Tuesday 17 July 2007

In business, ignorance is not bliss

I can't over-emphasize the importance of aligning your business strategy and re-focussing to incorporate a seamless integration with emerging markets. I have been reading and watching with interest the different discussions on the pros and cons of investing or doing business with the BRICS countries and other emerging markets but I was so excited when I read this report from BT Global Services - global service provider that has refocussed itself to play in the global market. They commissioned a research to find out what the CEOs of large organizations know about BRICS and other emerging markets, you'll be shocked at the results!

Read the full report at http://www.btglobalservices.com/business/global/en/business/collaboration/BRICS.html

If you think the cost of acquiring knowledge to understand and navigate these markets successfully is too high, if you consider the cost of the risks and you say its not worth it, then calculate what the cost of ignorance and in-action will be in the next 20 years…that’s if you're still in business!

Thursday 12 July 2007

Navigating the Risks in Emerging Markets

'It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change' (Charles Darwin)

Even though my writings on this blog is focussed mainly on the economic growth of BRICS (Brazil, Russia, India, China & South Africa) and how to integrate your business and investment portfolio successfully into these emerging markets, it is worthy of note to also let you know that 'BRICS' is not the only place to invest or do business but many countries in Africa and Asia are also developing their markets aggressively. However, it is only savvy investors and forward thinking entrepreneurs that will be able to navigate the risks in these markets and come tops.

You may have heard of the tremendous opportunities in the Nigerian Capital markets. Personally I have achieve a 100% ROI in the past 15 months and that is without trading or monitoring my portfolios. Since this discovery I have been studying and playing in this market successfully and so far so good. I'll leave you with the following article on the current analysis of the Nigerian Capital Market. Its the first part on how to successfully navigate the risks in emerging markets.

Equity Market Activity July 05 2007 (By CSL Stockbrokers Limited)
The All-Share Index rose by 2.80% (month-on-month) to close the month of June at 51,330.46 while the market capitalization of the 205 listed equities closed higher at N7.817 trillion up by 5.89% for the month.

On a year-to-date basis, the NSE ASI has appreciated by 54.66% as at June 29th, 2007. A turnover of 12.78 billion shares worth N185.92 billion was traded during the month of June. In the month of June, there were 80 advancers and 53 decliners. The market breadth index for the month of June is 0.115 which is a decline of 65% relative to the market breadth index for May.

The stock market definitely cooled in the month of June. We sincerely appeal to investors to invest logically and not emotionally.

The market is still plagued by unexplained upward movements by firms without any recent news to warrant the surge in price. Some banks have not recently any results post-consolidation and they are rising aggressively.

We are highly concerned about the alleged price manipulation currently pervading the market; firms are buying their own shares through brokerage firms to boost their share prices either to keep up with a rival firm, to avoid disappointing investors who bought into their recent public offers, to offer their shares at a designated price for a future public offer and to propel the non-savvy investor to “chase the market.”

People have lost belief in fundamentals and are basically buying any stock in sight. Caution should be the watchword. The shallowness of our market is allowing this to happen. We need to have short selling in Nigeria and market makers to give the market a balance and reduce manipulative activities. We will delve more into this in subsequent editions.

Majority of stocks are still overvalued and will correct themselves without warning at any time. The following stocks have value in the midst of the market craze: Vitafoam, C&I Leasing, NBC, GT Bank, WAPCO, Flour Mills, Custodian & Allied Insurance, Nampak and WAPIC to name a few.

Public Offers, Listings, Private Equity, Private Placements & Bond Issues
Diamond Bank, Access Bank, Fidelity Bank, GT Bank, Obajana Cement, Dangote Flour, NAHCO, CCNN, Capital Hotel, IGI, Nigeria Reinsurance, Nitel, Ecobank, ETI, Kaduna Refinery, Port Harcourt Refinery, Japaul Oil & Maritime Services, Guaranty Trust Assurance, Morison Industries, Skye Bank, FCMB, Continental Reinsurance, Wema Bank, Spring Bank, Design Union Developing Limited (a key player in the real estate sector) and Costain West Africa Plc are expected to come to the market through initial public offers or public offers.

So what is your view on developments in the stock market? Download the full Report

Wednesday 11 July 2007


I came across this article by T.D Clark and I feel I should share it with you.
Innovation & Emerging Markets: Perfect Together?
Everybody’s talking about innovation these days, but is anyone really doing it and doing it well? Are execs really using innovation to meet revenue goals and drive competitive advantage? A new study from Deloitte says “not really.”

Gary Coleman, global managing director of the Manufacturing Industry Group for management consulting firm Deloitte, says less than 50 percent of top-tier executives of developed-world companies that do business in emerging markets aren’t meeting their revenue goals.

Deloitte offers results of a new 23-page study, “Innovation in Emerging Markets,” in which the management consulting firm surveyed 446 “top executives” from manufacturing companies in 31 countries in order to profile business practices of U.S. companies in developing countries. (Although Deloitte won't disclose the list of corporations represented, 36 percent of the executives work for companies with annual revenues of $1 billion or more, 34 percent work for companies with annual revenues between $100 million and $1 billion, and 30% for companies with revenues under $100 million.)

Perhaps the most surprising result from the study finds that forming a wholly owned new subsidiary is a very popular strategy among global companies when establishing a presence in emerging markets. Also, consider the following:

Sixty-five percent of executives at companies that deployed this strategy had rated their ability to meet their operational goals as "extremely or very successful." Although the report doesn't provide a detailed case study, it concludes that a key factor in deciding when to deploy a greenfield strategy is whether a company is relying on proprietary technology or process true innovations as the main element of a value proposition in an emerging nation. Why? Because intellectual-property protection is crucial.

Deloitte’s Coleman says intellectual property (IP) really is the most obvious risk when focusing on innovation, especially in emerging markets simply because lack of IP laws means that it is easier for other companies to copy new products.

“We'll soon be looking at how companies like China's Haier, which now has the No. 1 market position for compact refrigerators in the U.S., built their brands globally,” Coleman says. “In terms of innovation in emerging markets, that’s the story of tomorrow.”

Not so fast, Deloitte. There are plenty of other “stories of tomorrow” out there.
Take Bristol-Myers Squibb, for instance. Like dozens of other firms, they are expanding research and development efforts in India. But what is slightly different about this expansion strategy is that it’s aimed squarely at attracting top talent to drive innovation efforts. Consider this:

Bristol-Myers Squibb will significantly increase the scope of its existing relationship with Biocon Limited to further develop integrated capabilities in India in medicinal chemistry, biology, drug metabolism, and pharmaceutical development. Under the terms of the agreement Biocon, through its subsidiary Syngene International, will work with Bristol-Myers Squibb to establish a research facility in Bangalore that could ultimately house more than 400 scientists to help advance Bristol-Myers Squibb’s discovery and early drug development.

“This broad expansion of R&D in India will allow us to grow competitively while maintaining our industry-leading position in productivity and innovation,” said Elliott Sigal, M.D., Ph.D., executive vice president, Bristol-Myers Squibb, and chief scientific officer, president, Pharmaceutical Research Institute. “Working with Biocon and Accenture, two well-respected and valued partners, Bristol-Myers Squibb will continue to access world-class talent to deliver and grow our robust product pipeline.”

And leading consumer goods company Land O’ Lakes is also hip to the notion of using product innovation to butter up profits. But rather than focus on attracting top talent, as in the aforementioned case, Land O’ Lakes will be investing in state-of-the-art Product Lifecycle Management (PLM) software to churn out innovation results.

The solution will be used initially within the company’s Dairy Foods business unit, where it will support cross-functional teams responsible for developing and commercializing new products. Plans include subsequent enterprise-wide deployment. Here’s more insight into their strategy:

Land O’Lakes has stated that one of its principal strategic goals is to incorporate best practices into all aspects of its operations. This focus is part of an overarching plan for driving additional revenue and profit growth from core businesses. Actions include an initiative aimed at enhancing the company’s processes for product innovation.

As such, Land O’ Lakes’ PLM system will be used to automate the product development process and assist the company in setting project priorities. Its capabilities will help to ensure that the right products get to market on time.

Of course, many leading manufacturers have deployed PLM to address new product development and introduction (NPDI), while others are now exploring its benefits. And even though studies from IBM and even Deloitte rank innovation and new product launch as a top strategic initiative, AMR Research surveys have shown that two-thirds of executives feel that this process is not under strategic and financial control. Perhaps resolving this ownership will be a top priority for manufacturers this year.

Are you on time with your innovation strategy? Do innovation and emerging markets go hand in hand?

Monday 9 July 2007

So much has been said on the emergence of BRICS (this is an acronym for Brazil, Russia, India, China and South Africa) and the continuos emphasis on shifting our consciousness to know that if we refuse to integrate with these emerging economies, then the future can be bloom and gloomy for most global companies.

To those who desire to turn their dreams to gold, to those who are seeking a worldwide market for their products / services, to those who are seeking high growth investment vehicles or instruments, then look to BRICS. It is no longer news that very large capitalised US companies have not been perfoming consistently in the past 10 years. Some gurus are optimistic of a come back...but I just think most of them 'value traps' (tremendous business valuation but major economic and business fundamentals is shifting).

In the next few weeks I will be giving you some insights into these countries / economies and how you can position yourself and your business to integrate seamlessly with these tremendously huge economies and secure a future for your company and its stakeholders.

Read Investing in BRICS Thesis - A Brief Overview to give you a foundation of what I will be sharing mostly on this blog.