The success of Land Rover, a company originally spawned off and owned by British carmaker Rover Company, saw its successes in the 70s dwindling owing to the parent company, British Leyland Motor Corporation’s financial troubles. As declines caused one takeover after another, the brand was then bought by BMW in the mid-1990s. But that too didn’t save the carmaker from its troubles. It was given another lease on life when Ford acquired the brand as part of its then Premier Automotive Group (PAG) in 2000, which then also included Jaguar, Volvo and Aston Martin.

The car manufacturer soon experienced financial performance troubles under Ford. The troubles compelled Ford to offload Jaguar and Land Rover to the Indian owned Tata Motors, and the Volvo brand to Geely Automobile of China.

Why couldn’t such previously successful brands be rescued by more successful and formidable carmakers like BMW and Ford? And why have the initially much “deplored” Chinese and Indian carmakers such as Geely and Tata, do the unbelievable and turn these companies around so quickly?

What lessons can we, as owners of small companies, learn from the history of Jaguar, Land Rover and Volvo to ensure our growth and development isn’t stunted by the same challenges they experienced? By Nimroth Gwetsa, 31 October 2016.

The Disclaimer

Let me apologise upfront that I did not check before publishing this article if there are academic case studies on the challenges of these carmakers. Nevertheless, I do not claim to be offering an “insider knowledge” on the lessons these manufacturers have learnt. I am writing from an “outsider knowledge” observer perspective, and mainly from being their customer for a while.

Our Distinguishing Factors

Our uniqueness as human beings among all created beings is our ability to search for meaning of life, explanation of mysterious things in our universe, and finding answers to difficult questions. It explains why answers to questions I have posed earlier, for which we need to learn lessons, cannot be answered frivolously. I do hope my non-scientific take on this matter will stir your mind a little.

Let us then, get the obvious out of the way so we could get answers. Though it might not be obvious to everyone but to some, it is becoming more apparent that human beings can be described from three key perspectives, namely, the Spiritual; Intellectual and the Natural/ Physical existence.

The spiritual aspect involves our deep-rooted understanding eventually becoming our core beliefs and convictions.

The intellectual one, as that involving our quest for knowledge and the interrogation, validation and verification of facts. All this, aimed at improving our understanding of life.

The natural or physical existence as it is about sensory and emotive aspects of our lives.

This explains why some suddenly become spiritual when inexplicable bad things happen to them. You would hear them explain away setbacks by attributing them to God’s or the will of some divine power. Ironically, when things go well for them, they do not usually attribute their successes to God, but take direct credit and attribute their success to personal effort and ingenuity.

Spiritual Understanding

From a spirituality perspective, I’ll join them by acknowledging the presence of the Superior Being, who divinely ordains the occurrence of events in our lives. For simplification, I shall call the Superior Being, God.

Most of these divinely ordained events do not occur without human participation and will. I therefore consider it laziness and fatalistic faith for anyone to attribute their failure purely to some divine power without intellectually reviewing their actions or part they played in their failure.

From the spiritual perspective, God then ordained that there shall be globalisation, specialisation and division of responsibilities to our development by forcing and increasing our interdependence and cooperation.

In this regard, Rover Companies’ woes could have been owing to God seeing the dominance of the West over other nations leading to their underdevelopment, that He decided it was time different nations integrated and became interdependent. It could have also been that He wanted to position the British to different roles as designers and technical advisors in the global economic ecosystem. With them failing to heed divine signals to change and reposition themselves to their new roles, God caused those companies to experience financial hardships that forced His willed integration.

In this analogy, Land Rover being taken over by Ford and still failing is akin to the Bible story of Jonah running away from God’s will and being swallowed by the whale. He attained freedom when he resolved to heed God’s will.

But I don’t want to dwell much on speculating about spiritual aspects of these companies, save to say spirituality is a personal matter for which only affected parties can confirm their enlightened experiences. My refrain is also owing to the understanding that spirituality can be likened to radio frequency. Signals are transmitted by a transmitter and decoded by receiver. Without these, no understanding of the presence of signals or transmission of messages could be known. In our spiritual example, the signal is the spiritual word transmitted by relevant spiritual scriptures and received by the recipient as their faith-building understanding.

As it is said in Matthew 11:15, “Whoever has ears, let them hear”. Likewise, for those failing to see the point of all this, it is also said in Mark  4:11-12, “[t]he mystery of the kingdom of God has been given to [believers], but to those on the outside [nonbelievers], everything is expressed in parables, so that, they may be ever seeing but never perceiving, and ever hearing but never understanding”.

The lesson here is, do we believe there is divine will for our lives? If so, have we tried to discover what that will is? And what are we doing about it?

Intellectual Understanding

Surely, it made sense for BMW and later Ford to incorporate Land Rover in their fleet because these carmakers then, had nothing in their current fleet cannibalised by Land Rover offerings. Leveraging expertise, operations, facilities and parts of these successful carmakers was, on paper, a recipe for success. Then, why couldn’t they pull it off?

From the developing world, why could the Indian-owned Tata Motors and Geely Automobile of China achieve such successes where superpowers failed to do?

I am of the view that the main problem has to do with “freedom of artistic and technical expression” that these carmakers enjoy under their Indian and Chinese owners than they experienced under the more established brands like BMW and Ford.

I happen to have experienced and observed how Western global companies operate when they take ownership of companies in the “less developed” worlds. Unlike their Asian counterparts, Western owners tend to dominate and discard anything the “captured” company was renowned for. They believe in their Western superiority, appointing their somewhat “has-been” managers to senior positions in the developing world companies, dismantling existing systems and replacing them with their global “misfits”.

Asian owners, though stern and decisive, do not often impose their will and systems on their “captives”. They seem to respect that the captured were successful before acquisition, hence their interest in those companies. They acknowledge that there must have been something that made them successful which should be retained and leveraged. They intervene where necessary.

I know I am making generalisations, but these are worth being noted.

The strategy of multinational companies spreading their model to captured companies globally and promoting the mono brand, culture and operational excellence, is best practice. After all, their global experience means they have deep expertise and have improved on many shortcomings still afflicting their acquisitions from developing worlds. Coupled with the growing sophistication of emerging world consumers, their desire for global brands justifies increased homogenisation by the acquirer.

But not all homogenisation is good, as the Jaguar Land Rover and Volvo experiences have shown.

In this light and with the benefit of hindsight, is there something unique from experiences of these companies we could take as a lesson to test suitability of homogenisation in company takeovers?

To know this, we first need to look at the major cause of failures of such mergers and acquisitions. Prime to these problems is the integration issue.

Like corporate IT systems’ modernisation projects, these never succeed nor end well. They often come at a large cost and great disruptions to normal business operations. Homogenisation by implication, means the removal of something and its replacement with another, often sourced from the capturer’s domain.

Again, there is nothing wrong with using successful global capabilities and systems to improve performance, but often these cannot be easily integrated without negatively affecting business operations.

The key to testing suitability of homogenisation lies with the positioning of the acquirer and acquired companies in the financial performance cycle stages, as shown in Figure 1 below.

Figure 1 – Ideal Opportunity For Mutually-beneficial Homogenisation Acquisition

It is my considered view that the best opportunity for a mutually beneficial homogenisation acquisition is that shown by scenario A in Figure 1 above. This acquired in this scenario, experiences declining financial performance, which coincides with the acquirer’s financial growth stage. This convergence presents good opportunities for parties to leverage each other’s resources and expertise.

Opportunities shown in scenario B pose increased risk for homogenisation, at least to the acquirer. That’s because the acquirer’s constraint growth in their current market, offset by an acquisition of a company in the growth stage, would constrain the performance of the acquired company. The acquired company would lose momentum of achieving market growth by focusing on seemingly bureaucratic requirements of the acquiring company. This tension creates disharmony that would cause the acquirer to fail to post good financial performance. Repeated failures would result in the need for the acquirer to offload its acquisition.

Acquisitions in scenario B would seem best served by strategies adopted by Asian acquirers. Capital is injected in the acquired business without forcing their integration until it is necessary to do so.

Homogeneous acquisitions shown in scenario B would somewhat be shielded from such risks if the combined companies would create a monopoly in the market.

Natural/ Physical Understanding

From a real sensory and emotive perspective, we, emerging companies and entrepreneurs, often become too attached to our brands because it does not feel right being absorbed by a bigger outfit.

We should be careful of this sentimental attachment, unless we know that such acquisitions are not in line with our envisioned strategies for which we were motivated to start our businesses.

As in the spiritual understanding, our stubborn attachment to our brands could result in our obliteration by bigger players, just as we have seen smaller township retailers being obliterated by larger retail chains with their cheaper and diversified offerings to consumers.

Unless we are clear about strategies and reasons for our existence and consumer propositions, we should position ourselves to intellectually and spiritually (for spiritual believers among us) handle such threats and opportunities.

Mark of a good entrepreneur is the ability to discern, seeing opportunities ordinarily not obvious to others and being risk takers. Fear has never deterred our entrepreneurial drive, nor has love for money.

The fact that Volvo, Jaguar, and Land Rover can thrive under new owners, is proof that new owners bought more into the entrepreneurial spirit of those brands than their desire to get even with their colonial masters. They used their superior financial and other resources to increase artistic and technical freedom of the acquired companies.

Today, both companies are thriving under their new owners, producing many award-winning desirable products.

For believers, it is always good to ensure good fellowship with God so we can know His will for our lives every step of our entrepreneurial journeys. And just because we depend on God for guidance, it does not mean we should stop applying our minds and listening to our gut in carrying out God’s will for our lives.

To nonbelievers, you have your intellectual prowess and feelings to depend on. You are already an achiever based on your faith of what success is about, and your efforts in envisioning and achieving that success. But your success was also mainly owing to the providential will (grace) of God even if you do not recognise Him.

Despite our different beliefs, we should continue discerning and seizing opportunities as we encounter them and quickly adapting our strategies to minimise regrets and failure.