Toyota & Honda are in trouble... And now, they have new leaders too! But really, have the batons been passed onto the right man? Will they deliver?
Moreover its product-mix includes two-wheelers, which is serving it well in emerging markets. Yes, it’s also true that the company is not immune to global environment, and that it has to delete names from its rolls and curb production for months to come; but having said that, the job ahead for Ito appears less rougher than his Toyota counterpart, and the fact that Honda still expects to close FY2009 with a profit of $860 million (an 86% drop as compared to 2008) stands allibi. And this is where we come to the ‘third-gen descendant’ Toyota President.
Research has proven it in the past – appointing a family CEO isn’t the best solution during times of trouble! To quote just two such works – the 2004 paper by Villalonga (HBS) & Raphael (Wharton) proved after an analysis of Fortune 500 firms that “when descendants of founders serve as CEOs, firm value is destroyed!” Then there was the 2005 report by Hillier (Leeds) & McColgan (Aberdeen) that revealed how family CEO successions are “almost always followed by dramatic declines in not only stock performance, but dangerously, even in operating results.” Indeed, besides the fact that Toyota has reduced its global sales target for 2009 by more than a million units, and that its losses would continue to mount, forcing it to shut plants in US and cut manpower further, it might just have made a succession planning bungle!
Times will get tougher for all in the industry as even Christian Breitsprecher, Analyst, Sal Oppenheim opines, “The scenario for the industry will only worsen in 2009 & I don’t see the industry making a comeback before end-2009.” The coming weeks will surely test the experience of both leaders and while you still wouldn’t want to complain about the powerless Honda engine or about your broken-down Toyota, do plan to pray; these men would surely need it.
Moreover its product-mix includes two-wheelers, which is serving it well in emerging markets. Yes, it’s also true that the company is not immune to global environment, and that it has to delete names from its rolls and curb production for months to come; but having said that, the job ahead for Ito appears less rougher than his Toyota counterpart, and the fact that Honda still expects to close FY2009 with a profit of $860 million (an 86% drop as compared to 2008) stands allibi. And this is where we come to the ‘third-gen descendant’ Toyota President.
Research has proven it in the past – appointing a family CEO isn’t the best solution during times of trouble! To quote just two such works – the 2004 paper by Villalonga (HBS) & Raphael (Wharton) proved after an analysis of Fortune 500 firms that “when descendants of founders serve as CEOs, firm value is destroyed!” Then there was the 2005 report by Hillier (Leeds) & McColgan (Aberdeen) that revealed how family CEO successions are “almost always followed by dramatic declines in not only stock performance, but dangerously, even in operating results.” Indeed, besides the fact that Toyota has reduced its global sales target for 2009 by more than a million units, and that its losses would continue to mount, forcing it to shut plants in US and cut manpower further, it might just have made a succession planning bungle!
Times will get tougher for all in the industry as even Christian Breitsprecher, Analyst, Sal Oppenheim opines, “The scenario for the industry will only worsen in 2009 & I don’t see the industry making a comeback before end-2009.” The coming weeks will surely test the experience of both leaders and while you still wouldn’t want to complain about the powerless Honda engine or about your broken-down Toyota, do plan to pray; these men would surely need it.
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Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
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