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Related Business Strategy: Diversification in Retail Firms

When the economic recession occurred in 2008, many business failed. In spite of this, however, many people saw an opportunity to start a business.

Many people decide on business ideas without careful research into whether there is sufficient demand for the product they plan to market. Dominic Salvatore, author of Managerial Economics in a Global Economy that “the quantity demanded for a commodity is a function of, or depends on the price of the commodity, the consumer’s income, the price of the related commodities,( i.e. the substitutes and complements for the commodity), and the tastes of the consumer.”

Limitation in Cash Flows

The consumer’s income in 2008 has been a major influence in the sale of products and services during his economic recession. Millions of people were laid off from jobs due to the financial difficulties of the automobile industry and other major employers. As a result, consumers were spending less money and became increasingly pessimistic about the economic recovery plan of the United States. Therefore, demand for many products and services declined.

Crisis in Supply Chain Management

As the automobile industry bailout resulted in a reduction in the production of automobiles, their suppliers went out of business because the automobile companies were their largest customer. When consumer income decreases, the businesses must find other uses for the product or increase promotional efforts. Since the products were unique to the automobile industry, the suppliers did not find an alternate market and many were forced out of business.

Action Planning

To avoid this in the future, the business owner must undertake a strategy which will work for him in times of economic decline. One strategy to employ is that of diversification in business. One can either undertake a related business strategy or an unrelated business strategy. Diversifying through related businesses helps the business owner to leverage the power of cross-business relationships which will help them to perform better under one umbrella.

For example, the CIT Bank is involved in factoring loans, leases, vendor finance programs and import and export financing, among other businesses. Its clients include those in the transportation, aerospace and rail, manufacturing, wholesaling, retailing, health care and other industries. All of theses clients could utilize more than one of the company’s products.

Recently, when CIT Bank was in danger of filing for bankruptcy, it was able to secure additional financing for its business because it could use the assets of the other businesses as collateral against the loan. The failure of this bank would have put may of its customers at risk, since they are dependent upon CIT Bank for factoring loans.

In conclusion, while there are opportune times to diversify and for some businesses, it may not be a good idea to diversify. Proper and thorough research into the market, after the core business services are established and profitable, will ensure success in diversifying a business.

Managing Business Case Risks: Security Measures Are Important Components in Corporate Systems

Implementing data security measures implies associated business case risks which need to be examined and assessed in conjunction with the proposed security solution.

In every case, the risk to the organization must be reduced to an acceptable level. Here are some of the potential risks:

  • Failure of the security solution to accomplish objectives
  • Presence of residual security risks not addressed by the proposed solution

Risks need to be properly identified, evaluated and addressed. The impact of these risks can be minimized by proper project management and control of the implementation process. It is important to note that risks are events, not issues, and the probability of occurrence and estimated business impact, should be calculated and documented.

Business Case Recommendations

For security solution implementations, business case recommendations must be presented to describe the justification for the recommendations, clearly put forth to enable readers at all levels of the organization to quickly understand the extent of the investment the nature of the product, service or resources which will provide the solution.

As for any business case presentation, an executive summary should be provided to summarize the details to be found in the presentation. Executives authorized with approving the recommendations will need to have this summary presented in a format which will enable them to understand the concepts sufficiently to warrant approval.

In presenting the business case, it is important to state as many positive factors that support the recommendations, in particular, setting out why a particular option is the best. For example, it may deliver the best ROI, it is the most effective solution, or it is the only option that can meet current business needs or regulatory compliance requirements.

Senior executives will be most interested in the option which offers the lowest cost, so other key factors, compliance, operational risk, and business enhancements, need to be emphasized. A major consideration in making a final decision is the support provided to other departments in the organization.

Protecting Corporate Property and Investments

Increasing security risks in the corporate environment, particularly those from targeted intrusions by experienced hackers, emphasize the requirement to implement effective security solutions using database assurance technology. Software security solutions are now available which enable organizations to re-evaluate their corporate systems to determine the best methods for protecting corporate assets, and to incorporate these security solutions in their corporate system structure.

Legacy investments need dynamic protection methods which can adapt with changing security threats, without increasing overhead costs or interfering with business processes.

Digital security in today’s corporate environment is progressing to being much more than an after-thought to functioning as an integral part of a business operation. Risk assessment of security issues has created business cases for security solutions which require a different set of assessment criteria than for traditional and more common business case proposals.

Significant Benefits

Corporate management needs to have a well-presented and well-documented business case, spelling out in detail the key requirements, business considerations and other elements of the proposal to obtain approval for the necessary expenditures for the selected security solution. There are significant benefits to be achieved for an organization which conducts the proper analysis and assessment of the risks and develops an appropriate security solution for database assurance, which takes account of these risks and delivers a positive ROI. These are the steps which have the potential for putting an organization ahead of any intrusion attempt.

Preparing for Business Negotiations: A Homework Checklist

Any experienced negotiator knows to do their homework before a negotiation.

Obviously, homework takes time and costs, money and the smaller the deal; the less homework can be justified. But within the limits of time and budget, the good negotiator does as much homework as possible.

The Good Negotiator’s Homework Checklist

Subject matter. The good negotiator will be thoroughly knowledgeable about the subject of negotiation. If they are not an expert on the topic, they must quickly learn as much as they can on the matter

The negotiator’s organization. The fully prepared negotiator searches his whole organization for carrots and sticks. The more carrots and sticks, the more leverage. Go on a leverage hunt. Who else in the organization has something the other side might want? Purchasing, credit, sales, and other departments should be polled to insure that no potential trade offs are being overlooked or wasted. Any handy requirements to fulfill, adjustments to make, or disputes to resolve can become trading ammunition.

The counterpart’s organization. What’s their history, financial situation, political situation, culture, and reputation? What are their short-and long-term goals What does their organization chart look like? Who reports to whom? What’s their deadline? Are there potential cross-cultural negotiating issues?

The individual counterpart. What’s the counterpart like? What is his reputation? What is his position? What are his interests and possible secondary interests? What concessions-obvious and obscure-might appeal to him? Is he known to use specific negotiating techniques (such as starting high, limited authority, good guy-bad guy)? Does he tell the truth? Does he keep his word? Has he written anything that might reveal some information? What personal interests might he have that could be used as small-talk material? Is he from a different culture and/or country?

Setting an envelope*. More than anything else, homework is about Envelope-setting. It’s by far the most important homework task. Everything learned while doing homework will ultimately be reflected in the envelopes. If there are multiple issues, envelopes must be set for each issue and given a relative value. If the negotiator takes the time to determine his envelope with care, he’s almost surely going to do most of the important things right. He’ll start high. He’ll trade concessions. He’ll make each concession smaller than the one before. He’ll nibble (go for some small concession from the counterpart) at the end. He’ll know when to dead lock.

Authority issues. The homework period is the time to get authority issues straightened out with the boss and organization. Detailed approvals at this stage will help avoid misunderstandings later. Beware of overly broad grants of authority. Get the higher-ups to agree to stay out of the bargaining. Prepare them for patient negotiations with long stretches devoid of apparent progress.

Team preparation. If a team will be negotiating, the good negotiator ensures that he has minimized the team’s size. He has briefed everybody on the overall game plan. He has assigned roles. Most importantly, he will discuss agreed upon communication rules with the team. There will be a single spokesperson, there will be no note passing or whispering, and team members can call a caucus whenever they wish.

Nibbles. What are some worthwhile things to nibble for? What nibbles might the other side seek? If they did, what should be asked for in return? Having a list of candidate nibbles in advance will significantly improve the overall quality of nibbling, especially when the negotiator is tired at the end of a session.

Creative concessions. The good negotiator identifies in advance any concessions that, while not particularly costly, might be especially appealing to his counterpart. Or something that is appealing to his counterpart’s boss, or other higher-up. Can the relationship between the sides be expanded so as to provide more potential trade-offs?

There’s No Subsitute For Proper Preparations Before a Negotiation

The side with the most information usually has the upper hand in negotiations, no matter how brilliant the negotiators might be. There is simply no substitute for doing homework to prepare for a business negotiation.

Setting Up A Stamp Collection Export Business: Turning a Fun Hobby into a Profitable Home Enterprise

This article shows how an entrepreneurial stamp collector can market commemorative stamps to millions of stamp collectors around the world at very little expense.

Exports of collector items including antiques, artwork and stamps represent a thriving niche market in international trade. America shipped US$8.5 billion worth of collectibles to its trade partners, up 12.7% from 2014 according to the US Census Bureau – Foreign Trade Statistics.

Many countries issue commemorative postage stamps to honor special events, sports heroes and other celebrities. While superstar series stamps may be readily available in their country of issue, those same stamps will be scarce and possibly in high demand in other countries.

Whether new or used, exporting postage stamps is a virtually risk-free way to profit from a product uniquely made in the exporter’s home country.

Examples of Special Issue Stamps

Back in January, Australia issued stamps to celebrate Cate Blanchett, Nicole Kidman, Geoffrey Rush and Russell Crowe – all Aussie winners of Oscar awards. With each celebrity stamp costing only AUD$0.55 (US$0.39), the expenses for selling 4-stamp sets of Australian Oscar winner stamps to stamp collecting fans in North America, Europe and Asia would be minimal. Shipping costs would also be small since an exporter could use lettermail to send collectible stamp sets, rather than have to rely on more expensive parcel delivery.

If the US Postal Service issues a set of commemorative stamps to celebrate the life of pop star Michael Jackson, American stamp collectors will be presented with an opportunity to export Michael Jackson stamp souvenirs to collectors and fans around the globe.

Canada has released a set of domestic postage stamps that feature competitive sports for the upcoming Vancouver Winter Olympics. These include bobsleigh, curling, freestyle skiing, ice sledge hockey and snowboarding. Canadian stamp collectors can easily set up an export business selling these special stamps to collectors in the more than 80 nations that will compete at the Winter Games.

Stamps are Free from Export Restrictions

As confirmed with Canada Border Services Agency, collectible stamps are non-restricted goods for export purposes. Similarly, the Australian Customs and Border Protection Services website excludes postage stamps from its list of prohibited and restricted imports.

Export documentation for collectible stamp shipments will be minimal, with no requirements for extra permits and certificates. In Canada, shipment of rare stamps valued at C$2,000 or above would require the exporter to fill out an export declaration form. Exporters should also consider insurance for higher value shipments.

Collectors’ pieces including postage stamps are duty-free in countries like Canada. Exporters should research whether other importing country charges any customs duties on stamps under tariff item code 97050000.

Other Advantages of Exporting Collectible Stamps

Partly due to small size, collector stamps also enjoy the following advantages as export products.

  • Stamp collecting is a hobby that people of all ages around the globe can enjoy
  • Very little storage space is required for inventory
  • Unlike perishable food products, postage stamps are durable if properly stored
  • Unlike technology product exports, collectible postage stamps never go obsolete
  • While many products depreciate, stamps can appreciate in value over time
  • Variety of stamps available enables exporter to creatively mix and match stamp sets
  • Stamps encourge repeat business as international hobbyists expand their collections.

The Competition Bureau of Canada has no labeling and packaging regulations that apply to exported postage stamps.

Marketing Stamps and Stamp Collections

A large percentage of the population in more developed countries are Internet users. Collectible stamp exporters can reach that international audience by tapping available web resources. Below are ideas for prospective stamp exporters to consider; most of these are free.

  • Amazon.com collector item sale listings
  • eBay sale listings on main (eBay.com) and local websites (Australian eBay site)
  • Craigslist collectibles listings in city sites of the target country (8 Australian cities)
  • YouTube videos that educate consumers about special stamp issues
  • Google Ads that target keywords pertinent to stamp collections
  • Blogger site where one can post articles promoting collectible stamps
  • Trade portals like Alibaba and Kompass allow free business-to-business listings.

Collectible stamp exporters can also tap into popular social networking sites in target foreign markets. For example, an American entrepreneur looking to sell stamps to Australian collectors might join:

  • Facebook Australia
  • Twitter Australia.

Responsible, Ethical and Sustainable Businesses: Business Ethics Involves a Concern for Environment and Social Issues

Responsible business practices include dealing fairly with employees and the community, using non-renewable natural resources carefully and avoiding environmental damage.

At a global level, the ethical issues facing businesses include reducing poverty, fighting corruption and adopting sustainable business models while they go about their main role of making money. Institutions like the World Bank are encouraging and equipping the private sector in corporate social responsibility and care for environment and the community.

Why Bother with Responsible Business Practices?

Irresponsible business practices lead to social instability and even damages the prospects of business itself. Businesses prosper when they can sell increasing volumes of products and services. This can happen only if the buyers can afford to buy what is offered.

Irresponsible business practices that lead to reduction of employment opportunities tends to reduce the volume of demand by concentrating wealth in the hands of a few and reducing the purchasing power of the majority.

Unethical business practices such as using bribery to get orders or to get out of trouble lead to distortions. They reduce the competitiveness of industry, lead to lower quality products and services, and also to an environment where rule of law is the exception rather than the rule.

Irresponsible businesses also damage our environment by polluting it and exhausting non-renewable resources. These lead to lower quality life in the present with polluted air, waterways and new kinds of diseases. Indiscriminate exploitation of non-renewable energy and other resources is equivalent to robbing future generations.

The Responsible Business Movement

With increasing awareness about the consequences outlined above, the public is becoming more assertive. They try to punish irresponsible businesses by boycotting their products and refusing to buy their shares. Highly skilled and talented employees, who can find employment where they want, tend to join companies with a reputation for responsible behavior.

The public also constitute the voters and governments have to bow to their wishes. The increasing reach and complexity of government business regulations seek to prevent irresponsible business practices.

In such an environment, businesses that do not adopt responsible practices tend to lose business and also run foul of the law. Instead of running the business, they have to fight the public and government regulators.

Just as working conditions and compensation of workers have improved dramatically over the centuries, responsible and ethical business practices are also likely to be adopted by more and more businesses as time goes along. They will be the winners in the long run because they will get greater public support and business.

This tendency will be strengthened by the increasing levels of public communication in the forms of blogs, social networking and other such forums. Programs like the World Bank’s sustainable and equitable business development campaigns also support this trend.

Businesses that are aware of their social and environmental responsibilities, and implement good governance and accountability, will get increasing public support and their orders. On a global scale, responsibility will also involve poverty reduction and creating health awareness. Gender equality, fighting corruption, job creation and preventing climate change will become part of accepted corporate responsibility.

Business Process Management Aims at Adding Value: BPM Seeks to Optimize Customer Need Fulfillment and Business Costs

Business process management focuses on the basic business objective of survival and prosperity through continuous improvement of the value delivered to the customer.

BPM is a continuing exercise to analyze existing business processes and improve them. The improvements can take different forms such as using technology for better performance and/or quality, removing bottlenecks or reducing costs. Delivering better value at lower costs keeps a business competitive, and this is the basic objective.

What Exactly Are Business Processes?

A business process consists of a series of related, structured activities that achieves a predetermined goal. The goal can be getting a customer order, producing a certain quantity of products meeting required quality standards, or even producing an accounting report. In a typical business, a large number of processes will be taking place at the same time.

There are management processes such as strategy development that focus on governance, operational processes such as production and marketing to execute the core business operations, and supporting processes such as maintenance, accounting and HR that are incidental to the core operations. Managing all the processes to work together to provide customer value at optimal costs is the overall business objective.

Businesses start with a customer need, develop processes and sub processes down to activity level to meet that need, and complete the overall process on fulfilling the customer need. It is this focus on customer needs that helps design and implement best practice processes. In the absence of such a focus, businesses tend to get compartmentalized into ‘functional silos’ with each functional department trying to further its own priorities.

Well-designed business processes eliminate activities that do not add customer value.

Business Process Management in Operation

Systematic BPM involves Designing, Modeling, Implementation, Monitoring and Optimizing.

  • Design: All elements of the existing business process such as process flow, human actions, standard procedures, alerts and handovers are mapped. New designs that seek to improve the process are developed.
  • Model: Alternatives are evaluated by checking how they are likely to operate if implemented. “What if” scenarios are simulated. Tools like graphic flowcharts, data flow diagrams and PERT charts, and computer simulations of complex scenarios are used to help analysis and evaluation.
  • Implement: The trend these days is towards automation. Computer applications use business rules to automate tasks wherever possible. Provisions are made for human input where the task is too complex for automation.
  • Monitor: Monitoring has two dimensions. It checks the current status of a process and generates alerts in real-time or on an ad hoc basis. Secondly, it mines data logs to compare performance against the model and generates reports.
  • Optimize: Performance reports and observations during the implementation and monitoring stages are reviewed to identify bottlenecks and the potential for performance improvement or cost reduction. The findings are used to revise the design and the cycle of value improvement starts again.

BPM and Business Competitiveness

It is the continuing exercise of business process management that keeps a business competitive by creating better performing products, marketing it more effectively or reducing costs of operations. BPM seeks to exploit the potential of new technologies for improving business processes. BPM also seeks to manage continuing changes effectively by attending to the people aspects involved.

Business processes are the groups of activities and tasks that, together, keep the business operating. In typical businesses, numerous processes of managerial, operational and supporting nature will be taking place simultaneously. The task of coordinating all these processes becomes more efficient when the common goal of adding customer value governs all the different processes. Elements that do not add value for customers are eliminated from processes. Business Process Management (or BPM) is an exercise that seeks to improve customer value addition and cost reduction on a continuing basis.

Student Grants for New Age Entrepreneurs

Below is a guest post from Avky Inc co-founder Aleksandr Vasser on obtaining student grants for entrepreneurial purposes.

Many young entrepreneurs recognize that high school and college years are the best times to launch a business. They are surrounded by resources such as teachers, professors and other school-affiliated mentors.

They have access to the knowledge of these mentors, as well as a wealth of information inside their school libraries. In most areas, local businesses and organizations recognize the talent in young entrepreneurs, and offer funding to students who exhibit promise and present feasible business ideas. With the help of this funding, it is possible for students to launch a business before they even receive a diploma. This is possible even more in this age of technology, where online commerce is so readily accessible.

Licensing Executive Society Foundation

In an annual competition held by the Foundation of the Licensing Executives Society, students compete for a grant of $10,000. To enter, students must first show judges that they understand why intellectual property is an important component in a business strategy.

Throughout the competition, competitors network with the members of the foundation and learn essential business strategies. Judges assess each student’s submission of a business outline that must emphasize intellectual property. Before the final ceremony, a select few competitors travel to London for a convention hosted by the foundation.

Edson Student Entrepreneur Initiative

Arizona State University offers local students funding for businesses through the Edson Student Entrepreneur Initiative. The University awards grant money ranging from $5,000 to $20,000 to ten or fifteen teams of young entrepreneurs.

These teams consist of up to five members and are headed by a student currently enrolled in college or graduate school. Although non-University students can be on a team, they cannot be the leader. Ideally, each member should have a different major. Each team must already run a business. Judges decide the winner after listening to presentations from each group.

Green Bay Youth Entrepreneur Grants

Young entrepreneurs in the Green Bay, Wisconsin area can take advantage of grants provided by the Green Bay Area Chamber of Commerce. The Chamber provides grants up to $500 to middle or high school students that wish to run a business over summer break. Students must live in close vicinity to the Green Bay area.

In order to apply for a grant, students must compose a business proposal. Local organizations such as the Small Business Council offer help to these applicants. The Commerce offers grants to students who attend any of the ten school districts within the Green Bay region. Students must submit their applications in time for the April deadline.

Global Student Entrepreneur

Available to students internationally, The Global Student Entrepreneur Awards distributes grants to young entrepreneurs in university, college or high school. In order to be eligible, a student must already run a profitable business that has brought in a return on investment for six months in a row. Judges base their decisions on the strengths of each student. Ideal candidates show leadership skills, innovation and strong character. Awards go out throughout the year, and vary in amount.

Five Characteristics of Successful Entrepreneurs: Utilizing Discipline and Proper Communication Creates Success

It’s just not the ordinary person can make themselves a successful entrepreneur. It takes a disciplined person to be able to properly communicate their idea behind a business, product or service and then administer that idea through a fleet of employees and then present the item to a consumer who is willing to make the purchase or investment. There are a few characteristics that every successful entrepreneur must be aware of in order to make money and promote their brand and name. Here are the five characteristics of successful entrepreneurs.

  1. Have an open line of communication among a team of employees, investors, consumers and anyone else who is involved in the running on one’s business. Just because a person may have a great idea for a product or service, it doesn’t mean they can hire an outside person to perform their duties. The owner of a business is the face behind the brand and it’s important for the entrepreneur to be able to talk about the item, market the brand, provide a call to action for consumer’s to make a purchase and speak to potential investors in order to improve the capital of the company.
  2. Have an open mind when it comes to other people’s ideas. Many other resources and people will come into the business in order to improve sales and selling tactics. Look into creating partnerships with those who have an expertise in marketing, public relations and investments in order to see the business grow. While the entrepreneur may have a healthy background in the product or service they run, there are many other people with different educational backgrounds who can also assist.
  3. Be able to properly identify a staff of employees who can properly carry out responsibilities of the business. It’s a vital characteristic to be able to identify a type of person that can handle their job title and follow through with all of their responsibilities. While many employees can talk the talk, it takes a successful entrepreneur to decide who can walk the walk, so to speak. Successful mompreneurs pay attention to cues and how a person acts so that it can be properly determined if they can uphold their job position.
  4. Be completely knowledgeable about the industry the business operates in. It’s important to be well adverse in every spectrum of the business and to remain in the forefront of current trends in the market. For example, if an entrepreneur is the owner of a successful restaurant, it is important to attend food expos or read up on what tastes and trends are entering the food business. Becoming knowledgeable on every spectrum of the business can also inspire the entrepreneur to be inventive and make additions to the product or service they hold.

5. It’s important to listen to what consumers have to say about the product or service and take into account any criticism. Not only will the consumers create revenue within the business, but they are also important when it comes to making improvements or revisions to the business. Listen to critique and imagine ways for improvement.