Corruption, sexism and thrift

 http://www.bbc.co.uk/podcasts/series/bizweekly

The chosen audio covers several problems. I'll try to classify them into key points.

1. Sexism.
Despite emancipation of women still a lot of cases of sexism take place. According to the research, in the UK women make up only 12% of board members and 15% in the US.
Taking into consideration the top 250 companies, we will see that only 7% of the representation of their board are women. A former banker, Lour Davis notices that more women on the board could introduce the better reflection of the society and get better performance. 'If you need the right level of discussion, engagement, and professionalism on the board you need more women.' - Mr. Davis says.
Jo Dickson, who worked at the top of the British bank, was on the board of a football club and currently is on the board of  two stocklisted companies can tell a lot of horror stories about her early days in business. Once there was a morning meeting of the board she was invited to join this meeting. Jo knew all the directors at that point, except for one. When she arrived in the room this unknown executive turned to her and said: 'Hello, Jo. We haven't met and I don't know tou THINK you are doing at this meeting because this bank has been run by men for 300 years and people like you are used to be home having babies.'
Jo was insulted, but she answered calmly: 'John, thank you very much for saying this. It's very kind of you to say it right to me, because a lot of people have the same opinion but they don't have the nerve to say it to my face. I have been invited to this room for  a reason and overtime you might realise why that is. This bank has a future and  a part of this future will be people like me who won't sit home having babies.'
According to Jo, companies should think of more flexible timetable, so that it didn't require 24/7 job. It could give them an opportunity to use a bigger pool of talents, including women-workers.

2.  The truth of ikea.
Nowadays Ikea is the largest furnature retailer which made its 85-year-old Ingvar Kamprad the 5th richest man in the world.
The broadcaster had an interview with Johan Stenebo, a former senior Ikea executive, the author of the book "The truth of ikea". Johan revealed a lot of ikea's unusual business culture. The corporate culture of Ikea is unique and it's entirely value based. The values of Ikea imply to doing a lot with small means. That means that one should be really cost-conscious from not allowing to wear a tie to how you fly, how you live3 in hotels, what kind of hotels and so forth.
Mr. Stenebo gives the example:
'If we go back 20 years men went to East Germany and Poland for purchasing aims. During such trips they had to share the same bed in the hotels. These trips could last for about 3 weeks.
By and large there weren't any problems with the business culture: it was very strong from the business point. It brought the management of Ikea together and they delivered a lot of good stuff.
However, Ikea could do a lot more for environment and to the values: how to work with ethnic minorities, how to let women a chance to reach the higher positions on the company and so on.'
Speaking about the profile of Ingvar Kamprad, Johan mentioned that privately he is a very genefous and thoughtful man. The problem one could have with the picture of Mr. Kamrad is that people want to think of famous people  in black and white terms, but that doesn't work with him. Ingvar Kamprad is too multidimensional.
According to Johan Stanebo's point of view, despite fantastic ikea's results in developing there are 2 factors working against its further rapid growth. The more company is the less good decisions are usually taken. Moreover, despite the sons of Mr.Kamrad are good people, they don't have a brilliant business mind of their farther. Therefore it could be very destructive for the development of Ikea in the future.

3. Toxic sludge of the reservoir of the plant in Hungary.
Salton Iesh estimates financial and legal consequences of the spill at the mark of 150 - 200 000 000 $.
The investigation of the catastrophe has taken place by the police and other authorities. The owner is known, operators are known, so when the responsibility is announced, then the responsible parties must pay.
The lawer of the aluminium company insists that the company isn't liable. The company's standpoint is that they followed all the instructions of the monitoring agence and therefore members of the management of the company or the employees of the company aren't responsible for the catastrophe.
Moreover, the aluminium company claims that the state environmental monitoring agency carried out the most recent examination just 9 days before the disaster and found nothing wrong.
In this situation the investigation must clarify who's responsible and who is going to pay.

4. Corruption.
The annual corruption barometer from Transparency International was published this week. It shows the view of ordinary citizens. The vast majority of almost 100 000 respondents believed corruption in their country was getting worse. In many countries bribery and corruption is a part of everyday life.
Gary Bosh, transport logistics expert, who used to work in Russia and Africa, says that the biggest problem of corruption is that people who take bribes are elected or appointes officials of the government and it's not for ordinary citizens to tell them how to run the country. In Gary's opinion, if people want to reduce corruption level, they should change the authorities.
Mr. Bosh says: 'Although there is a moral obligation for businessmen to refuse to pay bribes, there is also a moral obligation for them to make sure their workers have work to do and they aren't starving. Factories shouldn't be closed in the middle of the day because of people taking ideological position. People have responsibility to their workforce, to their families and to the shareholders.

David S. Rose on pitching to Venture Capitalists

http://www.ted.com/talks/david_s_rose_on_pitching_to_vcs.html

Continuing the topic of starting up which we started learning in 'The language of small business' I decided to write a short reviw about raising up money via venture capital.

David S. Rose's rapid-fire TED U talk on pitching to a venture capitalist tells us the 10 things we need to know about ourselves -- and prove to a venture capitalist (hereinafter VC) -- before we fire up our slideshow.

From the first minute, Mr. Rose grabs our attention: "I am a serial entrepreneur-turned-serial investor. By the use of pitching Power Point to VCs, I have personally raised tens millions of dollars from VCs through Power Point pitches. Then, turning to the other side of equation, I personally have supervised the investment of tens of millions of dollars into companies who have been pitching me Power Point Presentations." That is another reason for analyzing this video: it's very interesting to take an advice from the person who has seen the both sides of the coin, beeing both entrepreneur and VC.

David S. Rose claims that the single most important thing that VC is looking for when we come to them pitching our business idea are people. Therefore the entire purpose of a VC pitch is to convince that we are the proper entrepreneurs in whom they are going to invest their money and make a lot of profit in return.

How do we manage to do this?

According to Mr. Rose, in the course of our VC pitch, we have a very few minutes - most angel pitches about 15 minutes - to convey a whole bunch of different characteristics.
The most important of these characteristics is integrity. David Rose himself would much rather invest in somebody who he knows is straight than somebody where there is any possible question.
The same important as integrity is passion. If we are not passionate about our own company, why on Earth should anybody else be passionate and why should they put money into your company if  they are not passionate about it?
Besides integrity and passion there is a whole panoply of other things we have to do to wrap up in this package that we are presenting to a VC.
Experience
We should be able to say, "You know, I have done this before." And "done this before" is starting enterprise from scratch, creating value and taking something from its beginning to the end. VCs love to fund serial entrepreneurs.
Knowledge
If we are trying to convince VCs that we are going to be the great developers of the map of the human genome, we definetely had better know what a human genome is. We also have to carry out domain expertise.
Skills
We should also have the skills that it takes to get a company going. Those skills include everything from technical skills, if it is a technology business, to marketing and sales and management and so on.
Leadership
We have to be able to convince VCs that we either have a developed team that has all those factors in or in the other case we have the charisma and the management style and the ability to get people to follow our lead, to inspire, to motivate them to be part of our team.
Commitment
As a VC, Mr. Rose emphasises that he should know enterpreneurs have commitment, that they are going to be here to the end.  VCs don't want anybody who is going to cut and run at the first opportunity.
Vision
If we want to make the requirements of the VCs we should have vision to be able to see clearly where this is going. Being a VC, David Rose, doesn't want another "me-too" product. He wants somebody who can change the world out there.
Realism
While the change in the world is great, it doesn't always happen. That's why we are ought to have rational projects.
Coachability
Finally, VCs need to know that we have the ability to listen. People, who are VCs and angels, investing in our project, have had hands-on experience and they would like to know that we want to hear that experience.

How to convey all those things in 10 minutes?

David Rose reccommends to think about your pitch as a timeline. We walk in the door. The first thing we should do - start like a rocket. We have between 10 and 30 seconds to get the attention of the VCs. A story or your experience could be helpful here.
You should grab their emotional attention focused on you within that first few seconds. Then, from there, you have to take them on a very solid, steady, upward path. Right form the beginning to the end. While presenting our project we ought to get better, and better, and better, and better and at the very end we've got to "boom", to pull them in and knock them out of the park.

It took me 6 times to watch this video to understand the main ideas, outline key points and write them down because David's speech is really very fast (probably because it is very emotional).

Alex Tabarok on How Ideas trump crisis

http://www.ted.com/talks/alex_tabarrok_foresees_economic_growth.html

Breaking into international markets encourages a very interesting but controversial process of globalization. Nowadays we can hear many discussions whether forming a global market will have a favourable impact on the economies of particular countries or will damage them.

As I was interested in that problem I made a decision to choose the talk with Alex Tabarrok for my next review. In the video Mr.Tabarrok argues free trade and globalization are shaping our once-divided world into a community of idea-sharing more healthy, happy and prosperous than anyone's predictions.
According to the speaker's opinion, the main reason to support globalization is knowledge and ideas sharing.
At the beginning of his speech Alex reminds us of the famous words of Thomas Jefferson:
He who receives an idea from me, recieves instruction himself without lessening mine; as he who lights his candle at mine, recieves light without darkening me.

This idea goes through the whole Alex's speech. From his point of view, the greater function of ideas is going to drive growth even more than ever before. This provides a reason why trade and globalization are even more important and powerful nowadays. Mr.Tabarok explains what he means by giving an example:
Let's compare two diseases. One is common and the other one is rare. If they are not treated they are equally severe. However, there are more drugs to treat common diseases, rather than rare ones. This happens because of incentives. It costs about the same to produce a new drug whether this drug treats a 1.000 people or a 1.000.000. But the revenue is much greater if the drug treats a million people. That's why the incentives are larger to produce drugs which treat more people.
Alex Tabarok puts it differently: Larger markets save lives. He believes that if China and India were as rich as the USA is today the market for cancer drugs would be eight times larger than it is now.
Moreover, as other countries become richer, the demand for these pharmaceuticals is going to increase tremendiously and that means an increase incentive to do research and development which benefits everyone in the world.
Larger markets increase the incentive to produce all kinds of ideas: not only pharmaceuticals but software, computer chips, or, even new designs.
It can explain why action movies have larger budgets than comedies: action movies are easier translated into other languages and cultures. So the market for those movies is larger: people are willing to invest more and budgets are larger.

'If larger markets increase the incentive to produce the ideas how do we maximise the incentive?' - asks Alex Tabarok. That's when idea of having one world market and globalyzing the world could be helpful.
One idea, one world, one market.
Anothere advantage of globalization Alex reminds us of is spreading of 'idea creators'. Today less than 0.1% of the world's population are scientists and engineers. The US has been an idea leader because a large fraction of those people live in the US. However, the United States is loosing its idea leadership, that seems to Alex to be a good thing, because for too long the US and a handful of other developed countries have shouldered a burden of research and development.

'The real strategy of the last century is this: If you think about world's population as a giant computer, a massively parallel processor, then a great strategy has been that billions of our processors have been put off line', - Alex mentions. ' But in this century China is coming on line, India is coming on line, Africa is coming on line.'
'We shouldn't fear other countries becoming wealthy. That's something we should embrace: a wealthy China, a wealthy India, a wealthy Africa. We need a greater demand for ideas those larger markets I was talking about earlier and the greater supply of ideas for the world.' - Alex resumes.
Alex Tabarok finishes his speech with a conclusion that Thomas Jefferson didn't count one important thing in his words: when they light their candles at ours there is twice as much light available for everyone.

It took me 4 times to watch the video before writing this report. Firstly, I understood the key ideas of Alex Tabarok. Then I wrote the main points (during the second and third watching) and finally I checked my wrirings.

What is PEST analysis?

http://www.marketingteacher.com/lesson-store/lesson-pest.html

In connection with our studying international markets I decided to choose a video that explains how PEST analysis works. PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in strategic management.
PEST analysis is used to concider the features of the market we are breaking into, especially if it is located overseas. PEST analysis includes examination of the following factors:

Political / Legal Factors
The politishians make the laws so there is very close collusion between political and legal factors - it is sometimes difficult to separate them out.
Political factors require analysing the following matters:

• monopolies and mergers rules

It is important to understand from the beginning that if monopolies are present on the market, they not only own the largest market share, but they will definetely look to growing their market share. Example of that could be Tesco - the largest retail company in the UK

• local, national and supra national legislation

To t your business in a foreign country you have to look thoroughly through all the legislation

• taxation

It's changing all the time. That's why it is important to keep an eye on it. In England, according to the speaker, they have the whole issue of non-dom situations when politishians are interested in making the country more attractive for foreign investors but still are raising taxes.

• employment laws

This involeves the working week - you had better find out how many hours people work a week

• government policy and initiatives

Many goverments are moving towards green initiative and actually are investing a lot in green technology

• unions / pressure groups

It varies greatly all around the world. Just in UK recently they have had train strikes and since the strikes are having a great impact on all of the business this point is very important

Economical Factors

• business cycles growth, recession, depresion

Before entering a market we should define the stage of the cycle. We should clearly bear in mind that from one scenario of growth we will go into recession, it is just a question of way and time.

• inflation / interest / exchange rate

These will vary from each country to country and from market to market

• (un)employment rate

It will also have a huge impact on your goods or servises through the level of consumprion

• disposable income

It is one of the most important points because it helps in assessing the potential of the market and also is crucial point in establishing prices
While making such economic review we have to use the exact figures, otherwise it will be a genaral statement without any proof

Sociocultural Factors

• demographics
• diversity
• lifestyle

Who are our customers, what do they live like? Are they going under different lifestyles?

• distriburion of wealth

We need to examine if the wealth people are getting wealthier and the poor are getting poorer or we have a middle class emerging into the market.

• culture-belief values

People make our market, so we have to take this point into consideration

• consumerism

How are we consuming? As a marketing ploy Tesco have recently decided to change 'bogof' conception (buy one, get one free) into 'buy one, get one free later' because a lot of consumer didn't want to buy more than they actually needed.

• population size

It becomes hugely important because countries are becoming bigger and bigger because in connection with migration shift. That could have great impact on our particuliar market.

Technological Factors

• new discoveries and innovations

We should make sure that our product is meeting the requirements in that area (the version of our product is the latest on this market)

• the issue of obsolescence

Companies are building their products because they want customers to be able to buy the new ones

• Internet / mobile

Internet is the fabulous environment of where we can access information but the problem is how we access it, when we want it. So you must make a research if consumers on this particular market have access to Internet anytime, anyplace anywhere and if the mobile phones with access to Internet are common.

Among all of the factors mentioned above, the speaker tells that while entering a market we also should pay attention to ethics.  We should find out how to become a good citizen of the country we are making budiness in (How much do corporations put in charities?).

It took me 3 times watching the video to catch this information. There still are several words in the speech that I didn' t understand, but the main conception of the video is clear.

Malcolm Gladwell on spaghetti sauce

http://www.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.html

The reason for choosing this particular  video is that Malcolm Gladwell is one of my most favorite writers. A New Yorker staff writer since 1996, he visits obscure laboratories and infomercial set kitchens as often as the hangouts of freelance cool-hunters -- a sort of pop-R&D gumshoe -- and for that has become a star lecturer and bestselling author.
It took me 3 times to watch the video and unerstand the whole speech.

Mr. Gladwell tells us a story of one of  great American market reseachers named Howard Moskowitz. Howard is most famous for reinventing the spaghetti sauce. He graduated from Harward University with the degree in phychophysists (which is about measuring things) and set up a small consulting shop in New York. This was back in the early seventies. One of his first clients was Pepsi.  So the representatives of Pepsi came to Howard and said: "You know, there's this new thing called aspartame and we would like to make diet pepsi. We woould like you to figure out how much aspartame we should put in each can of diet pepsi in order to have the perfect drink."
More than that, Pepsi gave him particuliar borders: they were working with a band between 8 and 12%. Anything below 8% sweetness isn't sweet enough and everything above 12% sweetness is too sweet. So Pepsi would like to find out the sweet spot between 8 and 12.
At first this task seems to be very simple. We could make up a big experimental batch of Pepsi at every degree of sweetness, beginning from 8% - 8.1, 8.2, 8.3...all way up to 12% , then try it out with thousands of people, plot the results on a curve and take the most popular concentration.
Howard does the whole experiment, but when he plots the results on the curve he suddenly realizes it isn't a nice bell curve, it's a mess.
Most specialists in that kind of situation wouldn't worry too much about the results and would simply choose 10% - the middle result. However, Howad was't so easily placated. He is a man of certain degree and intellectual standards. The results weren't good enough for him and this matter bedeviled him for years. He would think it through and through, what would guess what was wrong.
One day he was sitting in a diner, when suddenly like a bolt of lightning the answer came to him. When they were analyzed the Diet Pepsi data, they were asking the wrong question. They were looking for the perfect Pepsi and they should have been looking for the perfect Pepsies. This was one of the most brilliant breakthroughs in all of food science.
Howard immediately went on the road, visited conferences around the country and shared his relevation. He would stand up and tell: You have been looking for the perfect Pepsi. You're wrong. You should have looking for the perfect Pepsies. People would look at him with a blank look and ask him what he was talking about. However, Howard was obsessed with this idea and when Campbell's Soup came to him,  he expressed the same point. Campbell's Soup is where Howard made his reputation. Campbell's made Prego, which in early eighties was struggling next to Ragu, that was the dominant spaghetti sauce of the seventies and eighties. Technically speaking, Prego is a better sauce than Ragu. Despite this fact, Ragu was winning the competiotion. That's when Campbell's Soup asked Howard to fix them.
Howard did just the same he did in Pepsi case - he got to the Campbell's citchen, made 45 varieties of spaghetti sauce and varied them according to every conceivable way (by sweetness, by level of garlic, ect...). He took all raft of 45 spaghetti sauces and went on the road to New York, Chicago, ect. He brought in people by the truckload into big halls, set them down for 2 hours and gave them 10 bowls of pasta with a different sause on each one. After eating each bowl people had to rate from 0 to 100. After the end of this process, Howard had a mountain of data about how the american people feel about the spaghetti sauce.
When he analyzed the data this time he did't look for the most popular brand spaghetti sauce. Instead, he grouped different data points into clusters. Finally he realised that all the Americans divide into one of three groups:
- people who like their spaghetti sauce plain
- people who like their spaghetti sauce spicy
- people who like it extra chunky
Of those 3 facts the last one was most signigicant, because at that time (early 1980s) there weren't any extra chunky sauces in supermarkets. When Prego saw the results and  realized that 1/3 of Americans crave extra chunky sauce and noone is satisfying their need, they completely reformulated their spaghetti sause that immediately and completely took over spaghetti sause business in US.
Other companies noticed Howard's succes and that's when the variety of food items started to appear on the shelves in supermarkets.

Although the name of the video is quite obvious, the story, which Malcolm Gladwell tells us is not only about spaghetti sauce. It has several interesting conclusions:
- Asking people what makes them happy not always help in achieving the success. People don't know what they want. (For years and years and years Ragu and Prego would have focus groups, they would sit people down and ask what they want in spaghetti sauce. For all those years through all those sessions noone ever said they wanted extra chunky - even 1/3 of them, deep in their hearts, actually did)
- Howard made us realize the importance of what he likes to call horizontal segmentation. Different kinds of goods serve different kinds of people.

What physics can teach us about marketing

http://www.ted.com/talks/dan_cobley_what_physics_taught_me_about_marketing.html

For my first review I have chosen a video talk with Dan Cobley, who is a marketing director in Google. His duty is to connect customers and businesses, helping to satisfy their needs. Before Google, Mr. Cobley was the vice president of branding and marketing for Capital One and the marketing director of Ask Jeeves. He has worked in both the UK and US, but always in marketing although his first degree from Oxford is in physics.

In his speech, Dan explains what physics taught him about marketing. He gives examples of the main physical laws and transfers his knowledge from physics to marketing.

It took me 4 times to watch the video, because at first I couldn’t make head or tail of Dan’s speech, especially when he was describing the connection between formulas and marketing rules. However, Mr. Cobley’s speech is coherent, persuasive, articulate and engaging.

I’ll try to put some of Dan’s key points in a nutshell:

Newton’s Law: For a larger particle of larger mass requires more force to change its direction. It’s the same with brands: the bigger the brand, the more force is needed to change its positioning.

Example: This rule explains why companies like Uniliver and P&G keep brands like Oreo, Arial and Pringles and Dove separate rather than having one giant parent brand.

Heisenberg’s Uncertainty Principle: You can never accurately and exactly measure the particle, because observation changes it.
The message for marketing is that try to measure what consumers actually do, rather than what they say they’ll do, or anticipate they’ll do.

Example: Think about of the group of moms who are talking about their wonderful children and mentioning that almost none of them buy junk food. And yet, McDonalds sells hundreds of millions of burgers every year.

The fundamental axiom of physics: you can’t prove a hypothesis through observation, it’s easier to disprove it.

As to marketing: no matter how much is invested in your brand, one bad week can undermine decades of good work.

Example: physics: Ptolemy had dozens of data points to support his theory the planets rotate around the Earth. However, it took only one robust observation from Copernicus to blow that idea out of the water.

Marketing: BP. They have spent millions of pounds over many years building up its credibility as an environmentally friendly brand, but then one little accident happened…

The second law of thermodynamics: Entropy will always increase.

Message for marketing: your brand is more dispersed than you suppose.

 Example: If we go back to 20 years the one message was pretty much controlled by one marketing manager. But today things have changed. You can get a strong brand image or a message and put it out, but then you will lose control of it. Your brand gets more chaotic.

From my point of view, Dan’s speech is very informative. I guessed that all of the sciences were related together, but I didn’t imagine such a close connection between physics and marketing. The rules that Dan mentioned above could also be very useful when we talk about international marketing. We should take them into consideration while doing a market research not only on the domestic market but on the worldwide one, too.