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Re: [sharechat] Tindall got it right in Oz

From: "David & Jill Stevenson" <>
Date: Wed, 10 Dec 2003 14:42:45 +1300

Look at Cole`s to get an idea of just how tough the retail market is in Oz. Sir Ron Brierley through Premier Investments holds an investment in CML of approx. $A 60 million , present market value . He has held those shares  for over 10 years  hamstrung to make a worthwhile play. He of all people would be sensitive to the fact that they are burning a hole in his pocket, watched by his own shareholders.Imagine how many times he could have turned overthose funds  in normal course of events. Yet he cannot  get CML totally on track to capitalise . Always something adverse crops up. . I suspect his undue loyalty to Solomon Lew has prevented him making a proper business decision. Just as he stuck by  friend Rodney Price in that man`s attempts to get Australis off the ground in the 1980`s which, right or wrong , was no hard-nosed business decision. Not typicalof the man. Or is that assessment unfair ?
     Successful NZ businesses should not automatically think the next step is Australia simply because of it`s vastly larger market size . The market may be  bigger,  but there is, to balance,  proportionately greater and perhaps more street-wise competition.
     Buying into existing unsuccessful businesses is doubtful strategy . That is why Eric Watson`s foray into a failed supermarket chain in UK will prove his mettle. What has he seen that other`s cannot ?
   In an expansionary  move abroad there are at least two challenges-
   (1)  Ask yourself why the heck you as a newcomer on the block should think that you can offer something special to turn around a failing business . Don`t think that there are not enough local competitors , already familiar with the local scene , that won`t have sized up the challenge before you did and walked away. In a sense the same question should be asked when we are offered a high power job . Why did not others apply for the position or exactly why did the previous office holder quit the job. Seldom will you get a correct answer to the last question !
  (2) The second challenge is - how do you evaluate, before committing yourself to a move -- in the particular industry, what would be the Aussie parochialism against a NZ newcomer ?  Obviously in some industries it will not be as much a factor as in others.
        When Lion Nathan moved their product into Australia the local beer drinker had a strong pre existing brand loyalty that one would have thought impossible to sway. A loyalty (bias ) equivalent to entrenched belief structure of an IRA Catholic. Yet somehow Lion over time whittled away that brand loyalty. Well Done Lion ! But somehow I suspect you were a rare exception.
        The Warehouse by contrast has had a relatively push-over march to success in NZ . It had a unique,until then,  formula. Part of it`s philosophy ,wittingly or not, to supplant the small business - though callous, is a unique factor in it`s success story. That success story may have made it cocksure about Australia . Or do I underestimate Tindall .
                                   David Stevenson


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