Dan Bogler

Should we care about the resignation of Hector Sants as chief executive of the UK’s Financial Services Authority?

No disrespect to Mr Sants, but the City watchdog has been a lame duck regulator since the Tories made it clear they would break up the FSA if they win the UK general election in May – which they are likely to. Mr Sants will work his notice until the summer. He has made it clear, however, that he opposes the Tory plans to dismember his organisation, with the supervisory arm being folded into the Bank of England and a new agency taking over consumer protection. Both he and his chairman, Lord Turner, have apparently turned down running the former bit in a new role as a third deputy governor of the Bank. He is an experienced and qualified banker who will no doubt find an interesting new job. So this is not a personal tragedy.

Dan Bogler

The world’s top 10 pharmaceutical companies spend around $50bn a year on research & development…but have very little to show for it.

The cost of bringing a new drug from the laboratory to market has risen to around $1bn and, in an influential study released last year, McKinsey estimated that the industry’s return on R&D over the past decade has averaged just 7 per cent, below its cost of capital. It is startling that companies boasting operating margins of 30 per cent or more are actually destroying value in their core activity. No wonder the sector has been de-rated so substantially over the past 10 years.

Dan Bogler

There has been a lot of hand-wringing in the UK about the future of Cadbury under Kraft Foods, which is currently raising debt to fund its $19bn acquisition of the chocolate maker.

It is understandable that employees, in particular, are uncertain about their jobs; it is also clear that Cadbury is a name that resonates publicly in a way that glass maker Pilkington or even BAA, the airports operator, both of whom were taken over by foreign rivals, did not. But there are some simple truths that should not be drowned in all the emotion.

Despite its Quaker origins, Cadbury has long been a commercial enterprise, run for profit. It is the current management, after all, that decided to close an iconic plant in Bristol with the loss of 400 jobs and Kraft that is promising to review the decision and “invest in British manufacturing jobs.

Second, Cadbury is already much more international and much less British than meets the eye. Only a fifth of sales come from the UK and Ireland. Its chief executive is an American and its top management committee is made up of continental Europeans, Indians and Americans alongside Brits.

Nor should you jump to the conclusion that Kraft, the home of cheap, processed cheese, has nothing to contribute to how Cadbury is run – or will necessarily pull investment out of the UK.

When Spain’s Santander bought Abbey a few years ago, there was widespread scepticism about what the Spanish could teach the British about banking. Yet the purchase has been an undoubted success. Santander’s IT infrastructure, processes and common sense have indeed proved superior to those it inherited at Abbey and the Spanish bank has gone on to roll up other UK financial brands, creating jobs along the way. Why shouldn’t Kraft be able to do the same?

Related links:

Latest news on Kraft-Cadbury FT
50 reasons to fight Kraft
Dan Roberts, The Guardian
Cadbury: banks are the real winners Robert Peston, BBC
From corner shop to Cadbury, the global brand FT interactive timeline

Dan Bogler

Avatar has been declared the “future of movies” and it may be – though perhaps not quite in the way Hollywood thinks. Barely a month after launch it has generated more than $2bn in ticket sales, becoming the top-grossing film of all time. Its popularity is almost entirely down to the amazing 3-D special effects rather than a compelling plot or a roster of bankable stars, since it has neither of those. Is this the point where, once-and-for-all, technology overtakes talent as the driver of box office success? Pixar’s animated features, after all, have already shown the way. And since technology tends to get cheaper every year, while movie stars don’t, perhaps this signals a shift in the industry that puts power and profits back into the hands of the studios. This is not true of Avatar itself, of course. Reputedly, director James Cameron stands to make even more ($400m) than News Corp’s Fox ($300m), as shown in yesterday’s results. But as 3-D effects become commonplace, studio’s won’t need a James Cameron behind the camera every time.

Dan Bogler

A problem that is handled well can increase a customer’s loyalty. This is something Toyota should bear in mind as it deals with the potentially devastating recall of more than 8m cars for safety defects. Just look at last week’s healthy results from Mattel, which has recovered admirably from the “toxic toy” scandal of 2007 that forced it to pulp more than 20m products that were covered in lead paint or had bits falling off them.

What Mattel understood, from the get-go, was the need to take full responsibility and to apologise and explain, and then to keep on apologising and explaining…until consumers were sick of hearing it. Unfortunately, this goes against a deeply-held corporate instinct – applicable globally but possibly even more pronounced in Japan – to downplay problems, shift responsibility and reveal only what is absolutely necessary. Just remember how Ford and Firestone blamed each other for the exploding tires on the Ford Explorer a decade ago, a scandal that ultimately cost Ford’s then-CEO Jac Nasser his job.

That senior Toyota executives have, over the last 48 hours, started to say sorry publicly, at press conferences and via YouTube, is a good sign. And they have a very strong brand to fall back on. But a 16 per cent fall in January’s US sales when those at GM and Ford increased shows how quickly the damage can be done. Keep on apologising.

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John Gapper is an associate editor and the chief business commentator of the FT. He has worked for the FT since 1987, covering labour relations, banking and the media. He is co-author, with Nicholas Denton, of All That Glitters, an account of the collapse of Barings in 1995.

Andrew Hill is an associate editor and the management editor of the FT. He is a former City editor, financial editor, comment and analysis editor, New York bureau chief, foreign news editor and correspondent in Brussels and Milan.

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