UK CEOs on their recession strategies
I am cross posting this superb blog from Jim on a new survey of CEOs and some background to their corporate tactics and strategies during the recession. Business responses to economic shocks and turning points in the trade cycle have a huge impact on the depth, severity and duration of any downturn. There is much below for students to consider when they discuss the reaction functions of senior executives to the challenges of the downturn and the financial crisis.
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Euro Land and Optimal Currency Areas - A Valentine’s Day Massacre
In A2 macro when we teach the economics of a single currency, it is not long before the idea of an optimal currency area makes an appearance. The crisis facing Greece and a number of other Euro Zone countries has laid bare the structural flaws in the monetary union project. Euroland is a long way from being an optimal currency zone.
Warner on merger motivations and shareholder value
This is a cross posting from Jim over at Business Studies. There is much overlap between A2 business economics and the focus on strategy for BUSS 4. The Kraft-Cadbury takeover bid provide rich pickings.
Jeremy Warner (formerly of the Independent) is well worth reading in the Telegraph each day. And he has written a timely piece on the likely result of Kraft / Cadbury takeover. Who are the likely winners from the deal? Nestle & Mars (who will probably gain market share as Cadbury struggles to come to terms with the new culture of Kraft) and the investment bankers and lawyers who have billed many millions of fees from the prolonged takeover battle.
There are some great quotes in Warners article.
I particularly liked this one:
“Most mega mergers are more the result of executive boredom, delusions of grandeur and the siren call of fee hungry investment bankers than compelling industrial logic”
Warner goes on to list some good examples for students of major acquisitions (often dressed up as “mergers") which have gone on to destroy huge amounts of shareholder value. Well worth reading and possibly printing out for students to use at the start of a lesson on external growth strategy
Law and Morality in Economic Life
It is easier to destroy a society than it is to build it. And tipping points that cause people en mass to lose faith and confidence in institutions are more likely than we might assume. This was one of the themes from an outstanding lecture given at the Royal Institution yesterday by Sir Partha Dasgupta as this year’s Royal Economic Society annual public lecture. Drawing on a lifetime of experiences and research, Sir Partha enthralled his audience with a brilliantly structured talk on the growing importance of social norms in helping us to understand more clearly the gulf in economic wealth and life chances between different parts of the world.
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Score Draw and Soccernomics
Arjun Bali looks at the surprisingly low number of draws in Premiership Football and suggests that the Reds might have challenged more strongly for the title last year had Benitez been more of an economist!
read more...»Managing a global business in turbulent times
Over ten years at my current school I have been hugely fortunate to hear some tremendous speakers on a tremendously wide range of issues. Few have impressed me as much as Simon Henry, CFO of Shell plc in his talk to our Keynes (Economics) and the newly-formed Management Society last night. His talk was beautifully paced and considered; the responses to questions were candid and rooted in a deep understanding of energy industries where volatility has become the norm. Future shareholder value will depend largely on successfully breaking the cycle of volatility.
Simon Henry at the Keynes Society
Simon Henry the CFO of Shell plc is speaking at the Keynes Society this coming Wednesday evening at 8-45pm in Upper School, Eton College. He will be talking on the topic of ‘Managing a business in a time of change’. Teaching colleagues are most welcome to come along to this meeting and it may also interest A2 students applying to read Economics and Management or A2 Business Strategy papers. Please if you are planning to come along.
Hold the phone!
For those of you are thinking of buying an iPhone, you would probably do well to wait until Christmas it seems. The exclusivity agreement between Telefonica-O2 and Apple is set to expire in the next few months, which could lead to an all-out price-war in time for the festive season. As the exclusivity is removed, it should make the market more contestable, and the price should fall.
read more...»Jury’s Inn - An Example of Organic Growth
This BBC news article flags up that Jury’s has secured additional finance to support their expansion programme. These are challenging times for the UK hotel industry as recession has affected room occupancy rates from business and household customers. But Jury’s Inn has instigated an ambitious programme of new hotels - a strategy of internal or organic growth. urys said it would look at new developments in key markets such as London. It has already opened five new hotels across the UK this year.
New hotels have opened in Sheffield, Watford, Exeter, Swindon and Derby. Another hotel is due to open in Aberdeen later this year, with more to follow next year in Portsmouth, Glasgow, Newcastle and Bradford. A new hotel in Prague is due to open in September 2009. Jury’s Inn has traditionally placed itself in the affordable business hotel market segment.
Taking the pulse around the UK economy - are the anti-virals working?
Here is a whole feast of reports about the current state of the UK economy from the BBC – albeit some of them quite unpalatable. On the day on which the Labour Force Survey shows the biggest quarterly rise in unemployment since records of the ILO measure began in 1971, the BBC has a survey that shows that two out of three people know someone who has lost their job due to the recession, and 40% fear losing their own job. The survey is part of their feature ‘Taking the Pulse around the UK’ which is being covered on TV, radio and the website today. As well as the survey there is a series of video reports; in one from a Northampton market where a fruit and vegetable trader says he has never worked so hard for so little, while a clothes stall owner says she has altered the clothing she sells, stocking cheaper goods than before, in order to survive. In another, Hugh Pym summarises key indicators about the state of the economy, and a third has Stephanie Flanders debating the state of the economy with herself. The set of reports are well worth browsing through, and following the links to related items.
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