globalEDGE Blog Archive May 2011

I was first introduced to cultural intelligence (CQ) in my international management class this past year, and was highly intrigued by the topic. CQ is a person's capability to function effectively in situations characterized by cultural diversity. When the opportunity rose to read The Cultural Intelligence Difference, I jumped at the chance. Dr. David Livermore wrote the book to essentially give the everyday person, whether you are a teacher, doctor, entrepreneur or CEO, strategies to increase your CQ.  Here is a little excerpt of an example from the book that may apply to you:

When people think of online shopping today, paying for goods or services via the internet usually comes to mind. However, in Russia this is not the case. More than 80 percent of transactions at Russian online megastores are in cash. Russian customers are not very comfortable with online transactions so businesses in Russia have developed alternatives for the online shopping model.

In part one we talked about the huge environmental costs for companies and the economic impacts these may have. Now we want to see what can be done, if reporting these costs should become standard, and the benefits this may have. Already many companies have made huge investments in reforestation, reducing water consumption, and an overall protection of natural resources. With the rising costs of valuable resources which are in danger, it only makes sense that these become a regular part of a company’s investment. With a strong sustainability agenda, corporations can help business be perceived as the place to best change what is going on in the world. As more companies realize how much sustainability helps their financial accounts, they’ll want to know how best to report these costs, and what can be done about them. The best step is to no longer ignore what’s going on, no matter what way you look at it.

In order to see if a company is viable as a going concern, environmental costs are vital to know for the long-run. The benefits to preserving the environment in terms of dollars may be surprising, but it’s not to many business leaders these days. A private sector solution may be the best solution on a global scale. Just last week, Puma became the world’s first major corporation to report the details of the cost of the company’s impact on the environment. They said the costs of the carbon emission and the water it used in 2010 totaled $134.3 million. The costs not only included the company, but all of its suppliers as well. The next step for the company is to measure their cost of waste and land-use change. Ecosystems are vital to the performance of most companies, and integrating the true costs of extracting these services could significantly impact bottom lines in the future.

The largest earthquake ever to hit Japan had detrimental effects on its economy. It also crippled Japan's top automakers, causing millions in lost revenue and almost a complete shutdown of the automakers' plants. What caused this supply chain disaster was the Just-In-Time production model that many automotive manufacturers have turned to in the recent years to decrease carrying costs and inventory. For the most part, this model is very safe but during times of supply shortages, having little on hand causes a big problem. As such, one vehicle contains roughly 50 to 100 microchips that control everything from brakes to navigation systems. To continue the car on the assembly line, not one part can be missing. During the earthquake, the main vendor of microchips had damage at its production facility creating a large shortage of a very hard to manufacture product. This shortage of microchips caused the automotive companies to cut production down to 20 to 50 percent of full operating capacity. Consequently, Japanese automakers are losing market share to American car manufacturers because of this shortage.

A massive project to renovate the Democratic Republic of Congo’s broken-down railway network has been launched in the capital city of Kinshasa. Most of the rail track in Congo was laid more than 100 years ago, so repairs and improvements are huge necessities. Costing a total of $600 million, this project is being backed by China and the World Bank with an estimated completion time of four years. The major goal for the revamped rail system is to restore services to provinces where rail is the only connection to the rest of the world in the absence of roadway and river transportation. This project has huge implications for businesses and bordering countries looking to trade with the Democratic Republic of Congo.

Since the Euro was introduced by the European Central Bank in 1999, Germany has gained competitiveness against not only other developed countries around the globe, but also against all other members of the Eurozone. In this time, they have also managed to transform a slight budget deficit into a strong surplus. A lot of people are starting to wonder what caused this rapid transformation?

With all the talk of the future growth of electric cars, many people might think that it will be as simple as plugging in their car next to the old refrigerator in their garage. Unfortunately, using a standard 120V outlet would take around 20 hours to charge a typical electric car. Most cars will require a 220V charging station that is connected directly to the home's circuit. Even with the shorter charging time, many batteries will only last between 25 and 100 miles. These short distances will require customers to charge their cars throughout the day and many companies are working to become the "go-to" method.

In 2007, former president Oscar Arias announced Costa Rica’s goal to become the first developing country to go carbon-neutral in 14 years. At the time, that goal seemed to be very unlikely for such a small country with financial difficulties. However, over the past years Costa Rica has made significant strides in accomplishing their energy goal and has become one of the leading countries in environmental sustainability.

In a recent Forbes article, they highlighted the top 10 green companies in the world. These companies have all in some way contributed a global environmental management system by reducing emissions, adjusting their manufacturing process, becoming environmentally certified and doing the best to adjust their performance records into a more positive light.

Recently gold prices have been up, but another metal connects countries around the world and provides insight into future economic and global trends. This metal happens to be copper and unlike gold, copper is not often viewed as a glamorous commodity. However, its practical use in water pipes, electrical wiring, computer circuit boards, and other electronic gadgets makes copper a valuable resource. Today the world’s copper mines are booming as copper prices continue to rise dramatically.

Food prices have certainly become a hot topic recently, and so has food quality. With oil spills, nuclear waste scares, and natural disasters constantly threatening the quality of the world’s food supply, businesses have to be more careful with what food they sell. Still the exporting of food seems to continue to increase. Fish exports in particular have seen a huge increase in global demand.

Coface is a world leader in trade-credit information and protection. On Thursday, May 12, Coface will be hosting their annual Country Risk Meeting at the Sentry Center in New York, New York. A panel of economists and business leaders will tackle the short-term economic outlook for the second half of 2011, with a special focus on hot spots, booming regions and the world’s economic power bases. It should be a great and informative event with all of the current happenings in today’s business world. Coface has provided some great services for us and our viewers here at globalEDGE, and globalEDGE is helping co-sponsor this event for Coface.

Coface has played a key role in providing risk information in the country profiles and industry profiles here at globalEDGE. From an overall country rating to the business climate rating, Coface provides our viewers with an in-depth analysis of the current risk assessments and the strength and weaknesses of an economy. Not sure about expanding in your industry? The Coface risk ratings on industries in different regions of the world are sure to let you know what you’re getting into. Be sure to look into these informative sections and check out that event if you can!

Globalization is becoming increasingly important for businesses all over the world. Not only is it important to expand into new markets, but it is important to localize enough to be accepted while still keeping your brand consistent worldwide. Corporations are beginning to see how difficult this balancing act can be. Expanding into new countries can lead to enormous profits, but it comes at a much higher risk.

With the local economy struggling, many businesses in Michigan have turned to international exporting as a source for new markets.  The state’s total exports for 2010 reached $44.5 billion, a 36.3% increase over 2009.  Rick Haglund recently posted a column on Ann Arbor.com about the work that trade specialists such as Patrick McRae of the United States Commercial Service and workers at Michigan State University’s International Business Center (CIBER) are doing to support globalization efforts of small and medium-sized local businesses. 

Over a quarter million small businesses in the United States export their products and services to other countries around the world. By doing so these businesses increase their revenues, broaden and diversify their customer base, and provide jobs for their local communities. The United States has set a goal to double exports by 2014 in order to support the addition of two million jobs for the American workforce and encourage economic growth. To reach this goal and help small businesses further increase their exports, the Office of the U.S. Trade Representative, the Department of Commerce, and the Small Business Administration have released a new Free Trade Agreement (FTA) Tariff Tool.

Many international business leaders treat it as a foregone conclusion that the world is flat.  Past posts on this blog have stated that globalization is an unavoidable feature of the current world economy which cannot be ignored by businesses.  Do the statistics support these conclusions?  A recent blog post for The Economist provides numbers that appear to question how prevalent the global economy really is.