The developers of Pac-Man built an arcade game so esteemed that it resides in the US Smithsonian Institution and New York’s Museum of Modern Art. Millions of players have moved their rounded Pac-Man figure through a maze – eating small dots and earning points – while trying to avoid getting eaten by the four monsters in hot pursuit. The game is a great analogy for the economy’s industry consolidation since Pac-Man’s debut in the early 1980s. The legal industry is a recent example of companies “eating” other companies. For years, large law practices have acquired smaller firms to both build broader geographic reach. Now the large law firms are in potential merger talks with each other. What’s driving these talks? By leveraging overhead costs, mergers enable partners to improve profits and protect their bonuses in the face of falling revenue. The revenue shortfall…
Are synergies enhancing your business model or fooling your leaders?
The brand premium Johnson & Johnson (J&J) historically earned for Tylenol and its other leading brands will undoubtedly shrink following events of the last two years. Why pay for peace of mind when the quality that created the peace of mind is now in doubt? J&J has long held a reputation as a champion of product safety that put the consumer first, even if it meant compromised profits. The company’s handling of tampering with its McNeil Tylenol brand in 1982 is a case study in crisis public relations. Yet, J&J’s recent history includes enough US Food and Drug Administration repeat visits and citations to cost J&J CEO Bill Weldon much of his 2010 bonus (if not his job this year). With product quality processes in doubt, McNeil and its parent J&J face an even graver set of concerns than those facing Toyota following…