They Zag; We Zig

“Most companies play it safe in hard times, cutting expenses and scaling back growth plans. Ambition gives way to caution. But some aggressive companies are shrugging off their own challenges and, in the words of management scholar Walter Ferrier, ‘going for the jugular of weak rivals.’

“Hewlett-Packard, Southwest Airlines and FedEx all have been sharpening their claws lately. Tactics include hiring extra salespeople, storming into new markets or holding down prices in a bid to pry business away from the competition.

“There's a risky side to these measures, because they can put extra pressure on short-term profits. But executives believe the long-term results will justify their audacity. As they see it, market share is most likely to be up for grabs in a downturn -- when some competitors are too hard-pressed to defend their position vigorously. New customers won today may become profitable accounts for years to come…

“Southwest Airlines… has been exploiting a huge cost advantage it enjoys over other airlines, which are reeling from the impact of $130-a-barrel oil. Southwest is paying far less for its aviation fuel this year, thanks to its active hedging program. As a result, Southwest can profitably add flights to attractive markets, even as other carriers are forced to retrench…

“At FedEx, the company's freight business has been picking up market share at the expense of long-established trucking companies. Douglas Duncan, president of FedEx Freight, says… FedEx's recent gains in freight market share have grown out of its decision in July to reduce its diesel-fuel surcharge by 25%... Competitors generally haven't matched that price cut, and customers at first waited to see whether FedEx would stick with it, Mr. Duncan says. As it became clear that FedEx's price break was here to stay, he says, that's proven to be a powerful tool in winning new business…

“And in some high-tech markets, such as chip-making equipment, aggressive strategies are all about continuing to roll out more advanced products even when demand is weak. ‘That's how the market recovers from down cycles,’ says Michael Splinter, CEO of Applied Materials. ‘Customers want new products.’”

(“Business: In Hard Times, Some Firms 'Go for the Jugular'”. George Anders. Wall Street Journal: June 25, 2008. pg. B.2)

AUDACIOUS EXCELLENCE -- born out of care-full, thought-full preparation when times were good.

The mortgage bankers ran so fast in boom times that now they are depleted. Wise strategists pace themselves so that they can pounce when all around them slow down before getting devoured.

Warren Buffett is buying!