Tag: PESTEL analysis

A farewell to the CE mark

Over the past week, I spent some time looking at the UK government’s draft amendments to legislation as a result of Brexit.  I also have had a look at the latest missives from the EU published in preparation for Brexit.  If you are in business, particularly businesses which involve the export and import of goods to and from the EU, this is a necessary process and I would urge you to take time to carry out such research.

There are eight weeks until the UK leaves the EU.  Suffice to say, everything is completely chaotic.  Not least the fact that the UK is way behind in its preparations for Brexit and parliament has reams of legislation to pass before we leave.

The parliamentary half term recess has been cancelled but even with that additional time (eight sitting days), it is unlikely that parliament can get all the necessary law in place before 29 March.  Seven acts of parliament and thousands of statutory instruments need to be passed before the UK leaves the EU for the law to operate.  It is highly unlikely that parliament can achieve that task in the time remaining.

The Department for Business, Energy and Industrial Strategy has taken a novel approach to the necessary amendments.  They have placed them all in a single set of regulations which runs to 619 pages.  This document covers the law of weights and measures, environmental law, product safety and some matters of food law.  Normally such amending legislation would be separate documents classed by subject matter.

The effect of this draft law is to remove all references to the European Union from existing UK law.  It is very much placing a sticking plaster on an amputated limb.  it is a temporary measure and it is unlikely that the amended law will stand for long after Brexit.

One result of the draft legislation is that the CE mark will be removed from UK goods.  The BBC reported on Friday that the UK will replace the CE mark with a new UK Certified Approved mark, UKCA.  This new mark has yet to be published, so with eight weeks to go, manufacturers have no idea as to the certification marks they will need to put on products made for the UK market.

The proposed UKCA mark also appears to be a complete misunderstanding of the purpose of CE marking.  The appear to believe it is a quality mark similar to the old BSI kitemark.  It isn’t.

The old BSI kitemark was a quality mark that told consumers that a product complied with a particular BS standard e.g. double glazing.

The CE mark is a declaration that certain categories of products comply with EU law (regulations and directives).  It shows that the product complies with the general product safety requirement of a particular EU law e.g. You test to the general safety requirement of the Toy Safety Directive, you do not test only to the terms of EN71 the EU safety standard.  Most toys designed for infants are tested to EN71 but also to the baby’s dummy bite test from the UK safety standard.

The CE mark applies to what are called ‘new approach directives’.  There is plenty of EU product safety law where the CE mark is not used e.g. The General Product Safety Directive.

New approach directives allow for type approval.  This means an example of the product is tested for compliance.  The manufacturer also has an approved quality assurance system which ensures that all further production of the product is identical to the tested example.  This removes the need for external batch testing of production and thus reduced costs.

So the CE mark is a compliance mark, but it goes further.  It is also a passport mark.  It allows goods to cross internal state borders within the EEA with no further need for certification or inspection.  So a French manufacturer can have his products certified in France and sell them in Germany.

It is clear that the new UK certification mark will not act as a cross border certification passport.  One must ask why this new mark is necessary as it is a criminal offence to sell unsafe and uncertified goods even if they are not marked.  If the mark is not a compliance passport, it simply reverts to the status of a quality mark like the old kitemark.  The main purpose of the CE mark is lost.

The CE mark was extended to metrological equipment when the market in weights and measures technology was opened.  It allowed manufacturers of weighing and measuring equipment to have them approved in one member state and to sell them across the EU.  This is why the old crown mark disappeared from pint glasses to be replaced by the CE mark.  There is no indication as to what will replace the CE mark on UK manufactured metrological equipment.  I suspect we will go back to the old crown verification mark.

On 1 February, the EU published a question and answer document relating to ‘industrial goods’ exported into the EU after Brexit.  This clearly states that UK producers will no longer be able to apply the CE mark, but it goes further.

It clearly states that UKAS, the United Kingdom Accreditation Service will lose its permission to award notified body status to test laboratories.  UKAS had been campaigning for a continuation of this permission but the EU is clear that it will be removed.  The EU document states that there will be little or no change to existing notified body approvals.

This means that UK test laboratories will no longer be able to issue CE mark type approval permissions to UK businesses.  This affect a wide range of products from toys to industrial machinery.  New models of these products will have to be certified in an EU state before the will be allowed into the EEA.

EU law is clear that responsibility for product safety compliance lies with the responsible person within the EU.  Currently that would be a UK-based manufacturer.  However for goods from ‘third countries, responsibility switches to the manufacturer’s agent within the EU or the person who first imports the goods into the community.  What this means is that UK manufactures wanting to export to the EU will have to arrange for an EU-based agent or to allow the customer importing their goods to the EU to act on their behalf with regard to the safety compliance of their goods.  This adds costs.

There is also a duplication of product testing and certification costs.  Firms will have to have test certificates for both the new UK certification mark and the CE mark.  Their quality assurance systems will have to be certified by an EU certified body and the new UK certification body (likely the British Standards Institute).  This is potentially a massive increase in costs.

Major manufacturers based outside the EU, such as Dyson with his vacuum cleaners (made in Malaysia) will have to consider where they will get products certified. For example, do they achieve type approval for an EU market of 550m potential customers; or do they spend the same amount to achieve certification in the UK, a market of 65 million potential customers.  I suspect many firms will prioritise EU certification over UK certification.

The other big news story this weekend was the rumour that Nissan was changing its decision to produce the new Xtrail 4X4 at its Sunderland plant.  This is not a surprise.  80% of Sunderland’s production goes to the EU.  There are major concerns regarding the application of tariffs and on rules of origin being applied to this EU export production as it will substantially increase the cost of production. Eighty percent of the Sunderland production is sent into the EU.  The EU/Japan free trade agreement, removing tariffs and allowing for regulatory equivalence, went into operation on 1 February.

However, there are other concerns.  All EU type approvals for UK produced vehicles lapse in March.  Nissan and other car producers will have to have all their models type approved in another EU state.  There will be no EU approved body for vehicle certification in the UK.  Again this increased costs.

Nissan is one-third owned by Renault.  So it clearly makes sense to locate production of new models within the EU and not in a ‘third country’.

This is the rubber hitting the road of Brexit.  The removal of CE marking and the loss of UKAS as an approval body for EU notified body status signal large increases in cost and restrictions in the ability to move goods across borders.

It is worth noting that the UK government preparation papers for no deal state that businesses reliant on, or with exposure to, EU markets should move their company registration to an EU state in preparation for Brexit so as to ensure continuity.  Such a move would take businesses out of UK corporation tax jurisdiction.

There has been much talk regarding tariffs in the politics of Brexit.  The removal of the CE mark from the UK is a clear signal as to new, non-tariff barriers, which will hobble UK manufacturing.

Brexit – A Project Management Perspective

I have tended to shy away from Brexit in this blog and have concentrated on Marketing and Business Strategy.  However, with ten weeks until the UK leaves the EU, I think it is worth looking at the way government has handled Brexit over the last two years.  To do this, I am taking a project management approach.  As anyone who has read some of the articles I have written about Brexit, or indeed anyone who follows my twitter feed, you will understand that I am no fan of the policy.  I see Brexit as a self-inflicted wound on the UK economy.  Indeed, all economic projections on Brexit see it as doing significant harm to the UK economy.  It is estimated that a Brexit deal, as negotiated by Theresa May in the draft withdrawal agreement, will cause a 5% drag effect on the UK.  A no deal Brexit is calculated as causing a 9% drag.  Brexit is the UK economy hobbling itself.  HMS Britain is about to drop a heavy drag anchor which will slow growth and hinder international competitiveness; all for the nebulous concept of ‘sovereignty’.

I say nebulous because those who shouted loudest about parliamentary sovereignty are now the first to shout foul when that parliamentary sovereignty is exhibited.

But this blog entry isn’t about political views or whether there is support for Brexit.  It asks whether the project is being appropriately managed.

Dennis Lock defines the stages of a project in his book, Project Management, the standard text for all business students on that subject.  Perhaps by listing those stages and factors for success and failure given by Lock, we get an idea of how the Brexit project is proceeding and its likely outcome.

The stages of a project listed by Lock are:

  1.  Project Definition
  2. Preparation and Planning
  3. Project Design
  4. Purchasing
  5. Fulfilment
  6. Completion and handover

It is utterly clear that the Brexit project is badly defined.  The referendum question asked one question; whether the UK should remain a member of the EU or Leave the EU.  The result, narrow as it was, was that the UK should leave.  But that answer didn’t provide a single possible outcome.  There was a range of options available and those on the Leave side of the argument didn’t present a single solution.  Britain could leave in a ‘hard Brexit’ or no deal.  Britain could retain close ties with the EU, the EEA model as shown by Norway; or Britain could decide to have a limited relationship: The Swiss model.  It seems that no one in government can decide and cabinet ministers to this day still present different potential outcomes.

Nor was there space left for compromise in the negotiation process, as Mrs May’s ‘red lines’ severely limited the options available.  Clearly Brexit was a poorly defined project.

Lock then describes success and failure factors in project definition:

  1.  Project Scope needs to be clearly stated and understood
  2. Technical requirements are not vague
  3. Estimates of timescale, costs and benefits are not over-optimistic.
  4. Risk Assessments are not incomplete of flawed
  5. The intended project strategy is inappropriate.
  6. Insufficient regard is given to cash flows and the provision of funds required to complete the project
  7. The interests and concerns of stakeholders are not taken into account.
  8. Undue regard is given to the motivation and behaviour of the people who will execute the project
  9. Insufficient regard is given to how those affected by the project will adapt to change
  10. Approval of the project plan is given for political, personal or intuitive reasons without due consideration to the business plan.

Where to start with this list in respect of Brexit!

As stated above, the project scope was vaguely defined.

Technical requirements as a result were vague.  If a soft Brexit was chosen, the technical requirements were completely different to those of a no deal Brexit.

The two year timescale is wholly insufficient to achieve Brexit.  The officials who drafted the Article 50 clause admit this.  But given the short timescale of the article 50 process, it was wholly inappropriate for the government to trigger that clause with absolutely no contingency planning in place.  A better proposal would have to been to do the contingency planning, then trigger Article 50 for the negotiations.  At least with contingency plans in place, the government’s position would be informed and appropriate red lines set.

The government’s Brexit plans completely fail to stand up to any interrogation based on the above list.

With only weeks to go until the Brexit deadline, arguments are still ongoing about factors in the above list.  We should have moved on to the delivery aspects of the Brexit plan by now: project fulfilment.

Lock lists the success and failure factors at the project fulfilment stage:

  1.  Good definition of the project and a sound business case
  2. An appropriate choice of project strategy
  3. Strong support for the project amongst management, in particular those managers responsible for managing the plan
  4. Firm control of changes to the project
  5. Technical competence
  6. Strong quality culture
  7. Appropriate regard for health and safety of all those affected by the plan
  8. Good project communication
  9. Well-motivated staff
  10. Quick and fair resolution of conflict.

Again, where do you start with this list!

The Brexit project has been poorly defined and there is no sound business case for it.  We are actually in a position of a government with a solemn duty to do the best for the country and its people is actively engaged on a mission which does nothing but harm to those interests.

The choice of project strategy, particularly the choice to trigger Article 50 prematurely has been appalling.

Those put in charge of driving May’s Brexit plan have been hard Brexiteers wholly opposed to it.

Fulfilment has been technically incompetent.  We have had ferry contracts awarded to a company with no ships and a port lacking the necessary infrastructure for HGVs.  We have had a trial at an airport designed to hold 5000 HGVs where only 87 HGVs turned up.  It appears we have a government which cannot plan a traffic jam.

Project communication has been appalling.  No deal preparation papers were short, vague and lacking necessary detail.  Risk assessments were incompetently produced and their content was held as secret.  Even when MPs demanded access to them, there was no appetite to share their content.

Staff motivation is clearly absent.  DExEU has the highest staff turnover of any government department.  It is seen by many as the death knell of a civil service career.  Currently the department is advertising for staff who ‘don’t panic’ in the face of pressure.

It is clear that the government, in particular ministers, put in charge of fulfilling the Brexit project simply aren’t up to the task.

Lock explains that in project management there is a direct relationship between cost, time and performance.

It is estimated that Brexit is already costing the UK government around £600 million per week.

The performance and quality of project delivery has been appallingly poor.

Most critical is the time objective.  A project not started in time can hardly be expected to finish on time.  To paraphrase Napoleon, “There is one kind of robber whom the law does not strike at and who steals that which is precious; time”.

It is utterly clear that the Brexit project has been managed horrendously and that it has run out of time.  In such circumstances the best option is probably to abandon the project entirely.

 

Brexit and Regulation

Over recent months, this blog has focused on marketing strategy.  However, there is more to Philmus Consulting than strategic marketing planning.  This consultancy also offers guidance on regulatory due diligence in relation to food standards and consumer protection law.

So this week I want to address the thorny issue of Brexit and its effect on the regulatory environment within which UK businesses operate.

Of course, this subject isn’t wholly divorced from marketing planning.  Analysis of the political and legislative environment is a prominent part of the market analysis process.  Government and regulators are often key stakeholders in the policies and procedures of businesses.

You may be aware that I wrote to Michael Gove shortly after his appointment as Secretary of State for the Environment, Food and Rural Affairs. My letter tried to get some information as to DEFRA’s preparedness for Brexit.  I chose to highlight two areas of food regulation, Organic Certification and Products of Designated Origin.

I chose these two topics as they brought the issue of regulatory diversion into sharp relief.  Also in my mind was Gove’s comments at the referendum that we’d “had enough of experts”.  I did wonder if Theresa May was getting some revenge in early ass DEFRA is a department filled with experts and where attention to regulatory detail is often required.

I did get a reply from Mr Gove’s office but it was less than satisfactory.  I got a holding letter which stated that no detail could be given until the conclusion of the exit negotiations and that only after the Article 50 process was concluded, could such planning take place.

Last week, the UK government released its first tranche of contingency plans in the event of ‘no deal’.  One of these documents concerned the certification of organic food.  That contingency paper confirmed my worst fears of the UK government’s lack of preparedness for Brexit and the regulatory chaos that will be thrust upon UK businesses as a result of Brexit.

The UK government is slowly drip feeding industry with these contingency documents and have taken 18 months to do so.  The EU produced their equivalent documents six months ago.

The organic products contingency paper was written for a no deal scenario.  However, my reading of the law is that the effect of the UK becoming a ‘third country’ will be the same on the organic sector whatever the result of the article 50 process.  The impact of EU exit and the UK government’s utter failure to plan, could destroy the UK organic food sector completely.

Currently, the UK, as an EU member, implements the EU Organic Products Directive.  What this means in practice is that the UK complies with the EU-wide definition of organic food.  A food producer wanting to describe their food as organic, must meet strict criteria as to the use of organic production processes.  There are strict limits on the use of inorganic fertilisers and pesticides.  If a producer wants to be classed as an organic producer, they must be certified as meeting organic standards and they must keep detailed records in relation to their organic status.

Getting organic status is expensive and can be extremely time-consuming.  Achieving organic certification can cost thousands.  I know one farm which spent nearly a decade working to ensure their land met organic standards.

There are nine organic certification bodies in the UK.  three of these bodies are based in the Republic of Ireland.  Each has been licensed by the EU to issue organic certificates to UK food producers.

Once a UK producer has achieved organic status, they can mark their food labels with the EU green leaf passport.  This symbol allows the food to travel throughout the single market with no further certification checks.

I wrote to Mr Gove as it was clear to me that leaving the EU would mean the collapse of this certification process.

The government’s contingency document confirms my fears but it also contains one crucial detail which may mean that organic production in the UK becomes financially unviable.

The document states that, “in the event of no deal”, all UK organic certificates will lapse.  UK organic certification bodies will no longer be authorised to issue organic status certificates to UK food producers.  The UK will have to set up a new system of organic certification.

Certification bodies will have to be licensed by the UK government.  This could be a lengthy process as the UK government will have to set up the certification system and carry out effective audits of the certification bodies to ensure that they comply with new UK-only organic standards.  Only after these bodies have been licensed by the UK government can new organic certificates be issued to food producers.  Existing organic food producers will have to reapply for organic status and pay certification fees.

The effect is immediate disruption to the supply of UK organic produce.

But it gets worse.  The contingency document states that the UK will continue to accept organic food produced under the EU system with no further checks.

So whilst UK production of organic food is disrupted, EU producers have full, unfettered access to the UK market.

So what if you want to export organic food to the rest of Europe.  Well, the contingency document is clear on that.  It must be noted that organic food is a value-added export product.

It is clear that once the UK becomes a third country UK organic food will not be able to use the green leaf passport. UK food described as organic will be subject to additional inspections at EU state borders and, if it uses the green leaf logo unofficially, will likely not be allowed access to the single market.

UK organic producers will have to be certified by an EU-based certification body which is licensed to operate within the UK.  Currently, no such body exists.

As the UK will be a ‘third country’, even if the producer is certified by an EU-licensed certification body, the food will need to be clearly marked as being of ‘non-EU origin’.

So UK exporters of organic foods will face expensive dual certification and this could be increasingly expensive if EU and UK organic standards diverge.  UK organic exports will likely face additional controls and barriers at EU borders.

Whilst UK producers flounder in the regulatory molasses of Brexit; with increased bureaucracy and additional costs; EU organic producers will have free unfettered access to the UK market; a distinct competitive advantage.

Such a competitive imbalance, and the likely reduction in margins due to the cost of additional UK bureaucracy, could easily make organic production in the UK unviable.

In this article, I have concentrated on one issue in one market sector; but this is just one example amongst thousands.  Similar issues occur across the UK economy, from toys, to pesticides, to motor vehicles, to financial services, cosmetics, metrology; to name but a few.

There is now six months until Brexit day.  Even if the UK government comes up with new systems of certification and regulation, it is highly unlikely that such systems will be in place for March next year.

Much of the media attention regarding Brexit has been focussed on custom’s tariffs.  But regulatory issues are a far more problematic concern.  Deal or no deal, the UK government’s failure to recognise the problems of regulatory divergence, and their appalling lack of preparation are going to be a costly and disruptive issue for UK business.

A prominent component in the arguments from Brexit was freeing the UK from EU bureaucracy.  Of what I have read of the UK government’s contingency plans, the solution to the loss of EU red tape is…..even more UK red tape.

Tomorrow’s World – Where are markets heading?

I am writing this blog the day after British, American and French forces carried out raids over Syria to knock out chemical weapons facilities.  This is just the latest example of how our world has changed since the cold war.  I was listening to an expert on the middle east trying to explain the Syria situation, and even he was struggling to put coherent labels on the situation.  He basically said that Syria was part civil war, part proxy war, part tribal conflict; in short a complete and confusing mess.

And that, at least in the medium term is the state of our world, one of confusion and complexity.

JP Kapferer in his book The New Strategic Brand Management describes our world as one of disequilibrium.  The old certainties, the balance in the world, has suffered entropy and it is going to be a long time before a new set of equilibria are established.

After World War Two a number of equilibria developed which gave certainty to brand planners and marketers.  There was a political balance between the capitalist entrepreneurship of western nations and the planned economies of communist dictatorships.  However, even China is now trying to balance a Communist one party state with capitalist markets.  For a while, following the collapse of the Soviet bloc, the United States was seen as the world’s sole superpower.  It is arguable, particularly with the situations in Ukraine and Syria, that Russia is now trying to re-establish its former status.

For many years, America and its allies had a clear purpose, to defend democracy against dictatorship.  The collapse of the Warsaw Pact and the fracturing of the USSR means that purpose is less certain.  Trump’s ‘America First’ policy is seen as increasingly isolationist and as threatening the economic consensus of organisations such as the World Trade Organisation.  Trump’s election campaign also put pressure on the NATO treaty as he accused other members of not pulling their weight.

In recent years we have seen the rise of the BRIC economies and political commentators have talked of a new world order emerging.

There is also a financial disequilibrium.  China is now the USA’s banker.  The Chinese hold significant numbers of US government bonds.  Households are spending more than ever before but wages are stagnating.  Despite the 2008 credit crunch, consumer debt is rising.

There is an ecological disequilibrium.  For most of human existence, there have been enough natural resources for demand to meet supply and the main concern was variation of price.  Now because of the growing human population; soon there will be 9 billion of us; there will no longer be sufficient resources to go round.  China has been stockpiling resources such as diesel and mineral ores.  In Africa, and other parts of the developing world, China has embarked on a campaign of resources for infrastructure.  China is building Africa’s roads, railways, dams and schools.  In return it is paid in iron ore, copper and timber.

There is a demographic disequilibrium.  There are aging populations in developed western nations where birth rates have fallen.  The world population is increasing but the majority of this increase can be put down to two factors, a high birth rate in the developing world and people living longer as health services improve.

Our world has never been so connected, with the rise of the digital world, but continents are developing divergent socio-economic models.

Sociologists state that human mentalities do not change, they are added to.  Deep in our brains, the ape which climbed out of the trees still exists.  Sports psychologists talk of our ‘inner monkey’, the primitive part of our brain that takes over in times of stress and excitement.

Sociologists talk of four social mentalities:

  • Tradition:  This mentality has been dominant in humans for thousands of years.  It is our tribal instinct, our sense of belonging to a particular community.  It is still relevant in some parts of the developing world.  It means we are all what our parents were.  We inherit tastes, religion and cultural norms.
  • Material Success:  This mentality promotes individual success and breaking free from the tribe.  Existing as a person and not as part of the whole.  China is a primary example of this mentality where the uniformity of the cultural revolution has been replaced by a desire for a western lifestyle.  Many Chinese now see themselves by what they buy and consume.  Shopping is now the primary leisure activity in Shanghai as much as it is in Seoul.  A process described as the ‘malling of Asia’.  It is an attitude of ‘I buy therefore I am’.  An attitude of success through the material goods you own.
  • Individualism:  This is the mentality where the individual is the centre of their own life.  At its extreme this mentality is evidenced by an egotistical, self-centred vision of human relationships.  We can all remember Margaret Thatcher’s comment that, “There is no such thing as society”.  David Cameron’s attempt to build a ‘big society’ went down like a damp squib.  Individualism at its worst can be shown through the election of Donald Trump and to some extent, Brexit.
  • Re-alliance: Sometimes referred to as ‘Me-Us’.  This is an attitude of a deeper me through connection to a greater ‘us’.  It is mirrored by the rise of social media and networking.  It is a mentality of there being no individual benefit if it does not supply collective benefits too.  It is a re-alignment of the tradition mentality.

So what does all this sociopolitical uncertainty and different parts of the world exhibiting different sociological states mean for brands and marketers?

A brand is a name which symbolises long-term engagement, a crusade or a commitment to a unique set of values which is embedded in a product, service or behaviour.  The goal of a brand is to make your chosen name become a reference point, a landmark, of a category or territory it has itself created.  For example, people ask for a Coke, not a cola’ (who has not experienced the ‘will Pepsi be okay?’ response at some fast food restaurants’).  The aim of a brand is for people to make it their number one choice criterion.

One way to examine where branding is heading is to look at the attitudes of young consumers, many of whom exhibit a ‘Me-Us’ mentality.  When asked about the attributes of their favourite brands they point to the following specific characteristics:

  1. Being known by their peers.
  2. Being active in communication.
  3. Symbolising a unique and strong value proposition
  4. Holding a deep, authentic, long-term value
  5. Being flawlessly incarnated into products and services that change the lives of consumers.
  6. Being a brand you can meet, interact with and which provides experiences through people, places and in different modes (both physical bricks and mortar contact AND digitally).  Note that digital contact on its own is not sufficient.
  7. Being extremely ethical.

Many fans of the Apple brand see it as meeting these criteria.  They view the Apple brand as:

  • 35 years of unchanged, meaningful high goals;
  • Consistency in the delivery of brand promise;
  •  Producing disruptive innovations and creating new product categories and changing lives:
  • Optimism and peacefulness;
  • Holding strong values and not compromising on them; even when under pressure to do so.  For example Apple bans apps which have sexual content; a position which caused significant problems for the Playboy corporation.
  • Being charismatic. Often through the executives promoting the brand (e.g. before his death, Steve Jobs).  This is seen as making the brand’s high technology pleasurable and which epitomises the company spirit.  This results in the brand seemingly having a magic touch.  Steve Jobs was seen as performing magic, so Apple products are seen as magic.

Apple is very much a post-modern brand.  It creates passion through the championing of values which appears to change the lives of people for the better.  Contrast this with the current problems facing Google and Facebook.  Google uses the tagline ‘Don’t be evil’ yet there was shock at some of the less ethical investment decisions of the brand’s parent company.  Facebook may be in serious trouble following the theft of personal data and its failure to take seriously data protection issues.  Facebook’s failings may cause a significant backlash from its core ‘millennial’ demographic which has the ‘Me-Us’ mentality.

As consumers move to a ‘me-us’ mentality, brands need to offer both individual and collective benefits.  It is not longer sufficient just to offer individual pleasure.  Hybrid cars are an example.  These vehicles may actually, through their lifespan, be more polluting than a diesel car fitted with a particle filter.  For example, the disposal and recycling of heavy metals in batteries may be an environmental concern.  However, these vehicles offer a ‘Me-Us’ position.  I am individually expressive in my choices but I am also contributing to the greater good by being green.

We are entering a world where big is good but big also needs to be responsible.  Brands need to be leading on ethical values, not a follower.

Future brands need to be optimistic.  The complexity of the current world and the prevalent disequilibria means that consumers face two choices.

  1.  To escape into dreams and to forget realities; or,
  2. To work harder in confronting difficulties and negating them.

Disney is a brand exhibiting the first option.  It is a brand which promotes happiness and which encourages social ties through connectivity, interaction and by being experiential

Nike is a brand following the second option.  It’s ‘Just Do It’ slogan is a hymn to social willpower and the determination of the spirit to overcome adversity (in the sporting world).

We live in a world of rapid change and uncertainty.  We live in a world where social mentalities are fragmenting on continental lines.  We live in a world of increased connectivity but divergent social norms.

To exist in such a world marketers and brand managers need to offer flexibility beyond their traditional values.

ODR, ADR and Regulatory Divergence

Online and Alternative Dispute Resolution

As a member of the Federation of Small Businesses Philmus Consulting meet numerous online retailers. Much of the talk amongst these firms currently involves the General Data Protection Regulations. However EU directives relating to Online and Alternative Dispute Resolution are often ignored. It is anticipated that EU rules on ODR and ADR will continue in the UK if a Brexit transition agreement is initiated in 2019.

Many of the small businesses I meet operate solely on the internet. They have no retail premises and are often based in their proprietors home. Many of these businesses are unaware of their legal responsibilities in relation to dispute resolution.

In 2016, the EU created an Online Dispute Resolution portal. This links consumers with an appropriate dispute resolution provider. The portal operates across the EU and applies to both domestic and cross-border electronic contracts for the sale of goods and services. The EU has an ever-growing list of approved alternative dispute resolution providers.

The aim of online and alternative dispute resolution is to make it simpler and cheaper for consumers to achieve restorative justice without the need for costly civil court proceedings.

The EU ODR portal allows documentation and information to be shared electronically. Consumers and traders can agree on a suitable independent arbiter to resolve disputes.

In some industries, such as financial services, legislation prescribes an official arbiter. Membership of certain trade associations requires acceptance of their arbitration service. Consumers can choose to accept the arbitration role of the trade association or agree with the trader to use a separate independent arbiter. If a consumer and trader cannot agree on an independent arbiter within 30 days, the complaint cannot be proceeded with and more formal resolution processes, such as the small claims court must be used.

Depending on the industry, alternative dispute resolution can result in a range of judgements, from formal advice through to legally binding decisions. ADR providers have to be registered with an appropriate certification body such as the Financial conduct authority.

If you are an internet trader please ensure that your systems are ODR and ADR compliant and that your website contains the above, legally required links and information.

Failure to comply with ODR and ADR protocols is a criminal offence enforceable under the Enterprise Act 2003.

The following questions and answers will help you decide on what action you need to take in relation to ODR and ADR compliance:

  •  Do you sell goods and services through a website?   If the answer is no, you do not need to put details of ODR on your website.  If you do, go to the next question.
  • Are you operating in a sector where an approved ADR scheme is
    mandatory under legislation?   If the answer is yes, you need to:
  • You need to inform consumers of the existence of the EU ODR platform and their opportunity to use it. You are required by law to provide:
    A link to the ODR platform on your website
    Emails to consumers must include a link to the ODR platform as first point of contact for dispute resolution
    Information on the ODR platform including terms and conditions relating to online contracts
    This information is in addition to giving details of your approved ADR provider.  If the answer is no, go to the next question.
  • Are you required by your trade association to participate in an approved ADR scheme?  If your answer is no, you need to provide a link to the EU ODR platform on your website. You also need to provide an email address on your website so that customers have a first point of contact for dispute resolution.  If the answer is yes, you are required to:  Place a link to the ODR platform on your website;
    Emails to consumers must include a link to the ODR platform as first point of contact for dispute resolution; You must include information on the ODR platform including terms and conditions relating to online contracts.

Regulatory Divergence

In recent months there has been significant attention paid to regulatory change by marketing industry commentators.

Much of this has focused on GDPR (The General Data Protection Regulations). However the prospect of Brexit could mean regulatory change which makes the changes to consumer protection law look like the proverbial drop in the ocean.

UK firms currently benefit from our EU membership. They can sell goods and services across the block without tariff and non-tariff barriers such as regulatory divergence.
The UK government is proposing a new trade agreement with the EU but it is highly likely that Theresa may’s red lines, in particular her opposition to the European Court of Justice precedent applying in the UK may make such an agreement impossible.
Some hard-line Brexit supports are keen to see mass deregulation within the UK which will put us at odds with our biggest trading partner. All trustworthy forecasts show that the potential increase in trade from non-EU countries will not match the trade we will lose with the EU. Rather than having one set of regulations to follow, UK firms may have to apply multiple sets of divergent regulations to their production. This is potentially a lengthy, complicated and expensive process.

Most commentators agree that it is in the interest of British Industry to have as little regulatory framework divergence as possible. This is unlikely as EU agencies which coordinate regulatory enforcement and conformity will have to be replicated within the UK. There is real concern about a reduction in economies of scale which will make it harder for UK firms to compete.

If the UK regulatory framework does diverge from that of the EU, British businesses will find it harder to sell into the EU as existing standards require compliance throughout the supply chain. They may also find that they face double or treble the regulatory burden than at present. This could be incredibly costly and seriously harm the competitiveness of the UK.