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Hubris can bring down any FTSE darling, not just Tesco. (2014)

“The Tesco crisis may not match the BP and RBS disasters for impact, but there are parallels. The story involves corporate hubris, poor governance, private jets, perverse incentives – and excessive rewards despite strategic failure.

Colin McLean
Wealth Manager, 22 October 2014

Even the investors lucky enough not to own Tesco shares can learn something from it. The supermarket giant’s strategic and accounting nightmare offers lessons for all.

As the crisis unfolds, investors have a rare opportunity to lift the lid on a major FTSE company, and examine the psychology involved.

Tesco’s high profile failure reveals the interaction between incentives, failed strategy and governance. Disappointingly, it follows a familiar pattern of setbacks in big companies.

The Tesco crisis may not match the BP and RBS disasters for impact, but there are some parallels. The story involves corporate hubris, poor governance, private jets, perverse incentives – and excessive rewards despite strategic failure.

There are even similarities in aspects of the management culture, excessive attention to make flattering adjustments to earnings per share, and in routine deflection of public criticism. It seems being out of touch with society is a characteristic of big global groups, irrespective of sector.

Access the full article here: Hubris can bring down any FTSE darling

 

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