ONE down, 76 to go. You could be forgiven for viewing last week's
swallowing of William Low by Tesco in the familiar gloomy light that we
in Scotland usually regard such takeovers. We only had 77 quoted
companies out of the UK total of 2500. Now we have lost one of those,
and to boot it was one of our more successful raiders south into the
English market.
Naturally it's not that simple and there is currently little
indication that another aggressive takeovers wave is about to hit
Scottish-headquartered companies. There are several of our more
important quoted businesses that the stock market preceives as being
vulnerable to acquisition because they have lost their way or hit big
setbacks, such as Dawson international and its recent withdrawal from
the US market with big write-offs.
But that is not the same as a wholescale threat hanging over chunks of
our large corporate sector as it did in the eighties. Remember the
Standard Chartered and Hong Kong and Shanghai bank bids for the Royal
Bank, or Elders IXL and Scottish & Newcastle or the Distillers Company
and Guinness?
Yet the Wm Low experience is worth examining from another viewpoint
altogether: the success or otherwise of Scottish based companies in
penetrating the national UK market, or to be more precise England.
In the immediate aftermath of the battle, Low's doughty chairman,
James Millar, reflected painfully that it may now be impossible to build
a national retail chain from a Scottish base thanks to the continuing
consolidation of markets into the hands of a few major players.
''I believe that Scottish companies can only grow large where you do
not have that national market with players south of the border who are
bigger and stronger than you,'' he was reported as saying.
Is that really true? Are there therefore sizeable slices of the
lucrative UK market that are now effectively closed to Scottish
companies because they cannot match the big boys?
At first sight the evidence does not support that assertion. A stream
of Scottish-based businesses have done very well thank you in England
these past few years. They include Kwik-Fit, Hewden-Stuart, Macfarlane
Group, Stagecoach, Scottish & Newcastle, British Polythene Industries
and What Everyone Wants. Indeed several of these have expanded to the
point where they are now the big boy whom the English competition seek
to target.
Some have effectively created their own market by launching new
concepts across the border. But others have done it the hard way through
acquisition and patient stalking of prime targets like BPI, Stagecoach
and Macfarlane.
So across the spectrum it is clearly possible for a well managed
Scottish company with a strong product, service or brand to successfully
attack the national market. But, to return to Millar's point, that
mostly happens where there is no dominating player south of the border
and, preferably, the Scottish company has a new concept or technology,
or indeed is targeting a niche market in which its lazier English
competitors have no immediate response.
Doing business in England is different to Scotland. It is to all
intents and purposes an export market even though you don't have to
drive through a tunnel or catch a ferry enroute. The language may be
(mostly) the same, but business practices and culture often differ
significantly around the regions.
Many of the rules that apply to successful exporting also apply to
invading England, including the one that it is usually best to hire
local people steeped in the business lore of the area rather than try to
import strangers from the frozen north.
I have always been intrigued by the relative lack of importance
afforded here to doing business in England. Most internationally
successful Scottish companies first conquered the southern market. It
provides a doorstep opportunity to grow a business far beyond what is
possible in its home market alone. One English region, the north-west,
has an economy 40% greater than that of Scotland.
Yet we are constantly encouraged to pursue ''real'' exports. If
Uzdeckistan is not to your taste then Guandong and Vietnam are flush
with opportunity.
Not having been to these places I cannot vouch for their commercial
attraction. But I have spent much time in Manchester and Liverpool these
past few years and there's lots of opportunity there for any business
that has succeeded in the rather small, fairly competitive Scottish
market.
Unless, I guess, you run a supermarkets group.
Alastair Balfour is managing director of Insider Publications Ltd.
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