Generating Cash and Value for Company Owners

Generating Cash and Value for Company Owners

Challenges for developing countries

by Global Investment Consultants, LLC on 04/11/13

     Developing countries are classified differently by the UN, IMF, and the World Bank. The term developing countries is used by the United Nations, the IMF classifies developing countries as countries in transition, and the World Bank defines them based on level of income.

    To become developed countries, developing countries have to deal with many economic problems. Economic development can't be achieved without developing the infrastructure.  To attract investment, developing countries must offer suitable and viable economic environments and demonstrate respect for democratic governments and human rights.

Challenges for developing countries include the following:

  • Doubling or increasing the standard of living
  • Infrastructure development i.e. schools, roads, housing, and hospitals
  • Eradicating corruption (misappropriation of funds, extortion, bribes, improper influence, corrupt property deals without legal process may lead to demolition of homes and land grabs etc.)
  • Rule of law (Ensuring all government officials are held accountable for constitutional failures and treated the same under the law; measuring the number of crimes committed and prosecuted etc.)
  • Ensuring public officials have the resources required to do their jobs
  • Reducing income inequality
  • Managing social structures that impede the poor from improving their situations
  • Unstable political leaderships drive or keep investors out
  • Threats of nationalization may prevent investors from making foreign direct investment.
  • Reducing higher rates of unemployment in order to prevent social unrest
  • Ensuring there is a large number of skilled workers
  • Measuring progress towards manufacturing or industrialization to ensure there is an increase in services that offer opportunities for advancing scientific development, technology, economic growth, and education etc. Examples include number of jobs created annually compared to the number of annual school graduates.
  • Good transportation links cut down on the time lost in traffic congestion
  • Determining the level of authority to give local officials and police

Ability to service customers in developing countries

by Global Investment Consultants, LLC on 04/10/13

The ability to service customers in developing countries may be determined by the following:

  • Understanding the needs of the local customers
  • Understanding customer expectations from the your company
  • Ability to provide high quality customer service
  • Establishing a customer service department that responds to the needs of local customers
  • Finding talent with the drive, abilities, and knowledge to work with local customers
  • Treating customers with respect
  • Establishing clear, appropriate, and satisfactory service
  • Respecting new regulations in order to avoid problems

Determining Target Market for Company's Product

by Global Investment Consultants, LLC on 01/22/13

    The company must find a group of people that have the need for the products and have the ability, authority, and willingness to make a purchase.

    The company must then generate and maintain a marketing mix i.e. product, distribution, promotion, and pricing to satisfy the needs of the groups.

    To determine the target market for a product or service, the company must determine the segmentation variables to use, develop the market segment profiles, evaluate the relevant market segments, identify an appropriate targeting strategy, and select specific target markets to enter.

     After selecting a target market, the firm must determine whether it has the resources required for exploiting and benefiting from that market. It would be unwise to continue with the project if the resources required to maintain the position are inadequate.   Managers that fail to figure out their capacities to exploit target markets may cause financial loses even bankruptcy.  Managers must be cautious when deciding to enter certain selected markets.

Identifying Potential Customers

by Global Investment Consultants, LLC on 01/22/13

    Developing countries might offer opportunities to struggling companies.  Firms need to incorporate the voices of potential customers in those markets; in the design and implementation of products and services.  Activities by the World Bank and Bill Gates foundation might offer some guidelines on how to design products for customers in some developing markets.

    Firms must perform an analysis of the target market before supplying products or services to consumers.  The identification of potential consumers involves serious analysis of the product and consumer characteristics.

    Product characteristics must correspond to the needs of consumers.  The relevant factors in identifying potential customers include political, geographical, behavioristic, Demographical, legal, and psychological.

    Higher benefits and more competitiveness may be realized if a firm is successful in identifying its potential customers.  There are risks for errors because the identification of potential customers is not an easy task.  Good managers may be able to correct the errors rapidly without driving the firm into a financial disaster.

Should Opportunities drive strategies?

by Global Investment Consultants, LLC on 06/18/12

    Due to increasing efforts towards global cooperation in areas such as common accounting standards, trade, sustainability initiatives, and fighting corruption etc., developing countries should be investing for long-term growth in areas such as transportation systems, communications systems, and education for both rural and urban populations as improvements and gains in agriculture continue.

    Implementing policies or reacting to events in the Eurozone as a means of mitigating risks might not be a good strategy for long-term economic growth. It appears there will be long periods of slow economic growth in the Eurozone including lower economic growth in developing or emerging markets that rely on the Eurozone for exports. The austerity measures in Europe; the debt crisis that appears to be spreading to Spain and Italy due to the rising borrowing costs; and weakening investor confidence may hurt demand for goods and services from developing countries for a while.

    Eurozone issues appear to be enormous but will be resolved. With input or guidance from outside policy makers, the good news is that the difficulties are being confronted. The issues that need to be resolved include common currency, deficits, fiscal discipline, and GDP growth. Fiscal discipline is the major issue at the moment. Once all the Eurozone countries get on the same page on this issue and meet the specified targets, Euro bonds might be the key to economic growth.

    Developing countries that investment in productivity reforms or long-term measures for growth will benefit once the Eurozone issues have been resolved.

Risk Management

by Global Investment Consultants, LLC on 05/14/12

    Generating cash and value for company owners in developing countries involves risk management. Company executives identify, quantify, and respond to the risks of a project without any material impact on the project objectives. Managers plan for risks, assess risk issues, develop risk handling strategies, and monitor risks.

    The attitudes against risk management may be different for some organizations. Managers in some companies may adopt a proactive attitude against risk management while others use of reactive attitude. In other words, a proactive company may develop a risk handling plan whereas the reactive company might wait for issues to occur before handling them.

    Now days, you hear stories in the media about resignations or replacements of executives in various companies. For a company that puts customers first, how important is risk management in protecting an organization's reputation? Business operations should be taken seriously. Methods and techniques that deal with known risks and techniques that provide an estimate of the costs and schedules associated with risks should be utilized. How should companies go about getting the higher benefits associated with the lowest risk of a project?

    International trade risks may include political instability, wars, GDP growth, and natural disasters such as earthquakes and tsunamis. Risk monitoring or the evaluation and tracking of risk handling control activities may be necessary.

Company Products for international markets

by Global Investment Consultants, LLC on 05/09/12

     The major product issues in international markets include product quality and per unit cost of production.  Company products for international markets must adequately respond to foreign demand.  It might be difficult to sell company home products abroad because they do not correspond to any need.  Likewise, it might be difficult to sell foreign products in your home markets because there is no home market for them.  

     After careful analysis of the potential markets, your company will decide on a target market and a product. How should your firm determine whether a candidate product is acceptable to the potential consumers?

    Providing high quality products at the lowest competitive market price to consumers in International markets and gain market share is a challenge.  Is your company losing market share at home because of the arrival of international competitors? What steps should your company take to gain market share in developing markets?

    It is important to remember that Competitors are aggressive and want to gain market share; and consumers in developing markets may be inclined to buy products that offer the best quality at the lowest price.  Cheap labor, low wages, and low price products are characteristic of firms in emerging economies.   What is the way forward for firms in developed economies?  Should firms in developed economies reduce their costs of production so as to provide low price products to international markets?  Should companies be asking for more protection from governments against foreign products?


Starting Trade in Developing Markets

by Global Investment Consultants, LLC on 05/09/12

It appears competition among companies has increased to a point where inefficient companies may be forced to go out of business because barriers to trade such as quotas and tariffs aren't being utilized by countries to protect businesses at the same rate as before. Markets are becoming bigger. Companies with inefficient operations need to find opportunities in markets abroad and become efficient.  Firms must be cautious when looking at entering developing markets.  To start trading company products in developing markets, managers follow a strategic approach. Helpful skills or tools utilized in planning include technological, financial, marketing, accounting, and technological.

Company managers planning on introducing a product into a developing market must plan adequately. Data on developing markets are provided by the government or subcontracted private organizations. 

The characteristics of the product to trade or introduce in developing markets must be identified.  Once a target market has been identified, company managers gather data about legal, geographic, political, demographic, sociological, and other relevant factors or data.

Profitability of the selected market must be assessed to determine short-term, medium-term, and long-term benefits. 

The economic behavior of the selected market must be monitored.  Based on the economic environment, the company might decide whether to interrupt or intensify project activities.

Mergers and Acquisitions in developing markets

by Global Investment Consultants, LLC on 05/09/12

Mergers and acquisitions may enlarge equity valuations, improve operational efficiency and increase market share including industrial capacity. Underestimating the financial impact of merging or acquisition could lead to financial difficulties. Positive mergers and acquisitions could be beneficial for further activities. Factors to consider before deciding on a merger or acquisition include the following:

  • The costs of merging or acquisition
  • Business culture
  • The financial strength of the firm to be acquired
  • Laws and regulations on mergers and acquisitions
  • Verification of accountability of the firm to be acquired
  • Finding out how foreign customers view the firm to be acquired.

Where to find Insurance for Exports

by Global Investment Consultants, LLC on 05/09/12

Insurance for exports is offered by public or private companies.  Public insurance refers to government programs designed to promote or develop exports.  Insurance coverage against risks such as political and commercial risks is important for Exporters. Currently, exporters in the U.S. could get export credit insurance from the Foreign Credit Insurance Association (FICA). What other options are available for businesses?


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