Wednesday, June 20, 2012

It's Not simply Foreign Takeovers that require Oversight

Lord Heseltine, WHO is conducting associate degree economic review on behalf of the govt, is because of advocate on that restrictions be placed on foreign takeovers of British corporations. this might sound like sensible business recommendation even however there area unit sensible problems with the advice, even though we do not think about the philosophic aspects.

Most people agree that some foreign takeovers of British corporations don't seem to be within the best interests of the corporate, its staff or customers. The takeover by kraft paper of Cadburys a few of years past is that the most blatant. however there also are lots of samples of takeovers by foreign corporations whose business coming up with has benefited, typically even saved British corporations. simply inspect the motor trade.

Obviously we can't grasp the detail of this recommendation till it comes out. however initially website it appears like a blanket, generalised business solution- foreign takeovers have to be compelled to be investigated before continuing. This may sound sensible as a policy headline, however it does not begin to handle several of the problems raised by the takeover of 1 company by another.

Penguin have just announced a merger with Random House. For a while it looked as if Penguin would be taken over by Harper Collins instead. Harper Collins is a NewsCorp company and many Penguin authors were deeply concerned at the thought of their work being published by an company with such a different brand identity and reputation. Penguin staff and customers were also no doubt dismayed.

The point about any takeover is that there are many different interested parties. Its not just about the stakeholders, it can't be, its just not good business advice. Customers need to be wooed, people with top careers within the company needs be retained, suppliers need to be kept onside. Takeovers need to be assessed by looking at their potential impact on all the stakeholders, not just the shareholders.

That's why Lord Heseltine's recommendation appears to be too simplistic. Yes, foreign takeovers may need to be assessed. But so British takeovers. All takeovers should be examined, from as many different angles as possible. We live in a complex, fast changing world. We have to keep abreast of and manage change, not be propelled blindly forwards because of regulatory regimes which only kick in under certain circumstances.

So here's a simple piece of business advice. Any merger or takeover which may affect jobs, the economy or society at large should be investigated. Not just foreign ones because controlling them gives the politicians good headlines. A country cannot be run by slogans alone.

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