Essay on John Jacob Astor Discussion

Submitted By coxlee
Words: 558
Pages: 3

Question1
Based on the HBS case of John Jacob Astor, six possible root causes of his success are summarized as follow.
1. Human resources. The most suitable candidates are chosen in his business and even in his life. For instance, two veterans of the American Fur Company (AFC) brought in by him took the great responsibility in the reviving of the company after the War of 1812. His wife, Sarah Astor, helped him build his business foundation based on her connections in New York.
2. Connections. Good connections in both business and government. The social networks with businessmen helped him find many excellent partners and workers, such as two veterans in AFC. The friendship with President James Monroe and the governor of Michigan Territory helped him exclude the competition in the interior business.
3. Diversity of the investment strategies and orientations. For example, the contrarian investing strategy was applied when he invested in the government loan during the war years from 1812 to 1814. Another example is that when he invested in the AFC, he received the profit as three different roles, including the partner of the company, the trade partner of the company and the individual investor. He invested in many different orientations, including the trade of fur, Chinese goods and Hawaii sandalwood, and the investment in railroads, insurance, banking, bonds and real estate.
4. Clear policies at different stages. For instance, when he tried to organize the AFC, he had two clear policies for his rivals, including the individual traders and smaller companies are quickly merged with AFC by using his financial and political powers and the good relationship with the government. Another typical example is the transition from the old fur and foreign trade to the new investments in banks and real estate and so on. He always kept pace with the new investment opportunities.
5. Good timing for the investment withdrawal. For instance, he withdrew from the China trade in 1825 even this business was still profitable. This results in that he can avoid the heavy fall of the tea market. Another example is the withdrawal from the fur trade. He sold all his interests in the Northern Department and ended the…