Don’t find a solution, find a way to make it better

12 03 2007

We make a large error in our business and personal lives if we believe that every problem or situation can be solved immediately or in the short term through our decisions and application of resources.

Theoretically it’s possible, but our focus on solution instead of optimizing and making changes to make it better can blindfold us toward evolutionary processes that in the long term provide better, stronger and long lasting solutions.

I’m suggesting that every situation should be initially evaluated based on two basic criteria; can it be solved now, or can it be improved now.

The situations that can be solved now or in the short term, should be. The organization should dedicate the time and resources toward the solution.

An example would be a delivery service that has 3 trucks and cannot cover the current delivery area on-time due to an increase in customers and package volume. A possible swift solution would be the purchase of another vehicle and hiring of a new driver.

A situation that cannot be solved now or ever should be approached by identifying areas where improvement should be made. The time and resources of the company should be focused upon the improvement.

An example would be government’s attempt to eliminate poverty or disease from a population. A perfect solution is not possible or practical, but by focusing on specific areas one can find great opportunities for success or enormous impact (vaccinations for children against polio).

When we look at every situation as a problem that needs to be solved right now we may be missing the best solutions and strategies required to resolve the situation over the long term. Ask yourself:

  • Can we solve the problem quickly and efficiently with simply modification of variables or a shift in technology? If the answer is yes, then set the process and resources in motion.
  • What if the problem is not able to be solved quickly or has no practical or economically viable solution? This is where the approach of resolving and modifying parts of the problem comes into play.

This evolutionary approach to problem solving is not often requested or expected in business (the quick fix is always applauded and sought after), but often the best long term strategy is optimization and gradual modification.

This evolutionary problem solving process will provide new opportunities for change and solutions to be developed in the future.The identification of areas, processes or resources that are the bottlenecks in your organization become areas of opportunity.

Modifying and improving these bottlenecks will automatically create new bottlenecks, in new areas. The focus on identifying and solving these “new” situations leads to a process of continual improvement and a better, stronger organization.

This is one of the fundamental ideas behind the Theory of Constraints (TOC).

Common sense tells us that in a complex world not all solutions are simple, quick or painless. The “quick fix” is a great idea, but not often found in everyday life.

Observation of science, technology, philosophy and business ideas and strategies show us that change occurs through the rare revolution (paradigm shifts and new discoveries) and through the more common evolution (gradual modifications leading to continual change.

What can be changed, fixed or modified today to make the organization, process, product or service incrementally better?

Related Links

Why don’t they?

Starting over

How to systematically analyze any situation for better decision making

AGI Institute – Theory of Constraints

Evolution (Disambiguation)





Top states for business in Mexico – World Bank Report 2007

17 11 2006

I highly recommend that you download and read the Doing Business in Mexico 2007 report, released on November 15, 2006.

For anyone currently doing business in Mexico, or thinking about doing business in Mexico, this is a must read.

The World Bank Group has announced that “Doing business became easier in many Mexican states in 2005-2006, according to the new Doing Business in Mexico 2007 report, released today in Mexico City. The report finds that some states compare well with the best of the world, while others need much reform to become globally competitive.” – November 15, 2006

Quick results of the top ten Mexican states based upon the factors of; starting a business, registering property, obtaining credit, and enforcing a contract include:

  1. Aguascalientes, Aguascalientes (Easiest)
  2. Guanajuato, Celaya
  3. Nuevo Leon, Monterrey
  4. Sonora, Hermosillo
  5. Campeche, Campeche
  6. Zacatecas, Zacatecas
  7. Queretaro, Queretaro
  8. Michoacan, Morelia
  9. Sinaloa, Culiacan
  10. Mexico City (Most difficult)

A full listing of all the 31 Mexican states is available in the report.

Excerpt from the report: “If you were to open a new business in Mexico City, the start-up procedures would take 27 days on average, 8 days fewer than in Shanghai. If you decided to open a business in Guanajuato or Aguascalientes, you would have to wait 12 days—only one day longer than your competitor in Amsterdam. But if you needed to take a customer to court for a simple debt default in Guanajuato, resolving the dispute would take 304 days—far longer than the 217 days it takes in Dublin,1 but significantly shorter than in Baja California Sur where it takes 581 days. These examples illustrate two patterns. First, some Mexican states compare well with the best in the world. Second, many states need much reform to become globally competitive.”

Related Links

Press release on Doing Business in Mexico 2007 (PDF, 75KB)

Doing Business in Mexico 2007 (PDF, 1.26MB)

World Bank Report – Doing Business in Mexico 2005





Sourcing and supply chain strategy – Mexico

16 11 2006

Purchasing from Mexico and Mexican suppliers?

Don Gringo at Catemaco News and Commentary brought these items to our attention.

Sourcing in Mexico gets easier.  The article points out that doing business with Mexico is easier than in the past.

  • The proximity of Mexico to the US markets impacts communication, logistics, costs and time factors.
  • Mexico has a history of dealing with the US, and are familiar with competitive manufacturing techniques.
  • Relationships are critical to success.
  • Beware of stereotypes.
  • Take the time to find the “right” partner.
  • Do’s and don’ts for doing business in Mexico

Does your supply chain strategy include Mexico?  It should.  Al Brown president of SupplyMex writes that Mexico offers:

  • Logistics infrastructure, highways, rail and port system that has been improved over the past 10 years.
  • Free trade agreements with 42 countries.
  • Global production and quality standards.
  • Stable political and economic environment.
  • Skilled workforce.

Thanks Don.
Related Links

Purchasing.com

Why you should pay attention to free-trade treaties 

Maquiladoras in Mexico

Industrial and Business Parks in Mexico





Corruption in Mexico

15 11 2006

Corruption in Mexico.

Quite a bit of interest generated from the piece regarding corruption and bribery in Mexico. Corruption, bribes, mordidas, tips – Doing Business in Mexico

Don Gringo says “Mexico possibly has one of the best governments anyone could buy. And cheap, too.” Catemaco News and Commentary

Bernard Wasow writes in the Globalist “It is no secret that the at law enforcement in Mexico is a “for-profit” business.” Greasing Palms: Corruption in Mexico.

Wide Angle presents a Corruption Chart; How big is Mexico’s problem. Which gives a great state by state overview and comparison of corruption levels in Mexico.

A quote from the page: “According to anti-corruption czar Francisco Barrio, the cost of corruption by government officials and by everyday Mexicans surpassed the amount budgeted for education by more than three percentage points — some 9.5 percent of Mexico’s GDP of $550 billion. Recent studies by the World Economic Forum, an international organization that works to improve worldwide economic conditions, found that the business environment such as rule of law, transparency and corruption were disincentives for foreign investment in Mexico. Corruption, which is often described as a tax, adds to the cost of doing business. The Opacity Index, a study conducted by Pricewaterhouse Coopers, found that Mexico lost $8.5 billion in foreign direct investments in 1999 due to corruption and other suspect legal or economic practices.”

Corruption exists in every country in the world, in politics, in business, in everyday life. In some countries it’s more sophisticated or hidden, in others it’s obvious and required in order to get things done. Mexico is no exception.

People seem to ignore corruption in their own countries, and react with shock and anger to corruption in others.

Depending on where you live in Mexico, what you are trying to do, and who you are dealing with, your experience with corruption and bribery will not echo anyone else.

Evaluation of Mexico, China, Brazil, India or any other country as a potential business location or market should include an analysis of how corruption will threaten and affect your operations, efficiency and bottom line.

Your organization should have a clear understanding of the situation and create a set of rules governing how to deal with the reality and any situations that might arise.

You have to ask and answer the question, “do I want my organization to participate and be involved in corruption and bribery, and at what levels”?

Get advice and information from local businesspeople and consultants on the reality of corruption and bribery. Learn how the culture deals with it, detects it and punishes it before you commit to a strategy, path or action plan.

Related Links

How to do business in Mexico, Parts 1 – 28

Tipping guidelines for Mexico

Doing Business in Mexico – cultural tips

World Corruption Perception Index – 2006

Patience chaos and doing business in Mexico





World Corruption Perception Index 2006 – Transparency International

7 11 2006

Interesting look at perceived corruption worldwide.

Transparency International has released their 2006 index of corruption perception on November 6, 2006.

Mexico lands at number 70 on the list, which puts it close to the middle of the pack out of a total of 163 countries.

Since 1995, Transparency International has published an annual Index of perception of corruption ordering the countries of the world according to “the degree to which corruption is perceived to exist among public officials and politicians“. The organization defines corruption as “the abuse of public office for private gain. ” – excerpt from Wikipedia Corruption Perception Index.

As this index is based on polls, the results are subjective and are less reliable for countries with fewer sources. Also, what is legally defined, or perceived, to be corruption differs between jurisdictions: a political donation legal in some jurisdiction may be illegal in another; a matter viewed as acceptable tipping in one country may be viewed as bribery in another. Thus the poll results must be understood quite specifically as measuring public perception rather than being an objective measure of corruption.

Statistics like this are necessarily imprecise; statistics from different years are not necessarily comparable.” – Wikipedia Corruption Perception Index.

Related Links

Internet Center for Corruption Research

Corruption Perception Index – 2006 (EXCEL)

Transparency International

Wikipedia





Mexico manufacturing, US inventories and safety stock

21 10 2006

Manufacturers are returning to Mexico after “experimenting” in the Asia Pacific region. Some of the big reasons for this return are ; to reduce time to market, eliminate the financial costs of inventories in transit, lower the logistics costs, and to strengthen the supply chain by moving closer to just-in-time deliveries.

But moving to Mexico isn’t going to solve all the problems.

A September 2006 article in CFO magazine points out how US businesses are increasing safety stocks “just in case”. Delayed in the USA The article points out how supply chain disruptions are being provoked by an increasingly saturated US highway system and bottlenecks in deepwater ports and railyards.

The good news is that Mexico is close to the USA, a truckload of goods can leave any point in Mexico and arrive at the US destination in as little as 4-5 days. The railyards and new multimodal Interior Port in Guanajuato, Mexico allow manufacturers to establish production facilities in the interior of the country. Exporters can now clear customs and load the sealed container onto the rail-car at the new (2006) high capacity Customs port located in the geographic center of Mexico.

The bad news is that unless the US begins to upgrade their highway, port and rail facilities, supply chain managers in the US will be buying and storing higher levels of inventory to assure continuity of operations, “just in case”.

Related Links

Delayed in the USA – Supply Chain

Industrial and Business Parks in Mexico

AMPIP Mexican Association of Industrial and Business Parks





Are you involved in creating the future?

20 10 2006

Facts serve no purpose by themselves, they exist.

We confuse the accumulation of facts with education.

A good education should inspire us to continue to discover and understand more. It should give us the tools and teach us how to think.

Thinking is the abilty to visualize, create and discover relationships between facts.

Intelligence should not only be measured by how much we know, but rather on how we apply our thinking and on much of that knowledge is passed to others for the future.

The future will be in the hands of those learning today.

Are you sharing your intelligence with others and creating that future?

(inspired by the study “Are they really ready to work?”)

Related Links

The future of our entry level workforce – gloomy

Are they really ready to work? (PDF)





The future of our entry level workforce – gloomy

19 10 2006

Will our future entry level workforce be competitive and competent?

Are we ready to build a nation full of entrepreneurs and world class workers?

I highly recommend you read the study published by the The Conference Board, Corporate Voices for Working Families, the Partnership for 21st Century Skills, and the Society for Human Resource Management, entitled:

Are They Really Ready To Work? Employers’ Perspectives on the Basic Knowledge and Applied Skills of New Entrants to the 21st Century U.S. Workforce”

According to this study of 431 companies in the US, representing over 2 million employees in a variety of industries and geographic areas, the future is bleak.

“The future U.S. workforce is here—and it is woefully ill-prepared for the demands of today’s (and tomorrow’s) workplace.”

The basic skills and knowledge identified and considered to be very important elements for future employees include:

  • English Language (spoken)
  • Government/Economics
  • Reading Comprehension (in English)
  • Humanities/Arts
  • Writing in English (grammar, spelling, etc.)
  • Foreign Languages
  • Mathematics History/Geography
  • Science

The applied skills, which are increasing in importance as criteria for success in the future:

  • Critical Thinking/Problem Solving—Exercise sound reasoning and analytical thinking; use knowledge, facts, and data to solve workplace problems; apply math and science concepts to problem solving.
  • Oral Communications—Articulate thoughts, ideas clearly and effectively; have public speaking skills.
  • Written Communications—Write memos, letters and complex technical reports clearly and effectively.
  • Teamwork/Collaboration—Build collaborative relationships with colleagues and customers; be able to work with diverse teams, negotiate and manage conflicts.
  • Diversity—Learn from and work collaboratively with individuals representing diverse cultures, races, ages, gender, religions, lifestyles, and viewpoints.
  • Information Technology Application—Select and use appropriate technology to accomplish a given task, apply computing skills to problem-solving.
  • Leadership—Leverage the strengths of others to achieve common goals; use interpersonal skills to coach and develop others.
  • Creativity/Innovation—Demonstrate originality and inventiveness in work; communicate new ideas to others; integrate knowledge across different disciplines.
  • Lifelong Learning/Self Direction—Be able to continuously acquire new knowledge and skills; monitor one’s own learning needs; be able to learn from one’s mistakes.
  • Professionalism/Work Ethic—Demonstrate personal accountability, effective work habits, e.g., punctuality, working productively with others, and time and workload management.
  • Ethics/Social Responsibility—Demonstrate integrity and ethical behavior; act responsibly with the interests of the larger community in mind.

Excepts from the study:”Business leaders must take an active role in outlining the kinds of skills we need from our employees for our companies and economy to thrive.”

“As business leaders, we must also play a role in creating opportunities for young people to obtain the skills they need. Businesses can partner with schools and other organizations that work with young people to provide internships, job shadowing programs and summer jobs. Businesses can encourage their employees to serve as mentors and tutors. Businesses can invest in programs at the local and national level that have demonstrated their ability to improve outcomes for young people.
Finally, business leaders can use their expertise in innovation and management to help identify
new and creative solutions.”

We assume that our schools are producing graduates with fundamental business abilities, why isn’t it happening?

Are we going to accept that the training of the future workforce is in the hands of private business, and not the educational system?

What is the cost to business when new employees must be given remedial training, just to get them up to entry level?

What is your organization doing right now to ensure, or create talent for the future?

Read the study, pass it around the office and makes sure the boss and human resource people get copies.

This is no longer someone elses’s problem.

“ The numbers don’t bode well for the future—the future of our workforce. It is in our interest to help solve the problem. And business has the capacity to help solve the problem by partnering with education and community leaders to create opportunities for young people to practice the skills they need to be successful.” – Bill Shore, Director, U.S. Community Partners, GlaxoSmithKline

Related Links

The Conference Board: Are they really ready for work?

Are they really ready to work (PDF)

Most young people entering the US workforce lack critical skills essential for success

Young Workforce is “Ill-Prepared”





Lessons in international business – negotiations

17 10 2006

Observations on how to create trust, effective meetings and excellent negotiations with overseas customers, suppliers and partners.

  • Whenever you are involved in international negotiations or global meetings keep in mind that you might be working with the same person for the next 10 – 20 years.
  • Negotiations should be open and straightforward.  Hidden agendas will eventually be discovered and make the next meeting very difficult.
  • Negotiations should involve creating value for both parties.
  • Meetings are important moments where trust is being built and confirmed.  Be honest and clear about your desires.
  • Never agree to something you cannot deliver or perform.
  • Listen, understand and evaluate what your partner is requesting.   What are they saying, and what does it mean.
  • Be certain of what you are negotiating and agreeing to.  If not 100% sure, stop and request clarification.
  • Prepare for the meeting several weeks before it happens.  Refresh and add information weekly.  When you reach the meeting, you will be in control of the information and feel comfortable during the talks.
  • At the end of the meeting, write down the most important points or agreements, with names and dates, and have it signed by those present.  This little tip will save lots of time and trouble for everyone involved.
  • Any agreement must have 100% follow-through.  If for any reason problems arise in the follow-through, immediately contact and communicate the situation to your partner.

Related Links

How to negotiate with Mexican business people

Great international business trip results





Great International Business Trip Results

16 10 2006

In any international relationship communication and understanding are critical for success.

Problems created by; language, stereotypes, misinformation, lack of information, and cultural misunderstandings combine with normal business problems to create a complicated scenario for anyone involved in international relationships and global business.

Prepare your international meetings and business presentations using the following questions as a guide to organize your ideas and focus on actions that will produce positive results for everyone involved.

6 Questions – Create Great International Business Trip Results

  1. What does this organization know about me, my company and my country?
  2. What do they think they know about me?
  3. What can I tell them that they do not know?
  4. What do I know about my international partner, culture and country?
  5. What do I think I know about this business, culture and country?
  6. What can they tell me that I do not know?

1. What does this organization know about me and my company. When you walk in the room an opinion has already been formed about you, your organization, and your ability to perform in the future. These ideas are based upon facts, information and past experience.

  • What has been the history of our relationship in their country?
  • Who has been involved in our mutual business, and why?
  • What promises have been made and kept by both?
  • What promises have been made and not delivered upon?
  • What have the major problems and success been in the past?
  • Press and media, our organizations promotional material.

2. What do they think they know about me. Clarifying the unknowns or presumed realities in a relationship is crucial to success. These ideas may be very damaging and limit your ability to trust one another. What stereotypical behaviour can you avoid or prevent? What can you clarify or refute through information or actions?

  • Behaviour and reacts based upon past experience with your organization.
  • Rumour and innuendo, press and media reports.
  • Negotiation styles.
  • Business objectives.
  • Behaviour, goals and methods of doing business based upon country and cultural stereotypes.

3. What can I tell them that they do not know. Today’s business world requires trust, information and solutions. Reinforcing your need to work with your international partner, providing important information or solutions, and clarifying misunderstandings can only help the relationship.

  • Clarify or destroy cultural stereotypes.
  • Clarify business objectives and why they are important in order to reach these objectives.
  • Provide solutions and alternatives to existing situations and challenges.
  • Provide information of value for their business and strategy.
  • Clearly identify current or potential business problems.
  • Predict and have answers ready for their questions.

4. What do I know about my International partner, culture and country? What do I know is true and not innuendo or interpretation? The numbers, facts, information, agreements and past performance history of the business. Information about the country and the business culture.

5. What do I think I know about this business, culture and country? What preconceived ideas and stereotypes are you working with? What are you assuming and what has been proven?

6. What can they tell me that I do not know? What questions do you need to ask in order to verify information or create plans. What pieces of your information puzzle are missing? This is the time to get your questions answered, what are they?

Related Links

Cultural misunderstanding it can happen to you

Stereotypes and global business

Create great international business relationships

16 Essential questions – the international business traveller’s quiz

Lessons in international business





The New Mercenaries – Outsourcing

13 10 2006

Mercenary, as defined by the American Heritage Dictionary: Motivated solely by a desire for monetary or material gain. One who serves or works merely for monetary gain; a hireling.”

Using this definition, and forgetting the military connotations of the word (warrior for hire). The term mercenaries can be used to describe outsourcing suppliers and organizations.

Our outsourcing mercenaries are individuals or organizations that are motivated solely by monetary gain and do not share our organizations philosophies, ideals and interests.

We are hiring mercenaries to manufacture our goods, “do the dirty work”, buy time and help us compete better (and win) against the competition.

Are we weighing the long term risks of this outsourcing strategy?

Beyond the current short term cost benefits, have we identified the long-term strategic and control risks to our organizations by embracing outsourcing?

There are inherent dangers and advantages to using mercenaries. What can history tell us of mercenaries and the long term results of depending upon them?

Niccolò Machiavelli in The Prince (a book about the strategy of power and control), wrote that mercenaries were not loyal, dangerous and even useless: “He who holds his State by means of mercenary troops can never be solidly or securely seated. For such troops are disunited, ambitious, insubordinate, treacherous, insolent among friends, cowardly before foes, and without fear of God or faith with man. Whenever they are attacked defeat follows; so that in peace you are plundered by them, in war by your enemies. And this because they have no tie or motive to keep them in the field beyond their paltry pay.”

The decline of the Roman Empire has been linked to the use and dependence upon mercenaries. The failure to control them, and their infiltration into positions of command and control inside the government.

Mercenaries

  • Historically tend to overthrow the power or control they do not like.
  • Adopt strategies to protect themselves from danger and risk.
  • If talented, will seek to increase their power, and if incompetent will ruin their employer.
  • Have no loyalty to the employers ideals, goals or objectives.
  • Are marked by their materialism.
  • Create their own agendas and goals
  • Their first priority is to themselves and self preservation.

Using (outsourcing) mercenaries can be positive when:

  • There is total control and agreement regarding training, quality, standards, and continual improvement.
  • The competition has access to equal or reduced resources in order to hire mercenaries.
  • There are clear short term objectives and goals, at which point the contract is finished and/or renegotiated.
  • There is clear recognition that their intervention is specialized, unique and required to create an advantage for swift campaigns or to solve specific problems.

Mercenaries and outsourcing become a risk or hazard to your organization when:

  • Mercenaries reach a level of importance and power, where their absence will provoke or contribute directly to your failure.
  • They understand your entire process or have access to your “secrets”.
  • When the competition can pay more for their services than you can.
  • Objectives are not clear, and contracts are not specific.
  • Quality standards fall, or the organization accepts below standard levels of work or products.
  • Mercenaries are relied upon to provide long term stability or to reach long term goals for your organization.
  • You forget that mercenaries respond to power and money, and not on providing quality “soldiering”.
  • You believe that by hiring mercenaries you have eliminated risk from your operations.

What risk factors and changes occur in our organization when we relinquish control over the entire process by using outsourcing mercenaries?

What happens when our outsourcing “partner” says no or begins to work for the competion?

Are we outsourcing because everyone else is, or are there fundamental long term strategic and economic reasons that support the decision?

Related Links

The Dangers of Outsourcing and What You Can Do About It

Reining in Outsourcing Risk





Global competitiveness 2006 – Mexico and China

11 10 2006

The Global Competitiveness Report 2006 – 2007 (Link), released by the World Economic Forum on September 26, 2006 has some statistics and rankings of interest if your organization is expanding into new international markets.

Based upon a mix of economic factors, information and the opinions of international business leaders, the report lists how competitive nations are in relation to one another, and compares this to last years ranking.

Mexico has clicked up a notch from 59 in 2005 to 58 in 2006.

  • Mexico’s ranking has remained broadly stable, moving up one place to 58. The country’s somewhat uneven performance over the various pillars of the GCI is shown by relatively high scores for health and primary education, goods’ market efficiency and selected components of technological readiness, e.g., FDI and technology transfer, no doubt reflecting the close links of the Mexican market to the US in the context of NAFTA. However, this is offset by the same institutional weaknesses as are prevalent in the rest of Latin America.”

China is the big surprise, dropping 6 points this year (48 in 2005, 54 in 2006).

  • “On the positive side, China’s buoyant growth rates coupled with low inflation, one of the highest savings rates in the world and manageable levels of public debt have boosted China’s ranking on the macroeconomy pillar of the GCI to 6th place – an excellent result. However, a number of structural weaknesses need to be addressed, including in the largely state-controlled banking sector. Levels of financial intermediation are low and the state has had to intervene from time to time to mitigate the adverse effects of a large, non-performing loan portfolio. China has low penetration rates for the latest technologies (mobile telephones, Internet, personal computers), and secondary and tertiary school enrollment rates are still low by international standards. By far the most worrisome development is a marked drop in the quality of the institutional environment, as witnessed by the steep fall in rankings from 60 to 80 in 2006, with poor results across all 15 institutional indicators, and spanning both public and private institutions.”

Related Links

World Economic Forum

Institute for Strategy and Competitiveness

U.S. tops world competitiveness index 2006





What can we learn from the piracy business model

10 10 2006

Here is a interesting way to view, prepare for and compete against businesses copying and pirating your content or products.

Piracy is a business model. Anne Sweeney, co-chair of Disney Media Networks and president of Disney-ABC Television Group, announced during a keynote address at MIPCOM. While her focus was on the pirating of media content, the same message applies for manufactured goods.

“It exists to serve a need in the market….. Pirates compete the same way we do – through quality, price and availability. We don’t like the model but we realize it’s competitive enough to make it a major competitor going forward.

What’s so amazing about this?

Taking the piracy is a business model approach allows us to analyze the business model and how it is acting or reacting to the economic fundamentals in the market.

Instead of locking up our company secrets and seeking punishments for the pirates, we can analyze why and where our “competition” is taking advantage of us in order to strengthen and modify our business model.

None of this changes the actual situation. But it might change business strategies and planning when you realize they are competitors and they are here to stay.

What are the advantages of being a pirate, and the disadvantages?

Why are there opportunities for them? What should I be doing that I’m not?

How can I change my organization to take back the market from the pirates?

Once weaknesses in the piracy business model are identified they can be exploited. When strengths are discovered, they can be integrated into our own business model.

The fight against piracy should begin with a focused analysis of the market environment, existing business models and new strategies on how to adapt to the changing market conditions and exploit them to your advantage.

We can stop focusing on the individual “pirates” and their control or capture, and move toward competing intelligently against them.

Related Links

The easy way

The power of something extra

Netribution – Disney Co-Chair recognizes ‘piracy is a business model’

Boing Boing – Disney exec: Piracy is just a business model

@MIPCOM Piracy is a business model


 





The easy way

9 10 2006

Despite all the attention on the power of marketing in order to create and maintain a successful product and business, there are still many organizations and people who don’t want to, or don’t know how to market their products.

They want others to buy their product because they are less expensive than the competition.

It’s the easiest way to sell, requires no planning, no marketing, no effort on the part of the salespeople or the organization. Quick short term results.

Everyone is in the market with the same goods, all screaming and shouting for the customers attention. The customer finds the seller by accident or luck, and proceeds to bargain and negotiate for the lowest price in the market. Very colorful.

It shows a lack of responsibility, lack of marketing, and lack of imagination on the part of the seller.

The owners say: “We need more profit, cut costs and sell more”.

The sales managers say: “We can sell more, but the product is a commodity, what can we do, cut the costs and we can corner the market”.

Production says: “We’ll cut costs, get cheaper raw materials and tweak the design”.

Buyers tell suppliers: “We can try your raw materials or products and see if the market accepts that price, but you have to give me a better price if you want me to buy more”.

Salespeople tell the sales manager: “I don’t know if I can meet that sales quota, it’s not up to me, it’s up to the market to decide”.

Salespeople tell the customer: “We’re cheaper than the competition, buy now”.

The competition is doing the same thing you are.

The customer faced with similar products and lack of information says: “Give me the one that costs less”.

Where was the marketer during all this?

What should they have been doing and saying to the organization and the customer?

If your product isn’t distinct, different or better than the competition. If you are not educating your customer about the advantages of your products and services. You will never have to the chance to market your products.

You will only be able to offer them for sale.

Related Links

Seth’s Blog: Cheaper

The power of something extra

Sales and marketing terrorism





The power of something extra

5 10 2006

Here is a simple but powerful rule – always give people more that what they expect to get.” – Nelson Boswell

What defines an exceptional leader, a great manager, a super business, or remarkable experience? Something extra.

There are two words (one French and the other Spanish) that convey and represent the concept of something extra, lagniappe and pilon.

Lagniappe (hear it) is the word commonly used in Southern Louisiana and Mississippi. It’s defined by the American Heritage Dictionary as an extra or unexpected gift or benefit.

Pilon is the Spanish word used in the southern US and Mexico to describe a gratuity given by tradesmen to customers settling their accounts, it’s something extra, and not expected.

Incorporating something extra in our actions, results and as a business philosophy can be incredibly powerful.

Something extra:

  • forces creativity and innovation.
  • demands clear understanding what is expected of us by others.
  • focuses our attention of adding value, and not on cutting costs.
  • is positive.
  • is rewarded with good will and positive reactions.
  • will lead to continual improvement.
  • is fundamental to continued success.

Something extra is all about the little things and details.

Something extra is not just something “free”, it must arrive without anticipation, unexpectedly in order for it to be special and make an impact.

Something extra allows you to surprise the customer.

Something extra will make think about your results and expectations. It will make the difference between simple compliance and outstanding results.

Something extra will make you and your results different from all the others.

Embracing something extra and applying it on a daily basis, will make you great.

Giving something extra is not a difficult task. It’s all about applying small acts of innovation and creativity to your results, especially for routine and day-to-day tasks.

The power of something extra can change your life, your products, your processes and how others perceive you.

“If you want to be creative in your company, your career, your life, all it takes is one easy step… the extra one. When you encounter a familiar plan, you just ask one question: What ELSE could we do?” Dale Dauten

Related Links

Motivation – Heroic moments

What defines an exceptional leader





Customer driven or customer ignorant

5 10 2006

“When people talk about successful retailers and those that are not so successful, the customer determines at the end of the day who is successful and for what reason.” – Gerry Harvey

Talking about it or Doing it.

  • There are organizations that talk about serving the customer.
  • There are organizations that do what customers want.

Enemy or Friend

  • There are organizations that perceive and react to the customer as an adversary.
  • There are organizations that listen to, seek out and embrace the customer and the customers ideas.

Products or Solutions

  • There are organizations that create products and services because they can, and hope that the customer will find them.
  • There are organizations that innovate and create better products and solutions for the customer.

Now take the word “organizations” and replace it with “governments”.

“This may seem simple, but you need to give customers what they want, not what you think they want. And, if you do this, people will keep coming back.” – John Ilhan

Related Links

There are no new management and leadership ideas

 





Maquiladoras in Mexico

28 09 2006

An Internet search for the definition of the terms maquila and maquiladora will turn up quite a variety of ideas and interpretations.

The maquiladoras have created quite an emotional and political reaction on both sides of the US and Mexico border. They have been accused of stealing jobs from the US, promoting sub-standard working conditions, lowering wages, exploiting workers, and not contributing to the Mexican economy.

Despite the controversy, the maquiladoras are growing and thriving in Mexico. They offer attractive benefits to organizations that are seeking competitive production and assembly costs, skilled labor and Mexico’s proximity to the US market. Recently many transnational organizations that moved manufacturing operations to China in the 1990’s have moved back to Mexico due to cost and logistic advantages.

Maquila and Maquiladoras – definitions and activities

  • The term maquila comes from the Spanish term that refers to the portion paid (in grain, flour or oil) to a miller for milling a farmer’s grain.
  • Maquiladoras are legal entities under Mexican law, with special tax privileges, they provide service, assembly or manufacturing operations.
  • Maquiladoras are able to import raw materials or semi-processed materials from foreign countries, in order to service, process or assemble them in Mexico, and then export the finished product back to that country. These activities take place without the collection or payment of import, export or V.A.T. (value added tax) taxes.
  • The maquiladora program was created by Mexico in order for foreign organizations to take advantage of low labor costs in Mexico (primarily the USA), and to provide employment to Mexican workers in Mexico. Initially the maquila operations were located close to the US border. Currently maquila operations can be found throughout Mexico.
  • Maquiladoras can be 100% foreign owned, 100% Mexican owned, or a joint venture between Mexican nationals and foreign investors.
  • Maquiladoras are also known as twin plants, in-bond industries, export assembly plants and offshoring.
  • The maquiladoras in Mexico suffered from a crisis of plant closings in the 1990’s and early 2000’s as many companies moved operations to China. Since 2004, Mexico has seen a resurgence of the maquiladoras.

  • Check with your attorneys and accountants in Mexico about the specific benefits of the maquila program. As of September 2006, there were important legal changes (simplification and consolidation of government compliance and monitoring programs) that will affect current and future maquiladoras.

Related Links

Why you should pay attention to free trade treaties

Industrial and business parks in Mexico


Official government websites of the 32 Mexican states

Maquila and Maquiladoras in Mexico





Why you should pay attention to free trade treaties

27 09 2006

Globalization, transnational companies, global sourcing and outsourcing, free trade, do any of these terms sound familiar?

Obtaining products and raw materials for the lowest price possible is a fundamental concept in business. Today organizations are looking for manufacturers and locations worldwide where they can find lower costs of production in order to remain competitive.

Combine the factors of: quality control, low cost production, logistics costs, and the time involved to get the product to market from the factory, and you understand the challenge of doing business and sourcing products in today’s global economy.

To truly determine the final cost of the product, all these factors must be calculated. This will determine which country offers the best competitive advantage. Make sure you are analyzing any existing free trade agreements when you are seeking suppliers globally.

Free trade treaties between countries have a significant impact upon the final cost of goods. These free trade agreements eliminate the tariffs and taxes on imported and exported goods between the countries involved, depending upon their concentration or percentage of “local” or national raw materials (including labor), as specified in the free trade agreement.

Free trade agreements between countries are of great importance and value only if are exclusive and not accepted by all trading countries. The more free trade is embraced by the international community (through treaties or elimination of import and export tariffs) the less impact the current free trade agreements have in determining competitive advantages for a single country.

Here is a simple example of how the NAFTA (North American Free Trade Agreement) free trade treaty between Mexico and the USA, would favor the US supplier over a Chinese supplier.

Example of free trade agreeement competitive advantage:

US supplier to Mexico. If I want to purchase paint made by a US paint manufacturer and have it shipped to my warehouse in Mexico, my total cost to bring the goods to my warehouse in Mexico would be the cost of the paint, plus freight and customs clearing costs. There is no import tariff on this product due to the NAFTA free trade treaty. It would take 4 – 6 days to arrive in my warehouse in Mexico once the product has been shipped from the USA.

US paint $ 20.00 + Freight $ 4.00 + Customs $ 1.00 = $ 25.00 total cost of the US product in my warehouse in Mexico

Chinese supplier to Mexico. If I purchase the same product, from the same transnational company, but it is manufactured in China. Transportation time is 40 days from date product is shipped from China.

Chinese paint $14.00 + Freight $ 8.00 + Customs $ 1.00 + Import tariff (13% of CIF value) $ 2.86 = USD $ 25.86, total cost of the Chinese product in my warehouse in Mexico.

In this example the final cost of the product is $ .86 lower from the US supplier as compared to the Chinese supplier, despite a lower initial product cost. Factor in the financial cost and time required to move the product from the factory to my warehouse, and the lowest final cost in this case would clearly come from purchasing product from the US supplier.

Mexico’s aggressive free trade strategy

Since the 1990’s Mexico has bet heavily on international free trade agreements as a method to improve their competitive advantage and increase their manufacturing base and attract foreign investment.

Mexico has signed 11 existing free trade treaties and 2 complementary economic agreements with 42 countries. It is the only country in the world to have standing free trade agreements with North American and the European community.
The free trade agreements have greatly increased international competition (imports) in Mexico (good for the consumer).

Free trade agreements have allowed Mexican exports to increase and reach destinations and markets that were closed before due to tariffs and costs. There has been increased foreign investment from countries that desired to use Mexico’s free trade competitive advantage for international manufacturing and export projects.

The Mexican manufacturers and suppliers of the national Mexican market were given a “sink or swim” option. Virtually overnight (many of the treaties were phased in over a period of 3 – 10 years), their previous protected market was filled with imported goods (more competition, lower cost, higher quality).

Those that have survived the “invasion”, have had to improve their efficiency, quality and costs. Making them much more competitive in todays global economy.

Britannica’s Definition of free trade:

“Policy in which a government does not discriminate against imports or interfere with exports. A free-trade policy does not necessarily imply that the government abandons all control and taxation of imports and exports, but rather that it refrains from actions specifically designed to hinder international trade, such as tariff barriers, currency restrictions, and import quotas. The theoretical case for free trade is based on Adam Smith’s argument that the division of labour among countries leads to specialization, greater efficiency, and higher aggregate production. The way to foster such a division of labour, Smith believed, is to allow nations to make and sell whatever products can compete successfully in an international market.”

Related Links

Mexico and international free trade agreements





Mexico and international free trade treaties

19 09 2006

Mexico has signed 11 international free trade treaties and 2 complimentary economic agreements since 1993.

Mexico is the only country in the world with active free-trade treaties that cover North American and the entire European Community.

These free trade agreements have made Mexico highly competitive in terms of manufacturing for export to world markets, for the importation of raw materials for manufacturing and for the import of consumer goods for sale in Mexico.

The free trade agreements currently in place include:

  • TLCAN – Includes Mexico, USA and Canada – Initiated January 1, 1994 (NAFTA in English)
  • TLC-G3 – Includes Mexico, Colombia and Venezuela – Initiated January 1, 1995
  • TLC Mexico-Costa Rica – Includes Mexico and Costa Rica – Initiated January 1, 1995
  • TLC Mexico – Bolivia – Includes Mexico and Bolivia – Initiated January 1, 1995
  • TLC Mexico – Nicaragua – Includes Mexico and Nicaragua – Initiated July 1, 1998
  • TLC Mexico – Chile – Includes Mexico and Chile – Initiated August 1, 1999
  • TLCUEM – Includes Mexico and the European Union (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Holland, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, United Kingdom, Cypress, Czech Republic, Estonia, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia) – Initiated July 1, 2000.
  • TLC Mexico – Israel – Includes Mexico and Israel – Initiated July 1, 2000
  • TLC Mexico – TN – Includes Mexico, El Salvador, Guatemala and Honduras – Initiated on March 15, 2001 with El Salvador and Guatemala and June 1, 2001 with Honduras
  • TLC Mexico – AELC – Includes Mexico, Iceland, Norway, Liechtenstein and Switzerland – Initiated July 1, 2001
  • TLC Mexico – Uruguay – Includes Mexico and Uruguay – Initiated in July 15, 2004
  • AAE Mexico – Japan – Includes Mexico and Japan – Initiated April 1, 2005

In addition there are Complementary Economic Agreements (ACE’s) in place with Brazil and Argentina.

Related Links 

Why you should pay attention to free trade treaties 





Stereotypes and global business

8 09 2006

A stereotype is defined as an unvarying form or pattern, specifically a fixed or conventional notion or conception of a person, group, idea, etc., held by a number of people and allows for no individuality or critical judgement. (Webster’s New World Dictionary, 1998)

Stereotypes are representative of a society’s collective knowledge of customs, myths, religion, ideas and sciences (McCrea,Stangor and Hewstone)

Working with global clients and international cultures provides the opportunity to breakdown and destroy existing stereotypes. Global business encourages and forces a confrontation of cultures and preconceived ideas.

Successful international trade and business is all about marketing. Marketing your product, yourself, the organization, your country and customs. Changing fixed and conventional notions and beliefs.

Interactions with other countries and cultures will be successful when we create an atmosphere of trust, build enthusiasm and excitement, and project an image of the organization or product that appeals to, and will be embraced by the client.

In essence, we are breaking the old stereotypes and helping to create new ones.

Related Link

International business traveller – ambassador, explorer, map-maker

7 tips for doing business internationally