Scribd
Upload
83 views1 page

Ogl 481 Strategic Planning Article - Bis 357 Discussion 2 Buffet

Warren Buffett pivoted Berkshire Hathaway's textile business into an insurance conglomerate to invest profits from other companies. Buffett looks for investments with trustworthy management, sound business models, and potential for long-term holding. As such, he allows acquired companies autonomy provided they remain profitable. Berkshire uses insurance premiums totaling around $100 billion to take large, long-term positions, fulfilling Buffett's preference and making Berkshire the most successful investment house through its "float" of insurance businesses.

Uploaded by

api-513938901
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
83 views1 page

Ogl 481 Strategic Planning Article - Bis 357 Discussion 2 Buffet

Warren Buffett pivoted Berkshire Hathaway's textile business into an insurance conglomerate to invest profits from other companies. Buffett looks for investments with trustworthy management, sound business models, and potential for long-term holding. As such, he allows acquired companies autonomy provided they remain profitable. Berkshire uses insurance premiums totaling around $100 billion to take large, long-term positions, fulfilling Buffett's preference and making Berkshire the most successful investment house through its "float" of insurance businesses.

Uploaded by

api-513938901
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

Austin Mixsell

BIS 357
Discussion 2
5/30/19

I think one could look at Berkshire Hathaway’s strategic planning and say that it is an extension
of Warren Buffet’s criteria for investments. Buffet essentially pivoted Berkshire Hathaway’s
textile business into an insurance behemoth and created a conglomerate to be the umbrella for
all his other investments. The profits from all the other companies in the conglomerate would
be invested in Berkshire Hathaway, which would in turn, invest the profits in a new position or
to increase an investment in already profitable position.

Buffet’s criteria for investment is governed by three factors; he wants to trust the management
of the companies, he wants to see sound economic theory and an accompanying business
model in and he wants to be able to stay invested for a long period of time. Buffet doesn’t
chase quick dollars. He positions himself to see steady profits over time with as little disruption
to the operation as possible. He has large investments in many Fortune 500 companies. Of the
companies he buys or takes over a majority share of, he lets each company run with as much or
as little autonomy as they would like, provided they still turn a profit. He does so with the
condition that each of the umbrella companies turn over remaining profits at the end of each
fiscal year. If the manager of the subsidiary company can convince Berkshire, Buffet and
Munger that they need to keep the profits for operating or R&D costs it may get approved or
they may even loan them more seed money for the project. This is an example of how
Berkshire’s Strategic planning supports Buffet’s investment criteria: Berkshire has the ability to
invest the money collected for its insurance companies in premiums. The amount in total
premiums that Berkshire Hathaway manages through investment currently is in the ballpark of
$100 Billion dollars. This allows Berkshire to take large positions for long periods of time, as is
Buffet’s investing preference. The “float” that he has created with his wealth of insurance
businesses is the key cog in the world’s most successful investment house.

References:

Anand, B. N. and Jayanti, S. A. P. (2009, January 20). Berkshire Hathaway 9-709-449. Harvard
Business School. Retrieved from https://hbsp.harvard.edu/download?url=%2Fcourses
%2F593797%2Fitems%2F709449-PDF-ENG%2Fcontent&metadata=e30%3D.

[glofis]. (2018, January 16). Becoming Warren Buffet 2017 HBO Documentary Films [Video File].
Retrieved from https://youtu.be/VNX0UgZCdXc.

You might also like