Eddielogic

– Thoughts on Strategy and Management

December 23, 2007
by Oliver
4 Comments

Organizational challenges of global trends

A couple of weeks ago McKinsey launched a survey on the organizational challenges presented by social and economic trends. The results for this survey are available now; according to available data McKinsey received 1,317 responses from a worldwide representative sample of business executives.

Top 5 of the most important identified trends are:

  • Competition for talent
  • Centers of economic activity will shift globally, regionally
  • Technological connectivity will increase
  • Omnipresent access to information will change economics of knowledge
  • Demand for natural resources will grow

One can download the survey results for “The organizational challenges of global trends” as pfd-file here.

December 20, 2007
by Oliver
2 Comments

Improving strategic planning processes

This post will focus on options and ideas to improve strategic planning, again. A couple of days ago I have presented the first post “Ideas for overcoming analysis barriers” in this informal series – for improving strategic planning in your organization – in our strategy blog. But before starting with this new post I think that it is essential to describe delimitations of scope and some general recommendations, which you should have in mind when managing your own planning processes.

There is a large number of options and ways to overcome existing barriers and problems and so to improve the process of strategic planning. Typically those barriers can be found in the organizational context, e.g. corporate culture; as well as in the different phases in the strategic planning process. Strategic analysis, agenda setting, strategy implementation including progress monitoring are confronted very often with barriers. However, according to some studies and our own observations the strategic analysis is done very well in many organizations. To be more precisely; the external analysis is done perfect; the internal analysis has some areas for improvement, too. We think, that the organizational context has an impact how you do the internal analysis. A corporate culture that does not allow raising the right questions and that does not have an appropriate debate culture, running the internal analysis is a very hard business. Determining the best method for every strategic planning process in every industry goes (far!) beyond the scope of this post series.

Continue Reading →

December 17, 2007
by Oliver
2 Comments

Update on Government Investment funds

A couple of days I posted some news related to previous activities by so called government investment funds (sovereign wealth funds). Their current investment activities focus on financial institutions; due to the subprime crisis some large players have to write off some parts of their loan portfolios. Therefore the share price of some players is declining and offers some interesting opportunities for investments.

I wrote the former post with the new version of Word, which has a blog writing feature now. Everything works fine, excluding the table feature… Anyway, here comes the table that illustrate the focus of the investment activities.

Continue Reading →

December 11, 2007
by Oliver
Comments Off on Government investment funds focus on banks

Government investment funds focus on banks

A couple of days ago we had a look at the current trends of government investment funds (sovereign wealth funds). Today we saw the next move of an investment fund: GIC (Government of Singapore Investment Corporation Pte. Ltd) and another investor subscribed (it might be Abu Dhabi – ADIA) subscribed convertible bonds of UBS, the famous Swiss bank. GIC subscribed for 11 billion CHF and the other investor subscribed for 2 billion CHF. In the case that the conversion will take place, GIC will achieve a share of 9 %; the other investor will have a share if 2 %.

It seems to be that large financial players have been become the investment target. A couple of weeks ago ADIA acquired 4.9 % of Citigroup for 7.5 billion USD. Bear Stearns has a large Chinese shareholder due to an exchange of stock since October 2007. In the last six months Government investment funds (sovereign wealth funds) made investments about 26 billion USD in financial players, including banks and other financial service providers. Now the total of all investments is 35 billion USD.

A good example for these investment activities is Singapore and its fund “Temasek Holdings”. 40 % of its capital has been invested into the financial industry. One objective is to participate in an increasing share price, driven by the growing middle class in Asia.

Continue Reading →

December 9, 2007
by Oliver
1 Comment

Ideas for overcoming analysis barriers

Strategic planning is linked with a variety of problems and barriers. Some of them are related to sequence and tools of the planning process. Other problems and barriers exist since strategic planning takes place in the context of the firm’s culture; in some circumstances this culture can break the planning process. Therefore I would like to set up an informal series of posts that presents some ideas how to overcome or to minimize some barriers. I would like to start with an essential part of each strategic planning process, the strategic analysis.

Typical problems exist within the analysis of environment, corporate analysis as well as within value analysis and acceptance related problems.

To develop a successful and sustainable strategy, your organization should apply an approach that considers the impact of secondary effects. In most cases I recommend taking a dynamic view of the marketplace. The size and scope of your view should consider the dynamics and the number of players in your business segment. Using this approach, your organization should anticipate competitive reactions and explicitly incorporate them into your strategic analysis. To ensure such a dynamic view I can recommend applying an approach that is based on the analytical technique of business dynamics.

Continue Reading →

December 2, 2007
by Dagmar
2 Comments

The side-effects of over-downsizing – Part two of the story

Now that we have discussed the strategies of a downsized workforce to cope with the resulting higher workload, it is time to address business leaders and their consultants.

Your company is threatened by falling profits or even losses. Your shareholders, your creditors, all analysts and the whole market expect you to do something. Of course, you have to restore profitability and what quicker way is there than to cut costs? By the way, cost cutting is much easier than developing a new growth strategy, as the large North American car manufacturers demonstrate nicely. There are plenty of consultants who are willing to help you to readjust the headcount of your workforce to the fallen figures for sales and profitability.

Don’t get me wrong. It is often necessary to reduce the number of employees, even if there is not a severe crisis. To my experience it is a common phenomenon, that successful companies tend to increase their workforce more than necessary: add a bit of support staff here and some service people there, more heads of something are allowed to have a personal assistant, marketing could need a few more people for event management and other departments like to have some specialists with a very particular area of expertise. This is all very comfortable for everybody. Nevertheless, it is advisable to cut back such ‘luxury positions’ from time to time.

Unfortunately, companies and consultants tend to overdo necessary and helpful downsizing initiatives. Continue Reading →

November 28, 2007
by Oliver
2 Comments

Trends of government investment funds

A few days ago I posted some interesting figures related to large government investment funds (sovereign wealth funds) and their cash flow sources. So what do these funds in detail in their investments?

DubaiWell this matter is not directly related to strategic planning. However the current trends and financial investments of these funds should be considered carefully when planning, since they might represent a major external impact factor for certain organizations. These can include firms within the technology sector, high tech industry and financial business. So let’s have a brief look at some recent activities of those funds that have their cash flows “generated” by commodities.

An interesting example is Dubai International Capital (DIC): In July 2007 the DIC announced that it has the objective to invest 10 billion USD in world’s top 500 companies.  DIC (founded in 2004) is part of the Dubai holding, which belongs to the monarch family. In the last couple of years DIC made investments in USA, Europe and Asia, often together with KKR and Carlyle. The total of all investments is said to be 12 billion USD.

Continue Reading →

November 27, 2007
by Dagmar
2 Comments

The side-effects of over-downsizing – A story in two parts

Part One: What to do when your department was over-downsized

This question might be back on your agenda soon. Latest turmoil at the financial markets made the profits of banks and other investors drop sharply. Nobody knows how many more unrealized losses are to come. We have already seen first redundancies. With growing fears that a spill-over effect might lead to a global recession, the next wave of redundancies might not be too far away.

Let’s assume that you belong to the lucky ones; your department isn’t made redundant as a whole, it is just reduced in headcount. Experience tells us, that your departments workload is unlikely to be reduced to a matching degree. What do you do?

For reasons of illustration, let’s assume that your department is some sort of internal service provider, like IT, legal, finance, personnel etc. Here are some reality-tested strategies to get away with doing less than you should: Continue Reading →

November 25, 2007
by Oliver
5 Comments

Government investment funds

FundsA couple of months ago I discussed in this post capital market issues and the cash flow that is created in specific nations trough commodities. Recently in some nations discussions are underway that focus on the financial power, which arise from “government investment funds” – also known as sovereign wealth funds – (in the sense that the government of a specific country has the majority or ownership to that fund or at least the ability to control the fund).  Some nations see a threat that these funds would invest their capital in certain industries; furthermore some funds could be used as a “Trojan Horse” to control and to guarantee access to strategically important industries.
To understand these issues it is helpful to give an overview about the largest and most powerful funds.

Continue Reading →

November 24, 2007
by Oliver
3 Comments

Green up your product

CarThat is an unusual headline, isn’t it? To be honest, the fundamental sentence was “pimp up my car” and all those measures that take place, when people bring their old, rusty cars to a particular TV show. However, this post has a strong link to the car industry; too…therefore I choose this headline.

Environmental issues have become very popular in the last decade; hence it might be possible that your target customer group will keep an eye what you do in terms of environment al issues. Another option is that your competitor will highlight all his measures to protect the environment or to demonstrate his social responsibility. In this case the overall objective might be to present himself as the “better company” or to “make the better product”.
Furthermore you have to consider that your organization lives in a global village. Access to information trough travel, internet and advertising messages have established common demands and expectations in all countries. Customers have other expectations compared to their expectations years ago, both in general and in terms of environmental issues…and they have chances to share their ideas and expectations on a global whiteboard.

Today I saw an interesting approach by a car maker when presenting a new model in a shopping street in Cologne (Germany). The car maker supports a specific charity event (Canadian Whale Night 2007) that has the objective to transfer all donations 1:1 to the Whale and Dolphin Conservation Society (WDCS). Hence the company was colored in a Canadian Style, presenting the URL of the charity as well as additional flyers on the car.
Continue Reading →