Schumpeter
Business and management
Merging drinks makers
Two Scottish plays
Nov 14th 2012, 20:27 by B.U.
WHEN mergers involving Scotland's two national drinks happen within a week of each other it counts as an odd coincidence. It may also hold a lesson for the way the world is going, at least for makers of branded consumer goods.
Consulting
Monitor's end
Nov 14th 2012, 10:33 by L.G. | NEW YORK
“MONITOR’S clients, and those seeking to advance business knowledge, consistently recognize the firm’s rigorous analysis and advice and the results they produce.” Though this sounds like marketing fluff, it comes from a bankruptcy filing. While it is true that Monitor, a consulting firm based in Cambridge, Massachusetts, once had a sparkling reputation, on November 7th, it declared it can no longer pay the bills and sought bankruptcy protection. Failing a higher bid at auction, Monitor will be bought by Deloitte, an enormous professional-services firm, for just $116m, a figure subject to future reductions as Monitor sorts out its finances.
UBS’s rogue trader trial
Blame the institution, not the individual
Nov 13th 2012, 13:18 by L.P.
KWEKU ADOBOLI’S defence lawyer told a jury at Southwark Crown Court to blame the institution, not the individual, for alleged illicit trading activities that led to a $2.3bn loss at UBS last summer. The judge says evidence should override any assumptions about either.
Continue reading "Blame the institution, not the individual" »
Microsoft
Defenestration
Nov 13th 2012, 9:45 by P.L. and M.G. | ISTANBUL AND SAN FRANCISCO
ON NOVEMBER 12th, just over a fortnight after launching the new version of its Windows operating system, Microsoft said that Steven Sinofsky, the executive in charge of its Windows division, was leaving the company. Precisely why, no one outside the company seems to know.
Mr Sinofsky had been at the company for more than 20 years and had steered not only Windows 8 but also its successful predecessor, Windows 7, to market. As the head of a division that contributed about a quarter of the company’s $74 billion in revenue in its most recent financial year, he might have been thought to be a possible successor to Steve Ballmer, Microsoft’s chief executive.
Money talks: November 12th 2012
Bumpy roads ahead
Nov 12th 2012, 23:13 by The Economist online
IN THIS week's programme: the euro crisis rumbles on, America's fiscal cliff threatens and Britain expands the terms of quantitative easing
Social media followers
Beware the tweeting crowds
Nov 12th 2012, 23:12 by C. S.-W.
IF YOU think money can't buy you friends, think again. In the online world, it’s possible to purchase a crowd of fans. One thousand cost only $18 on average, according to estimates by Barracuda Networks, a network security company. Yet these friends won’t meet you for drinks after work. In fact, they don’t even exist. They are pixels on a screen.
A large share of social-media followers of the biggest companies are not human, believes Marco Camisani Calzolari, an entrepreneur and professor at Milan’s ILUM University. In a recent study he quantified the proportion of computer-generated fans or inactive users following big brands on Twitter.
The UBS rogue-trading trial
“A reputation built on lies”
Nov 9th 2012, 12:12 by L.P. | LONDON
In her closing speech for the prosecution on November 8th, Sasha Wass reiterated her case that Kweku Adoboli (above) lied to his colleagues at UBS about a $2.3 billion trading loss. Mr Adoboli’s trial reached a "watershed", the judge said, when the jury finished hearing evidence from all the witnesses called by both sides. Ms Wass finally had the opportunity to sum up the prosecution’s case against him. The prosecution’s opening statement was eight weeks ago and since then the 12-member jury has listened patiently to detailed and technical evidence from witnesses, including from Mr Adoboli himself.
Money talks: November 5th 2012
Leverage
Nov 6th 2012, 9:40 by The Economist online
ON THE eve of America's big election, our correspondents explain the prospective economic plans of both Barack Obama and Mitt Romney
Open-source design
Mass bespoke
Nov 5th 2012, 17:18 by S.D. | NEW YORK
IN WILLIAMSBURG, Brooklyn—the hippest part of New York’s hippest borough—you can pick up a seat for $750 made from the redwood reclaimed from an old water tower; or fork out $3,200 for a “Bilge” lounge chair, crafted from bourbon barrels and truck springs. Alternatively, if you are trend-conscious but cash-poor, you can download the free designs for strikingly similar items, get them cut at a local shop, and assemble them at home.
Why marriage equality is good for business
Competitive disadvantage
Nov 5th 2012, 4:22 by The Economist online
ON November 6, Minnesota will consider a ballot to ban same-sex marriage. John Taft, head of RBC Wealth Management in the United States, explains why this will hurt his business
Sandy
Success and failure after the storm
Nov 2nd 2012, 18:19 by T.E. | NEW YORK
There have been five New York blackouts in my lifetime, which, if nothing else, suggests that it is hardly an aberrant event. The one in 1965 was a little spooky but exciting. In retrospect, it was a crack in the city that would widen into the anarchy of the blackout in 1977, with its rampant looting and arson. A disaster is good if, for nothing else, bringing into stark relief the vulnerabilities of a community.
The World Trade Center attack in 2001 stands on its own, but two years later was a better indication of how the city’s ability to cope had been transformed from the 1970s. There was palpable fear that the outage in 2003 was the result of another attack, but the two most important public officials that year, Michael Bloomberg, the mayor, and Ray Kelly, the police chief, were calm and credible and people calmly evacuated offices, often to walk many hours back home.
The aftermath of Sandy, notwithstanding horrendous devastation and many accidental deaths, has much in common with 2003, most notably a sense of orderliness that has come to be expected, and is likely deeply appreciated only by those who experienced prior panics. The same mayor and the same police chief were very much in charge this time as well, ticking off lengthy lists of steps, with dull and self-serving political statements only protruding when other politicians managed to grab time before news cameras. Perhaps most surprising has been the remarkable response by the city’s often reviled mass transit authority, which cobbled together numerous temporary methods, began an enormous clean-up, and, through the mayor, provided constant updates.
An A-Z of business quotations
Unions and industrial relations
Nov 2nd 2012, 16:20 by B.R.
STRIKING is for plebs. At least it was to begin with. The first recorded general strike is often said to be the secessio plebis in 494BC, during which plebeians brought Roman trade to a standstill in protest at the city's spiteful consul, Appius Claudius. But the battle between bosses and workers is more often seen as a post-industrial-revolution struggle. Often the cause is just—unions can take the credit for improving working conditions in many a factory or mine, saving countless lives along the way. Today, some question their relevance. Margaret Thatcher sent the union movement into decline in Britain in the 1980s; during her 12-year premiership trade union membership fell from 13m to around 10m. Today it is barely 7m. Still it is too early to say that the decline is terminal. As austerity bites, unions in the Western world have again entered the fray. But perhaps there is another way, as Homer Simpson explains: “If you don’t like your job you don’t strike. You just go in every day and do it really half-assed. That’s the American way.”
The UBS rogue-trading trial
L’imitateur
Nov 2nd 2012, 12:24 by L.P. | LONDON
An emotional three days spent listening to Kweku Adoboli defend himself against charges of fraud and false accounting at the witness box, with his friends and family present in the courtroom, soon changed once Sasha Wass, the prosecutor, began her rigorous cross-examination on Tuesday afternoon. She described Mr Adoboli’s trading activities as “unprotected, unhedged, incautious, and reckless”, and costing UBS $2.3 billion. Ms Wass kept to her initial account of Mr Adoboli as a rogue trader, who lied to his colleagues while working at the bank’s offices in London. His motivation was to become a star trader, she says. Mr Adoboli refutes this, saying everything he did was for the good of the bank—in other words a means of generating profits.
Ford's management changes
Mulally keeps on truckin'
Nov 2nd 2012, 11:32 by P.E. | DETROIT
It took a giant shove by Chrysler’s board of directors in 1992 to get Lee Iacocca to relinquish his lengthy, powerful tenure as head of the company. That is clearly not going to be the case at Ford, despite the fact that Alan Mulally, its chief executive, is 67 and already two years older than the average age when company bosses trot off into the sunset.
On November 1st Mr Mulally (on the left in the picture above) “signed” a handshake agreement with William Clay Ford junior, the carmaker’s chairman, that will see him stay on until at least 2014. “I’ve enjoyed working with him so much I’d like him to stay forever,” joked the great-grandson of Henry Ford. The announcement will put to rest the issue of Mr Mulally’s future, at least for another couple of years, but it leaves open the other half of the question that has been at the centre of water-cooler conversations in the car industry and media speculation: who will eventually take his place?
A merger consolidates Calvin Klein
Nothing comes between me and my brand
Nov 1st 2012, 16:05 by B.U.| LONDON
FEW of Calvin Klein’s customers know, and probably fewer would care, that the fashion label is controlled by two separate companies. PVH (once Phillips-Van Heusen, a shirt maker) owns the brand. Warnaco, which dates its history back to 1874, manufactures and distributes the jeans (and owns the underwear). On October 31st the two companies announced that they would merge. The idea is to reunite the “House of Calvin Klein” and form one of the biggest “global branded lifestyle apparel companies in the world”, with sales of more than $8 billion.
In this blog, our Schumpeter columnist and his colleagues provide commentary and analysis on the topics of business, finance and management. The blog takes its name from Joseph Schumpeter, an Austrian-American economist who likened capitalism to a "perennial gale of creative destruction"
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