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After the recent death of a senior corporate executive, a search of the “business news” category turns up an article about a major deal a company is doing. The article is about a Japanese company called Panasonic who’s in the midst of a $3.6 billion acquisition.
This sort of deal is common in Japan. A company is acquiring another to take advantage of the high productivity they’ve built over a long period of time. The acquisition is an investment in a company’s future, not a sign of any imminent takeover. You’ll see the same pattern in the next few weeks in the Japanese stock market.
A Japanese company doing a big deal. Another example of “big deal” companies moving into other countries in order to do bigger deals. The idea is that the deal will be more profitable for both companies if the company is acquired, but also that the employees will feel safer because they won’t be competing with each other for a bigger paycheck.
It turns out that this is a little more complicated than it may seem. While the Japanese government is very much in favor of big deals, they are also very much against “acquisitions” (i.e. takeovers). However, there are some Japanese companies that are buying smaller companies because their operations require fewer employees. The problem is that the big companies are often in a better position to invest in the smaller ones, so these companies are reluctant to invest in the smaller company.
It’s not an uncommon story. However, it is very much the exception to the rule. Many Japanese companies are very reluctant to invest in smaller firms because they can’t afford to lose them. If they choose to buy the smaller firm, their shareholders lose out. The bigger companies want to keep the smaller firms in business, but the smaller companies want to end up with less employees to start with, which can be quite expensive to do.
The Japanese companies that invest in smaller firms are reluctant to take on the smaller company because their shareholders don’t want to lose them and want to keep them in business. They are worried about the smaller firm’s employees, especially if the smaller firm has a large share of senior employees. They don’t want to lose their employees’ jobs because they’re reluctant to make that investment in the smaller firm.
The other issue is the smaller firm’s lack of a strong CEO. Small firms often don’t have the ability to hire high-level executives for the CEO position. Because of the lack of a strong CEO, the smaller firm may not have a strong position to influence the decision of the larger firm. However, if the smaller firm’s CEO is strong, the smaller firm has a better position to influence the larger firm’s decision.
A small firm, therefore, does not have a strong CEO. If the CEO is strong, the smaller firm has a better position for the CEO to influence the larger business’s decision. They don’t have a strong CEO, therefore they have a weak position.
In Pacific Business magazine, we asked for ideas on what might be a good next CEO for the firm.
