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Microsoft Word - PF - Leadership Buffett
Microsoft Word - PF - Leadership Buffett
ANALYSIS OF LEADER FI LM
WARREN BUFFETT
The Chairman of Berkshire Hathaway
DISMAS PRASETYO
Student of the Special Education Program
Kruibeke Belgium
January 31, 2009
Warren Buffett, apart from being the worlds most successful investor, is
the CEO of Berkshire Hathaway and is worth an estimated $141 billion. Despite
his wealth he still lives in the house in Nebraska he bought for $31,500 in 1958.
Additionally, he is a great philanthropist and has announced that his entire
fortune will go to charity upon his death.
Early Life
Education
Warren Buffett graduated from Woodrow Wilson High School in 1947 and
then attended the Wharton School at the University of Pennsylvania from 1947 to
1949. He went on to earn a B.S. at the University of Nebraska in 1950 and a
Masters in Economics at Columbia University in 1951. It was at Columbia that
Buffett met his mentor Benjamin Graham and began to form his investment
strategy.
Early Business
In 1954 Benjamin Graham offered Warren Buffett a job at his partnership.
However, two years later, Graham dissolved the partnership and Buffett moved
back to Nebraska and created his own partnership: Buffett Associates Ltd. In the
next five years Buffett built up Buffett Associates Ltd. while also forming new
partnerships. Then, in 1962, Buffett merged all of his partnerships and began
aggressively purchasing shares of Berkshire Hathaway.
Berkshire Hathaway
By 1965 Warren Buffett had accumulated enough Berkshire Hathaway
shares to take control, at which point he named Ken Chase as President. At this
time Berkshire Hathaway stock was worth about $15 a share; today the stock is
trading around $140,000 per share. Since he took control of Berkshire Hathaway,
Buffett has not only used it as a mechanism for investment, but also as an
umbrella company for subsidiary companies including World Book Encyclopedia
and G.E.I.C.O.
Philanthropy
Warren Buffet has already given a large portion of his earnings to
charitable organizations. His largest contribution has been to the Bill and Melinda
Gates Foundation which aims to improve healthcare and reduce poverty around
the world. Having already given a significant amount of money to this
organization, Buffett plans to leave 83% of his fortune, or $30 billion, to the
charity upon his death.
Warren Buffett has the three crucial traits which are needed to be a good
business leader (organizational, controllers and budgeters).
Warren Buffett leads by doing. Rather than saying how important it is for
the people to give, he simply gave away most of his fortune (something
like 75%) to a charity that can do great things with it. It was indeed the
largest charitable gift in the history of the United States.
Warren Buffett himself admits that his major weakness ( or I can even say
strength, depend on how we see it ) is his inability to put up with bureaucracy and
inefficiency. Hence, though Berkshire has about 190.000 employees and runs
$141 billion, he has only 17 employees at its Omaha Headquarters. He says,We
delegate almost to the point of abdication.
REFLECTIONS
Below are my reflections about Warren Buffett that I know, using the three
modes of deliberation :
Normally, Buffett asks them to let him know early, if there is any significant
bad news. (Philosophical)
By bringing in the best (his criterions of the best here is someone who
have an integrity, intelligence and energy) and then taking himself out,
Buffett is sending the message that he had complete confidence in his
managers. As a result, in turn, his approaches enable his managers to act
as owners and decision makers for the business. They will have a strong
motive to succeed. (Interpretive)
Warren Buffett weighs every decision for its impact on the balance sheet.
(Descriptive)
He does it to target an effective use of assets by earning return on
investment greater than the cost of capital. (Philosophical)
By giving a huge attention, calculation and consideration to balance sheet,
Warren Buffett is sending the message to his managers that he is skilled
in managing the balance sheet as much if not more than the income
statement. (Interpretive)
Warren Buffett will wait and wait and wait if he can not find an investment
that is selling at an attractive price. (Descriptive)
His principle is it is better to buy a wonderful company at a fair price than a
fair company at a wonderful price. (Philosophical)
What Buffett does obviously is sending the message that he is patient and
persevere. Mostly he reads and thinks and does not want to be influenced
too much by the outside, lest it make him irrational. (Interpretive)
By living with the said life style, he is sending the message to his
employees and environment that thrift is a virtue. (Interpretive)
BIBLIOGRAPHY
Few would call Warren Buffett unwise with his money. Online. January 27,
2009. http://www.mobilebeat.com/superior-leader-warren-buffet/