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Shun defensive, quick-fix approach, Andersen study advises Asian corporates, CEOs

As the Asian region emerges from its worst-ever financial crisis, market-opening reforms will alter the competitive landscape dramatically, an analysis by Andersen Consulting has said.

The analysis found that instead of trying to find new opportunities, the companies went on the defensive and focussed on quick-fix responses to their problems. In the process, they ''risk missing out on strategic opportunities for long-term gains,'' the consulting firm said in its journal Outlook.

''Understandable though this search for antidotes to cure corporate pain may be, this kind of response is quick-fix in nature, aimed primarily at short-term survival. This pain-relief approach must be weighed against the reality that each short-term decision will impact the company's longer-term capabilities,'' the firm said.

Its interviews early last year with Asian companies and western multi-national companies in five key industries revealed that the primary response to the region's crisis was defensive. It included cost-cutting, postponing investments, adapting to rationalisation, restructuring portfolios and restructuring debt.

''Selling off the crown jewels of a company will raise short-term cash but will also leave the company with low-value businesses that are unable to compete when Asian economies recover,'' Andersen Consulting noted.

It also warned that the payroll savings from cutting middle management positions must be set against the opportunity costs of low staff morale as well as a management vacuum.

Andersen's Bangkok-based associate partner, Charles Chun, did the study. He found that it would be up to the chief executives now how to take advantage of the opportunities even when the business environment is not too friendly.

''Living through the crisis and even emerging as a stronger, more effective, competitor requires the corporate chief to prioritise and make decisions that are all aligned towards a shared direction.

''To manage through the difficult times, the CEO will need to create a corporate agenda that balances the need to effectively address short-term problems with the strategic imperative of orienting the company for the long haul.''

Andersen Consulting concluded that in uncertain times for business in Asia, there are no simple or guaranteed solutions. The CEO's leadership and courage to challenge the conventional thinking will offset the anxieties and fears that are paralysing companies from doing the right things today to prepare for tomorrow.

UNI

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