Trans Atlantic tit for tat

It often amazes me that the captains of big, really big companies get things so spectacularly wrong. Of course taking risks is part of an entrepreneur’s task, and some failures are to be expected but three cases in the recent past stand out since they perfectly illustrate Americans getting it wrong about Europe and Brits screwing it up in the USA.

The first case to consider is that of the Ford motor company of the USA which, in 1989 purchased the iconic Jaguar and Land Rover cars for $2.3 billion. $10 billion of investment later and in 2008 they sold them both to the Indian car company Tata Motors for, yes you’ve guessed it, $2.3 billion.

What took them so long, you might ask since by 2004 commentators were asking, “How could Ford have got it so wrong? Is this the end for Jaguar or does it still have a future? What might become of it and what will it take to revive its fortunes and once again be the car that one day every small boy would aspire to own?”

How they got is so wrong is, in my opinion the a perfect example of an concept I have developed over the years, “Accountants know how to save money, but they don’t know how to create wealth”. Creating wealth takes vision and imagination. If your aim is to save money, and maximise revenue from what you currently have, you are not in the game.

Though not of the same scale, the decision by Tesco, the third largest food retailer in the world to enter the USA market with the concept store “Fresh and Easy” was a disaster waiting to happen. Knowing nothing of food retailing myself I had visited the USA enough times to realise that this is a highly competitive and professional market with very few “gaps” to exploit. £150 million later and Tesco are out.

But perhaps Tesco should feel itself lucky to get out so cheaply. The worlds leading food retailer Wal-Mart is thought to have lost $1billion in the German market between 1997 and 2006 before it too gave up.

And how has Jaguar/Land Rover faired with Tata? “Losses in 2009 were reversed as turnover trebled by 2013, and Jaguar Land Rover has recorded billion pound-plus annual profits for the last three years, adding around nine thousand employees to date with plans to recruit 1,700 more.

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Trouble ahead for Turkey

Ukraine in flames, Egypt in the hands of the military. Why? Both former governments seem to have adopted the commonly held misconception among those new to democracy that when a government is elected it represents the people who elected it. In fact a Government has to represent the overall interests of the entire population. Ignoring these interests is the path to civil disorder.

In Egypt the Morsi government  choose to pursue a strongly partisan agenda by the imposition of an Islamist code yet only 52% of the electorate voted and of these only 51.7% voted for him. So with only 26.88% true supporters of his policies is it any wonder that it “ended”, as we say to children, “in tears”.

The situation with Yanukovych in the Ukraine is a little different in that it may have been in the best financial interests of the Ukraine to be close to Russian, but clearly a substantial part of the population disagreed, and given the history of the past 100 years, probably correctly so. Financially they may come to regret it but sometimes money alone is not enough.

Next to watch could well be Turkey where the conservative government of Abdullah Gül and Recep Erdoğan seems set on eroding the secular principles of the state as established by the founder of modern Turkey Kamal Ataturk. A lot of young Turks (there is a pun here but a bit obscure) and indeed some older ones, seem to disagree with him. We have already seen one protests, more could well follow, inspired by the recent events in the Ukraine and Egypt.

English in Vienna