Outlook: Fresh faces for a transformed business

A lot has changed at ICI since Ronnie Hampel arrived as a fresh faced commercial trainee 42 years ago. For a start, most of its traditional UK customer base has disappeared. For another it has discovered that bulk chemicals is a mug's game for all but the world's biggest players and those with supplies of cheap raw materials and labour.

Through all this ICI has managed a surprising clever evolution, first by shifting its production and marketing effort abroad, then by growing a high margin pharmaceuticals business. When it realised that pharmaceuticals is an entirely separate industry, it bravely demerged. Then last year ICI did the splits for a second time, selling off industrial chemicals and concentrating on the less lumpy, less cyclical businesses of paint and speciality chemicals.

Now it is about to change again but this time it will be management, not businesses going through the revolving door. The promotion of Charles Miller Smith to chairman next year only three years after arriving from Unilever and the recruitment of an heir apparent as chief executive in the shape of Brendan O'Neill from Guinness means that ICI will be run by a pair or outsiders for the first time since its foundation in 1926.

Although ICI's traditional strengths lie in science and technology, its future belongs as much to those who know how to market products, like Messrs Miller Smith and O'Neill. The fact that an incumbent is not being groomed for the top slots speaks volumes. Those who are passed over for the top job at ICI rarely hang around. Bill Duncan and Bob Haslam went off to run Rolls-Royce and Tate & Lyle respectively after John Harvey Jones pipped them to the chairman's job, and Robin Ibbs soon left for Lloyds Bank after coming second to Denys Henderson. Sir Ronnie may find the exodus has already started when he hands up the chairman's job next April.

Gates is trying to stifle competition

A recent survey discovered that Bill Gates has achieved role model status among children and teenagers - a position normally reserved for pop, movie and sports stars. Unfortunately, not all of what Mr Gates does deserves unqualified admiration. Like many inspired and highly successful businessmen, he is also essentially a monopolist. And like Rupert Murdoch, he is also a remarkably successful one.

Microsoft was back in the US courts yesterday arguing over whether its Internet Explorer software should be treated as a separate product from its Windows computer operating system. The arguments bear some repeating. Microsoft claims that the two are essentially one and the same thing, that its internet browser is an integral part of Windows, and that anyone who installs Windows must therefore also install Microsoft Explorer. Rival browser suppliers say Microsoft is attempting to use its near complete monopoly of the PC operating system market to dominate the quite separate and distinct market for browsers, which act as a gateway to the internet.

There has always been a powerful intellectual argument for allowing inventors an extended period of copyright over their inventions. Windows is undoubtedly Microsoft's invention, and there is no obvious reason why policy makers should yet be interfering with the company's right to profit from it. But internet browsers are not and it is plainly wrong that Mr Gates be allowed to stifle competition in a different technology in this way.

An obvious, though inexact, parallel in this country is Rupert Murdoch's TV encryption technology, which allows for the operation of subscription TV. It was Mr Murdoch's vision and commercial risk which developed the technology, but should he be allowed to use it as a barrier to entry for other pay TV operators now that digital is about to arrive? Plainly not.

Unfortunately, it is not obvious that the Microsoft problem would be solved even if the courts do succeed in forcing the company to unbundle the Windows and Explorer products. Mr Gates would still be able to cross- subsidise the browser from the monopoly profits of his operating system. An entirely different set of rules and regulations would have to be brought into play to stop him doing that.

There is nothing new about any of these issues. They are as old as the modern-day corporation. But because computer software and pay TV are comparatively recent industries with underdeveloped competition, they are cropping up in complex and unexpected ways. In this country, the new Competition Bill, with its catch-all clauses to deal with abuse of market power, goes some way to an appropriate tightening of the legislation. But until guidlines are published on what constitutes an abuse, we won't know to what extent ministers have ducked the issue.

Tricky time for inflation-busters

For all the talk of global deflation, it is often hard to remember that here in Britain we still have a comparatively high rate of the reverse - price inflation. All the same, we do seem to be moving slowly in the right direction. The latest figures show underlying inflation edging another notch back towards its target. The economy's pace of growth is slowing, and manufacturing output is showing sure signs of suffering from the strong pound. In the background, Asia's turmoil is expected both to keep the global inflation background very subdued and to prevent the Fed from raising US interest rates. All in all, the Monetary Policy Committee must be thinking that the case for not raising interest rates at next month's meeting is starting to look persuasive.

But 1998 could prove tricky for Britain's inflation-busters. The trouble is that inflation is likely to dip below its 2.5 per cent target only briefly before climbing again. The Bank of England's inflation forecast sees this starting in the autumn, although the chart conveniently ends just as the central range of its forecast hits 2.5 per cent again. Other economists reckon it could happen sooner. In fact, seven out of 31 City forecasters reckon underlying inflation will be back above target before the end of this year. Some time in 1998 there could well be an unhappy situation with growth slowing quite sharply and inflation heading higher equally smartly.

Obviously any forecast is highly vulnerable to events. What happens will depend on how quickly the economy slows, the exchange rate, how high pay settlements climb during the current round, and how much world price levels weaken. The inflation pessimists might well turn out to be wrong.

On the other hand, the Bank's own inflation forecasts have turned out to be consistently over-optimistic. What if the figures show it is still under-estimating inflation as the months go by? It is one thing to take the unpopular step of raising interest rates when you have firm evidence that growth is very robust, but what about doing so when growth is clearly slowing?

Hypothetical worries like this do not change the calculation next month. Events and figures since the last meeting suggest, so far, that the balance has tilted away from announcing another rate rise. Moreover, the policy always has to be to wait and see in the sense that it is impossible to map out the entire future profile for interest rates on the basis of what might happen to the economy meanwhile. Even so, the Bank's experts - and the wider range of members due to be appointed to the Court - need to be prepared for the worst outcome as well as the best.

News
people And here is why...
News
people
News
peopleStella McCartney apologises over controversial Instagram picture
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?