Monthly Archives: July 2012

Andrew Hill

Halfway through my evening at Wembley Stadium on Sunday I realised why watching Olympic football – or any Olympic sport for that matter – feels strange: it’s the absence of advertising. A stadium normally decked in every type of corporate branding was dominated instead just by the Olympic rings, the participants’ flags, and the purple hues of London 2012. Read more

Once upon a time, companies simply made new products and sold them. In due course, they made them, advertised them to buyers and then sold them. Now, publicity frequently comes before the sale, the production and sometimes even the design of the item, with what modern marketers like to call a “pre-announcement”.

John Gapper

When a senior executive gets the boot from a company, it is usually covered up with some pablum about seeking new opportunities. So General Motors’ statement about the abrupt departure of Joel Ewanick as its head of global marketing is remarkable.

The FT reported it in this way:

“The resignation is disappointing but he failed to meet the expectations that a company has of an employee,” Greg Martin, a GM spokesman, said in an interview. He declined to give further details.

 Read more

John Gapper

If you wait around long enough, you will observe another retreat by Nomura from trying to transform itself from a dominant retail stockbroker in Japan into a global investment bank.

The latest example comes after an insider trading scandal that led to the replacement of its senior executives. Nomura is already signalling clearly that it is turning its back on the latest expansion, which dates from 2008.

This time, Nomura tried to use the acquisition of the Asian and European operations of Lehman Brothers to march on to the global stage. However, it has not come to much more than its experiments with US commercial real estate securitisation in the 1990s and sub-prime mortgages in the 2000s. Read more

John Gapper

Sandy Weill’s belated conversion to the reinstatement of Glass-Steagall – the act that he helped to demolish – is a significant moment. It suggests that the pressure for greater and more effective structural reform of finance is becoming overwhelming.

Mr Weill was a major force behind the Gramm-Leach-Bliley Act that ended Glass-Steagall and allowed the merging of commercial and investment banking in the US. Now, he seems to think it would be better to have Glass-Steagall back. Read more

Nearly four years after the Wall Street bailout, the beneficiaries of the US government’s support are battered and unpopular, but still in business. Meanwhile, the regulators that rescued them are in trouble.

Andrew Hill

In the annals of odd academic tasks, trawling through nearly six decades of obituaries for chief executives ranks highly. But, in doing so, Timothy Quigley of Lehigh University has disinterred interesting evidence that the all-powerful CEO is alive and well.

For a paper to be presented to next month’s Academy of Management annual meeting in Boston, Prof Quigley looked at the market’s response to 193 sudden CEO deaths (with causes from plane crash to cerebral haemorrhage) between 1950 and 2009. The magnitude of investors’ reaction, whether negative or positive, was greater in recent years than in the early part of the period. In fact, the share price rise (or fall) for deaths announced between 1990 and 2009 was more than double the reaction in the 1950s and 1960s. Read more

Andrew Hill

There’s a tantalising glimpse of Oliver O’Brien’s wonderful interactive map of London (and the UK) in Tuesday’s FT. The map is in the style of the great Charles Booth, who researched London poverty 120 years ago and displayed it cartographically. Our analysis contains the sobering observation by Mr O’Brien that “London’s mix of rich and poor changes dramatically from street to street. But what you see even 120 years after Booth is that many of the patterns remain the same”.

Visitors to the Olympic Games may want to take a look at the map before heading for the Olympic park to gain a little socio-economic perspective amid the glitz and hoop-la. As my colleagues James Pickford and Chris Giles write in their analysis: Read more

Around the turn of the last century, I heard Jack Welch recount how he had visited a clothing store on New York’s Fifth Avenue to buy a sweater. A sales manager approached the then boss of General Electric, said he was a fan, and in an embarrassed whisper, sought his advice. Was it essential to get rid of the worst-performing 10 per cent of his staff every year, even though his own team consisted of just three people? “Of course,” Mr Welch replied breezily.

Andrew Hill

Both John Gapper and I are away on holiday this week, so expect a short break until July 23, when normal service will resume.

Andrew Hill

Royal Dutch Shell’s plan to reintroduce attendants to the forecourts of Britain’s petrol stations is bothering me.

Don’t get me wrong, I’m all in favour of better service, but, as everyone knows, such improvements – particularly the personal “shall I check your tyre pressures, madam?” service promised by Shell – cost money. I’ll drink a litre of unleaded if the Shell plan isn’t really based on selling more stuff. Read more

Andrew Hill

“I can’t be confident about anything after learning about this cesspit” – Paul Tucker, deputy governor of the Bank of England, to the House of Commons Treasury committee, July 9, 2012.

Paul Tucker’s disgust at the Libor rate-rigging scandal (echoing business secretary Vince Cable) sent me back to records of the last time a foul stench of rottenness overwhelmed the UK parliament: the “Great Stink” of 1858. In that year, the smell of raw sewage, decanted into the Thames through overburdened sewers, reached the Palace of Westminster. It prompted emergency debates on “the state of the Thames”, in which R.D. Mangles, MP, told the House of Commons (as reported by Hansard): Read more

Barack Obama has labelled Mitt Romney an “Outsourcer-in-Chief” in his latest campaign ads. He’s tapping into a deep well of suspicion about a decades-old business practice.

Andrew Hill

Jeff Bezos is famously smart but I wonder whether he has thought through all the political implications of Amazon’s strategy of becoming back-office ecommerce infrastructure provider to the world.

The first part of FT colleague Barney Jopson’s series on the etailer was full of insight, but it was the comparison between Amazon and investment banks that struck me most forcefully. As Barney writes:

One investment banker says Amazon’s position is reminiscent of Goldman Sachs’ dual role as a broker and trader at the centre of capital markets. “People complain about conflicts of interest. But you still have to do business with them.”

Like Goldman and others, Amazon has set out to simplify the life of its clients, so they can concentrate on what they do best.  One business identified by the FT investigation – RJF Books and More – has delegated the “selling, shipping, customer service, payments and complaints” functions to Amazon, which left me wondering what else was left for RJF to do. Simplification was a strong theme of my recent trip to Silicon Valley, where countless start-ups, and a few larger businesses like NetSuite and Salesforce.com, are offering businesses the opportunity to “plug in” their operations to outsourced back-office services and payment systems. Read more

John Gapper

I’m never sure whether to be reassured or not that the biggest reason for aircraft to crash is through pilot error, rather than mechanical failure or terrorism. In the case of the Air France Airbus 330 crash in July 2009, in which 228 people perished, pilot error is the culprit once again.

The statistics show that many of the things that typically worry passengers — turbulence, engine failure, the possibility of hijacking etc — are much less dangerous than the simple risk of someone in the cockpit making a mistake. Read more