One of the most important – indeed, crucial – issues facing the American stock market in the 21st century is the issue of whether large corporations have become simply “too big to fail.” In other words, even when a large corporation is bleeding money and spitting out horrifically substandard product, they can still manage to beg a bailout from the Federal government because, as an institution, they are simply too large and omnipresent to be let go of. This has led to many corporations presuming to themselves a kind of spurious immortality, based directly on the false premises of this troubling proposition.
A Spurious Immortality: The Danger Of Being Unable To Fail
This may be because they represent a significant chunk of a state’s manufacturing income, or because letting them fail would open the door to untrammeled domination of the market by purely foreign corporations. In any case, the phenomenon of becoming “too big to fail” has captured the imagination of the American media, and has been filtered down to the public in the past decade, largely due to the massive bailouts afforded to GM and a select group of other unwieldy corporate giants that fall into this unenviable category.
Immobility And Stagnation Are The Result Of Intellectual Obesity
Robert Rosenkranz and other financial experts in this country have long pointed out the dangers of corporations becoming intellectually immobile and stagnant due to this troubling phenomenon. The dry rot that seems to have set in at the roots of many American corporations has come as the direct result of their inability to stabilize themselves in a functionally positive direction in line with their competitors in foreign lands. This intellectual stagnation has cost American businesses dearly at the start of this new era.
The Danger Of Becoming Too Big To Succeed
Attendant to the danger of becoming too big to fail is the perilous dilemma that is represented by the converse scenario: Becoming too big to succeed. This scenario involves a corporation which has grown by leaps and bounds through more or less natural processes until it reaches a point where it begins to experience serious challenges related to having exhausted all of its natural resources, whether intellectual or financial.
Corporate Civil War: A Fatal Scenario
A corporation that reaches this state will begin to be choked by its own internal bureaucracy and red tape. Superfluous and contradictory positions and offices will begin to pile up, leading to a state of open or thinly concealed civil war between the various competing departments. This state of affairs can lead to a situation in which the company becomes “too big to succeed”, because the various departments that at war with each other constrain the company from acting in a unified manner to reach its targets and goals.
Charting A Fine Line Between The Two Extremes
The history of any successful corporation is, in large part, a history of a firm that is able to successfully chart a fine line of progress between the extremes of being too big to fail and being too big to succeed. While there is no sure fire recipe for success, it is hoped that more up and coming young executives take heed of the lessons history has to offer in this regard.
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