World Greatest Strategists

Name: Jojie A.
Dador Course & Year: BSBA 3rd Year

Subject: CBMEC: Strategic Management MIDTERM Examination
World Greatest Strategists
Strategic Guides:
1. Study the biography of Warren Buffett, CEO of Berkshire Hathaway. Include his childhood, if
there is something significant, his interests, his educational attainment, professional and career
orientation, and other facts that might have contributed to the success he is enjoying now.
Warren Buffett, in full Warren Edward Buffett, (born August 30, 1930, Omaha, Nebraska, U.S.),
American businessman and philanthropist, widely considered the most successful investor of
the 20th century, having defied prevailing investment trends to amass a personal fortune of
more than $60 billion.
Known as the “Oracle of Omaha,” Buffett was the son of U.S. Rep. Howard Homan Buffett from
Nebraska. After graduating from the University of Nebraska (B.S., 1950), he studied with
Benjamin Graham at the Columbia University School of Business (M.S., 1951). In 1956 Buffett
returned to Omaha and in 1965 took majority control of the textile manufacturer Berkshire
Hathaway Inc., turning it into his primary investment vehicle. From the 1960s through the ’90s
the major stock averages rose by roughly 11 percent annually, but Berkshire Hathaway’s publicly
traded shares gained about 28 percent per year. Though Buffett’s success with Berkshire
Hathaway made him one of the world’s wealthiest men, he eschewed lavish spending and
criticized governmental policies and taxation that favoured the rich over the middle or lower
classes.
2. Study the beginnings of Berkshire Hathaway, the challenges it encountered through the years,
and its journey toward success.
Founded in 1839 as the Valley Falls Company (so named because it resided in Valley Falls, R.I.),
the company owned multiple textile companies in the region, and eventually merged into the
Hathaway Manufacturing Company in 1888. After decades of industry growth, Hathaway
Manufacturing and Berkshire Fine Spinning Associates merged in 1955. That company,
headquartered in Bedford, Mass., employed 12,000 workers and generated more than $120
million in annual revenues, making the newly formed Berkshire Hathaway as one of the most
successful textile firms in the U.S.
Yet by the end of the 1950s, the U.S. textile industry fell into disrepair, and Berkshire-Hathaway
fell with it, losing seven of 15 plants in the New England region, setting up an uncertain future
for the company. Even with the company’s troubles, Buffett remained a believer. In 1962,
intrigued by the company’s long-term business success and strong balance sheet, Buffett began
buying up Berkshire Hathaway stocks, at a price of $7.60 a share. By 1965, he owned a total of
$14 million in Berkshire Hathaway stock, and wound up taking control of the company in May of
that year. At that point, the company was a shell of its former self, with only two manufacturing
plants and just over 2,000 employees – down from 12,000 in its glory days.
Name: Jojie A. Dador Course & Year: BSBA 3rd Year
Subject: CBMEC: Strategic Management MIDTERM Examination
3. From the management, result-driven, practical, and inspirational strategies implemented by

Buffet at Berkshire Hathaway, which struck you as something worth imitating? Explain your
answer.
Factors that Enable Success

1. Trust
Buffett is famous for his hands-off management style. He lets the CEOs of the companies
run their show; he only asks that they send him the money they can’t use.
Good people want to work with him and this is important because most of the people
running Berkshire subsidiaries are already wealthy. They don’t have to come to work; they
want to come to work. And that is a huge difference. The only time you can get away with a
crappy bureaucracy and a culture of distrust is when people have to come to work.
2. (Quickly) Scramble Out of Your Mistakes
You know the old adage, when you find yourself in a hole the first thing to do is stop digging.
That applies to business as well as life.
In the late 1960s Buffett acquired a department store, Hochschild-Kohn, through a company
called Diversified Retailing, which later merged with Berkshire.
“It’s a learning process, and mistakes made in one year often contribute to competence and
success in succeeding years.”
— Warren Buffett
3. Remove Ignorance
Diversified Retailing also owned shares in a better business: Blue Chip Stamps, which
provided supermarkets and other retailing outlets trading stamps to give their customers
that could be exchanged for merchandise.
“See’s has provided us with lots of cash for acquisitions and opened my eyes to the power of
brands. We made a lot in Coca-Cola partly because of See’s. There’s something about
owning [a brand] to educate yourself about things you might do in the future. I wouldn’t be
at all surprised that if we hadn’t owned See’s, we wouldn’t have bought Coca-Cola.”
— Warren Buffett

World Greatest Strategists - Warren Buffet

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World Greatest Strategists - Warren Buffet

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Name: Jojie A.

Dador Course & Year: BSBA 3rd Year

3. From the management, result-driven, practical, and inspirational strategies implemented by

Factors that Enable Success

2. (Quickly) Scramble Out of Your Mistakes

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