There aren’t many examples of companies which lost and then subsequently regained its competitive advantage
In terms of competitive advantage and then regain… lost and then regained… there aren’t many examples of that. In the property-casualty company, I’ve got a friend who always wants to buy lousy companies with the idea he’s going to change them into wonderful companies.
And I just ask him, you know, “Where in the last hundred years have you seen it happen?”
I mean, GEICO got into trouble in the early ’70s, but it had a wonderful business model. It did get off the tracks, but it wasn’t because the model went astray, it’s because they’d started reserving incorrectly and went crazy on growth, and a few things like that. But the basic model was still underlying it.
You might argue that one company that lost its competitive position and then came back in a different way, actually, was Pepsi-Cola. I mean, they were “Twice as much for a nickel, too.”
They were selling on a quantitative basis, the fact that you got to guzzle more of the stuff for a nickel… twice as much, as the slogan went… and they lost that edge, post-World War II, when costs went up a lot.
And so they basically changed their marketing approach successfully, and that’s very, very seldom done. But you have to give them credit for that.
To some extent, Gillette lost its competitive position somewhat in the ’30s, lost market share against what they called penny blades and all that, and then regained it in a very big way in the next 10 or so years when their market share went up enormously.
But generally speaking, if you lose your competitive position… the Packard Motor Company had the premier car in the mid-’30s.
The Cadillac was not the premier… it was the Packard.
And then they went downscale one year and they never came back. They jumped their sales that one year because everybody wanted to own a Packard, and now you could own one a little cheaper. But they never regained that upscale image again.
And certain department stores have done that, too. They’ve had a upscale image. And you can always juice up your sales, particularly if you’ve got a great upscale image, by having, you know, this sale or that sale, and going down-market.
It’s very hard to back upmarket again, and you’ve seen some great department stores that have had that… or specialty stores… that had that problem.
Charlie, you got any thoughts on that?
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