Global Economy

Five ways to grow in any economy

Learn to keep your company moving even when things are stagnant:

Jennifer Brown

Even in tough economic times, small businesses need to find new ideas, develop original products, and engineer fresh market approaches. These are the pillars of good business, and each is made from a mixture of creativity and expertise. While it may seem counterintuitive, it’s entirely possible to implement strategies that drive not only employee engagement, but also innovation and, ultimately, sales - all without enormous investment in systems or people.

What can your company do to remain fresh, vibrant and alive - all without breaking the bank? Here are five ways:

De-emphasize office space

The traditional office space, where cubicles, the hum of overhead lights, and group politics preside, is not usually the most conducive environment for harnessing the most creative ideas. Giving employees the opportunity to perform some or all of their work outside the office can break this routine and cultivate an innovative workforce.

Often simply changing the physical working location to the cafe or tea house on the corner can produce a stream of new and valuable ideas. And many of these ‘third places’ provide complimentary wireless internet access, have space for convening, and sell enough coffee to keep everyone alert. Writers and musicians know about the creative effects of a cafe’s stimulating and relaxing atmosphere - why not CEOs?

Virtualize your workforce

In addition to being ineffective at times, the office space may be an unnecessary expense. The cost of maintaining an office space is usually the single largest line item when it comes to business overhead. Many small businesses have eliminated the expense by ceasing to rent office space and setting up virtually.

Transforming your business into a virtual operation creates the new opportunity to hire and retain talented people from outside of your geographic area and frees up funds to be invested elsewhere.

Keep in mind, though, that while there are many benefits to virtualizing a company, the reduction in face time also necessitates a change in management style. Much greater focus is needed on project expectations and deadlines, as well as clear and consistent communication.

Leverage collaboration applications

At the beginning and end of the day, your business is about people - the clients you serve and the staff that you employ. Connecting these people in the right way is essential to creating and running a great company, and collaboration applications are excellent tools with which to accomplish this goal.

Collaboration applications create new avenues of communication that effectively improve team cohesion and break down the invisible barriers within a company. Intelligent implementation can turn a stagnant, sluggish company into one composed of engaged employees, who contribute more of their ‘discretionary time’ toward the success of the company.

One excellent collaboration application is GoogleDocs, which creates an online conference table where ideas can be put forward, discussed and implemented. Every document created within the application is saved, so it can be opened and edited wherever there is an internet connection. Novice computer users will find GoogleDocs easy to learn and intuitive to operate. Likewise, instant messaging programs such as Skype or MSN Messenger enable fast communication through chat groups formed around departments or projects.

CPS Creative, a website design company, is a great model for its implementation of collaboration software. The company, which is almost entirely virtual, requires all employees to use the same instant messaging program and be online at designated times.

All of the employees assigned to a specific project join the same chat group. Also, at the beginning and end of each work day, all employees check in with their colleagues in order to let them know they have arrived and left.

Invest in the skills of current employees

On a regular basis, companies face a host of small but necessary tasks that must be accomplished, like creating a Flash graphic for the website, writing a marketing brochure, or drafting a press release.

Yet smaller companies cannot afford a dedicated IT department, marketing staff or public affairs coordinator, despite the fact that many of these tasks, like maintaining a functioning and well-designed website, are essential to attracting new business and transitioning from a struggling start-up to a vibrant and growing company.

Hiring new employees with the necessary skills is not the only solution; invest in the skill development of your current workforce. Your staff most likely either has the requisite capabilities to accomplish these projects or can quickly acquire them.

The additional skills will undoubtedly be very marketable, which satisfies your employees while providing for the needs of the company.

One resource to help accomplish this is the website Lynda.com (http://www.lynda.com/), which provides online training in professional-grade applications like Adobe Dreamweaver and Illustrator the required tools to build quality websites and produce stunning marketing materials.

Build cross-functional teams

Finally, one of the greatest methods for producing innovation in a company is to solicit contributions from the entire workforce. Taking your employees, who are the most knowledgeable experts on the company, and gathering them around a conference table will help your company develop innovative solutions with little investment.

CPS Creative once encouraged a non-technical member of their staff to try his hand at Flash design, something that he had never done before. After seeing his immediate aptitude for it, the company merged the product developed by the original Flash expert with the staff member’s design, creating a better product in the end.

Regardless of the condition of the economy, companies should always looking toward expansion. Growing while revenue is stagnant is a difficult, but not impossible, task. Consider these five ideas: shifting the workplace away from the office, virtualizing the workforce, using collaboration applications, investing in new skills acquisition, and tapping into the talents of existing employees.

All of these strategies are inexpensive and cultivate the essential ingredients of successful small (and someday large) businesses everywhere - workforce engagement, innovation and, ultimately, sales.

entrepreneur.com

The world economy

The Great Stabilisation:

It has become known as the “Great Recession”, the year in which the global economy suffered its deepest slump since the second world war. But an equally apt name would be the “Great Stabilization”. For 2009 was extraordinary not just for how output fell, but for how a catastrophe was averted.

Twelve months ago, the panic sown by the bankruptcy of Lehman Brothers had pushed financial markets close to collapse. Global economic activity, from industrial production to foreign trade, was falling faster than in the early 1930s. This time, though, the decline was stemmed within months.

Big emerging economies accelerated first and fastest. China’s output, which stalled but never fell, was growing by an annualized rate of some 17 per cent in the second quarter. By mid-year the world’s big, rich economies (with the exception of Britain and Spain) had started to expand again. Only a few laggards, such as Latvia and Ireland, are now likely still to be in recession.

There has been a lot of collateral damage. Average unemployment across the OECD is almost 9 percent. In America, where the recession began much earlier, the jobless rate has doubled to 10 percent. In some places years of progress in poverty reduction have been undone as the poorest have been hit by the double whammy of weak economies and still-high food prices. But thanks to the resilience of big, populous economies such as China, India and Indonesia, the emerging world overall fared no worse in this downturn than in the 1991 recession. For many people on the planet, the Great Recession was not all that great.

That outcome was not inevitable. It was the result of the biggest, broadest and fastest government response in history. Teetering banks were wrapped in a multi-trillion-dollar cocoon of public cash and guarantees. Central banks slashed interest rates; the big ones dramatically expanded their balance-sheets. Governments worldwide embraced fiscal stimulus with gusto. This extraordinary activism helped to stem panic, prop up the financial system and counter the collapse in private demand. Despite claims to the contrary, the Great Recession could have been a Depression without it.

Stable but frail

So much for the good news. The bad news is that today’s stability, however welcome, is worryingly fragile, both because global demand is still dependent on government support and because public largesse has papered over old problems while creating new sources of volatility.

Property prices are still falling in more places than they are rising, and, as this week’s nationalisation of Austria’s Hypo Group shows, banking stresses still persist. Apparent signs of success, such as American megabanks repaying public capital early make it easy to forget that the recovery still depends on government support.

Strip out the temporary effects of firms’ restocking, and much of the rebound in global demand is thanks to the public purse, from the officially induced investment surge in China to stimulus-prompted spending in America. That is revving recovery in big emerging economies, while only staving off a relapse into recession in much of the rich world.

This divergence will persist. Demand in the rich world will remain weak, especially in countries with over-indebted households and broken banking systems. For all the talk of deleveraging, American households’ debt, relative to their income, is only slightly below its peak and some 30 percent above its level a decade ago. British and Spanish households have adjusted even less, so the odds of prolonged weakness in private spending are even greater.

And as their public-debt burden rises, rich-world governments will find it increasingly difficult to borrow still more to compensate.

The contrast with better-run emerging economies will sharpen. Investors are already worried about Greece defaulting, but other members of the euro zone are also at risk. Even Britain and America could face sharply higher borrowing costs.

Big emerging economies face the opposite problem: the spectre of asset bubbles and other distortions as Governments choose, or are forced, to keep financial conditions too loose for too long. China is a worry, thanks to the scale and composition of its stimulus. Liquidity is alarmingly abundant and the government’s refusal to allow the yuan to appreciate is hampering the economy’s shift towards consumption. But loose monetary policy in the rich world makes it hard for emerging economies to tighten even if they want to, since that would suck in even more speculative foreign capital.

Walking a fine line

Whether the world economy moves smoothly from the Great Stabilization to a sustainable recovery depends on how well these divergent challenges are met. Some of the remedies are obvious. A stronger yuan would accelerate the rebalancing of China’s economy while reducing the pressure on other emerging markets. Credible plans for medium-term fiscal cuts would reduce the risk of rising long-term interest rates in the rich world. But there are genuine trade-offs. Fiscal tightening now could kill the rich world’s recovery. And the monetary stance that makes sense for America’s domestic economy will add to the problems facing the emerging world.

That is why policymakers face huge technical difficulties in getting the exit strategies right. Worse, they must do so against a darkening political backdrop. As Britain’s tax on bank bonuses shows, fiscal policy in the rich world risks being driven by rising public fury at bankers and bail-outs. In America the independence of the Federal Reserve is under threat from Congress. And the politics of high unemployment means trade spats are becoming a bigger risk, especially with China.

Add all this up, and what do you get? Pessimists expect all kinds of shocks in 2010, from sovereign-debt crises (a Greek default?) to reckless protectionism (American tariffs against China’s “unfair” currency, say). More likely is a plethora of lesser problems, from sudden surges in bond yields (Britain before the election), to short-sighted fiscal decisions (a financial-transactions tax) to strikes over pay cuts (British Airways is a portent). Small beer compared with the cataclysm of a year ago-but enough to temper the holiday cheer.

The Economist

Commodity markets stage rally in 2009

Commodity prices rallied in 2009 on keen demand and signs of global economic recovery, with oil soaring and gold striking record levels, while copper and sugar surged.

Many raw materials also rose this week in thin trade ahead of the New Year holiday weekend, with investors winding down for celebrations to usher in 2010.

“2009 has been a rollercoaster ride for most commodity markets, with copper, sugar and New York crude performing especially well,” said VTB Capital commodities analyst Andrey Kryuchenkov.

“Refined copper and raw sugar were certainly the outstanding gainers as both more than doubled from lows at the start of the year.”

He added: “China’s unprecedented financial stimulus had certainly benefited raw materials linked to the expanding infrastructure and industrial growth.

“Demand (from leading industrialised economies) has yet to show significant and sustained signs of an economy recovery. However, end-of-year data, especially from the United States, was fairly encouraging.”

Back in 2008, crude oil and base metals had forged historic peaks on supply woes, before tumbling as the global financial crisis and recession sparked demand worries.

OIL: Crude oil leapt this year by around 80 percent as traders were heartened by evidence that the battered global economy was on the mend, with the eurozone, Japan and the United States escaping a fierce recession.

The worldwide economic downturn had slammed demand for energy and sent oil prices plunging to around 33 dollars towards the end of 2008.

“So much then for 2009, a year that the oil market spent mainly in a recovery mode,” said Barclays Capital analyst Paul Horsnell.

“It produced a (New York oil) average of about 62 dollars per barrel, encompassing a low of 33 dollars and a high of 82 dollars, with prices finishing the year close to the highs after a steady 10-month climb.” However, prices still remain far below the record highs above 147 dollars that were struck in July 2008 on fears of supply disruptions.

New York crude rose on Thursday to briefly hit 80 dollars per barrel in light pre-holiday trade.

The market had climbed on Wednesday after news of a drop in US petroleum reserves, which suggested stronger demand in the world’s biggest energy-consuming nation.

Prices were also supported this week by cold winter weather in the northern hemisphere — which increases demand for heating fuel — and geopolitical concerns over key crude producer Iran.

Last week, the Organisation of Petroleum Exporting Countries held its crude output quotas unchanged at its meeting in Angola, warning of lingering weakness in the world economy.

The OPEC meeting capped a year of recovery for oil prices, which have more than doubled since the cartel set strict quota cuts in the depths of the economic crisis a year ago.

In January, the cartel enforced total OPEC cuts of 4.2 million barrels a day.

New York’s main futures contract, light sweet crude for delivery in February, crept eight cents higher to close at 79.36 dollars a barrel.

London’s Brent North Sea crude for February fell 10 cents to settle at 77.93 dollars.

PRECIOUS METALS: Gold prices sparkled this year, scoring a record peak of 1,226.56 dollars per ounce at the start of December, before tailing off as many traders cashed in gains.

The glamorous metal has smashed records on the back of inflationary fears and increasing moves by central banks to diversify assets away from the dollar, which weakened against the European single currency.

The weak level of the greenback made dollar-priced commodities cheaper for buyers using stronger currencies — which tends to stimulate demand.

However, by Thursday on the London Bullion Market, gold stood at 1,104 dollars an ounce, down from 1,104.50 dollars the previous Thursday.

LONDON, (AFP)

Asian currencies

Asian currencies were mixed against the US dollar last week in thin year-end trade.

JAPANESE YEN: The yen dropped against the dollar in the past week amid growing hopes for sustained recovery in the United States, while Japanese assets looked less attractive due to the nation’s easy monetary policy.

The yen stood at 92.41 to the dollar in Thursday trade in Singapore, down from 91.30 to the dollar on Friday, December 25 in Tokyo. Asian markets took a break on Friday for New Year’s day.

“Expectations of an economic recovery in the United States continued to sustain underlying support for the dollar,” said Yosuke Hosokawa, head of forex at Chuo Mitsui Trust Bank. “The market has reacted positively to recent US economic data, including job figures,” Hosokawa said.

Speculation has grown recently that the Federal Reserve might raise rates sooner than previously expected as the US economy claws back from recession.

In contrast, the Bank of Japan is widely tipped to leave its benchmark lending rate at very low levels for some time yet as it battles renewed deflation in the world’s second largest economy.

Japan’s key lending rate currently stands at 0.1 percent, while the Fed has set a range of zero to 0.25 percent for its main interest rate.

AUSTRALIAN DOLLAR: The Australian dollar ended the week higher, as the currency moved towards the 90 US cents mark in quiet trading, dealers said.

The Aussie closed at 89.68 US cents on Thursday, above the previous week’s close of 88.25 US cents.

Westpac Banking Corp currency strategist Jonathan Cavenagh said the currency’s recent rally came on the strength of commodities, particularly iron ore and thermal coal.

“The whole bulk commodities story is really starting to be a positive again for the currency,” he said. Westpac anticipates the Aussie will reach 96 US cents by the end of the March quarter in 2010.

NEW ZEALAND DOLLAR: The New Zealand dollar finished local trading Thursday ahead of the New Year holiday at 72.57 US cents, up from 70.54 at the end of the previous week.

ANZ chief currency dealer Murray Hindley attributed the kiwi’s rise to end-of-year influences. “There’s no data to suggest this is other than thin market activity... and a continuation of position-squaring into the year end,” he said.

CHINESE YUAN: The yuan closed at 6.8270 to the dollar Thursday on the over-the counter market, compared with Wednesday’s close of 6.8253 and a closing price of 6.8272 to the dollar the week before.

The central bank had set the yuan central parity rate at 6.8282 to the dollar Thursday, compared with 6.8283 on Wednesday.

The People’s Bank of China allows a trading band of 0.5 percent on either side of the midpoint.

HONG KONG DOLLAR: The US-pegged Hong Kong unit ended the week at 7.755 from 7.757 the week before.

INDONESIAN RUPIAH: The rupiah closed at 9,435 to the dollar, from 9,500 the week before.

PHILIPPINE PESO: The Philippine peso closed marginally lower against the US dollar week on week at 46.53 on December 29 from 46.51 on December 23. There was no trading on December 24-25 or from and December 30 to January 1.

SINGAPORE DOLLAR: The Singapore dollar closed the week at 1.4034 to the US dollar from 1.4064 the previous week.

SOUTH KOREAN WON: The won strengthened against the dollar, closing at 1,164.5 won on Wednesday, the last trading day, compared with 1,175.00 won on Thursday last week.

Exporters actively sold the greenback in year-end settlements, prompting suspected intervention by the central bank amid concerns that the won’s persistent strength may sap an export-led recovery.

Dealers said the greenback is poised for more falls this year.

TAIWAN DOLLAR: The Taiwan dollar rose 0.76 percent in the week to December 31 to close at 32.030 against the US dollar. The local currency closed at 32.274 a week earlier.

THAI BAHT: The Thai baht was flat against the dollar over the past week amid light trading, dealers said.

The Thai unit closed the year at 33.33-35 baht to one dollar, a rise of more than 4.0 percent over the past year, and is expected to gain further against the greenback in 2010, they said.

The Kasikorn Research Center predicted that the baht would test the 33.00-level in the first half of next year and close 2010 at around 31.50.