David Prosser: The cloud at Best Buy Europe comes witha silver lining forCarphone Warehouse
Outlook: Courage to face failure is a key attribute for all entrepreneurs, Carphone's Charles Dunstone included
One attribute often said to be a crucial requirement for entrepreneurs is the courage to confront failure. Charles Dunstone, the founder of Carphone Warehouse – and thus one of Britain's most successful entrepreneurs ever – will want toremember that. For yesterday'sannouncement of the closure of the 11 Best Buy megastores in Britain is a failure, even if there are mitigating factors.
There are a host of reasons why the project, a joint venture between the US electricals giant and Carphone, has not proved successful. The companiesunderstandably point to factors beyond their control – particularly the pressure on household incomes, with the British economy having failed to bounce back in the way they hoped when launching the venture three years ago.
But Best Buy Europe's management can't pin all of the blame on the downturn: with hindsight it is clear they misjudged the market. They appear to have been unrealistic, for example, about the threat posed by online electricals retailing, where price comparison sites have done such a good job pointing shoppers towards the bargains. Best Buy's instinct that Britons wouldrespond to better service standards hasn't been proved correct either. Those disappointing sales suggest either that Best Buy's megastores have beenunable to offer a better standard of service, or that customers are less bothered about such niceties than price.
In any case, while the Best Buy venture in Britain was conceived in 2008, before the recession, the global financial crisis unfolding back then ought to have given all involved pause for thought.
Against all that, there is plenty in the announcements made yesterday for both Carphone and Mr Dunstone himself to be pleased about. Not least, that the sale of the Carphone stake in the Best Buy mobile phones operation in the US represents a handsome return on the time and money invested (note the windfall for Mr Dunstone).
Moreover, as all good entrepreneurs know, those failures are useful for the lessons that can be learned from them. The new joint venture in Europe,focused on Carphone Warehouse'sretail operations, reflects that: it will focus on the technological requirements of connected customers across segments such as smartphones and tablet computers. This is the area where Best Buy has had more success. The aspiration of rolling that concept out in emerging markets has great potential too.
Then there is the final part of the deal announced yesterday, which gives both Carphone and Best Buy an opportunity to exit their arrangement in 2015. That limits the downside risks of the next stage in the partnership not working either.
BP's new boss suffers yet another setback
Dear oh dear. It is not at all clear who is at fault in the collapse of BP's deal to sell its stake in Argentina's Pan American Energy to Bridas Corporation, with both sides blaming each other yesterday. But there's no denying this is an embarrassment for the British oil giant and its chief executive Bob Dudley. This is a company prone to accidents of the corporate kind as well as the (more disastrous) operational ones.
The money the sale would have raised, some $7bn, is certainly not to be sniffed at, particularly in the context of the $45bn worth of divestments BP has said it wants to make in the wake of the Deepwater Horizon catastrophe of two summers ago. The figure will be harder to hit now, making it tougher for BP to raise its dividends next year, as analysts had been expecting it to do.
The better news is that the failure of this deal is not as significant as it would have been, say, a year ago. The cash BP has on its balance sheet, the assetdisposals it has made already, and the cashflows being generated by ongoing operations thanks to the still elevated oil price, leave it robust enough to cope with its Deepwater Horizon liabilities and the demands of its business.
The damage here, then, is more reputational. Mr Dudley, appointed to steady the ship following the awful summer of 2010, seems to keep running into trouble, from the failure to see through his transformational deal with Rosneft to this latest mishap.
How to hold the Bank of England to account
There is plenty to chew over in today's report by the Treasury Select Committee into the governance of the Bank of England – and it is difficult to disagree with its criticism of the current arrangements as "antiquated". That is not to say, however, that there is agreement on how they should be modernised.
The MPs' first recommendation should be their least controversial. Moving to appointing a Bank of England Governor for a single eight-year term, rather than the current two terms, with reappointment necessary in the middle, makes sense. Look at the way the final year of Sir Mervyn King's first term was destabilised by speculation the then Labour government was desperate to get shot of him. If the Bank of England is to be truly independent it can't be healthy for its Governor to be at the mercy of the Government of the day.
Other parts of the proposals are more difficult. Giving the Chancellor powers to direct the Bank in a time of crisis would undermine that independence, even if it improved accountability. Taking away the Bank's majority on the Monetary Policy Committee and the Financial Policy Committee would make these operators of policy levers different types of body altogether.
Sir Mervyn is on record saying that he believes the Bank's lines of accountability need to be clarified, particularly in the context of the regulatoryreforms currently being undertaken. But there is a difference betweenmaking the Bank more accountable and undermining its independent powers.
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