Cameron’s EU gamble and 4 other rolls of the dice that went disastrously wrong
08 July 2016 -
When gambles pay off the rewards can be immense, but things can so easily go the wrong way with catastrophic consequences
British prime minister David Cameron’s decision to call an EU referendum was a calculated gamble to unify the all quarters of the Conservative Party, and reinforce his leadership credentials.
It didn’t work.
With Britain set to leave the European Union after 40 years, the fallout of the Brexit vote continues to reverberate across the UK political system, and the world, with a litany of high-profile resignations, protests and petitions left in its wake.
First Cameron put an abrupt end to his six-year stay as the UK’s prime minister, then lead Leave campaigner and bookies favourite as new leader Boris Johnson stepped away from the spotlight, and even UKIP leader Nigel Farage resigned.
All the while, leader of the opposition Labour Party Jeremy Corbyn continues to fight off a coup from politicians in his own party.
Here are four other examples of when gambles went wrong:
Roy Hodgson’s Euros Nightmare
The former Liverpool and Fulham manager was forced to resign as England football manager after his team lost to Iceland in the knock-out stages of Euro 2016, arguably the most embarrassing football upset in half a century.
The shock result concluded a series of poor performances from Hodgson’s team during the tournament whereby they managed just one win when playing Russia, Wales, Slovakia and Iceland.
This is despite the manager taking a number of gambles including taking unfit players Jack Wilshere and Jordan Henderson to the tournament instead of Premier League winner Danny Drinkwater, picking just one winger in his squad, and making six changes against Slovakia and allowing Wales to top the group stage and enter a less formidable side of the knock-out draw as they carved a way to semi finals in France.
Microsoft’s Failed Ownership of Nokia
Having been slow to recognise the rising importance of mobile devices and smartphones since the late 2000s, Microsoft made the bold step to buy Nokia's mobile phone business for £4.6bn ($7.2bn) in late 2013, as a platform to launch its Windows Phone Operating System.
The plans have not been a success, however, with Nokia continuing to decline as a mobile hardware provider, while Microsoft have reportedly had to consider shopping the Windows Operating System to other phone makers.
Recently, Microsoft has announced that it is cutting 7,800 jobs largely from its phone business and writing off $7.6 billion (around £4.95 billion) related to its acquisition of Nokia.
The deal, led, by former Microsoft chief Steve Ballmer was a gamble from the outset with Nokia falling to compete with Samsung and Apple, and many of the 25,000 Nokia employees have seen their jobs disappear with the project seemingly written off by current chief executive Satya Nadella as a disaster.
Bombardier’s C Series Gamble
A family of narrow-body, twin-engine, medium-range jet airliners by Canadian manufacturer Bombardier Aerospace, the C Series received rave reviews from industry experts upon its creation and was expected to mark a new standard in aircraft design.
But having invested billions of pounds in the C Series, Bombardier has struggled to find buyers. While competitors have racked up hundreds of billions of dollars in new orders for their planes, the C Series has mainly relied on existing customers including Swiss International Air Lines AG.
In January this year, United Continental Holdings Inc. reportedly ordered 40 Boeing 737-700 aircraft instead of the C Series, due to a combination of the firm’s previous experience of using the 737 and a major discount offered by the rival.
Between its July 2008 launch and December last year, Bombardier shares lost more than 80% in value and accrued more than US$9 billion (£6.9 billion) of debt. The financial situation led the Quebec government to give Bombardier a total of US$2.5 billion (£1.9 billion) to help their cash woes.
Although the C Series project is still alive, it's two-and-a-half year delay to reach the market and US$2 billion-plus budget overspend has led to a huge turnover of within the company’s C-Suite, with all of the executives who oversaw the project leaving.
Failed Cross-Continental Merger
The merger of Germany's most profitable car company, Daimler-Benz and one of America's Big Three car producers Chrysler in 1998 was supposed to be the deal which elevated both brands as the biggest players in the global automotive industry.
But while both firms were well suited in brand reputation and resources, they were reportedly very different in their cultures. While the German engineers were process-led, experts reported, Chrysler’s employees were more risk-taking and free-wheeling, requiring a tricky merger of the two respective headquarters in Stuttgart and Auburn Hills, Michigan.
Not long after paying $37 billion (£28.6 billion) for the U.S. automaker, Daimler found itself weighed down by uncompetitive labour costs, such as the liability for future health care costs for Chrysler's unionized employees and retirees, estimated to be as high as $18 billion (£13.9 billion).
Furthermore, Daimler began to lose out sales to nimbler Japanese rivals, including Toyota Motors, who recorded higher US sales for the first time in 2006.
With high gas prices and its reliability on the falling sales of light truck models taking its toll, Chrylser was a loss-making company and plans were afoot to close plants and cut staff.
In 2007, DaimlerChrysler sold an 80% stake in the Chrysler brand to Cerberus Capital Management, a private equity investment firm for $7.4 billion (£5.7 billion).
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