Trading without borders
YOU sometimes get the distinct impression that leaders in Britain’s boardrooms are fighting the wrong war.
BT chairman Mike Rake looks to have forgotten that the future of telecoms and media is global and overreaches by telling the group’s 81,400 employees that ‘Remain’ is best.
The former CBI president would do better letting the workforce know that the company’s prospects depend on keeping and expanding its offer to 8m broadband customers. At present, service it is not reliable.
BT will need to re-energise its super-fast fibre provision if the company doesn’t want to be blown out of the water.
The landscape in tech has radically changed again with Microsoft’s out-of-the-blue $26bn (£18.5bn) offer for business networking site LinkedIn at a handsome 50pc premium.
This is a leap into social media for Microsoft’s chief executive Satya Nadella who will be looking at ways of integrating LinkedIn into Outlook, Word, Bing and other Microsoft media. The race among the Silicon Valley giants to snap up other perceived ‘weak’ brands in the sector, including Twitter and Yahoo, will now speed up.
What does any of this digital stuff have to do with Brexit? Quite a bit. Most of the single market is about the trade of things – physical goods such as steel, cars and textiles. Two of the areas where Britain has real competitive advantage – financial services and media and creative industries – are only narrowly covered, if at all. Brussels has been more concerned with economic nationalism, keeping Microsoft and Google on the back-foot, rather than encouraging digital open markets.
This is entirely detrimental to Britain. New data collated by PwC shows that by next year Britain’s entertainment and media sector will be the biggest in Europe, the Middle East and Africa. By 2020 it will be worth £68.2bn, outstripping Germany at £61.3bn.
The digital economy knows no boundaries as Mail Online has discovered as it has reached across continents to become the world’s most-read media site.
Microsoft will not be drawing a Maginot line across the Atlantic when it integrates LinkedIn any more than Facebook did when it bought WhatsApp for $19bn (£13.3bn) two years ago. Britain’s burgeoning creative and fintech sectors will flourish across boundaries, not within them. Dinosaurs like BT should recognise that reality, rather than leaning on employees.
Grocery scramble
PRESSURE on UK grocers from the twin threats of discounters and online has them scrambling for an edge.
Asda owner Walmart has shown frustration with falling sales and market share by summarily replacing chief executive Andy Clarke with the head of the group’s China business Sean Clarke. That’s just days after the exiting Asda boss was crowing over his choice of successor, Roger Burnley from Sainsbury’s. Oh dear. The decision to parachute an outsider suggests acute frustration at HQ in Bentonville, Arkansas, with the speed of delivery for ‘Project Renewal’, which seeks to make Asda more competitive with discounters Lidl and Aldi as well as more traditional foes.
Elsewhere in the sector, Morrisons is taking advantage of its supply-chain strengths to join forces with online services Ocado and most recently Amazon Fresh.
And under the direction of Dave Lewis, Tesco is retreating from its role as a buyer of new businesses and slimming down. It is focused on bringing down the debt burden and regaining the high ground in grocery and non-food sales. In the past week Tesco removed itself from Turkey by selling a controlling stake to Migros for £30m in cash. It has also moved out of restaurants by selling family favourite Giraffe.
Sainsbury’s is champing at the bit to get its hands on Argos owner Home Retail Group having forked out £1.4bn. It is in effect buying Argos’s digital skills and hub-and-spoke delivery systems. The company regards Amazon as its next big challenge.
Competition has brought an end to the cosy complacency of the UK supermarkets. That has been bad (over the short term) for investors but great for consumers.
BHS sorrow
MPs and tycoons continue to tussle over the independence of the probe into BHS, the evidence which is being provided and whether witnesses should be required to appear when called. All very fascinating. But we should never lose sight of the people that really matter in this saga: the 11,000 workers and 21,000 members of retirement schemes who largely have been abandoned.
The saddened mother of a BHS worker writes to me from Hull that her offspring has worked for the company for 21 years, has reported for work daily for the past eight weeks with the aim of keeping the doors open despite all the adverse publicity.
‘Support from regular customers has been amazing. The owners have had their fingers in the till while the employees have been treated like second-class citizens,’ she says.
The moment for rescue may have passed but the workforce is entitled to know who plundered their futures.