Sunday, November 28, 2010

SME survival in the global era: The bookstore around the corner

The bookstore around the corner
Written: June 14, 2001

In the movie "You got mail", Kathlin Kelly, owner of a traditional, small and corner bookstore in a neighborhood of New York (Kelly is played by actress Meg Ryan), is one day suddenly faced with a huge "megabooktore", part of the super-chain "Fox Bookstores", which occupies the entire block opposite her store.

"What can I do," asks desperately in an e-mail to an anonymous online friend, who happens to be her own competitor, son of the founder of "Fox Bookstores" (played by Tom Hanks).

The question of the heroine is the classic question of the traditional small firm that is faced with a corporate "Goliath". But globalization makes this question evem more relevant for a growing number of businesses, while more and more companies that considered themselves a "Goliath" in their local market are now "Davids" faced with a regional or global "Goliath". Thus who is a "Fox Bookstores" and who a "Kathleen Kelly" is something relative these days!

In the film, Fox relies on cues from another famous movie, the "Godfather" to advise Kathleen Kelly. "Take them to the mattress" he suggests, without knowing that he is giving advice to a competitor.

"Take the weapons of your opponent and use them against him" is a solution proposed by the character played by Gene Hackman in the movie "Public Enemy".

However, fortunately for entrepreneurs everywhere, aside from Hollywood films, there is a special area in Business Administration, Strategy, that studies the ways a company can compete.

Strategy remains a relatively neglected area for many businesses, not just small.

But more and more companies of all sizes, note that in an ever-freer competitive environment, Strategy is not an elitist process and intangible plan inside only the mind of SME owner, but a regular business process with a specific (and written) product that can be communicated and shared across the enterprise.

Strategy also has its own methodology and expertise, and various "schools" of thought. It can also benefit from external consultants as well as the "strategic thinking" and "training" of managerial staff.

But for many companies, takig advantage of the strategic thinking of the staff remains am unclear perspective. Especially when the executives, including senior ones, are consumed 100% by daily executive chores.

For many small businesses, such as the bookstore of Kathleen Kelly, the introduction of a culture for strategy has as a prerequisite the introduction of a culture of Marketing, Sales, Financial Management, Information, etc. to the employees, but mainly to the entrepreneur who started it all based on a vision, an idea or an "art".

This adjustment not only for workers and "the staff", but mostly of the owner's own business philosophy is a crucial tool for 'survival' in the era of globalization and is essential for the competitiveness of a small economy (eg Portugal, Greece, Ireland, etc). The cultural change is ultimately the first, but absolutely necessary step. From this change come a real human resources strategy, the development of human capital, etc. From companies that do not rely on armies of expendable "soldiers" and headquarters of elite "officers" or "queens" attached to the boss, but a flexible backbone of "horses" and "towers".

It is no coincidence that there is a rising number of executives with experience who actually evaluate their prospective new employer and who are not driven primarily by the prospective employer's size or name but the culture of the boss and the company, often placing a low priority on some traditional symbols of "corporate status" (car, etc.) even earnings.

Wednesday, November 24, 2010

The American and European good times? Over?

For the comformist portion of the US and European population, the "good times" have ended, one way or another. The reason is that world GDP cannot grow enough to accomodate the fair rise in the GDP of the BRICs et al & maintain the US & European level.

Full European Integration can create enough economies of scale to minimise the shock for Europe. Provided European countries have learned their lesson from the 2 world wars caused by ill European dynamics

Sunday, November 21, 2010

"People in glass houses shouldn't throw stones" economics!

It has become 'people in glass houses shouldn't throw stones' global (and EU) economics (& politics & policies)!

Quote from Bernake's speech at ECB obviously does not refer only to China but FRG as well (among others):

"For large, systemically important countries with persistent current account surpluses, the pursuit of export-led growth cannot ultimately succeed if the implications of that strategy for global growth and stability are not taken into account, ...."

IMO this analogically also applies to EU Single Market & Eurozone context as well: the implications of that strategy (by FRG) on stability of systemics with the EU Single Market and the Eurozone.

Of course if one can blame FRG over-exporting for SM & Eurozone imbalances, same can be said for low corporate tax regimes and other practices by other member states of the EU.

And if US authorities can be blamed re US subprime "manufacturing", European & others can also be for allowing over-purchase of those "products"!

Other analogies come to mind as well!e "manufacturing", European & others for allowing over-purchase of those "products"

So, IMO, it has become 'people in glass houses shouldn't throw stones' global (and EU) economics (& politics & policies)!

And the key governing dynamics: Oxymora!

Communism's revenge on capitalism?

Is China (and its buying-spree in the US, EU etc) communism's revenge on capitalism? IMO it does seem so!

Fair global economic competition?

Is the global economic (trade etc) competition between centrally planned and non-centrally planned economies a "fair" one?

The global economic game today: Corporations or countries?

Is the global economic "game" today a competition a) between multinational corporations or b) between countries/national economies?

IMO (b)

Actually not fully (b) but more (b) than (a)!

Friday, November 5, 2010

Econ & Policy Dynamics: Who is the central planner after all?

October US unemployment rate steady at 9.6% but 151,000 new jobs created

France's "realeconomik" (with China)> 14+ bn Euros worth (but worth it?)

"QE2" The US Fed will buy $600bn of US gov bonds, thus pumping liquidity (stimulus) into the US economy (QE1 was worth $1.75tn)

Which is the centrally planned economy after all? China or the US (or France)? It's getting confusing. Why?

a) Geithner's 4% upper limit proposal on trade balances.

b) China's Foreign Minister said his country "planned" to double the value of its annual imports from France to Euros 56bn over the next 5 years!
Reminder: China is WTO member and trade (imports and exports) are SUPPOSED to be (almost) free. Thus how can China PLAN to double its imports from France?

In the meantime, the G20 summit is next week.

Another interesting element is that officials in China and Germany have complained re the US' "QE2"!!!

While in the recent past the US admin has complained re Germany's over-exporting and timid domestic consumption!

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