As a postscript to our posting on this company on 10th September (read it here) we read this week that Carphone Warehouse is expected to enter the FTSE 100 shortly. Charles Dunstone started the company in 1989 with just £6,000 of savings. Not many FTSE 100 companies have come from that little that fast!
We believe that this success is an inevitable outcome for a company that has achieved a high Competitive Strength condition, Excellence or above. How can we justify this in the case of Carphone Warehouse?
Well like any other really excellent company they are not immune from making mistakes. Carphone made a big one when it completely underestimated the level of the response it would get to its TalkTalk broadband package. Service levels were catastrophic and the potential damage to their brand was real and significant. Carphone faced up to their mistake, made the investment to rectify it and slowly worked its way out of the corner it had got itself in.
That’s the difference Competitive Strength makes. How do we know? Well do you really think Carphone Warehouse would be knocking on the door of the FTSE 100 less than two years after a disaster like that if it doesn’t?
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