Organizations Strategy and Cars Across Roads [OSCAR] Theory

Well whenever I see lots of cars going slowly or fast on roads, different models, different types of roads, SOMEHOW I am always able to co-relate them with the state of economy. This Analogy is quite striking to me.

Lets imagine simple traffic on roads with numerous four wheelers. Now there can be different kind of Roads as well such as Highways – 8 lanes, 6 lanes, 4 lanes, and 2 lanes; good roads; bad roads; roads full of potholes; mirror finish roads; brick roads; path ways; village ways; etc.

Now imagine what kind of vehicles can travel on these roads. For example on village roads you can not drive Ferrari for sure. Also you can not drive Bull- cart on mirror finish highway. You can not drive large trucks on path ways. etc.

Now imagine the size of these four wheelers can be changed as per your imagination. It can be made 10 times both large and even small of the standard size.

Now imagine any company based on its culture, revenue, profit, market cap, etc.[y = f{c, r, p, m}] is shaped into any four wheeler. It can also be Flotilla of 4 wheelers if that Group is into multiple businesses.

So what I mean here a start up is just a toy car and is placed on a highway. Similarly a mid size company which is traded on NYSE or NASDAQ or BSE or NSE, or any other major stock market is equivalent to say Maruti Alto car or Hyundai I10 model, etc.

So a large diverse group such as TATA can be a Flotilla of say 100 four wheelers of different sizes going on the road. Apple can be a highly magnificent and very large truck white in color running at 200 kmph on 8 lane highway.

So the speed of four wheeler is proportional to the rapid pace at which that company is growing. The Road is the Economy or Market Segment in which that company is doing business. And the type of car is the Business Model which the company is following.

For example; a sick company is like a Bull Cart on a 4 lane highway if it not doing good business though new companies are coming and doing good in that market.

A Start Up can sometimes act as Rocket Car, speed of growth can be 2000 kmph. So the car is very small (toy size) but the speed is immense. Hence high market cap.

Now its important to understand types of Markets.

A Developed Nation Market i.e. OECD Market is basically Mirror Finish 8 Lane or 4 Lane Highway Roads. So there is no point in carrying your Bull Cart business into those economies. They are meant for much faster things such as Start Ups. Just like Amazon changed the E-commerce business there few years back. Then came Facebook, WhatsApp, Twitter, etc.

Similarly Developing Nations Market is like 2 lane highways full of pot holes. So here Bull Cart business model make sense probably. A Sick company can do Ok kind of business here.

Poor economies such as in Africa, or war torn nations, their road is similar to village roads hence businesses can not sustain which have Ferrari models. Here again you have to bring Bull Carts, etc.

It should be noted that Bull Carts are good in poor economies but its wastage of resources and capabilities if they are doing the same in developing economies.

Now comes 4 Wheelers. Big Trucks or Flotilla are equal to Big Conglomerates. Rocket Toy Car is equal to Start Ups promising ones. Small size cars are equal to Non Innovative Bovine kind of companies with Mid market cap size. Sports cars are equal to Innovative companies which have focus on Future. Bull Carts are equal to Sick Business models, frog companies which think in a well. etc.

Other examples of 4W can be such as Milk carrying small truck, Courier small truck, LNG large truck, SUVs, Rickshaw, Buses of different sizes, etc

Moreover Speed on these Roads is equal to Govt. Regulations of that market. Hence in Open Markets with liberal and fair economic practices the speed is likely to be high and suitable for Start Ups and Low Road Clearance Cars such as Sports Cars (point to be noted that efficiency is high when road clearance is less i.e. returns on investments are bound to be greater as there is less wastage). Similarly in closed markets and when the Govt. is apathetic towards growth, etc. the model is good for Bull Carts.

In India for example all car manufacturers know that popular models need to have High Road Clearances. As Roads are far away from Mirror Finish. Yet there has been substantial progress in quality of highways in last 15 years. Same is the state of Indian Economy actually. It is still far from Efficient Economies such as Singapore, etc. May be we can not ignore complexity of the size of nation with a huge population and a real diverse culture, people, and lifestyles.

Now take the example of China. Their roads are actually now nearing to world class. So same is their economy. The companies are doing excellent. And are successfully beating competition world wide.