15 April 2012

That was week ending 13th April 2012

Politicians tax affairs

This one will probably run for a while but it was certainly around last week. However most of the pressure for publication of politicians' tax affairs seems to be coming from politicians themselves and of course journalists. I am not sure just how interested the rest of us actually are. Politicians appear to want to boast that "my income is smaller than yours" which is a bit perverse when you think about it, whilst journalists are hoping for a juicy story with possibly a ministerial scalp at the end of it for which they can claim the credit.
However if government policy is that everyone should pay their fair share of income tax then if they are to have any credibility at all Ministers at least must show that they are personally paying their fair share. It's called "setting an example" something that has always been an essential element of good leadership. If politicians could remember this then they might just do the right thing, first time, more often.

Facebook - coasting not surfing?

Facebook's acquisition of Instagram raised a few eyebrows. They paid $1bn dollars for a business less than 2 years old and with no revenues. Several commentators have understandably speculated whether this is a sign of another tech bubble. However others have noted that this looks more like Facebook taking out a smaller more innovative competitor whilst it has the financial firepower to do so.
We agree. To us Facebook looks just too comfortable, coasting towards its supposedly record IPO sometime soon. Google continues to produce new services and find innovative ways to exploit its expertise but Facebook just seems to be still, well, just Facebook.  In particular they appear have lost any clear sense of purpose, other than the big IPO. Unless something changes this will catch them out, just look at Yahoo.
So we wouldn't touch Facebook's IPO with a barge pole. In the meantime if you want to make money out of Facebook then come up with a small innovative idea that looks like a threat and you may well find they throw money at you.

Mothercare - into care?

Another week another retail casualty. Mothercare announced more job losses and store closures in its UK business. It will have just 200 stores, less than half the number it had in 1981 when founder Selim Zilkha sold out to Terence Conran's Storehouse (remember them). When Zilkha floated Mothercare he said " we will continue to do what has made us successful, provide everything for mothers-to-be, for their babies and young children".  He did this with a highly effective combination of stores and mail order, the nearest thing at the time to a "clicks and mortar" operation.
So here was a clear sense of purpose and effective system to deliver it. But with Zilkha and his team gone both were soon lost. First in the confusion that was Storehouse and then in the struggle to cope with competition they had allowed to overtake them in almost every respect.  True they had success overseas, but mostly built on joint ventures and franchising.  If the UK business continues to struggle this will affect the confidence of its current and potential overseas partners.
Businesses with a clear sense of purpose find they can make the right decisions to grow and sustain themselves. Those that have lost it or never had it just get lost as Mothercare has been for over 30 years.

More oil & higher prices

Finally, we spotted a report from the International Energy Agency that a combination of increased production from Opec and sluggish demand has resulted in oil supply constraints easing. Current high prices are say both IEA and Opec more to do with perceived than actual shortages. Much of the extra supply has so far been stockpiled on land and at sea and it will be interesting to see how long that situation can be sustained. Whilst we might all be pretty pleased to see some of the speculators involved with their fingers on fire, the pleasure would be short lived and not actually the point.
The situation is finely balanced. Unless we want to endure near recession levels of global economic growth energy costs will continue to rise over the medium to long term. Any business, big or small that does not have as part of its strategic plan the means by which it will significantly reduce its energy consumption year on year will only find out why it needed this when it is too late.

So that was some of the week before this week. We hope you found some of the above thought provoking and useful for you and your business. We trust you had a good weekend and hope you have a great week this week.

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