bought us out.

The MBA helped me a lot and so did research, research, and passion for self improvement.   Certain quarters sought my assistance in acquiring troubled

We did fine with new owners but some quarters always went for shady deals through the chairman and soon we had string of troubled accounts.     Fake ICR for discounting of receivable's, watershed as collateral, scams loans (the borrower refused to pay for the loan because of an assignment - claimed he did not receive the php.  We were naive. But we were able to save a number of accounts who difficulty with their take outs   

The govt was forced to sell the SLA to private party.   But at that time there were about P100 million in deposits,, 3 branches,  and 50% liquidity.   This was offered to me first to take the deal:   pay 13 m, and then the following day, take out DOSRI loans to pay the P13 m paid.   That's what the buyer a real estate developer did and used the bank as his piggy bank for his real estate projects   He was known to live lavishly traveling in private helicopter and staying in P30,000 a day suite's   He sold to another development bank for P1.00 only.

I could see the difficulties of many rural bankers:

1.   The board does not do its job,  Most members come for the per diem.   Most of the chiefs have their board by their noses.

2.  The owners or majority stockholders use the banks for piggy bankj and use the same to save the interest of their business group.  Some love DOSRI account

3.  Most banks cant compete in the new world of fintech and low cost  high speed banking.  Without access to capital and technology, the rural banks cant compete and are bound to fail.  

4.  Need to professionalize management -  MBA continuing program of professional development for the staff  

5.  In one of the advice giving sessions, I was asked to evaluate a PDB which was for sale

     1   I predicted that its going to run out of cash in 2 months time (based on FS I had)

     2   I talked to their suit donned executives and they looked the least worried about their predicament

     3   I evaluated some of the major items in their balance sheet.  One was a memorial park in 

          SL and worth P40million and this turned out to be raw and, maybe P1M at most.    So bank

          is all ready in the negative on day 1.  It is going to take forever to erase this negative

    4.  In an alcom analysis framework, the bank was in a negative carry for 10%.   How could it survive

         (the bank was incurring 10% more interest expense than it did on its loan generation 

There was no other economical way of keeping the bank alive further.  It had to be foreclosed and true enough 2 months affer PDCI took over 

I rura banking a bad dream for Philippine banking system