Today's new highlights will be featuring companies with long history, how they managed to survive for so long and the tips and trades of doing so.
Boustead Singapore celebrates its 180th year of existence last year and continues to make record profit; remains today as the only Singapore-based company which can boast about their unbroken lineage of almost two centuries. The current chairman and group CEO Wong Fong Fui cities abaptability, business cycles have been getting shorter and tighter and a company's survivability depends largely on its ability to adapt to the changes thrown up by these cycles,' he says.
Mr Wong first bought up Boustead Singapore in 1996, the company then was a struggling gem having only earning of $1million out of $60million and was bought at a price of $85million when its net worth then was only $27million.
Mr Wong said’ This was a company with great history and pedigree, it was all about how it could be restructured to adapt to a new marketplace' I therefore was quick to set about the transformation of the company, building up its capabilities in design,engineering,resource management technology and specialist construction. According to Mr Wong, the survival of his company has been due to its ability to adapt to the new realities after each upheaval:"A company that succeeds does not simply accept its fate when it hits a very thick wall, instead it finds not one but several ways around the wall" Another expert on the subject Arie de Geus author of 'The living company' argues that successful surviving companies exhibited four key factors.
1) Is sensitivity to their operating environment which enables them to learn and adapt quickly to changes occurring around them.
2) Is a cohesion and identity. This defines a company's ability to create a strong sense of identity and persona for itself which is essential for survival amid challenges.
3) Longevity is also dependent on the company's ability to tolerate decentralisation of control and diversification, and yet maintain strong and cohesive relationships within and outside of itself.
4) Companies that survive tend to be those which are financially conservative. They are frugal and do not risk capital gratuitously. By keeping their proverbial gunpowder dry, they are well equipped to pursue new opportunities and also attract third party financiers. But Mr Wong adds more point
5) Being a master over Technology. By doing that, it propels your company forward and now can become an albatross around your neck for the next decade.
Going back to Boustead, Mr Wong says that his company was starting to change some parts of its business model yet again! Like Mr De Geus, Mr Wong is a believer in the theory of corporate evolution for survival."There are times when you have to let go of your pass glories" he explained "it is the same with companies; a highly successful product/service today may not be successful tomorrow. A stubborn company will try its best to hold onto those products and services even when they are irrelevant. The companies that enjoy longevity do things differently. They simply evolve creating different businesses each time and adapting to prevailing times.
Going on to another business Fj Benjamin, the one in charge says changes in the business environment are inevitable. The ability to adapt to these changes quickly however will determine if a business has staying power. Fj Benjamin has been around in Singapore for about 50 years. "After 50 years, we put in place policies and practices that will keep us nimble so that we can adjust swiftly to changes in our external environment. This principle of staying fleet=footed and fit for all cycles applies to all functions across our business" says the CEO of FJB.
During the 1997 crisis which taught them to never put their business in a position where sudden unexpected external events can threaten their future. They learnt to be conservative and to pay more attention to risk management. They learn also to be prudent with their capital (debt/equity) and to keep their gearing low. Not to reply inordinately on short-term credit or to be overly invested in assets that they do not need for our core business. Expansion is still vital to growth of any business. However businesses does not have to be BIF in order to survive, it has to be well managed, etc understanding the consumers' needs and be able to deliver what they are looking for, this means having strong leadership and key management who have their fingers on the pulse explains the CEO of FJB.
Investors could look out for some of these 'longevity' chacteristic before putting their hard earn money into their prospective companies, increasing therefore the chances of successful investing in the future.
