Huge debts

Huge debts 

by Abu Abdul Rahman Kashfi

Once a lecturer in Strategic Management asked me: "What if I decided not to do anything. Will it be considered as a good strategy?"

I replied: "Sounds not!"

He then told me: "Do nothing will be considered as a good strategy if it is what we need to achieve our goals!"

As an example. A country is in deep problem with huge debts. It has two choices.

1: Do not add any further developments with new CAPEX, but continue managing existing OPEX and other costs. All extra income are used to clear the debts.

2: Add more projects and borrow more money, hoping that new projects will spur growths hence more income into the coffers.

I choose 1, do nothing.

Lower risks, and better financial management.

Unless if I have a very productive and efficient team (or workforce), I might consider option 2!!

What say you?

Aizol Wahab :I don't think option 1 is 'do nothing' per se. You still have to do something i.e. managing the OPEX (with optimization, cost reduction, maximize value etc) which is not an easy task considering you are in debt.

Perhaps the choice is between taking risk (option 2) or not taking risk (1)?

Anyway I think you should add option (3) which is, change the whole management who put you in debt in the first place. Just my thought. 

Like · 2 · November 22 at 1:00am

Abu Abdul Rahman Kashfi Haha, Dr. you are indeed pointing it out correctly! It is impossible to really do nothing.

Option 3 seems attractive to me. Its just kinda difficult considering the mechanism of changing the whole management. Whether by voting (shareholders or employees?), or like by corporate take-over.

But, as for a government? I guess there is no chance.

The board of directors were stripped from any powers. They just come to the meetings to say yes. There are no answers for Nay!

Consider a former CEO now is trying to persuade employees to vote the existing CEO out of office. What are the odds?

Very slim chance to my sight though. Haha!

 If you're interested in how the power devolved from owners to directors and then to managers via the legal system, read Berle and Means. Almost 100 years old, but still relevant today.

Idlan Zakaria : Doing nothing is always an option - we often discount this and think we must DO something to solve / overcome an issue. But sometimes leaving it to the status quo is the optimal solution. Problems arise when people insist on doing something, just to be seen to be doing something.

Sebab tu, not voting is also a vote. Hehe side tracked sekejap saya,

Like · 1 · November 22 at 12:58am

Abu Abdul Rahman Kashfi Haha, not voting if it can send clear message of protest can be considered an effective strategy. But if it doesn't then it may become just another example of how "emotion" can create noises in a huge set of samples. 😂😁😁

Like · November 22 at 1:03am

Idlan Zakaria Abu Abdul Rahman Kashfi Oil and Gas - try Robert Gordon University in Aberdeen: they specialist in that.

Like · 1 · November 22 at 1:15am

Abu Abdul Rahman Kashfi Okay Dr. Idlan Zakaria, will surely explore that. (I deleted earlier comments bcoz I think it is more appropriate to be personal message rather than public). My apologies. 😊😀😃😂

Like · November 22 at 1:30am