A princely sum for the Asprey family silver

COMMENT

'After 200 years of quietly selling upmarket jewellery to the rich and royal, Asprey has been laid low and lost its independence in little more than a decade'

Selling the family silver is always a painful business, but when the person doing it is John Asprey, one of the world's most famous names in jewellery and silver, it must be doubly difficult. As always in such circumstances, there is more than a whiff of desperation about the sale, even if Mr Asprey has managed to extract a far higher price than many thought possible. It has been a long, long rise for the House of Asprey, but a depressingly rapid fall. After 200 years of quietly selling upmarket jewellery to the rich and royal, Asprey has been laid low and lost its independence in little more than a decade.

Where did it all go wrong? One culprit was the recession, which closed the purse strings of even the most affluent of punters and made that diamond- encrusted cigar case an expendable luxury. Another was the expansion programme, which saw the group attempt to broaden its customer base with a flurry of mid-market acquisitions. That strategy may once have had something to commend it but it looks like folly now. Its architect was Naim Attallah, the group's flamboyant chief executive and a long-standing friend of Mr Asprey. Mr Attallah retired yesterday, a year earlier than expected, and is likely to be paid a year's salary (pounds 300,000) in compensation.

But this is history. The real question is why the wealthy prince should want to buy Asprey at all and why he should pay so much. A key asset of the group remains its brand names. For all the recent tribulations, the Bond Street store remains a byword for dignity and taste. As the Crown jewellers, Garrard will always be a treasure. Even so, the 250p per share offer looks remarkably generous at double the previous day's closing price. No more than speculation this, but it is always possible that the view was taken that since the Brunei royal family is one of Asprey's largest customers, it might as well own the company too.

Benchmarking is not a panacea

Benchmarking is a term that, when applied to companies, might seem hardly to merit a thought, let alone an opinion. Among aficionados, however, it clearly stirs strong passions. To prove the point, one of the most established names in this highly specialised business, PIMS Associates, has launched a bitterly critical broadside against a new benchmarking service for manufacturing industry to be launched by the CBI at its annual conference next week. In part, this is just sour grapes. The CBI service is likely to cost just pounds 1,000 a go, while PIMS rarely charges less than pounds 10,000 for its more sophisticated version. But there is more to it than that.

As the word implies, to benchmark a company is to measure its performance against others - allowing it to identify its strengths and weaknesses and to assess its relative position in the world. It is a job you might think about as exciting as being an actuary. But such is its appeal that its use has spread like topsy in recent years. More recently still, its cause has been taken up by the Department of Trade and Industry and the CBI. The former CBI director general, Howard Davies - now deputy governor of the Bank of England - described it as one of the most important ideas to come out of the DTI's competitiveness programme.

A national benchmarking service - to enable Britain's small firms to compare their performance with the world's best - has just been launched by Ian Lang, President of the Board of Trade. The idea is that it should complement the CBI's service, a joint venture between IBM and the London Business School, which is aimed at larger firms with more than 60 employees.

So far so good. Unfortunately, benchmarking cannot offer miracle cures. When crudely applied it can be positively harmful, pushing businesses in entirely the wrong direction. To compare one company with its industry leaders without accounting for market dynamics, culture and corporate structure can be highly dangerous. Competitive strategy is much more than comparing numbers. Until you establish the true drivers of performance, benchmarking against industry best practice is often of little value. That most basic piece of management advice acts as a warning to those who see benchmarking as a panacea: copy the strengths of your successful competitors and you will fail; analyse their weaknesses and attack them there, and you will succeed.

The CBI service is certainly a modest effort - a quick self-assessment of corporate strengths and weaknesses under the guidance of an expert facilitator. It is almost certainly true that in this area, as in so many others, you get what you pay for, whether Rolls or Renault Clio. Newcomers to benchmarking, through the DTI and CBI services, should not be fooled into thinking it will solve all their problems.

Challenge for the Chancellor

There is a new tradition to brighten up the British autumn. After Hallowe'en and Guy Fawkes Night, a month of feverish pre-Budget speculation now fills the gap until Christmas shopping can start in earnest. As the Cabinet met this week to draw the public spending round towards a close, the Treasury's panel of independent forecasters contributed its advice to Kenneth Clarke.

The new report from the panel confirms that a majority of the Wise Men, as prudent as their nickname implies, think there is only modest scope for tax cuts. Bigger reductions would have to be matched by bigger spending cuts, most of them agreed. However, the financial markets have been softened up during the past few days for a bigger tax giveaway than the average economist - including most of the Treasury's panel - has been willing to endorse. The new consensus is that we have pounds 6-7bn in tax cuts to look forward to, rather than the cautious pounds 3-4bn limit the City had settled on.

Yet even with expectations successfully primed, the Chancellor will still have to satisfy the markets that he is not flinging caution to the winds in an irresponsible canter towards the general election. The Government's borrowing requirement will have to continue shrinking - and credibly so. He will have to keep it heading towards balance in the medium term.

While there is little doubt that, with the spending cuts agreed by Cabinet, he will be able to make the arithmetic work, the catch is that wielding the spending axe rarely works. In practice the axe is always more like a trick dagger whose blade disappears on contact with a hard obstacle.

A control total of pounds 260bn implies an increase in expenditure equal to about half the rate of inflation in 1996-97. Since the last election public spending has grown by about 2 per cent a year in real terms. It is not true that real government expenditure never falls. Denis Healey managed it in 1977 after the IMF crisis. So did Geoffrey Howe in 1981, in the excitement of early Thatcherism. But it is a little difficult to believe that Mr Clarke is going to meet with similar success in present circumstances.

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