Berkshire Hathaway Case Study

681 Words 3 Pages
Berkshire Hathaway: “Trust” and Laissez-faire Management

Berkshire Hathaway, under the leadership of Warren Buffett, is one of the largest conglomerate by revenue in the world. It has earned successful achievements and growth from the size and diversity of its asset base including insurance, gas and electric utilities, rail roads, wholesale distribution, manufactured housing and many other specialty finance companies. Looking at the number of acquisitions made by Buffett, this indicates something remarkable about Buffett’s management and governance approach. Unlike what has been typically adopted in the corporate world, Berkshire Hathaway takes on a non-traditional laissez-faire and trust approach – a hands-off management style that requires minimal guidance from leaders and provides employees
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Even though Berkshire Hathaway “trust” and laissez-faire management philosophy has been studied and researched extensively, it is not widely adopted in the corporate world. It is undeniably difficult to develop full trust in management practices, which may be the reason such management style is not widely adopted. One disadvantage of such management style could be seen as leniency and may be taken advantage of by the management team. Also, the management approach by Berkshire Hathaway may seem to be a simple philosophy. In reality, it warrants the corporate to have good judgment on a manager’s business ethics and capability, hands-off delegation approach, and great trust in human resources to perform the tasks. As the saying goes, “No matter if it is a black cat or a white cat. As long as it can catch a rat, it is a good cat”. The success of laissez-faire and trust management style has been proven in this case and has such a spectacular investment return track record. Therefore, this would be feasible in many other corporations that are committed to grow the business in the long

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