The New World of Global Value Chains

About global value chains
Globalization has caused companies worldwide to divide their products or services into components and, instead of obtaining those components domestically, acquire them from
other countries though international trade. This business model comprises all the linked activities needed to bring a product or service from conception to consumer, and is called a global
value chain (GVC).

Whether you export or not, your company has very likely been affected by the three major forces driving the growth of GVCs. The first is transportation; as logistics costs fall, a firm can
move its goods and services over greater distances without losing competitiveness. If you’ve relocated some of your production abroad, thus moving it farther from your Canadian customers, you’ve become part of a global value chain.

The second driver of GVC growth has been the advent of more flexible, adaptable and cheaper information and communication technologies (ICT). If distance has become less of a constraint on your foreign operations, it’s likely that better ICT has been partly responsible. Advances in ICT have also made it possible to trade in services that depend on the rapid movement of large volumes of data (such as software development or financial services) or real-time communications (such as online medical diagnosis or teleconferencing).

The third GVC driver is that the world’s countries have been reducing barriers to international trade while establishing more and more free trade agreements. If you export to the U.S.,
the North American Free Trade Agreement has probably made it easier for you to do business there.

Benefiting from global value chains
It’s quite possible that your company is part of a global value chain even if you’re not an exporter – if your customers are all in Canada but you acquire some of your production inputs
from a foreign country that has labour-cost advantages, you’re linked to a GVC. This is a very simple and basic way of benefiting from a GVC, but there are several other ways to take advantage of them.

Provide an intermediate input for an existing value chain
If your product is something that another company (either Canadian or foreign) uses as an intermediate input for its own activities within a GVC, you may be able to link into that
chain by becoming a supplier to the company. This is a very common approach and certainly the simplest, since it closely approximates the traditional model of production and/or exporting. For SMEs, particularly those with niche technologies or specializations, GVCs provide new opportunities for selling to multinationals and their suppliers, especially as these firms
outsource activities that were previously carried out internally.

Develop your own global value chain through outsourcing
If your company manufactures either finished products or intermediate inputs for other companies, you can use outsourcing to set up your own GVC. This means that you acquire your own intermediate inputs, such as raw materials, components, subsystems and other goods and services, from foreign suppliers, and use them to manufacture your finished product or intermediate input in Canada (or in another country, for that matter).

Use FDI to connect to or establish a global value chain
By investing abroad you can gain immediate access to a foreign market, allowing you to expand your sales and promote your company’s growth. There is a considerable spectrum of investment approaches, ranging from the passive to the active. You might, for example, become part of a GVC in a passive manner, simply by investing in a foreign company while taking little or no part in its operations. Purchasing a foreign firm, or setting up a joint venture or partnership with a foreign company, might also work for you; either of these strategies lets you take advantage of the other firm’s assets and experience, which will increase your competitiveness in the local market and give you better control of local production and distribution networks. This approach can be very cost-effective if you obtain existing production and distribution capabilities through the investment and don’t need to build them from the ground up.

At the active end of the spectrum, you could become a full participant in a foreign market by establishing a wholly-owned subsidiary there. This investment strategy presents a range of
advantages that can help you benefit from the GVCs of which your company is already a part. Perhaps the most important of these advantages is that you aren’t dependent on a partner, so
you control the direction your subsidiary will take. You also have direct contact with your end users, which is good for developing new products and for building solid customer relationships.

Focus on service sectors
The service sector provides many opportunities in the financial, educational, consulting, environmental, engineering and architectural sectors, to name just a few. Even if you’re primarily a manufacturer, you may be able to move up the value chain by branching into value-added services related to your sector, such as design, distribution, marketing and logistics.

Author: Milusha Petrica: Discover New Markets---EDC.

Recession To End in '09

Bernanke Sees Recession Ending in '09

By JEANNINE AVERSA, AP

WASHINGTON (Feb. 24) - Federal Reserve Chairman Ben Bernanke told Congress Tuesday the economy is suffering through a "severe contraction" and pledged to use all available tools to lift the U.S. out of the recession that already has cost millions of Americans their jobs.

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In testimony to the Senate Banking Committee, Bernanke said the economy is likely to keep shrinking in the first six months of this year. Housing, credit and financial crises - the worst since the 1930s - plunged the economy into its worst slide in a quarter-century at the end of last year.

Bernanke hoped that the current recession will end this year, but said there were significant risks to that forecast. Any economic turnaround will hinge on the success of the Fed and the Obama administration in getting credit and financial markets to operate more normally again.

"Only if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery," Bernanke said.

Among the risks to any recovery are if economic and financial troubles in other countries turn out to be worse than anticipated, which would hurt U.S. exports and further aggravate already shaky financial conditions in the United States.

Another concern is that the Fed and other Washington policymakers won't be able to break a vicious cycle where disappearing jobs, tanking home values and shrinking nest eggs are forcing consumers to cut back sharply, worsening the economy's tailspin. In turn, battered companies lay off more people and cut back in other ways.

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"To break that adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets," Bernanke said.

In an effort to revive the economy, the Fed has slashed a key interest rate to an all-time low and Obama recently signed a $787 billion stimulus package of increased government spending and tax cuts.

In addition, Treasury Secretary Timothy Geithner has revamped a controversial $700 billion bank bailout program to include steps to partner with the private sector to buy rotten assets held by banks as well as expand government ownership stakes in them - all with the hopes of freeing up lending. The Obama administration also will spend $75 billion to stem home foreclosures.

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Those and other bold steps - including a soon-to-be-operational Fed program to boost the availability of consumer loans - for autos, education, credit cards and other things - should over time provide relief and promote an economic recovery, Bernanke said.

Radical actions by the government since last fall when the financial crisis intensified have relieved some credit and financial strains, Bernanke said.

"Nevertheless, despite these favorable developments, significant stresses persist in many markets," he said. "Notably most securitization markets remain shut ... and some financial institutions remain under pressure."

Although Bernanke didn't mention any financial institutions by name, Citigroup Inc. - the industry's troubled titan - apparently is in line for additional government help.

Critics worry the Fed's actions have the potential to put ever-more taxpayers' dollars at risk and encourage "moral hazard," where companies feel more comfortable making high-stakes gambles because the government will rescue them.

Sen. Jim Bunning, a Kentucky Republican, criticized the Fed for not releasing the names of banks that borrow from it. But Bernanke said that could create a "stigma" on the banks, possibly putting them in further jeopardy and defeat the purpose of the Fed's help.

Stress tests on the biggest U.S. banks, which regulators will start conducting Wednesday, are designed to give regulators a better idea of how much additional capital and the type needed for banks to lend if the crisis were to grow worse than anticipated, Bernanke said.

All the negative forces have battered consumers and businesses. "The economy is undergoing a severe contraction," Bernanke said.

The U.S. unemployment rate is now at 7.6 percent, the highest in more than 16 years, and it will climb higher - even in the best-case scenario that an economic recovery happens next year.

The Fed expects the jobless rate to rise to close to 9 percent this year, and probably remain above normal levels of around 5 percent into 2011.

The recession, which started in December 2007, already has killed a net total of 3.6 million jobs.

Fed policymakers think that a "full recovery" of the economy is likely to take more than two or three years, Bernanke said.

To brace the economy, many analysts predict the Fed will leave its key rate at record lows through the rest of this year. The Fed has said repeatedly that it will explore expanding existing programs to provide loans or buy debt, or come up with new tools to fight the crises.

The Fed is "committed to using all available tools to stimulate economic activity and to improve financial market functioning," Bernanke told lawmakers Tuesday.

Sen. Christopher Dodd, chairman of the panel, said the economy's problems "spread like cancer" and told Bernanke that he has an "extraordinarily difficult task ahead of you" in turning the situation around.

Copyright 2009 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

2009-02-24 10:15:35

Business Plan Myths to Avoid

4 Big Fat Business Plan Lies

By TIM BERRY, ENTREPRENEUR.COM

Posted: 2009-01-29 14:41:41

Get past these 4 myths and learn what a business plan is at its simplest.

Getty

With the economy spiraling downward, now is the worst possible time to neglect business planning. People do it because they lose track of the fundamentals. They also fall prey to the four myths about business plans. Don't get caught by any of these lies:

1. It's a big deal. It's hard to do. No it isn't. The number one biggest lie in business planning is that a business plan isn't a business plan unless it's a complex document containing a full list of components--from the executive summary, company description and management team all the way to detailed financial projections and thorough market and industry research.

A business plan doesn't have to be all of that. A business plan should be only as big as you need to run your business. Only if you need a document called a business plan to show to a banker or investor do you need to make it the full thing.

What a vast majority of companies need is business planning--not just a plan, but planning--to run their businesses well.

Planning starts with a plan, but then continues with plan review, tracking and follow-up, which makes it management. And you can have planning without market research or industry analysis, just by focusing on what your strategy is and what the specifics are that you need to do.

So what's a business plan, at its simplest? It's what you need. For some, it's as simple as a sales forecast plus regular plan vs. actual review to track the forecast and follow the implications of the difference between the plan and reality. For others it's as simple as a list of the most important strategic priorities. For most it's this list plus an expense budget plus some strategy points you can track, plus clear task assignments and ownership of tasks.

2. You're not supposed to change it. Hogwash. The point of having the plan is tracking progress toward goals, noting what went right and what went wrong, and using that difference between the plan and reality to manage better.

One of the most important things you do with a business plan is to set your assumptions down in writing so you can see them later. When your assumptions change, your plan might (not necessarily, but possibly) change, too. You don't change the plan just because you want to; you change it because the world has changed. On the other hand, if you didn't have a plan to change, you wouldn't have a way to maintain your direction toward long-term goals even as your immediate assumptions change.

3. Lots of successful businesses didn't have a plan. That's like saying lots of successful athletes didn't train, or saying that lots of good students didn't study.

A lot of this myth's reason for being is because of bad data. Ask successful entrepreneurs after the fact whether they had a plan and many will say they didn't because they're caught in that old myth of the big fat business plan. But in fact they did prioritize, set goals, track progress, divide the work into tasks and owners, estimate sales and expenses, and manage budgets.

Furthermore, ask successful people, after the fact, whether they worked hard in school and most of those who did will say they didn't. "I didn't have to study in school because I'm so smart." Yeah, right.

Don't be dumb about planning. It helps you manage. It reduces uncertainty. It builds tracking toward goals and accountability. Don't refuse to plan just because you don't need the big, fat, formal plan.

4. Business plans are for startups. This is obviously not true. Setting goals, prioritizing, tracking progress toward goals, and developing accountability for those goals isn't just for startups. It's that myth again. Maybe only companies looking for bank loans or investors need the big, fat business plan. But everybody needs planning.

Don't deprive yourself of useful tools and methods. Develop your business plan and make that the first step toward planning, which then becomes management.

Oil Price Down, Gas Price Up

Oil falls below $35, and a bottom is nowhere in sight

Joseph Lazzaro
Feb 17th 2009 at 3:00PM

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Filed under: Energy, Economy

Investors should heed the advice of energy traders: tread carefully, if you're considering an oil stock or an oil-related play.

Oil, which plunged another $3.03 to $34.03 per barrel Tuesday at mid-day amid concerns of a deepening recession in Western and Eastern Europe, is a market in search of a bottom. It would be a technical and a fundamental stretch to say that a bottom will occur anytime soon.

Oil's fundamentals certainly argue against a price recovery in the near term. The U.S. economy is in a pronounced recession, creating year-over-year consumption declines in oil and essentially flat gasoline consumption. Europe's economy, both West and East, appears to be slowing more, and Japan in Q4 recorded its worst GDP performance in more than 30 years, falling at a -12.7% annualized rate. Yes, China's economy continues to grow, but at only roughly half the 10% rate seen during the global boom. In sum, global oil demand is likely to decline in 2009 as it did in 2008 -- that's the International Energy Agency's most recent forecast -- the first consecutive demand decline since 1982-83.

A world awash in oil

Meanwhile, oil supplies remain plentiful, with inventories rising in the U.S. In a market economy, sluggish demand conditions combined with a long-term price declines compel oil producers to decrease production, and that's presently occurring in the private sector. The problem is, many major oil producers around the world are state-owned, and many need oil revenue to fund government budgets. Historically, many have maintained production levels despite a large drop in prices, due to this revenue need. That will place the largest burden on OPEC, which has already cut production by 4.2 million barrels per day (bpd). The cartel will need to cut at least another 1.5 million bpd when it meets next in Vienna in March, says economist Richard Felson, "to take some excess supply out of this weak market."

Weak oil market? The phrase still sounds slightly surreal. A scant seven months ago, oil hit $147.27, an all-time high, on surging emerging market economic growth and talk of supply shortages in selected developed economies. Economists now generally agree leverage-fueled hedge funds created an oil bubble, distorting oil's price to the upside, but the price has plunged more than $110. A $110 bubble? That's not likely, according to Felson, who believes the global recession accounted for about $30-40 of that fall. If the U.S. and global economy were growing, oil would be trading around $60 right now.

But they're not, so oil is below $35 and heading south, almost daily. Oil has psychological support at the $30 level, but unless demand characteristics change, traders say that support will not hold. Oil trading below $30 would be historically cheap, Felson says, but it's important to note that during periods of light demand, oil has traded below $30 for years.

Oil Analysis: For investors, oil's price trend and the U.S. economic outlook speak for themselves, and it's likely to remain a challenging environment for integrated oil companies. Refiners may fare better as gasoline demand picks up in the spring, but keep in mind gasoline demand, roughly flat now, could resume falling if the U.S. recession worsens.

Accessibility for all makes sense

Businesses Need to Comply with New Standards under the Accessibility for Ontarians with Disabilities Act

by the Ontario Chamber of Commerce, July 2006

Imagine a customer coming into your business and finding all of the shelves and counters out of their reach. Or a restaurant patron enjoying dinner out with a friend but finding they can't read the menu because the typeface is too small. What about a customer being unable to find your particular entertainment venue because the signs they're following make no sense.

These are the kinds of barriers that prevent people with mobility, visual and learning or developmental disabilities from being able to participate in many of the aspects of life that others take for granted. These are the kinds of barriers that the Ontario government is working to dismantle under its landmark Accessibility for Ontarians with Disabilities Act (AODA), 2005.

The legislation requires that, between now and 2025, new standards be set to improve accessibility with respect to goods, services, buildings, employment and accommodation. Initially, proposed standards will be developed to address barriers to customer service, transportation, information and communication, the built environment and employment.

Improved accessibility won't just make life easier for people with disabilities - it also makes good business sense.

Did you know that just over 13 per cent of Ontarians have a disability? That's one in every seven Ontarians.

In fact, according to a Royal Bank estimate, across Canada, people with disabilities have consumer-spending power of about $25 billion a year. The study also confirms that customers with disabilities influence the spending decisions of 12 to 15 million other Canadians.

This is a market no business can afford to overlook. And it's a market that's growing.

As the baby boomer generation ages, businesses will have more and more customers who will need and expect some type of accommodation to enjoy the same kind of social, business and community interactions that many people take for granted. And they have the means, as well as the time, to seek out those businesses that are working to adapt.

While the goal is to make Ontario more accessible by 2025, there are a number of things that businesses can do right away to better prepare themselves for the changes ahead.

The first proposed standard expected to be ready for public consultation in the fall will cover the area of customer service.

Customer service for people with disabilities is about providing high quality service as you would for your other customers. It is about being responsive and knowledgeable about your customers' needs.

Here are some simple things that businesses can put into practice right away to provide better service to customers with disabilities:

• Don't make assumptions about what type of disability or disabilities a person has.
• Some disabilities are not visible. Take the time to get to know your customers' needs.
• Be attentive and don't rush the transaction. People with some kinds of disabilities may need a little longer to take in the information and respond.
• If you're not sure what to do, simply ask if you can help.
• If you can't understand what someone is saying, just politely ask again.
• Ask before you offer help - don't just jump in. Your customers will know if they need help and how you can provide it.
• Use plain language.
• Don't touch service animals - they are working and have to pay attention at all times.
• Ask permission before touching a wheelchair or a piece of equipment.

You can broaden your customer base by welcoming everyone to your store, restaurant or services, including customers with disabilities. In the end, accessibility isn't just the right thing to do - it's the smart thing to do.

For more information on improving accessibility in Ontario, visit the Ministry of Community and Social Services website at www.mcss.gov.on.ca

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Article provided by The Ontario Chamber of Commerce (www.occ.on.ca). The OCC represents over 57,000 businesses through 160 local Chambers ofCommerce and Boards of Trade, and has been Ontario's business advocate since 1911. Its advocacy and policy initiatives focus on six areas key to the economic well-being of the province: health; education; energy; finance & taxation; transportation & infrastructure; and border issues.

Creating a Competitive Advantage

Visa “How-To” Business Guides
Creating a Competitive Advantage

Overview

A little competition can be a healthy thing. It can also be both costly and disastrous if you aren't up to par with others in your particular business or industry. How you handle competition can be a direct link to the success or the failure of your company. You can, however, significantly increase your chances of coming out on top by creating a competitive edge.

Having a competitive edge means possessing an advantage over your competition. This does not take the luck of the Irish but rather some solid strategic planning. Before you can accurately identify your competition, it's crucial to first define and analyze your target market. What are you selling and to whom? Next, make a list of those companies trying to do the same. What are their strengths and weaknesses? Their strategies and goals? How do they draw in customers? What, if anything, makes them stand out from the pack?

If you don't have this vital information, get it quickly. You shouldn't live in awe of your competition, nor should you fear them, but you must find out who they are and what makes them attractive to current and potential customers. Assessing your competitors openly and honestly will play a key role in helping you develop a competitive edge.

Remember, winning companies aren't successful by accident, though often it may seem that way. A closer look usually reveals that most have sized up their target markets and zeroed in on a unique approach to meet their customers' needs, values and expectations. Through important considerations like location, product, services and product features, they have somehow found a fresh spin, a new way to offer buying incentives that similar companies either can't or don't offer.

Once you have developed a competitive edge, maintaining it will be a daily challenge. It will require you to look into your crystal ball and attempt to forecast where the trends and changes in your industry will come from and what your company can do to stay ahead of the game. It will demand that you continuously track your competitors' moves to help you predict their future moves. You will also need to recognize that through the course of time your customers' needs may change due to a variety of circumstances. Your company must be flexible and willing to change as well.

The following questions are designed to help you determine whether your company has a competitive edge:

• Have I clearly defined my company and its target market?
• Who are my competitors?
• What is my company's clear-cut strategy and plan for success?
• Do I regularly track my competitors' moves?
• Do I take advantage of my competitors' weaknesses?
• What have I learned from my competitors' mistakes?
• Do I take advantage of competitive opportunities?
• Does my company possess a uniqueness that easily separates it from my competitors?
• Would I pay money to use my own product or service?
• How do my prices compare with the rest of my industry?
• Who are my customers?
• Do I have a loyal customer base?
• Am I sensitive to my customers' needs and requests?
• Are my employees trained in customer service?
• What trends do I see for my industry in the future?
• Do I have the capabilities and resources to compete in the market five to 10 years from now?
• What is my vision for my company five to 10 years from now

Creating a Competitive Advantage

Define Yourself | Define Your Competitors
Identify Your Customers | Personal Experience | Differentiation
Price | Product | Marketing Strategies

A. Define Yourself

Before your customers can get to know you, it's important to first know yourself and your company's mission in the marketplace. In today's highly competitive world, it isn't enough to simply say, "I own a card shop." You must define the type of card shop. Are you a card shop for everyone with wall-to-wall generic cards that can easily be purchased at other stores? Or do you specialize in unusual cards, thus attracting those people who demand cards that are unique and not readily available at other locations?

Ask yourself the following questions:

• Is my product or service unique, and if so, why?
• Is the way I operate my business unique?
• Do I service a niche market? Are there other markets that could benefit from my product or service?
• Are my employees a key asset that sets me apart from my competitors?

B. Define Your Competitors

Now that you have a clear understanding of who you are, you must make a list of all your competitors and keep track of them on a regular basis. In order to compete, you should compile the following data about each competitor:

• What are their strengths?
• What are their weaknesses?
• What are their capabilities?
• What is their customer base?
• What are their revenues?
• What are the promotional and marketing tools they are using?
• What are their current offerings?
• What do you perceive to be their future goals?

Gathering data on all of your competitors could, in itself, be a full-time job. To make it easier on yourself, you should realize upfront that tracking each and every competitor every day of the week is probably an impossibility. Therefore, you should break your competition into categories and prioritize them, asking yourself who poses the biggest challenge. The following are suggested ways to categorize your competitors:

Priority #1: Head-to-Head Competitors

These are the companies that compete most directly with you. Your product is similar. Customers compare you to them in terms of price, quality and service. These companies should be tracked on a weekly basis.

Priority #2: First-Tier Competitors

These folks compete with you, but not for everything. They may try to woo a particular kind of customer from you, or they may be similar to you only in a certain area. This is an important group to stay on top of because they may decide to expand and compete with you more directly. You should track them at least one to two times per month.

Priority #3: Indirect Competitors

These competitors tend to be in the background. You only run into them occasionally. Their products usually serve as alternatives to yours. But make no mistake about it, these companies are still definite competitors, vying for business. They need to be watched because there is no telling what rabbits they might pull out of their hats when you least expect it. It's better to be prepared. You may want to review these companies three or four times a year.

In tracking your competitors, it is important to chart their strengths and weaknesses. By comparing their strengths to your own, you will clearly see where the challenges to your future business may lie. By examining their weaknesses, you may find direct opportunities for your company to capitalize on.

Though you will spend less time tracking some companies and more time tracking others, it is important that you track them all. A common mistake is to underestimate certain competitors. By closing your eyes to what is out there, you can put your company at a huge disadvantage. Far too often, it's the companies you tend to write off that suddenly make a huge push and threaten you directly.

It's unlikely your competitors are going to give you any more information about their companies than you would be likely to give them about your own. So, how do you find out precisely what they are up to? Thankfully, in this technologically advanced society, you don't have to be at CSIS to find out about other companies. You can easily find out how they are doing and what they are up to from a number of sources, including:

• Newspapers and magazines
• Trade publications
• Web sites
• Customers
• Seminars
• Trade shows
• Suppliers and distributors
• Stock market analysis
• Government filings
• Shop or visit the competition yourself

Once you have all of the data, be sure to find a way to properly organize it. This is imperative for you to be able to see movement and growth of various companies over time.

Define Yourself | Define Your Competitors
Identify Your Customers | Personal Experience | Differentiation
Price | Product | Marketing Strategies
> back to top

C. Identify Your Customers

Once you have a handle on your competitors, the next important step is to clearly define what your customer base is. For more information on this subject, please refer to the article Identify Your Target Market.

To clearly identify your customer base, ask yourself the following questions:

• Where do my customers live?
• Approximately how old are my customers?
• Are my customers primarily male or female?
• What is the income level of my average customer?
• What are my customers' needs?
• What motivates my customers to buy? Consider such factors as price, quality, credibility, customer service, location, etc.
• When do my customers do their buying? Daily? Weekly? Monthly? Annually? Seasonally?
• How much research do my customers do on a product or a service before spending money?
• What services or products are my customers willing to spend more on?
• What services or products are my customers willing to spend less on?
• What are my customers' buying trends and habits?

A good way to identify what your customers want is to talk with them and really listen to what they have to say. Customer feedback can be a cheap and invaluable tool in creating a competitive edge.

D. Personal Experience

Chances are, in any given week you reverse roles and go from business owner to consumer. You may visit the grocery store or dry cleaner or eat at a particular restaurant. Consciously or unconsciously, you make decisions about which businesses will get your own hard-earned money. Stop and analyze the choices you make. Do you choose the big grocery store over the small corner market? Why? If there are two dry cleaners close by, do you tend to go to one instead of the other? If so, for what reason?

Make a list of all your favourite companies and ask yourself why you enjoy doing business with them. What is it about them that attracts you? Is it their prices? Their products? Their service? The fact that they know you by name? Do they clear up problems and correct mistakes in a timely, hassle-free fashion?

Now list the companies that you refuse to do business with. Again, ask yourself why. What has turned you off? Are their salespeople rude and unhelpful? Are their shelves scarcely stocked? Is their parking limited? Is the quality of their product or services poor? Are they overpriced? Do they not take your problems and complaints seriously?

Analyzing both the positive and negative personal experiences you have had as a consumer can significantly improve your own business. You may be able to implement similar policies of the things you liked and altogether avoid those that have steered you away.

Define Yourself | Define Your Competitors
Identify Your Customers | Personal Experience | Differentiation
Price | Product | Marketing Strategies
> back to top

E. Differentiation

In today's crowded marketplace, consumers have lots of choices. In order to gain a competitive advantage, you must give customers a reason to choose you over the competition. You must make it your business to see that your product stands head and shoulders above the crowd. While lowering prices is certainly a viable way to reel customers in, there are other things you can do to make your company unique simply by using a little imagination and creativity. The following are ways to differentiate your product and/or company from your competitors:

• Look at what your competitor has to offer. What new spin can you put on it?
• Assess your product. Can you add any new features that might make it more desirable or useful than your competitors?
• Think of new uses for old products or new ways to package or bundle your offerings.
• Analyze your marketing strategy. Are there ways to use your promotional campaign as an advantage?
• Make sure your products are user-friendly and easy to order. Make it easy to do business with you.
• Can you provide exceptional customer service, hours of operation, guarantees, etc.?
• Are there any special services you can offer your customers that your competitors don't?

F. Price

While there are those people who will spend top dollar on any given product, most people are price-conscious. Many folks are willing to shop around to see where their dollar will go the furthest. It is important to recognize that you may not always be able to be the lowest-price service and still maintain a healthy profit margin. However, there are still many ways to lure customers, including some of the following techniques:

• Special offers for repeat customers and introductory offers
• Coupons
• Sales and discounts
• Financing packages
• Convenient return policy
• Money-back guarantees if customers aren't completely satisfied

Define Yourself | Define Your Competitors
Identify Your Customers | Personal Experience | Differentiation
Price | Product | Marketing Strategies
> back to top

G. Product

Here is the golden rule: your product or service is everything. Without it, your business is nothing. It is what your entire reputation will ultimately be based on. You can have the nicest business location, the lowest prices and the best customer service, but if you don't have something people want to buy, your business will, more than likely, go belly up. Therefore, it's crucial to constantly place your product or service under a microscope, examine it and re-examine it carefully. Ask yourself the following questions about your product or service:

• Does my product perform?
• Is it durable?
• Is it reliable?
• Is it fairly priced?
• Does it consistently live up to its reputation?
• Am I known in my industry for producing quality goods or services?
• Is my product easily recognizable?

It is important to understand that your product has a life all its own. Like people, it goes through a life cycle. First it is born, then it goes through a growth period; eventually, it may decline or die altogether. The following are ways to ensure that your product or service has the longest possible life:

• Create ways to ensure your product or service is in demand.
• Make your product or service a trend-setter.
• Think of innovative ways to encourage more people to buy your product.
• Venture into new and different markets.
• Add new features to your product.
• Market a companion product.

There may come a point where, due to circumstances beyond your control, your product is no longer in demand. Signs to look for include sharply dropping sales in spite of continued marketing expenditures, new technologies that have replaced those your product is based on, or changes in your customers' lifestyles or preferences. If that is the case, there is no point in continuing to supply your product. It is best to move on.

H. Marketing Strategies

Now that you have a fabulous product, it's time to take it out into the world. You would never think to venture into a blizzard without the proper snow gear. Why? You know you wouldn't survive. Likewise, you should never venture into the market without a specific strategy as to how you intend to sell your product. A good place to begin is with the competition. Look at companies with similar products and analyze how they have marketed them. In what ways have they succeeded? In what ways have they failed? You have the luxury of learning from their mistakes and benefiting from their triumphs. It's an invaluable tool. Don't overlook it.

You have heard the phrase, "Nothing ventured, nothing gained." In other words, don't be afraid to try new things. There is something to be said for a fresh approach. Be inventive and come up with your own creative strategies. In devising your own plan, you may want to keep in mind the following:

• Remember to whom you are selling.
• Focus on your product's or service's benefits rather than features.
• Don't be afraid to toot your own horn.
• Be sure your plan is attainable.
• Have a backup strategy in mind, especially if your primary one is risky.
• Collect facts, figures and important data before you put your plan into action.

There are many roads you can take when marketing your product. Ask yourself what your primary focus will be. Is it low cost? Is it product differentiation? Product uniqueness? Is it based on your reputation, having had success with other products?

These days, most markets are highly saturated. Without a clear marketing strategy, you will not be able to compete.

Define Yourself | Define Your Competitors
Identify Your Customers | Personal Experience | Differentiation
Price | Product | Marketing Strategies

Maintaining a Competitive Edge

Congratulations, you have finally established a distinct edge over your competitors. That's the good news. The bad news is that you must now maintain it. Doing so can take a lot of effort and energy. Staying ahead of others in your field requires several key elements. First, you must monitor your competitors' capabilities. The following questions will help you determine how far your competition might be able to go:

• What is their customer base?
• Can they keep up with supply and demand?
• Are they in good shape financially?
• Are they expanding?
• How determined are they to conquer the market?
• Do they have the resources to eventually become number one in the market?

By analyzing your competitors' past and present through the data you have been tracking, it may be easy to see precisely what they might do in the future. In order to stop them in their tracks, you must be a step ahead, so figuring out their next move is key. Here are some areas of your competitors' business it might be helpful to look at:

• Customer targets
• Customer service goals

Keeping Up With Changes

As if your everyday life isn't hectic enough, you must also worry about the future. Accurately forecasting new trends, as well as which trends are here to stay and which will be gone tomorrow, can give you a huge leg up on the competition. How do you forecast trends if you aren't psychic and don't have a crystal ball? The best way is to talk to experts in your given industry. Beyond that, there are some definite outside factors you should be aware of that will most likely affect your business in the future.

Lifestyle Trends

The 1970s were different from the '80s, which were different from the '90s, right? Lifestyles change with time. Trends come and go. Predicting what will be important in people's lives down the road is no small feat, but it is achievable and can make you very rich. For example, the trend in the '80s was to work, work, work. In studying that trend, it's possible look ahead and conclude that people would eventually run out of steam. Where would they go? A good bet would have been their homes. Thus, home supply businesses in the '90s skyrocketed as more people became homebodies, which created more demand for home supplies and decorations.

Technological Trends

Technology changes all the time, and it is crucial that you keep up with it. Once some new and viable technology enters your industry, be sure to grab it because most likely your competitors will. Like you, they won't want to be left behind. If you can see the advances coming and be the first to get in, you may be able to win over and keep your competitors' customers.

You can keep a few steps ahead of new technology by attending trade shows and conventions. Press releases on technology will also clue you in as to what's in store for the future. Also, it is a good idea to make sure your company is always ready to handle technological change.

Economic Trends

Let's face it, some years are going to be better than others because of economic conditions. This can be key in determining when to place your product on the market. For example, if your product is more luxury-driven, chances are it's not going to do well during a recession. Regular dialogue with financial experts, such as stockbrokers and bankers, can help you predict how people will be spending money in the future. The economy can directly change your customer base, and you should always have a contingency plan for how to combat it.

Government Trends

Like it or not, the government will be involved in your business to a certain extent. Thus, it's important to read the newspaper and keep tabs on what your lawmakers are up to. Things can happen that force government to react, and this can greatly affect your business. For example, if the papers report that many children are getting hurt in front-facing car seats, the government may pass a law requiring all car seats to face backwards. Thus, this wouldn't be a good time to market a front-facing car seat no matter how many nifty features it had. It would, however, be the perfect time to introduce a seat that faces backwards.

Keeping up with changes in your industry is crucial to maintaining a competitive edge. You can find information by using resources such as business and trade publications, trade shows, industry organization newsletters and reports from industry consultants. Remember, it is your job to tell your customer about new and exciting things within your industry, not the other way around.

Evaluating Your Competitive Advantage

Once you have established a clear, competitive edge, the tendency might be to coast for a while. After all, you have worked hard to get where you are, so why not sit back and enjoy it, right? Wrong. Picture yourself in the middle of the ocean floating on a raft surrounded by sharks waiting for you to make one tiny mistake so they can swallow you whole. That is precisely what your competitors are doing: circling around you, waiting for the moment you let down your guard just long enough so they can go in for the kill.

In order to stay at the top, you must continuously monitor and evaluate your competitive advantage. Constantly redefining and re-inventing your company is essential. So how do you know when it's the right time to do this? Start by identifying specific changes in your marketplace, even subtle ones. For instance, if you own a burger joint and people don't seem to be eating as much beef as they used to, then perhaps it's time to introduce a chicken burger or the vegetarian burger as a regular part of your menu.

As you make changes and introduce new and innovative changes, don't be alarmed if your competitors follow suit. Remember, imitation is the sincerest form of flattery -- and it makes good business sense. If you are continually evaluating your competitive advantage, by the time competitors begin to copy your strategy, you will already be three steps ahead and onto a different approach.

Another good time to evaluate your position in the market is as trends and technological advances come and go. It is safe to assume that you won't continue to be a threat to your competitors if your business is stuck in time. Remember, everything changes with time, and what worked in your industry today may not work tomorrow. In order to stay successful and competitive, you must change and grow along with your industry.

Also, don't be afraid to ask your customers for a report card. Check in with them from time to time just to see how you are doing. If you are slipping in places, it may be time to re-evaluate your approach to certain things.

Finally, don't automatically assume that because you are ahead of the gang now, you always will be. The truth is, just as easily as your business is on top of the world today, it could be wiped off the planet tomorrow if you aren't careful. Remember, you must always be seen by your customers and competitors as extraordinary. Anything less and you will have lost the competitive edge you worked so hard to create.

Resources

Books

Jay Newborn, Cloud Marcus, "Target $mart: Database Marketing for the Small Business" (Mainstreet Marketing Software, 1996)

Hattie Bryant, "Beating the Odds" (Prima, 1996)

Don Reynolds, Jr., "How to Sharpen Your Competitive Edge" (Sourcebooks, 1994)

Barrie Pearson, "Manage Your Own Business" (Mercury Business Books, 1992)

Copyright © Virtual Advisor, Inc. 2004

EDC---Export Development Canada

Exporting 101

• Introduction
• Understanding Exports
• Growing Your Exports

Introduction to Exporting 101

There’s a lot to think about when you decide to make exporting a part of your business. First there are the basics: what exporting is all about—the rules, the players, and how to make it work for you. The second set of considerations has to do with making your export business grow. How do you capitalize on hard-won success?

As Canada’s exporting experts, we can help. Read on.

Learn more:

• Understanding Exports
• Growing Your Exports
  

Is your biz ready to franchise?

by By Entrepreneurship Expert Roger Pierce, www.BizLaunch.ca, January 2009

Franchising, with its ability to quickly develop a national or even global network of outlets, was one of the economic success stories of the twentieth century. The concept became inextricably linked with fast food thanks to the incredible success of McDonald's, but more recently, companies from a variety of other industries have used the franchise model to accelerate their expansion. EBGames, Jenny Craig, First Choice Haircutters, and Curves have expanded rapidly through franchising. If your business is humming and ready to grow, expansion through franchising is one option to consider.

The Rationale for Franchising
Every time your company expands it takes on significant risk. You need to consider how much capital will be required to enlarge your infrastructure as well as other associated costs. You may require more equipment, another level of management, and a potentially large investment in human resources. Each new location needs to be sourced, built, staffed, and tooled. This time-consuming and painstaking process could be well served by a franchisee willing to become part of your enterprise.

Cloning your business as a franchise allows it to grow as you envision it. It also gains the support of independent business people: your franchisees.

Proving your Business Model
Any business takes time, generally three to five years, to prove itself. Prior to franchising, your business should also have operated a sufficient number of outlets to prove it has a viable concept which can be duplicated. By operating numerous company-owned outlets you are:

• Showing demand in various markets
• Developing systems which are repeatable
• Defining clear management procedures
• Proving logistics plans
• Developing economies of scale with marketing and promotions

Streamlining the opening of each new location fine-tunes operating systems and procedures, and defines the necessary training needed when unrolling franchises in the future.

Be Well Prepared
Preparing a company for franchising takes time, sometimes several years, and needs to be planned properly and financed adequately. Each outlet owned and operated by your company serves as a test case and helps work the bugs out of the systems. Since the day-to-day operations will be transferred to your franchisees, your new job will be to run your franchise operation:

• Take proper professional advice ? consult a lawyer, banker, and accountant
• Have the franchise agreement written by an experienced franchise lawyer
• Choose your franchisees wisely, as they will represent your brand
• Create an accurate and complete operations manual to save time and costly misunderstandings.
• Document your training processes thoroughly
• Set your franchisees up for success: have realistic forecasts and ensure that your agreements support their profitability
• Focus on maintaining standards across the franchise network
• Realign marketing and advertising to the new expansion
• Make sure your trademarks, brand names, and intellectual property are legally protected

What are the Advantages of Franchising?
Franchising combines the resources and expertise of a large organization with the motivation and hands-on willingness of individual owner-managers. Benefits to the franchisor include:

• Achieving expansion through using franchisees? capital
• Shifting responsibility of outlet operations to the franchisee
• Quick and concurrent growth with each new franchisee
• Reduced staff requirements and concerns
• Scouting, building, and financing outlets are handled by a motivated owner-manager

Do You Have What a Franchisee is Looking For?
Someone looking to purchase a franchise likely wants to own their own business without enduring the risks of starting one from scratch. The average stand-alone small business has an extremely high chance of failure in its first five years of operation, while a franchise, year by year, proves to have a much greater success rate. The franchisee is also looking for the business procedures needed to ensure success so that they can get results in a fraction of the time it takes to build a going concern from the ground up. Attracting motivated, capable owner-managers is the key to your franchise?s success, so it helps if you can ensure that:

• You have a proven track record with solid public endorsements
• You are unique or noticeably different from other businesses in your market
• You have a sustainable competitive advantage
• Someone can learn to operate your business in a short period of time
• It is sufficiently profitable to satisfy franchisees, after deducting royalties
• Your product or service is adaptable to many locations
• Your company is prepared to support your franchise network

The success of your franchisees determines your success
The process that prospective buyers go through when considering a franchise is like that of purchasing any other product: identify a need, research, evaluate, purchase, and conduct post-purchase analysis. Therefore, it is important to clearly communicate what they are purchasing when buying a franchise from you. It is in your best interest to:

• Provide audited performance statistics of your business
• Provide access to franchisees for consultation
• Encourage prospective franchisees to obtain legal advice to understand the franchise agreement thoroughly

Franchising can be a win-win opportunity. The franchisee gains the autonomy of being self-employed along with the stability of being part of an already successful organization. Their franchised business can compete with larger outfits. By building a strongly motivated owner-manager network, the franchisor expands rapidly into new markets, has less overhead than traditional chains, and has less capital risk. With the right preparation, your company could be the next global franchising success story.

Salma Hayek's breastfeeding experience

Salma Hayek's breastfeeding experience

Salma Hayek

Salma Hayek has revealed she breast-fed an African baby during a recent trip to Sierra Leone.

(BANG) -

Salma Hayek breast-fed an African baby.

The mother-of-one volunteered to nurse the child on a recent trip to Sierra Leone, when the baby's mother stopped producing milk.

Salma, 42, said: "The baby was perfectly healthy, but the mother didn't have milk. He was very hungry. I was weaning my daughter Valentina, but I still had a lot of milk that I was pumping, so I breast-fed the baby. You should have seen his eyes. When he felt the nourishment, he immediately stopped crying."

The actress, who claims older mothers have more energy, has been slowly returning to work since having one-year-old Valentina.

She said: "There was a lot of crying on both sides because I'm not used to separating from her. I guess I have to start separating a little bit. I'm still with her all the time. She's such a happy baby."

Alongside the running of her two production companies, Hayek will appear in six-episodes of NBC's '30 Rock'. The actress also wants to do some movies in 2009, but isn't keen on the "dark" roles she's being offered.

She said: "I'm having a hard time picking because I don't want to do violent things, I don't want to do things that are too dark, and I'm getting those offers. I'm being very picky."

(C) BANG Media International

Investor Caveat

Toronto Star----Friday, February 06, 2009
SPECIAL SECTION: INVESTING

TheStar.com | Investing | Cushioning the fall for investors

Cushioning the fall for investors

ILLUSTRATION BY JONATHAN EVANS

Experts are cautious about investing this year but they do see some bright spots along way

Jan 22, 2009 04:30 AM

Be the first to comment on this article...

Lisa Wright
Business Reporter

A new year, a new U.S. president and, hopefully, a new, more positive direction in the market, right?

Let's face it: investors are looking for a fresh start after last year's stunning market crash.

Well, if the last few weeks are any indication, the bears aren't back in hibernation just yet. And, according to the experts, there's still a lot more volatility expected in the coming months.

"What lies ahead in 2009? It is likely to be a difficult year," says Ross Healy, chief executive of Strategic Analysis Corp.

He notes that some economists are forecasting that corporate earnings this year will be about half of what they were in 2008.

"If so, the stock market today has a recession built into it, but not the recession that it is likely to have.

"U.S. consumers have nothing left on their balance sheets to fall back on. Home prices and stock holdings have been badly mauled, but all the debt is still there."

Speaking at the Empire Club's 15th annual investor outlook luncheon earlier this month, Healy was among a trio of investment gurus looking into their crystal ball for 2009 as the Bay St. crowd noshed on a poached salmon lunch at the Fairmont Royal York Hotel.

None of the three pundits were overly buoyant about the year ahead, but they aren't 100 per cent bearish either, reflecting the current mood in the business community. While each has a slightly different message, they agree there are indeed some bargains to be had out there but to proceed with caution no matter what size your portfolio is today.

"After 2008, many investors will relate more to (humorist/actor) Will Rogers, who famously said: `I'm not so much interested in the return on my money as I am the return of my capital,'" quips Nick Barisheff, president of Markham-based Bullion Management Group Inc., a mutual fund trust investing exclusively in gold, silver and platinum.

He says 2008 was a "painful" year for those in the market, with many portfolios experiencing capital losses of 30 to 70 per cent.

It was quite a wake-up call, considering the prior 25 years marked the longest equity bull market in history. The next 20 years are unlikely to be a continuation of the past, notes Barisheff.

"Looking ahead, it seems many people believe the crash of 2008 was just a correction, and that real estate and equity markets will soon recover. Current data does not support this argument," he says.

He argues the global financial imbalances that became evident last year have been building for decades and are unlikely to correct in a single year.

"Until consumers feel confident about their jobs, the value of their houses and the safety of their savings, they will curtail spending and the economy will not improve.

"For investors, the take-away from all this is that while a `buy-and-hold' strategy may work during a bull market, it doesn't work during a bear market."

Of course Barisheff is bullish on bullion, pointing out that while the price of gold increased by 31 per cent in Canadian dollars and 45 per cent in British pounds, the Toronto Stock Exchange lost a whopping 35 per cent of its value. (Gold rose just 5 per cent in U.S. dollars last year due to the extraordinary demand for that currency in the crippling credit crunch.)

"In 2009 and beyond, the six-year upward trend for precious metals should continue, while real estate, equity markets and even bonds will likely decline," he says.

There are, then, several implications for portfolio management in the future.

Thomas Caldwell, chief executive of Caldwell Securities Inc. in Toronto, called the 2008 market sell-off "a cleansing of the financial system" that paves the way for investors to scoop up depressed stocks.

He likes several sectors now, including financial services, health care and consumer product stocks. And yes, he too likes some exposure to gold since it's widely expected there will be downward pressure on the U.S. dollar (which typically moves in the opposite direction to the price of safe-haven bullion.)

"Bull markets ignore bad news and bear markets ignore good news. We've gone through a period of very, very bad news and the market is accommodating it," notes Caldwell.

While he says there are "exciting opportunities" in equity markets, there are also traps investors should be wary of while digging through the ashes for value, noting overall market sentiment should not be ignored when picking stocks.

For his part, Healy argues that, sure, investors can expect some growth stocks to emerge and even some periods of growth along the way – just not for the same long periods as we've enjoyed for many years.

"As for the overall market, we should have a decent rally in the early part of the year as the market digests what has happened already, and what the authorities are doing to try to turn things around The market is then likely to sink back into a pit of despondency.

"Those investors who adjust their tactics early will do well. And those who do not should probably run to GICs right now and get it over with," Healy quips.

While Caldwell calls short-term investing "a guess," he projects equity markets will see an increase of between 10 and 15 per cent this year overall.

"One to two years from now, we will look back at this (year) as a great opportunity" to pick up bargains in the market, adds Caldwell.