Warren Buffett bussiness startgy

Warren Buffett, known as: “The Oracle of Omaha” is the chairman of Berkshire Hathaway- the biggest conglomerate and holding company in the globe. He is viewed as one of the richest and most successful investors in the world. Buffett’s amazing career is such a big inspiration for all individuals who are working in the business. Therefore, his business strategy, leadership are the important guides for every business worker. To achieve big reputation and success, Warren Buffett needs to have his own strategy to have a clear vision and guides for his business. Warren Buffett’s strategy is exclusive because of the way he invests. Buffett only invests in companies he truly understands and believes would do well in business. Unless he comprehends about the business, he will not put money into it. As he told Quick in February: “You have to learn how to value business and know the ones that are within your circle of competence and the ones that are outside” (Martin, 2019). This is one of the most important key principles to his success, since having a profound understanding will make it easier to evaluate the company aspects and its potential in the future. Besides, Buffett’s strategy is long-term. He recommends looking for business has-long term value. Buffett tends to invest in undervalue and durable companies rather than these trending companies to have a return on equity. He said on “Squawk Box” in 2018 that “Nobody buys a farm based on whether they think it is going to rain next year. They buy it because they think it is a good investment over 10 or 20 years. (C. Jaber, 2019) As we know that Buffett owning companies in different countries around the globe. Unlike other well-known CEO leading their one business, such as Bill Gates or Jeff Bezos, Buffett is likely to buy several companies over the world. Therefore, Buffett purchased Berkshire, made it become a multinational holding company and conglomerate, comprises Geico, Heinz, Benjamin Moore, See’s Candies. According to his strategy, the company will less be affected by the failure of any industry thanks to the diversity of the industries that the company is owning. Furthermore, Warren Buffett focuses on business instead of the size of the company. In his opinion, “size seems to make many organizations slow-thinking, resistant to change and smug. ” (Crippen, 2016). Therefore, at his headquarter, there are only 25 employees run the organization. Moreover, Buffett give almost managing works for his managers. He believes that hiring hard-working and knowledgeable managers and let them do what they do best will boost their creativity and productivity. This helps Buffett able to manage his vast business and make it success, (O. C. Ferrell, 2020). Warren Buffett is an owner of Berkshire Hathaway, so he is leading numerous companies. Owning companies in various industries can bring numerous benefits. The first and foremost advantage is that the more companies you hold, the less danger you will get. As a conglomerate is diversification, it diminishes the investment risks. If one company has a poor performance, the parent company will not be affected because these failures could be offset by other industries. By participating in different organizations, the parent company can lessen the cost by expanding business interest. Thus, the risks are mitigated (Chen, 2020). Second, a conglomerate could develop its companies and growing its size and profitability by taking the advantage of the flexibility it consumes since it has purchased more companies. This should be possible through economies of scale and especially economies of scope. In addition, in a certain situation, the company will consistently lower its relative cost due to its growth, then these favorable benefits could be gained from complementary services (London, 2020) On the other hand, there are some disadvantages when leading several companies around the world. Firstly, it would hard and tough to manage these companies effectively due to their diversification. Because of its diversity, it is challenging to focus on each sector equally and efficiently. Thus, the company could lack the inability to manage the business. (Chen, 2020) Next, the organization will face considerable debt when expanding their companies, including the cost of management and cost of operation, tax, . . . For example, when the company decides to open their group, they would need a leader who has a huge understanding or specific knowledge about the business to lead these various companies. However, this kind of work is too tough for one person to manage so the leader has to decide the managers to handle all the tasks in each sector. Consequently, the management cost is also expensive because of the size of the group. If the head company is not able to handle and manage these debts, it would face a massive loss and fail due to its huge size. (Anon. , 2020) Another crucial factor for Buffett’s success is about his leadership. According to Buffet’s philosophy, he allows the managers the capacity to manage his variety industries because of its diversification. Buffett additionally employs managers who have deep knowledge about the firms so they can manage these works more effectively. Buffett depends on his managers as he believes and trusts them to do the best things. And the reason why Buffet leaves companies to the manager is it could help employees achieve their best performance, then they could develop the company better by themselves. As Buffett allows his employees to make decisions, so they have to consider what to do instead of asking the leader. Thus, they learn how to make a judgment and know what is good or bad. Besides, workers have to approach, experiment with problems, and solve them in their ways, moreover, they do not get help from the leader. (Anon. , n. d. ) As a result, it not only boosts the worker’s motivation and energy to work, it likewise trains them to work more productive. For instance, Don Akery – an employee from Buffet’s company shared his experience that: “I am lucky to be part of TTI and Berkshire Hathaway. It's a healthy environment to work in; I’m allowed to make decisions and not be second guessed; I am given the opportunity to take educated risks, and the possibility of making a mistake doesn’t paralyze me” (Akery, 2020). To conclude, Warren Buffett is one of the most influential businessman of the 21st century. His wonderful business strategy and amazing guides for leadership are do not only show how sharp-minded and insightful of him but also an important lesson for all business workers in the world. References: