The Well-Timed Strategy: Managing the Business Cycle for Competitive Advantage

by Peter Navarro

Book Overview

Most companies ignore one of their best opportunities for honing competitive advantage: the opportunity to proactively manage business cycles and macroeconomic turbulence. Despite the profound impact... This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 0131494201
• ISBN13: 9780131494206
• Release Date: January 2006
• Publisher: Wharton School Publishing
• Length: 244 Pages
• Weight: 1.25 lbs.
• Dimensions: 1.0" x 6.4" x 9.2"

Customer Reviews

A well-timed review of this book may help you weather the economic storm

Predicting the weather is part science and part art, but it requires an in depth understanding of weather conditions, phenomena and pattern recognition. Meteorologists spend several years studying these cycles, and they rely on advanced radar systems and computer modeling software to help identify storm fronts so people can evacuate or beautiful high pressure systems that people can enjoy. Peter Navarro's book titled - The Well-Timed Strategy - takes a similar tact at predicting business patterns, economic cycles and enterprise turbulence. Soundview recommends this read because it not only identifies tools that can help you sidestep micro-and-macro-market disasters, it also helps you align all aspects of your business to surf the cycle rather than be a casualty in its wake. This book is jammed with helpful insights regarding customizing your business to adapt to cycle change; operations and inventory management; negotiation maximization as well as best hiring strategies - to name a few. Given the current state of the economy and market uncertainties, this book is definitely worth a look to help you weather the storm.

Well-Rounded and Useful

"The Well-Timed Strategy" can be applied to you, your company, and your investing. This is a very informative, practical, and useful book that deserves a lot more attention. There's a lot of variety that's relevant and each chapter can be read in the order you choose. The index is very useful to go straight to the topic or concept, also. Many specific examples and companies are noted, such as Xilinx, Nucor, United Airlines, Intel, Lowe, Soho China, Dupont, Labor Ready, South West Airlines, FedEx, IBM, Cemex from Mexico, the United Airlines Contract, and many more. One of the many useful points in "The Well-Timed Strategy" is hiring through the the different economic cycles. Tapping the best available talent and also securing the best deal. Here is a paraphrase from page 73: A "Reactive Cyclist" keeps hiring employees at premium wages into the late stages of economic expansion. When the recession emerges they start massive layoffs which often leads to other employees leaving because of low morale. The Master Cyclist use a variety of means at this stage to avoid to pit-falls and also retain talent. At the bottom of the recessionary trough the labor pool will be deepest and wage pressures least. This is the time to hire the most talented employees at bargain wages (Navarro, 73). By "Cherry Picking" this Master cyclist maintains a solid competitive advantage in getting a skilled and talented workforce and lower labor costs (Navarro, 73). Spending throughout the cycles: Be watchful of too much capital expansion during boom times. A concept referred to as "build the empire syndrome." This creates large cash flow needs. Revenue may fall. Cut back when a recessions seem imminent. The Master cyclist will engage in capital expenditures during a recession, to be ready for new innovation when the recovery begins (Navarro, 37). A good detailing of diversification is covered. Once case study is IBM vs. Hewlett-Packard. IBM is diversifying into such areas as outsourcing, web hosting, and services, why HP remain in computer hardware. There are many well-chosen quotes by known industry leaders, and they are edited to fit perfectly with the chapter and topic at hand, to augment the point Peter Navarro is making. (Even Robert Frost's "Road Not Taken" gets a plug.) The constant array of natural and human-made events affect the cycle and influence what needs to be done and what is, actually done. The concept of "Chaos Theory," when a butterfly flaps its wings in China it causes a metaphorical typhoon half-way around the world. El Nino affects coffee and cocoa prices, Tsunamis in South East Asia cause increased demand for medicines to counter the resulting epidemics of cholera and typhoid. A massive earthquake in Taiwan drives up semi-conductor prices. "If it's raining in Brazil, buy Starbucks." The chicken restaurant 'El Pollo Loco' acted swiftly when they foresaw a drought in Australia and the simultaneous mad cow threat hit. They

Tomorrow Will Not Be Like Today

I always enoy those shows on televiion where people are predicting the future. The overwhelming tendency is for the forecasters to predict that the future is going to continue about what it's doing now. If we're in a recession, they see nothing that looks like it's going to pull us out of the recession. If we're in a boom, the general consensus is that we are just starting a boom and that there's nothing that looks like it means the end of the boom. Instead we have a lot of evidence that whatever is going on will change. Boom cycles, bust cycles happen. Most companies, it seems, ignore any idea at all of a long term trend. This quarter is down, fire people (really good for morale), cut back everything you can. This quarter is up, try to expand like crazy, making up for lost time -- just in time for the next down turn. Dr. Navarro understands the business cycle and in this book explains the cycle that business follows with special attention to people, production, credit and so on. Then there's a chapter on forecasting tools. Knowing what to do is a lot easier if you know what the future holds. Here the model shows weakness. There are a lot of stories about companies that guess right, or wrong about the future. Predicting the future however reminds me of the old saying: 'Predicting the future is easy, it's being right that's hard.'

Conventional wisdom is not necessarily wise.

The conventional wisdom among many business executives is that you cut marketing expenditures, staff, prices and all other budgets as much as possible during the dips in the business cycle. Unfortunately for the practitioners, this is often very counterproductive. The best time to hire is during downturns, when the pool of potential hires is largest and contains the greatest number of outstanding people. With prices for many commodities at their lowest during their dips, it is often the best time to purchase new capital equipment or modernize pre-existing machinery. If you don't have the work to keep your people busy, it is a good time to carry out training programs. Peaks in the business cycle are also often not a good time to make long-term commitments because the good times are not permanent. Many company executives look at their balance sheet, smile with pride and then think that they are so brilliant that future success is assured. Contracts are signed under the assumption that the only possible side is the upside and there is no thought of new competitors entering the field or that their decisions are anything but brilliant. All of these excellent ideas are listed and their effectiveness demonstrated in this book. Case studies of companies that have successfully carried out such programs are presented as well as some that engaged in absurd policies that cost them dearly. There is a lot of solid business wisdom in this book, making it a worthy read for all business minds. However, to take advantage of that wisdom, the mind must be open, which is one of the most consistent failings of business executives. The sound business mind must be open to new ideas, capable of admitting mistakes and willing to take risks. Unfortunately, this combination is rarer than it should be which is why we use the phrase conventional wisdom.

Timing for Competitive Advantage

Timing is everything. In the year 2000, the health care giant, Johnson & Johnson, cut its capital expenditures by more than $100 million. The action, its first capital spending decrease in more than seven years, swelled cash reserved and contributed to double-digit increases in both revenues and earnings. When the recession hit the following year, the company's shareholders experienced double-digit appreciation. During the same period, Cisco Systems ignored the flattening yield curve, a rise in oil prices and increasing interest rates to continue its breath-taking rate of expansion. When the recession started in March, 2001, Cisco was unprepared. It was forced to take an inventory write-off of more than $2 billion and lay-off more an 8,000 employees. Cisco's shareholders experienced the effects of financial gravity. Timing is everything. It drives return-on-investment. It is a critical factor in competitive advantage. Peter Navarro, a business professor at the University of California, Irvine, argues business cycle awareness should drive each activity of the modern corporation. Marketing, production, human relations, supply-chain management, capital spending and even acquisition and divestiture strategies benefit from knowing not just how to make a move, but when. Writing in a clear and concise style, Navarro reduces the business cycle to understandable concepts. Citing examples, case studies and economic indicators, he makes it even easier to act upon.