Guardian
April 11, 2011
Imagine for a moment that you are one of those straight-talking celebrity executives signed up by TV to turn round an ailing business. Imagine also that this is not a restaurant, a retailer or a small manufacturing business but the 17-nation eurozone. What would your analysis be?
The first thing you would want is the latest trading statement of the business, which does not make pleasant reading. Created more than a decade ago, Euro PLC has continued trading but growth in turnover has been slow and market share has been lost to more dynamic companies operating out of East Asia and the Pacific Rim. More recently, there has been a series of acute financial crises in some of the smaller enterprises that make up the conglomerate.
Your first thought as chief executive is to wonder why the previous management bought these businesses in the first place. But then you remember that the Greek, Portuguese and Spanish divisions were acquired during a period of aggressive expansion in which it was assumed that there would be positive synergies from a diversified portfolio of businesses.
There were, you recall now, those who favoured a core-business strategy based operated out of the German head office and that the acquisitions of Greece, Portugal, Spain, Italy and Belgium were rushed through without the normal due diligence.
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