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Keywords
Renewal, Corporate strategy, Steel industry, Strategic management, France
Abstract
Successful corporate turnarounds occur, thus avoiding liquidation, but historical examples are few. In late nineteenth century France Henri Fayol became managing director (CEO) of a vertically integrated iron and steel firm and made various decisions that retrieved the firm from the brink of liquidation. In examining his career, the competitive nature of the industry, and his decisions, it is suggested that he employed a deliberate and comprehensive corporate strategy to guide the firm toward its objectives. While he developed his theory of management from these experiences and claimed that its application was the primary cause of the turnaround, this paper suggests that there were several other factors at work.
The rise and fall of firms in a competitive environment is a familiar fact of life in the study of business history. Firms emerge, grow, struggle to survive, prosper and endure, or may eventually go into decline and disappear from the scene. Navin (1970) identified what a Fortune 500 roster would have been in 1917 and found that size in terms of assets helped explain survival but not in a clear and consistent manner. Mergers, acquisitions, diversification, and the development of new industries based on emerging technologies were forces that affected organizational survival. Reports by Forbes (Newcomb, 1987) and Fortune (Newport, 1989) also indicated the precarious nature of survival among US corporations.
Prescriptions for preventing or delaying the decline of a firm fail to reach any consensus. Organizational redesign to align strategy and structure (Chandler, 1962); changing managerial leadership, mergers, acquisitions, alliances, downsizing, divesting unprofitable ventures, focusing on core competencies and resources (e.g. Hitt et al., 1999; Huber and Glick, 1993; Pettigrew and Whipp, 1991) and re-engineering (Hammer and Champy, 1993) are some options offered for guiding a corporate turnaround. While there have been case studies of modern corporate revivals (e.g. Doody, 1988; Lutz, 1998; Miles, 1997) corporate turnarounds of earlier periods have been neglected. What is unique about this corporate turnaround is it occurred in France in the late nineteenth century; its primary change agent attributed this success to the use of managerial skills and, in turn, this experience led to the development of a theory of management[1].
In 1888 Henri Fayol...