Posts Tagged ‘Queen Victoria’

311

This may come as a shock. But apparently there used to be a system in the UK where if you wanted to send a message to someone, you wrote it down on a piece of paper, put the paper in a flat paper bag known as an envelope, stuck an adhesive picture of the queen in the top right corner of this ‘envelope’, and put it complete with this likeness of the Queen in a big red box.

Some people put other things in the red box, but they were not thought of positively by society. And then, something miraculous occurred; this envelope appeared on the door mat of the person for which the message inside was intended a day or two later.

It seems like a primitive custom, but that, according to a research recently made available on Facebook and emailed to journalists, is how things used to be.

And now, a company that operates in this state of the art way of delivering messages is set to be privatised. The Unions say that the Royal Mail is the type of company, offering such an essential service as it does, that should be under state ownership.

The Unions are right. How could we possibly manage without the Royal Mail if it wasn’t for email, Facebook, Twitter, Skype, LinkedIn, oh and DHL and TNT and, well… the list goes on a fair bit.

Delivering messages by the British postal service was once a lynchpin of the British economy, and indeed of the British Empire. Where would Victorian Britain have been without it?

But, and this may come as a shock to some, Queen Victoria is no longer on the throne and these days we have this thing called the Internet. Funnily enough, in this Internet age the Royal Mail has found a new function – namely to be the means by which shoppers and eBay users can have the products that they buy online delivered.

Some of the products shipped over the Internet will be sent that way only on a temporary basis. Love Film is a great user at present, but for how much longer? Given the increasing ease by which we can watch films online whether there will be a need for DVDs delivered by post seems unclear.

The Unions don’t like it, and it may be harsh to say that they need to accept Queen Victoria isn’t the throne anymore, but their concerns are legitimate. But the government has come up with a way to appease workers; 10 per cent of the shares on offer will be given to staff. Unions may try to block the privatisation, but once it has happened they will surely be forced to step back.

The Royal Mail has too many competitors for the Unions to risk weakening it, and the job security of members.
But there are some questions.

Does Royal Mail have an unfair advantage? In much the same way BT used to have (perhaps still does) an unfair advantage in supplying cables to the home (which the competition authorities tried to counteract), the Royal Mail has a distribution monopoly. When was the last time you went to the Post Office to send a parcel and the clerk asked you if would be using the Royal Mail or DHL today?

And then there is timing.

Privatising state companies, such as the Royal Mail and indeed Lloyds Bank and RBS, may well be a good idea. Frankly, the government coffers could do with some extra money. But does that mean the ideal timing is now? It may, but right now the government can raise money easily and cheaply.

The plans to privatise the Royal Mail have nothing to do with whether this is a good time, and a lot to do with where we sit on the political calendar.

Finally, there is a question mark over the belief, commonly held, that governments are lousy at running companies and that the private sector is always best. Maybe the private sector is best, but perhaps not for the reasons generally given. Lots of private firms turn out to be badly run, even more badly run than state owned firms. It is just that such firms go bust. State firms tend to get more subsidies.

See it in terms of evolution.

This works by having lots of different ideas, and selecting only a very small proportion of them. You can’t second guess what evolution will throw up next. The private sector scores over the state sector because it has survivor bias built in. Good businesses evolve. The state sector tries to do things via a kind of intelligent design, and that is what doesn’t work.

© Investment & Business News 2013

270

What is going on at Marks and Spencer? Profits were down 14 per cent to their lowest level since 2005, and its boss Marc Bolland has said his efforts to turn the business around will take time.

But does it all add up? Cast your mind back to 2004. The former queen of the High Street seemed to be going the way of Queen Victoria – that is to say to the graveyard. Philip Green made his bid for the company, and it seemed M&S was nearing its end and was set to be swallowed up by the Green empire.

Then Superman – or if you prefer Stuart Rose – came along and all seemed different. Back at the EGM when Green’s offer was discussed, one shareholder said he preferred to view the world through “Rose tinted spectacles,” and those remarks set the tone.

And with all those super models, Bryan Ferry and then that Christmas Party with Take That, Twiggy and co, all seemed better.

Well the Green furore was nine years ago now. Rose has gone. Bolland says he needs time to deal with the company’s underling challenges. We are told it needs investment in its infrastructure. Some are even talking about Rose as short term-ist, little more than a trader, barely better than one of those cursed bankers who put profits before stability.

Can this be true? Has Rose really gone from hero to zero, from Superman to Krypton-affected weakling?

If you watched the M&S story of the last ten years or more from Roger Holmes to Rose to Bolland, you can’t feel a little tired, a little bit “yes but we have heard it before.” Or maybe not, maybe the problem was party that Rose knew fashion and got the buying right. Since he left the buying has been awful. Unless that is fixed, no amount of investment into infrastructure will be enough, and even if Bolland says chooses to wear red M&S boxers outside of Blue M&S tights with a red M&S clock, unless the products for sale in the M& stores are better than products for Sale at Next, it will all be in vein.

© Investment & Business News 2013