Page 99 - Five Forces of Americanisation Richard Hooke 04072025 final post SDR1

The UK Defence Industry in the 21 Century
st
The Five Forces of Americanisation

Argenti uses data to assess three areas of organisational performance. Errors or deficiencies in one
area of the organisation are the root cause, leading to further problems in the form of mistakes. They
result in tangible outcomes, which if not addressed, become symptoms of progressive failure.
The following pages make use of Cobham as a case study in using corporate failure analysis. The
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analysis uses the Argenti framework, which enables an assessment of three areas of organisational
performance. Research has shown that errors or deficiencies in one area are the root cause of ultimate
failure, since they trigger mistakes or problems in other parts of the organisation that ultimately lead
to tangible outcomes which, if not addressed, become symptoms of progressive failure.
• Defects - management defects and accounting defects
• Mistakes - arising from poor management: if the management and accounting system is weak
then mistakes will occur, ranging from imprudent levels of debt, cashflow problems, the
failure of major projects, etc
• Symptoms - these will become apparent as defects and mistakes lead to tangible outcomes:
a qualified audit opinion; inability to mitigate or avoid known risks; extended debt to
accommodate normal trading; dependence on few suppliers or customers, sponsors or
corporate partners; use of “creative accounting” or corporate statements amounting to
“puff”; director’s resignation; high staff turnover; senior management departures;
recruitment difficulties
The Argenti diagnostic uses a scoring system that the analyst can use to assess the seriousness of the
situation and the need for early action, as well as to shape the remedial action that may be required.
Argenti: Corporate Failure Analysis
Issues for Cobham *

Calculation of score Maximum Marks
possible Awarded
marks
1. Management & Accounting DEFECTS

1.1 Autocrat at top 8
1.2 Chairman & CEO same person 4 *
1.3 Passive board 2

1.4 Unbalanced board 2
1.5 Weak/No FD 2 *
1.6 Insufficient management 1 *

1.7 No budgetary control 3
1.8 No cashflow planning & reporting system 3
1.9 No costing system 3

1.10 Slow response to changes (in production 15 *
or markets)
Sub total 43
(Pass Mark) (10)
Note: the higher the mark awarded, the more pronounced the defect, mistake or
symptom
Assessing Cobham from public records alone, one could identify a number of defects (highlighted here
with a red asterisk) that might provide an “early warning” of trouble ahead. A more insightful view
would be gained by talking to managers, group executives and directors, particularly concerning
internal performance reporting, budgeting and forecasting, adherence to policies and authorities in
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07/07/2025 Richard Hooke 2025