Friday, September 18, 2009

Singapore is the Best Country to Do Business

(Source: IFC)


According to a document Doing Business 2010 released by IFC, Singapore is the best place to do business followed by New Zealand and Hong Kong. Singapore which is located in Southeast Asia is a small country but an economic lion of the region.

The document assesses the ease of doing business in Singapore by looking at several criteria:



    Find out more about Singapore Business.
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    The Best Country to Start a Business

    Do you think that your country is a very conducive place to invest? Perhaps so, but there are still many other countries considered as more conducive than that of your place. IFC released a document comprises of countries according to its rank on their ease of doing business, from 1 – 183, with first place being the best. A high ranking on the ease of doing business index means the regulatory environment is conducive to the operation of business. This index averages the country's percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic. The rankings are from the Doing Business 2010 report, covering the period June 2008 through May 2009.


    The followings are top 10 countries ranked on their ease of doing business among the rest of world:
    1. Singapore
    2. New Zealand
    3. Hong Kong
    4. USA
    5. United Kingdoms (UK)
    6. Denmark
    7. Ireland
    8. Canada
    9. Australia
    10. Norway
    Your place is not included? Find out more here:




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    Starting a Business in Other Countries

    (Source: International Finance Corporation)

    You may wonder or be interested on how to start a new or simply expand your business overseas. Perhaps you are interested in opening your business branch in Brazil, Singapore, Hong Kong, Mumbay and other parts of the world fastest economy growth. Simply follow advises and procedures provided by IFC. It provides objective measures of business regulations and their enforcement across 183 economies and selected cities at the subnational and regional level.

    You can download the document overview here:
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    Thursday, September 17, 2009

    For first time in two years Americans get wealthier


    WASHINGTON: For the first time in two years, Americans actually got a little wealthier.
    Household wealth grew by $2 trillion, or about 4 percent, this spring, ending the longest stretch of quarterly declines on records dating back to 1952, the Federal Reserve reported Thursday.
    Net worth - the value of assets such as homes, checking accounts and investments minus debts like mortgages and credit cards - came to $53.1 trillion for the second quarter.

    Stock portfolios came back to life this spring after the market hit its lows for the year in March, and home prices have stabilized.But the collective American wallet is still almost 20 percent thinner than it was when net worth peaked two years ago.

    Some analysts say it could take as long as four years for households to recoup trillions in losses and get back to where they were before the downturn struck in December 2007."Households saw $14 trillion of wealth get blown away by the recession, and they recouped $2 trillion of that in the second quarter. That's good news," said Brian Bethune, economist at IHS Global Insight.
    "But they still have another $12 trillion to go to get back to where they were."

    Many analysts expect the economic recovery to be lethargic, limiting further gains in the stock and housing markets.That's why Scott Hoyt, senior director of consumer economics at Moody's Economy.com, thinks household wealth won't rise back to pre-recession levels until 2012 or 2013.

    "It is going to take a while for Americans to regain lost ground and become as comfortable as they were before all this started," Hoyt said.Even if the economy continues to improve, analysts say the erosion of wealth will keep Americans thrifty for years.

    In fact, even as wealth grew, Americans trimmed their spending slightly in the spring.
    The increase in wealth in the second quarter was led by stock portfolios, the Fed report said.
    The value of Americans' stock holdings rose almost 22 percent from the first quarter - the first increase in two years.

    Higher home prices helped, too.

    The value of real-estate holdings rose 1.8 percent, the first gain since the end of 2006.
    Home prices are still about 30 percent below their 2006 peak.Home equity, the market value of a home minus what's still owed on the mortgage, has been dropping in recent years - first because more Americans used their homes to get loans and now because of falling home prices.

    Collectively, U.S. homeowners had just over 43 percent equity in their homes in the second quarter, up only slightly from a record low in the first quarter.Moody's Economy.com estimates nearly a quarter of all U.S. homeowners owe more on their mortgages then their homes are worth.

    This week, Fed Chairman Ben Bernanke said the worst recession since the 1930s is probably over.He warned that the pace of recovery probably won't be brisk enough to generate solid job growth and keep the unemployment rate - now at a 26-year high of 9.7 percent - from rising further.

    Retail sales jumped in August by the most in more than three years.

    But rising unemployment, the reduced wealth and still hard-to-get credit are expected to keep people cautious about spending in the months ahead.

    Households are trimming their debt loads, too. Total household debt - including mortgages, credit cards, autos and other consumer loans - stood at $13.7 trillion in the second quarter, the Fed report said.

    That's down slightly from $13.8 trillion in the first three months of this year. Debt peaked at $13.9 trillion in the spring of last year.

    Americans' savings rate - savings as a percentage of after-tax income - rose to 5 percent in the second quarter, according to Commerce Department figures.

    Analysts believe households are using that money to whittle down their debt. - AP

    (The Star Online)

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    Sprucing up homes for Eid Al-Fitr

    (Special Eid ul Fitr)

    JEDDAH: With Eid Al-Fitr only a couple of days away, people are hectically preparing for the grand event by buying new clothes for the family, especially the children, and refreshing the house either by buying new furniture or refurbishing the old.

    Many citizens prefer to have their rugs and carpets cleaned instead of buying new ones in the final days of Ramadan. The carpet washing businesses are very busy during the last days of Ramadan. People expect the prices of cleaning carpets to rise with demand but, Ali, a Somali worker in a carpet washing business, said there was no change in the price, regardless of the high demand.

    “The price of washing one meter is SR5 as it was before Ramadan. Though we work around the clock seven days a week, we have not increased our prices,” he told Arab News.

    Lebanese customer Abu Nadir contradicted Ali and said the price of cleaning one meter of rugs had gone up between SR10 and SR15.“You either accept the high price or they will tell you they cannot clean your carpet because of a shortage of time,” he said.

    The upholsterers told Arab News that since the middle of Ramadan they have stopped accepting requests for redoing furniture because they are under extreme pressure.

    Ibrahim Qaid, a professional upholsterer, said he and his colleagues started upholstering furniture a month before Ramadan so as to be ready for Eid. This is not only the season for tailors but for upholsterers as well,” he said.Qaid said that to upholster a 4x4-meter salon comprising chairs and cushions would begin at SR1,500 and might go as high as SR7,000.

    “This is a season for factories to make special items for upholstering and to compensate for the rest of the year,” one factory owner said. There are more than seven such factories in Saudi Arabia competing in a SR4-billion market. High-quality upholstery is also imported from Morocco and Turkey.
    The paint shops are also doing good business this time of the year with more people keen to paint their homes or redecorate them. Maintenance work is also thriving, with citizens keen to repair their electrical connections and plumbing. “The ten days before Eid are a good season for all. We wait for a whole year to make our money,” an owner of a carpet-washing factory said.

    Muhammad Humaidan | Arab News Read More......

    Sunday, September 13, 2009

    Strategies for Growth

    (Source: Kourdi, J (2003). Business Strategy. UK: The Economist. Page:111-112)


    One of the most fundamental decisions for any organisation is to choose the most effective strategy for growth. It is tempting to believe that doing in the future what has been done in the past will lead to continued growth – “if it ain’t broke, don’t fix it” – but the past is no guarantee for the future.


    Continuing down the same path may lead to continuing success or it may lead off a cliff. If managers are to make the right decisions, therefore, a strategic direction and set of guiding priorities are needed together with an assessment of the most effective strategy for growth.

    The different routes to growth fall broadly into five options:
    • Organic growth
    • Mergers and acquisitions
    • Integration
    • Diversification
    • Specialisation

    The characteristics of each are outlined below, but they are not mutually exclusive and can overlap. They are, however, limited by the resources available and all require a clear focus on objectives and a sustained level of commitment.

    Organic growth

    This is when a business grows from its own resources. Organic growth can happen because the market is growing or because a firm is doing increasingly better than its competitors or is going into new markets.

    Exploiting a product advantage can sustain organic growth; examples are a law firm with a star partner or a software firm with a unique programme. But there is only so much growth that one person or one product can generate and people eventually retire and products mature, so
    organic growth normally requires launching new products or product extensions, entering new markets or establishing wider distribution networks and sales agency agreements, or licensing or franchising.

    Organic growth depends on a number of things outlined below.

    Core competences and capabilities

    Organic growth depends largely on what an organisation is good at and capable of. It is helped by identifying and exploiting synergies across different parts of an organisation’s activities; by structuring the organisation to take advantage of “priority” opportunities; and by creating a culture that is able to spot opportunities when they arise and make the most of them.

    Planning

    Growth can be achieved quickly and unexpectedly, but for it to be sustained a co-ordinated plan of action is needed among business functions such as marketing, production, finance and human resources. Organic growth gives an organisation total control over the process of development
    and relies on the experience and expertise within the firm.

    Time

    Growing organically can be a slow process, as with acorns that become mighty oak trees. It requires patience, application and strong, focused leadership to keep the strategy on course and maintain support for it.

    Cash

    Cash is essential for organic growth, preferably cash generated from within the business being used to develop other parts, or cash provided as a loan or in return for an equity stake in the business. Cash is needed to pay for expansion and new developments, either by taking on new
    staff, buying in new resources (such as it systems), developing and producing new products or undertaking marketing initiatives.

    Mergers and acquisitions

    The fastest route to growth is through an acquisition or merger. But more than half fail to add value and they are notoriously difficult to pull off successfully.

    (Source: Kourdi, J (2003). Business Strategy. UK: The Economist. Page:111-112)


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    Four Types of Strategy

    By Raymond Miles and Charles Snow
    (Source:http://www.12manage.com/)




    What are the Four Strategic Types? Description


    In their 1978 book: "Organization Strategy, Structure, and Process" Raymond Miles and Charles Snow argue that different company strategies arise from the way companies decide to address three fundamental problems:


    • Entrepreneurial problem. How a company should manage its market share.
    • Engineering problem. How a company should implement its solution to the entrepreneurial problem.
    • Administrative problem. How a company should structure itself to manage the implementation of the solutions to the first two problems.
    Based on that, they classify companies into Four Strategic Types:


    1. Defender. A mature type of company in a mature industry that seeks to protect its market position through efficient production, strong control mechanisms, continuity, and reliability.
    • Entrepreneurial problem: how to maintain a stable share of the market? Hence they function best in stable environments, they strive for cost leadership, they specialize in particular areas and they use established and standardized technical processes to maintain low costs.
    • Administrative problem: how to ensure efficiency? Centralization, Vertical Integration, formal procedures, and discrete functions.
    • Environment: because their environments change slowly, Defenders can rely on long-term planning.
    2. Prospector. A type of company that seeks to exploit new opportunities, to develop new products and/or services, and to create new markets. Typically its core skills lie in marketing and R&D and it will tend to have a broad range of technologies and product types.
    • Entrepreneurial problem: how to locate and exploit new product and market opportunities? Prospectors have broad product or service lines and often promote creativity over efficiency. They prioritize new product and service development and innovation to meet new and changing customer needs and demands and to create new demands.
    • Administrative problem: how to coordinate diverse business activities and promote innovation? Decentralization, employing generalists (not specialists), have few levels of management, encourage collaboration among different departments and units.
    • Environment: Prospectors thrive in changing business environments that have an element of unpredictability, and succeed by constantly examining the market in a search for new opportunities.
    3. Analyser. A type of company that avoids excessive risks but excels in the delivery of new products and/or services. Typically it concentrates on a limited range of products and technologies and seeks to outperform other companies on the basis of quality enhancement.
    • Entrepreneurial problem: how to maintain their shares in existing markets and how to find and exploit new markets and product opportunities? Must maintain the efficiency of established products or services, while remaining flexible enough to pursue new business activities. Seek technical efficiency to maintain low costs, but also emphasize new product and service development to remain competitive when the market changes.
    • Administrative problem: how to manage both of these aspects? Cultivate collaboration among different departments and units. Analyzer organizations are characterized by balance—a balance between defender and prospector organizations.
    4. Reactor. A type of company which have little control over their external environment, lacking the ability to adapt to external competition and lacking in effective internal control mechanisms. They do not have a systematic strategy, design, or structure.




    No single strategic orientation is the best. Miles and Snow argue that what determines the success of a company ultimately is not a particular strategic orientation, but simply establishing and maintaining a systematic strategy that takes into account a company's environment, technology, and structure.


    (Source:http://www.12manage.com/)




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    Maslow and His Theory of Hierarchy of Needs

    (Source: http://www.12manage.com/)

    Abraham Maslow is born April 1, 1908 in Brooklyn, New York. He is the first of seven children born to his parents, who themselves are poorly educated Jewish immigrants from Russia. His parents hope for the best for their children in the new world and push him hard for academic success. Not surprisingly, he becomes very lonely as a boy, and finds his refuge in books.

    To satisfy his parents, he first studies law at the City College of New York (CCNY). He marries Bertha Goodman, his first grand niece, against his parents wishes. Abe and Bertha go on to have two daughters.

    Abraham Maslow and Bertha move to Wisconsin so that he can attend the University of Wisconsin. Here, he becomes interested in psychology, and his school work begins to improve dramatically. There he is working with Harry Harlow. Harlow is famous for his experiments with baby rhesus monkeys and attachment behavior.

    Abraham Maslow receives his BA in 1930, his MA in 1931, and his PhD in 1934, all in psychology, all from the University of Wisconsin. A year after graduation, he moves back to New York to work with E. L. Thorndike at Columbia, where Maslow becomes interested in research on human sexuality.

    He begins teaching full time at Brooklyn College. During this period of his life, he comes into contact with the many European intellectuals that are immigrating towards the US and towards Brooklyn in particular. People such as Adler, Fromm, Horney, as well as several Gestalt psychologists and Freudian psychologists.

    In 1951, Abraham Maslow serves as the chairman of the psychology department at Brandeis for 10 years, where he meets Kurt Goldstein. Goldstein introduces him to the idea of self-actualization and Maslow begins his own theoretical work. It is also here that he begins his crusade for a humanistic psychology, which was ultimately much more important to him than his own theorizing. He spends the last years of his life in semi-retirement in California. On June 8 1970, he dies of a heart attack after years of ill health.


    The Hierarchy of Needs model of Abraham Maslow


    Hierarchy of NeedsHierarchy of Needs - Physiological needs

    These are the very basic needs such as air, water, food, sleep, sex, etc. When these are not satisfied we may feel sickness, irritation, pain, discomfort, etc. These feelings motivate us to alleviate them as soon as possible to establish homeostasis. Once they are alleviated, we may think about other things.

    Hierarchy of Needs - Safety needs

    These are dealing with achieving of stability and of consistency in a chaotic world. These needs are mostly psychological in nature. We need the safety of a home and family. However, if a family is dysfunctional caused by for example an abusive husband, the wife cannot move to the next level. Because she is constantly concerned for her safety. Love and belongingness have to wait until she is no longer in fear. Many in our society cry out for law and order because they do not feel safe enough to go for a walk in their neighborhood.


    Hierarchy of Needs - Love and belongingness needs

    These are next on the ladder. Humans have a desire to belong to groups: clubs, work groups, religious groups, family, gangs, etc. We want to feel loved (non-sexual) by others, to be accepted by others. Performing artists are appreciating applause. We need to be needed. Compare: Hawthorne Effect


    Hierarchy of Needs - Self-Esteem needs


    There are two types of esteem needs. The first is the self-esteem which is the result from competence or mastery of a task. Second, there's the attention and recognition that comes from others. This is similar to the belongingness level, however, wanting admiration is related to the need for power.


    Hierarchy of Needs - The need for self-actualization

    This is "the desire to become more and more what one is, to become everything that one is capable of becoming." People who have everything can maximize their potential. They can seek knowledge, peace, esthetic experiences, self-fulfillment, oneness with God, etc.

    Maslow's Hierarchy of Needs model was developed between 1943-1954, and first widely published in Motivation and Personality in 1954. At this time the Hierarchy of Needs model comprised five needs. Maslow's most popular book is Toward a Psychology of Being (1968), in which more layers were added.

    (Source: http://www.12manage.com/) Read More......

    Turnaround Management

    (Source:http://www.12manage.com/)


    What is Turnaround Management?


    Turnaround Management involves the formulation and implementation of a strategic plan and a set of actions for corporate renewal and restructuring, typically during times of severe corporate financial distress. Often with the help of outside turnaround consultants or strategy consultants, a Root Cause Analysis is made and a turnaround plan is devised and executed, assuming that the firm still offers the potential to return to financial solvency, profitability and strategic viability.

    Root Causes of Strategic distress

    There are just a limited number of root causes for corporate strategic distress:

    1. "Acts of God" - Certain risks may occur and cause irreparable damage (despite proper anticipation and thorough preparation).
    2. Poor Vision / Understanding of the Market
    3. Poor Strategy
    4. Poor Business Model / Execution

    More Immediate Causes of Strategic distress

    Typically, when these root causes are not dealt with properly, they will cause a range of problems, which can then trigger a corporate crisis:

    • Lack of expertise, experience or education, weak management
    • Market circumstances, weak economy
    • Business economical reasons, earnings crisis
    • Bankruptcy of holding company
    • Board level arguments
    • Fraud, insufficient financial controls
    • Overly optimistic sales projections
    • Financing problems, liquidity crisis, excessive debt burden,undercapitalization
    • Operating cost levels too high
    • Very strong, successful competitor
    • Overinvestment
    • Insufficient resources, underinvestment
    Often these triggers are interrelated, and several causes are involved. Slywotzky and Drzik have categorized these triggers in 7 Classes of Strategic Risk.

    Steps in a Turnaround Process

    The first step in a turnaround process is often to change the top management or leadership of the business and to appoint an experienced turnaround manager. Often strong, Commanding Leadership or even Charismatic Leadership is exerted. The turnaround process typically consists out of the following key steps (in approximate chronological order):

    1. Assess the situation and future business viability
    2. Implement emergency steps ("stop the bleeding")
    3. Develop strategic survival plan
    4. Implement the plan, restructuring the business. Survive the crisis
    5. Return to normal operations, profitability and growth
    6. Prepare for departure of turnaround management
    (Source:http://www.12manage.com/) Read More......

    Business Process Reengineering

    (Source:http://www.12manage.com/)


    The Business Process Reengineering method (BPR) is described by Hammer and Champy as 'the fundamental reconsideration and the radical redesign of organizational processes, in order to achieve drastic improvement of current performance in cost, services and speed'.



    Rather than organizing a firm into functional specialties (like production, accounting, marketing, etc.) and to look at the tasks that each function performs, Hammer and Champy recommend that we should look at complete processes. From materials acquisition, towards production, towards marketing and distribution. One should rebuild the firm into a series of processes.


    Value creation for the customer is the leading factor for BPR and information technology often plays an important enabling role. Compare: Relationship Marketing


    Michael Hammer and James Champy


    The main proponents of re-engineering were Michael Hammer and James Champy. In a series of books including Reengineering the Corporation, Reengineering Management, and The Agenda, they argue that far too much time is wasted, passing on tasks from one department to another. They claim that it is far more efficient to appoint a team who perform all the tasks in the process.




    A five step approach to Business Process Reengineering


    Davenport (1992) prescribes a five-step approach to the Business Process Reengineering model:
    1. Develop the business vision and process objectives: The BPR method is driven by a business vision which implies specific business objectives such as cost reduction, time reduction, output quality improvement.
    2. Identify the business processes to be redesigned: most firms use the 'high-impact' approach which focuses on the most important processes or those that conflict most with the business vision. A lesser number of firms use the 'exhaustive approach' that attempts to identify all the processes within an organization and then prioritize them in order of redesign urgency.
    3. Understand and measure the existing processes: to avoid the repeating of old mistakes and to provide a baseline for future improvements. Compare: Scientific Management
    4. Identify IT levers: awareness of IT capabilities can and should influence BPR.
    5. Design and build a prototype of the new process: the actual design should not be viewed as the end of the BPR process. Rather, it should be viewed as a prototype, with successive iterations. The metaphor of prototype aligns the Business Process Reengineering approach with quick delivery of results, and the involvement and satisfaction of customers.

    As an additional 6th step of the BPR method, sometimes you find: to adapt the organizational structure, and the governance model, towards the newly designed primary process.




    Generic Circumstances that influence whether BPR is advisable


    Although it is difficult to give generic advice about this, some factors that can be considered are:

    • Does the competition clearly outperform the company? Compare: Turnaround Management
    • Are there many conflicts in the organization?
    • Is there an extremely high frequency of meetings?
    • Excessive use of non-structured communication? (memos, emails, etc)
    • Is it possible to consider a more continuous approach of gradual, incremental improvements? 


    Critics of the BPR approach


    Reengineering has earned a bad reputation because such projects have often resulted in massive layoffs. In spite of the hype that surrounded the introduction of Business Process Reengineering, partially due to the fact that the authors of Reengineering the Corporation reportedly bought huge numbers of copies to reach the top of the bestseller lists, the method has not entirely lived up to its expectations. The main reasons seem to be that:

    • BPR assumes that the factor that limits organization's performance is the ineffectiveness of its processes. This may or may not always be true. Also BPR offers no means to validate this assumption.
    • BPR assumes the need to start the process of performance improvement with a "clean slate", i.e. totally disregard the status quo.
    • BPR does not provide an effective way to focus the improvement efforts on the organization's constraints. (As done by Goldratt in the Theory of Constraints).
    • Sometimes, or maybe quite often, a gradual and incremental change (such as Kaizen) may be a better approach.
    • BPR is culturally biased towards the US way of thinking.


    BPR compared to Kaizen


    When Kaizen is compared with the BPR method is it clear the Kaizen philosophy is more people-oriented, more easy to implement, but requires long-term discipline and provides only a small pace of change. The Business Process Reengineering approach on the other hand is harder, technology-oriented, it enables radical change but it requires considerable change management skills.


    (Source:http://www.12manage.com/)


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