globalEDGE Blog Archive July 2009

The World Trade Organization recently released their "World Trade Report 2009." It is very interesting to see what is actually happening to world trade right now. The situation appears to be darkening. After forecasting a 9 percent decline in world merchandise trade just last month, they now foresee a 10 percent decline. It seems as unemployment rises, global demand will be even less.

MSNBC gives answers to questions small business entrepreneurs have - but we at globalEDGE like to ponder how this advice would be different if they were overseas. The video presents information that can be helpful to many entrepreneurs and gives advice that can easily be implemented in everyday management activities.

Do you have any thoughts on how the business climate is different internationally?

Beer, actually.  To celebrate, they produced a commercial for it, running almost three minutes. Here's a video from Reuters with more details:

The U.S. commercial service specializes in helping U.S. businesses expand internationally. Recently, they posted three interviews on their website which focus on business opportunities in India. If you are even considering India as a potential market, you should take a minute to learn from the experiences of people in these interviews.

India's younger population is growing quickly, and with that comes a greater demand for energy. Despite an ambitious rural energy program, 400 million people still live without access to elecricity. Approximately one-third of the world's urban residents live in slums. In the city of Mumbai, about half of it's residents (roughly 8 million people) live in these slums. Access to electricity can raise the quality of life dramatically, where now it is hard to do simple tasks such as reading and cooking. Many families must choose between putting food on the table or keeping the electricity running. The desperation resulting from this situation has led to a major problem of people stealing the energy.

Airline companies across the world are doing everything possible to cut costs and are taking other measures to ensure revenue increases. In Europe, German airline company Lufthansa is planning on expanding by overtaking Austrian Airlines. EC officials said that Lufthansa’s chances of attaining the regulatory approval it needs were fading because the company is failing to answer concerns that the merger might reduce choice and hike fares on some routes. The main concern with the merger is that the new company has the potential to become too powerful on certain flights. This is because Lufthansa is Germany’s largest airline company and Austrian dominates routes out of Austria.

Want to know more about how the top Japanese companies do business?

The Fall 2009 class at Sophia University in Tokyo, Japan has written and narrated a series of podcasts which explain many aspects of Japanese firm management, in addition to presenting the students' perspectives on the issues.

I thought that hotels were suffering drops below 50% and 60% occupancy in many high touristy areas? What's up with building these highfalutin hotels all over the place?

Well, believe it or not, there are some locations on the globe that aren't suffering such a setback. Places such as Egypt, Dubai, and Panama are really looking at a bright future still. Tourism even increased in Egypt by 15.5 percent from 2007 to 2008. This is where MGM Mirage is teaming with Egypt's New Giza for Real Estate Development to build a brand new MGM Grand New Giza, just outside of Cairo, Egypt. Imagine waking up looking out at those amazing pyramids. Multiple companies around the globe are looking to follow suit.

Some of the largest and most popular beverage companies in the world have been making some changes in the hope that they will help bring sales up.

PepsiCo announced its plans to invest $1 billion more in Russia over the next three years. This decision is supposed to increase Pepsi's influence in the food and beverage market in Russia and is also part of a plan to expand in emerging markets. Furthermore, the investment in Russia is funding various programs to expand manufacturing and distribution capacity such as opening new beverage facilities and snacks manufacturing plants.

The Economist Intelligence Unit(EIU) has created a corporate barometer to survey businesspeople's confidence levels. The Corporate Expectations Barometer takes about five minutes to complete, and can be helpful in gauging the expectations of fellow businesspeople in one's own industry as well as other industries. Additionally, the EIU will prepare a customized briefing for those who complete the survey which will allow them to track their results over time and receive monthly updates, as well as being able to compare results with the EIU's own findings.

This could be a very helpful tool for the small business owner, as it helps connect different business peers and can give them an idea of where their industry could be headed. Check it out here!

The international consulting firm Mercer recently released its list of the World’s Most Expensive Cities to Live. The implications of the study on global business are substantial. With all of the outsourcing that has taken place, companies will be much more guarded in where they move their businesses to. Many times, companies provide compensation packages to employees living abroad, and it will cost them considerably more to help support employees abroad in cities which are expensive to live in.

Although there may be a demand for their business, companies will likely choose cities which are cheaper for their employees, which means they spend less on employee compensation and can gain more profits. What implications does the list have for you?
 

The Top 5:

"If you can't measure it, it doesn't exist."

So says the old adage about the importance of quantifying results. If we're applying it to environmentally friendly products, then our progress is almost non-existent. Customers at the store don't have the time or information to calculate the environmental impacts of various products, and so they are forced to balance their taste for saving mother earth with their suspicion of empty greenwashing.

The rising stock of Twitter and Facebook as valuable business assets is a surprise to nobody, but just how big of a role they play may be overlooked. Australia, which is currently going through a tourism slump due to the global economic downturn and the swine flu epidemic, is getting a bit of help from social networking giants Twitter and Facebook.

The managing director of Tourism Australia, Geoff Buckley, asserts that Twitter and Facebook are helping to pull the Australian tourism industry through the recession. “Tourism Australia’s activities on Twitter and Facebook are connecting people around the world who have visited Australia and getting them to share their experiences with a community of travelers who are equally passionate about our country.”

Now, more than ever, it is important for the business world to employ people who are willing to continuously grow and expand their knowledge. Technology is changing constantly and what is needed is people who can adapt to different situations rather than those who do things “by the book”. Furthermore, it is important that people learn to not be afraid of failure. A big mistake can cause someone to lose their job, but risk-taking can also lead to innovation and career advancements.

The recent acquisition of the automobile retailer Saturn by Penske has reawakened an old debate in business: to co-brand or not to co-brand? Co-branding is the collaboration of two companies in marketing their product, aimed to create synergy and draw interest. If Pillsbury Brownies are enhanced by Nestle Chocolate, then brand recognition and desirability is increased for both parties. Too often, though, co-branding has been relegated to large businesses, because small businesses stand nothing to gain by co-branding because they cannot reach as many people with their products. However, co-branding can be effective for small businesses as well.

France is one of the leading countries with employees taking long vacations and working short work days. For the French, Sunday has always been a day to relax, visit family, or go to church. However, the government is trying to pass a bill making Sunday a working day for stores.

Some believe that if stores in the big cities and in tourist areas are open on Sundays it will be good for business and add a boost to the economy. This seems quite logical, since it will be more convinient for tourists and will also increase the income of those working. However, many disagree with the idea. They are used to regarding Sunday as a work-free day. Therefore, in order for the idea to reach its desired success, it is necessary to keep workers enthusiastic about work on Sundays.

Imagine a 3D videogame like environment, except instead of a game, you are attending a virtual trade expo, with other real people, over the internet.  Could this ever catch on?  Personally, I think there is no replacement for meeting in person, however, this has a lot of potential applications for international businesspeople that can't afford to travel overseas often. 

Here's an interview with the CEO of InXpo, talking about his product:

If the norm at the moment is that countries don’t want to invest in other countries due to the economic downturn and volatile markets, then the exceptions are Qatar and Germany. Currently, the country of Qatar is looking to invest heavily into the exporting powerhouse, and they have the money to do it. As of 2007, Qatar has attained the highest per capita income in the world, primarily through the means of oil and natural gas revenues. So what interests Qatar so much about Germany?

Surprisingly enough, Qatar has its sights set on Germany’s auto industry. The oil giant is primarily concerned with the German brands Volkswagen and Porsche, brands which are very numerous and very popular in the Arab world, especially in the country looking to invest, which had an $80,900 GDP per capita in 2007.

Here's how it could be possible:

Asian economies have recovered much better from the current economic downturn than many countries. Their industrial production has reached previous levels not seen since the global crisis hit. Less and less it seems to have been because of net exports and more because domestic demand fell. When a surge in food and energy prices occured, a tighter monetary policy curbed inflation but further squeezed the demand. The recovery has come from the ending of destocking by manufacturers and the large fiscal stimulus that most governments put forth.

However these are only temporary solutions. With exports forecasted to still be low in the near future, consumer consumption should become a forefront for the Asian economies.

As jobs are scarce worldwide, women in some countries are finding it harder than ever to find a job. There are still many places where women are not allowed to work, and in almost the entire world women are faced with less opportunities to get ahead than men. This is not only unfair, but a business mistake. Especially now, when the world is faced with a financial crisis, both men and women should be given equal opportunities. Also, including women in the workforce allows for more innovation in the economy as there is a larger diversity of ideas.

Watch this video to hear the story of women trying to make it in the world of construction. It is important to give both men and women the chance to prove themselves capable of doing any kind of work because the world of business needs some renovation.

Gas prices have been fluctuating in the past few weeks without following a certain trend. The volatility is minimal however, when compared to last summer's record-setting high prices. Many people started using public transportation more often, or buying more fuel efficient cars. Others looked toward hybrids. This increased the pressure on car companies to produce zero-emission vehicles at an affordable price. Nissan was one of the companies to rise to the challenge. Spokespeople for Nissan express confidence when saying that their new electric car will sell exceptionally well because it is what the consumer wants.

In light of the current state of the global economy, people will want to cut down on expenses, while still enjoying the leisure and relaxation afforded by tourism. Here are the Top 10 2009 Tourism Trends, which include several options for the cash-strapped consumer:

1. Domestic tourism—This year will see a boost in domestic tourism as tourists will go around their own countries more than flying to another. This is one of the cheapest ways to travel and may help balance out the anticipated lack in foreign tourists.
2. Travel to nearby countries—As many people still want to explore countries other than their own, the next best thing is going to neighboring countries where they’re not expected to spend as much as a jet-setting spree. Europeans may go backpacking across their continent; Americans may go either north or south; and Asians may island-hop around the tropics.

There’s been a lot of talk lately about a new global reserve currency, or how the Yuan might overtake the dollar. One little-examined currency issue, however, is the role of virtual currency. Massively Multiplayer Online Role-Playing-Games such as World of Warcraft, which has nearly 11 million players worldwide, use an in-game currency system, where players can buy items, creatures, or even services from other players with virtual “gold”. In China, where a huge online gaming community exists, government officials are worried that, to some degree, virtual currency could replace the actual currency, and might even have a significant impact on the country’s economic system.

One month ago we posted about the Top 10 Global Small Busines Trends for 2009. Apparently this is still a hot topic, and Emergent Research has compiled a more pointed list of 10 expected trends for small businesses in 2009:

Economic Trends

1. The recession drives small business innovation.

2. Government plays an increasing role in the economy.

3. Global infrastructure and stimulus spending.

4. The number of small businesses will increase in 2009.

5. Small business globalization will temporarily slow.