re: Thomas L. Friedman: Save us, O Toyota based on Thomas L. Friedman article in the Herald Tribune Save us, O Toyota [the broken link was removed] where he states:
The Lean Manufacturing blog post asks: “if Toyota bought or merged with GM, could Toyota “fix” GM?”
Yes, Toyota could fix GM. Even the right leaders and managers, within GM, could fix GM but it is a huge long term job and it would be harder to do it internally because you will have to do it while competing with Toyota. Also they have some difficult issues to deal with since their previous managers did not tihnk of the long term (20-50 years out from the decisions they were making in the 70s though 90s).
I wouldn’t buy GM if I were Toyota, though. Why bother. Just grow Toyota, it is working very well so far. It makes sense to buy if you need to grow quickly to gain critical mass, or you will lose the opportunity to grow early in a fast moving market. High tech companies (like Cisco and Intel) often do well buying other companies – but just as often high tech companies make more mistakes buying than is justified by the successes.
Another reason to pursue buyouts is to buy market share to appear to be growing (or not shrinking), for example the HP and Compac merger (this is often driven by the ludicrously huge salaries of CEOs… of US companies trying to get even more ludicrous incentive “bonuses”). But that almost never works over the long term, Dell has grown past the combination of those two without any significant buyouts. Good companies are almost always better off just growing themselves. Buying companies can work when it fits into sensible plan, it just often is not done that way.
The only purchases I would focus on if I were Toyota are those companies innovating new technology. If some companies have developed great stuff, with say battery technology, and Toyota realizes it is much better than what they have then consider buying those companies.
You may also want to buy a company if they had assets, clients, people, propritary technology… that you could buy more cheaply (looking at the long term full costs) than you could grow “organically” yourself.
But while you could probably buy assets of GM cheaply, I am not sure it would be the best decisions when you look a the long term.
Do you really want to buy their facotries and then have to completely redesign everything, it might well be better just to design what you want from the ground up.