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Tuesday, September 27, 2016
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Tag: Business

The changing – and unchanging? – nature of the company town

The decline of manufacturing industry had been associated with the decline of the company town. In contrast, service companies have always tended to be fragmented. And yet there is one service industry which is conducted in large plants, in which people travel hundreds or even thousands of miles to consume the product, and which has been conducted in company towns not just for decades, but centuries.

Stakeholders with the most to lose should control struggling companies

When a corporation is unable to meet valid claims, control passes to the holders of these claims in a legally defined order of priority. But, as finance has grown more complex, these rules have come to look more shaky; they can falter dangerously in modern banking or in the case of a struggling retail business such as BHS.

Berkshire business model is simple and effective, yet rarely copied

Buffett's method is to find well-run companies and give them more freedom than they would enjoy on public markets. Yet other conglomerates use financial engineering and impose “transferable” management skills.

Central problem with banks is “too complex to fail” not “too...

Recent stumbles by Bernie Sanders illustrate a misdirection in his attack on the banking establishment. The central problem is not so much “too big to fail” but “too complex to fail”.

What Uber and another John Kay teach us about innovation and...

Uber's superior service threatens London's black-cab drivers, just as (my namesake) John Kay's flying shuttle eventually led to rebellion by out-of-work Luddites in the 19th century. The losers from such innovations should in some circumstances be compensated. But restricting competition is against the public interest.

HBOS report yields three important lessons for all businesses

British regulators have finally published their report into HBOS, the bank formed from the merger of Halifax with Bank of Scotland, more than seven years after its collapse. The 600-odd pages contain much detail on events and personalities. But there are general lessons for all businesses. Avoid the diversifier’s fallacy. Beware the winner’s curse. Fear adverse selection.

Lower business rates would benefit property owners not retailers

Retailers have recently complained about the level of business rates. However, were this property tax is reduced their joy will be short lived. Business rates are both a tax on land and a tax on structures, and in the longer term all we would see is higher property values and rents, especially in prime locations.

Let’s challenge our fixation on the principle of one share, one...

The Savoy Group and Google both adopted share structures that give individuals disproprtionately greater voting rights than their diverse set of shareholders. It has worked well for these companies and their investors over the long run. Perhaps we should reopen the debate over share structures?

Labour Party’s economic rethink should focus on good corporations

The UK's Labour Party failed to provide a convincing economic narrative and duly lost the 2015 general election. In future it would do well to recognise the role it can play in promoting good corporations; reestablishing the political and social legitimacy of the market economy.

The best strategy is to be good at whatever it is...

Michael Porter warned on the danger of being “stuck in the middle”. Companies, he said, must either gain a cost advantage or emphasise product differentiation. But what really matters is enjoying a competitive advantage in the market position you choose.

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