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Even though there is widespead acceptance, entrepreneurs often ask how to value the sweat equity invested in their startup. A quick and easy response:

It’s worth whatever your investors tell you it’s worth.”

But over the years, come to realize that sweat equity isn’t the same thing as market value for your startup.

“Investors have no idea how to value sweat equity, and I now believe it’s a bad idea to let them tell you how to do it.”

At a minimum, they could use this as a negotiating tool to undervalue your startup.When you’re getting started, sweat equity is often a critical component of your negotiating leverage with co-founders, early stage employees and others who aren’t paid market wages to help you grow your business.As the business owner, you should be the expert on valuing sweat equity, not your investors, accountants or lawyers. Here are some tools for tackling the challenge.When determining the value of the sweat equity provided by an employee or potential co-founder, first assess these three characteristics of the person in question:

  1. Commitment:Is he or she committed to being a founding partner for the long haul?
  2. Unique contribution:Does he or she bring specialized knowledge, skills, leadership ability or experiences that you don’t have?
  3. Hopes and dreams:Are his or her hopes and dreams for personal wealth, business success and autonomy the same as yours? If not, are the differences substantial enough that they’ll pull the company apart?

Then, start thinking about the numbers.
1. Market value doesn’t equal the sum of sweat equity invested by you and your partners.

If you have invested $100,000 worth of your time in writing a business plan, and your partner, a young engineering student, has invested $25,000 worth of her time in building a prototype, it doesn’t mean the market value of your startup is $125,000.

In fact, it could be worth much more. Sweat equity is just one component of early-stage valuation. In a previous column, I discussed how valuing a startup is more driven by market conditions, comparable companies, exit potential, future capital needs and many other factors.
2. Foregone wages for an engineer aren’t the same as foregone wages for a prototype designer.

In the example described above, the $25,000 estimated by your business partner is likely to be based on wages that she could have earned in a full-time job. This is the typical way that a founder determines sweat equity: foregone wages.

However, your partner could just as easily have argued that her sweat equity is worth $250,000 since that’s what a prototype would have cost you to make had you hired a prototype development firm. Or she could argue that the prototype is so critical to the business that she should get 50 percent of the company’s stock.
In my experience, this is the basis for much of the negotiation that CEOs will have with their early-stage employees and co-founder. You need to determine the principle applied for valuing services invested in a nascent business. Foregone wages tends to be the anchor that keeps valuation negotiations from sailing into oblivion.Don’t be tempted to dole out equity to everyone who helps you found the company–even it makes you feel good to have co-founders. (Being an entrepreneur is lonely, but there are better ways to make friends or build a community of credible supporters than by giving early-stage equity to people who make small contributions to your business.)
One simple solution is to “pay” a slight premium for sweat equity to early-stage employees. For example, when valuing the sweat equity invested by your prototype designer, use $30,000 rather than $25,000 as a valuation figure and explain that you’re paying a 20 percent premium because of the risks associated with being paid in equity rather than cash.
3. Employees and founders are motivated by different things.

How should you decide if your prototype designer should be a co-founder who deserves 50 percent of your company or deserves $30,000 in sweat equity for her work as an employee or consultant?

Too often, I see entrepreneurs make this critical decision by trusting the opinion of their investors–or potential investors-rather than determining what their business will actually need. First-time entrepreneurs often think,

“If I approach a VC with a chief technology officer or chief prototype designer in place, then I’m more likely to get funded.”

So they end up getting a co-founder and parting with 50 percent of their company, even if their CTO is really a young prototype designer who will get discouraged or fired a few months later. Using a restricted stock agreement, you can mitigate risk, building in a buy-back right for the partner’s equity grant.Ultimately, it’s up to you. You get to decide what you need to give up to keep or get an invaluable partner on board.


All sorts of organisations use the vocabulary of strategy. Compare these extracts from the statements of communications giants Nokia and Kingston University, a public institution based in London with 200.000 students.

“Nokia’s vision and mission believes in communicating, sharing, and in the awesome potential in connecting the 2 billion who do with 4 bilion who don’t. Connecting is about helping people to feel close to what matters.”

If we focus on people, and use technology to help people, than growth will follow. In a world where everyone can be connected, Nokia takes a human approach to technology.
Nokia’s priority is to be the most proffered partner to operators , retailers and enterprises. A strategy where customers remain our top priority.

In line with this priorities, Nokia ‘s business portfolio strategy focusses on five areas, with each have long-term objectives: create winning devices; embrace customer Internet services; deliver enterprise solutions; build scale in networks, expand professional services.
There are three strategic assets that Nokia will invest in and prioritize:

1. Brand and design

2. Costumer engagement and fulfilment

3. Technology and architecture.

“Kingston University’s mission is to promote participation in higher education, which it regards as a democratic entitlement; to strive for excellence in learning,teaching and research, to realise the creative potential and fire the imagination of all its members.”

The vision is to be comprehensive and to create by present possibilities, with a grander and more aspirational vision of the future.
The University’s goals are to provide all students equal opportunities to:

🔹Realise their learning ambitions;

🔹Create authority in research and professional practice for the benefit of individuals, society and economy

🔹Develop collaborative links with providers and stakeholders within the region, nationally and internationally;

🔹Manage and develop its human, physical and financial resource to achieve the best possible academic value and value for money.

“Strategy is part of every day language of work.”

Strategy vocabulary therefore is used in many different contexts for many different purposes.


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Latest News for Strategy Business Developments

The Insight Value

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In the financial markets, the term financial is applied to situations in which financial institutions or assets suddenly gain a significant portion of their value.
The current global credit markets and banking systems is represented by an arise of companies who invested in the global financial system and regulatory framework.
Real estate boom period before the crisis was fueled by standards increasingly lighter approving mortgage loans, a significant increase in loan incentives such as the original terms advantageous, a long-term trend of increasing house prices. As a result people do not hesitate to resort to cumbersome mortgages, hoping to refinance their ongoing and more advantageous rates. Following the financial institutions, provide a few recent competitiveness on the price of basic goods, food prices and oil prices.
The research of economic, financial, political and social in 57 countries and in all four hierarchies believes that the stock market could stabilize after a waiting period from investors.
Narrowing your focus in success assume risks for developing a new business within an old framework, says Lenann Gardner, an internationally known sales consultant and author of the new book, Got Sales? The Complete Guide to Today’s Proven Methods for Selling Services.
“You have to get people to change their behavior to support this new corporate strategy, and that’s a difficult thing to do. In fact, it’s one of the hardest things to do, to change human behavior,”
says Gardner.
Narrowing your business’s focus is one way to attract customers to your new take on an old concept.
“Nobody wants to do business with a business that tries to be something for everybody,asserts Gardner.
Granted, tell Wal-Mart that, but she’s right. Stores known for having a little bit of everything thrive because the stakes aren’t too high for customers shopping for soap, cat food or a lawn chair. But as a general rule, the more someone is spending on an item, the more likely they are to seek out a specialized business. Take buying a house, for example. Garry Aloia is an owner and managing partner of My First Home, a business that caters specifically to first-time homebuyers. Aloia, who also co-owns parent company New State Mortgage, came up with the idea when he realized that because agents are driven by commissions.
“Human nature takes over. If there’s a bigger commission involved, that customer gets more attention!” he says.
First-time home buyers-who make up about 40 percent of the home buying market-are often purchasing smaller residences and are likely getting less attention, reasons Aloia. To remedy the situation, Aloia’s My First Home, based in Merrilville, Indiana, near Indianapolis, employs real estate agents who are paid higher salaries-25 percent more than the average agent- but who don’t receive commissions. Aloia doesn’t see his business as a traditional real estate office, but rather as a home-buying educational and assistance center. The office is even set up to look like a home, complete with a fireplace and coffee.
The company offers seminars to first-home buyers, as well as advice and tools to help them figure out what their monthly budget should be after they move in. What Aloia’s business is doing is what all entrepreneurs, whether veteran or novice, ultimately should be doing.
“I try to put my feet in the shoes of the customer,” says Aloia. “I ask myself, ‘How can I make their life better and simpler?
Every business faces an identity crisis during its evolution. For instance, when it was set out to build Urban Compass, it was aimed to innovate on three fronts:
Scope:

While most real estate firms tackle a very thin sliver of the real estate experience, they wanted to build a product for the holistic experience – search, schedule, visit, purchase, move, and connect to new neighborhoods.
Technology:

They have bringed data and technology to a space in which no one had founded a way to harness these elements in a valuable way.
Compensation:

They’ve callenged the assumption that agents should be paid on commission and piloted a salaried real estate agent model, in which agents received bonuses for delivering good customer service.
While it was gained a tremendous traction because of the innovation on scope and technology, it was found that the initial innovation on compensation was actually detracting value: it had prevented from hiring top performing agents who wanted to benefit from the upside of commission, and misaligned incentives for the current agent base, who were being paid to be nice, not to help their clients close deals. From since it was turned that stone back over, and it was a match to the industry standard on paying out commissions.
This was an important lesson:

Be exhaustive in questioning industry assumptions and be selective in challenging.


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New Business Models

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“Ecommerce is an area being watched closely by entrepreneurs and wantrepreneurs alike. New business models are constantly emerging, making this a competitive and constantly evolving field.
The apparel category is particularly exciting: The recently launched Amazon Prime Wardrobe, for instance, allows consumers to have clothing delivered to their door, after which they can try it out for seven days before deciding whether to keep it. They can send items back whenever they decide; they don’t even need to be home to have return packages picked up.
Taking inspiration from Amazon and other businesses, many apparel and accessory ecommerce companies are similarly trying their hand at “something new and different.”
These innovative companies are taking ecommerce to the next level.

Crisp Clothing
The perfect shirt is hard to come by. But what if perfect fit could be achieved with the help of two simple metrics? That’s what Crisp Clothing does. By using your height and weight and what it calls “3D Measuring,” Crisp Clothing can tailor the perfect shirt for you.
Founded by Swapnil and Prakash Kamble — a father-and-son team — Crisp Clothing uses 100 percent Egyptian Giza cotton to fashion its handmade tailored shirts, which are currently available in black, white, blue and pink. The company recently launched a Kickstarter campaign to raise funding for the project.
Not surprisingly, the cost of a single shirt isn’t cheap, but pledging to the Crisp Clothing campaign at the $78 level will get you one custom, hand-crafted shirt.
What’s clearly innovative about Crisp Clothing is the approach it takes to crafting the perfect shirt. Technology is the difference. It gives Crisp Clothing a more scientific way to tailor shirts that look and feel great.

Trunk Club
The Nordstrom-owned Trunk Club may be a familiar name to some. Its business model is a lot like that of Amazon Prime Wardrobe, except Trunk Club has been around a lot longer.
This is its process: First, the customer is prompted to answer a few questions about the style of clothing he (or she) is interested in, how the clothing should fit and what budget range is desired. Then, he can chat with a stylist who’ll offer help on exactly what he’s looking for (though this step is not mandatory).
The trunk is delivered free of charge once the customer approves it, and he or she has five days to decide what clothing to keep and what to send back. Then, the customer can either reorder on his or her own schedule or set up a regular delivery schedule, to keep the wardrobe fresh.
What Trunk Club did right was make it easier for the consumer to get items that are truly desired. Time can be a commodity in today’s busy world, and with the rise of online shopping, consumers don’t necessarily go to malls or stores to shop anymore. Trunk Club is an easy, fast and convenient way for today’s buyer to meet his or her clothing needs.

Bonobos
Bonobos was launched because its founders recognized how difficult it is for consumers to find pants that fit perfectly. To solve this problem, Bonobos developed a signature curved waistband that fits more naturally around your waist. The company offers free shipping as well as painless returns and exchanges.
Bonobos also has something called a Guideshop. Customers can schedule a one-hour appointment at a Guideshop, try on anything in the store and find the perfect clothing with the help of a Guide. Customers don’t have to take any bags home, as the Guide will place the order and have it shipped to the customer’s home or office.
Bonobos is doing a couple of noteworthy things for its customers. First, it came up with a solution where none previously existed, thereby creating more comfortable pants. Second, it created a unique in-store experience that allows customers to find what they’re looking for on their own time — a personalized experience they’re sure to remember.

Wanderlust + Co
Accessorizing is a term near and dear to many women. Jenn Low, founder of Wanderlust + Co, creates custom jewelry and accessories that many models and celebrities don at notable events. Her work is inspired by what she calls the #WCOgirlgang, which includes celebrities, fashion bloggers, editors, stylists and content creators.
What’s innovative about Wunderlust + Co is Low’s willingness to cater to a specific audience. She doesn’t create products consumers dn’t want. She built her own tribe, #WCOgirlgang, and stays in regular contact with them to come up with new product ideas her audience will love.
Entrepreneurs sometimes take the opposite approach, creating a product first and then finding an audience for it. Sometimes that can work, but there are no guarantees. A more reliable approach, especially today, is what Low does: She’s built a brand around a target audience, offering products they want and have even asked for.

Everlane
Complete transparency is hard to find but has become somewhat trendier, thanks to online entrepreneurs like Pat Flynn and John Lee Dumas.
That’s where Everlane stands out. These founders aim to be as up-front as possible about the cost of their goods. They even offer a detailed breakdown on materials, hardware, labor, duties and transport. They also reveal what the true cost of the product is, in addition to what they’re selling it for.
If you’ve ever wondered where your money is going when you purchase a product, you won’t have to, with Everlane. You’ll get total transparency, and that builds trust. Though full transparency may not be the right approach for every business, it’s something to consider: Maybe no one in your industry is embracing it, making it worth considering as a strategy.

Final thoughts
If you’re an ecommerce business owner, what could you be doing to separate yourself from the pack? If you have a different business model, what can you learn from the above and implement in your business?
As ecommerce becomes increasingly competitive, it will be more and more necessary for more business owners to embrace innovation and find their unique approach. The ecommerce landscape will continue to be an interesting one to watch, especially as Amazon continues to launch new and noteworthy services.


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Decisive Entrepreneur

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An overview on one aspect that captures almost all the economic activities include a representation to a change. This clue distinctions of when and where supports all those interested wantings for the future development and innovation, in the activity of the products and the services desired for the necesary market.

“ You never know where you are going to find a good idea.“

That may sound like a saying from a fortune cookie. But for Normal CEO, and founder, Nikki Kaufman, it’s a management style.

It’s also why the headquarters of her 3-D printed custom earphone company are open and transparent across departments. It’s a guiding principle on how to run a team.

“I encourage new ideas all the time here at Normal. That’s one of the things that I really like about having everyone in one office.”
She included this advices from the floor of her New York City retail location, which also serves as the company’s factory and corporate office along with an incredible pursuatiation for advocating content into the shared markets .
“An idea can come from anywhere.”



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Old Business Models

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Every industry is changing. There are no original ideas left. Sure, it’s kind of a cynical thought, but try and brainstorm a completely new concept, whether for a business, an advertising campaign or even a limerick, and you’ll start to think it’s true. It can sometimes be a stretch to come up with anything that hasn’t already been thought of. It’s the reason someone once famously said there are only three original jokes and all the others have been derived from them. It’s why Hollywood remakes old movies. And the dearth of original ideas is why businesspeople sometimes pay other businesspeople to come up with a new concept for their own products or services.

“Fortunately, if you’re an entrepreneur trying to come up with a new business model, you don’t have to be completely unique. “

For instance, you probably wouldn’t attempt to sell fingernail clippings in a bag, no matter how groundbreaking and unique the idea is. In fact, if you’re starting a business, you probably shouldn’t do something that’s never been done -after all, think of the learning curve your target market will have to tackle. But you would be well advised to take an old idea and make it new. That’s exactly what David Friedberg did. It was around 2001, Friedberg figures, when he was 20 years old and living across the road from a bicycle rental shop.
Every day that it rained, the bike shop was closed.

“It became pretty noticeable,”

recalls Friedberg, now 26 and already an ex-Google executive and the CEO of his own company, WeatherBill, in San Francisco.
After watching the bicycle rental store owner get rained out day after day, Friedberg started noticing how many other companies- think golf courses and car washes- were taking a financial bath whenever it was wet outside.

“You don’t really think about it, but 70 percent of businesses are affected by the weather every year, across regions and industries,”

says Friedman.

“The weather affects so many different types of businesses, whether in negative or in positive ways, like taxi cabs in New York, which are often full in the cold.”

Friedman was a business product manager at Google when he had his

“a-ha moment.”

It occurred to him that he should start an insurance company- a very old idea- but gear it specifically toward companies that want to protect themselves from losing money on a rainy day -a new idea. It may not sound new. After all, insurance companies generally protect you if you’re hammered by a hurricane, slaughtered by a sandstorm or frozen under the tundra. But we’re talking about the car wash that doesn’t want to lose an entire day of income when there are five inches of rain.

That’s why Friedberg developed, with his “computer science friends,” an elaborate website where anyone can log on and buy a contract to protect themselves from unseasonable weather. The site is completely customizable and automated. A farmer, for instance, could receive money every time the temperature dips below 67 degrees in a particular month. Or if a ski resort has a week and a half of beautiful, balmy weather in January, the owner could automatically receive a check without having to report the weather.

There is no claims process,”

Friedberg says proudly. Instead his company uses a third-party weather station, EarthStat, that independently confirms data and sends daily reports to WeatherBill, which then processes the checks and sends them out.

Modernizing the wheel in some business models it only needs to be slightly tweaked to appeal to the modern consumer. If you want to update the traditional dentist office, put it on wheels. While cleaning teeth is an industry almost as old as, well, teeth, putting an office in a van that can travel anywhere from giant corporate campuses to nursing homes is a much more recent concept. The rise of mobile dentist offices in the last few years shows that catering to people’s busy and complicated lives is a nearly surefire way to improve upon an old concept.
Then there’s the Pearson Ford Fuel Depot in San Diego, which has received a lot of attention for its one-of-a-kind gas station that offers a full range of clean-burning alternative fuels from ethanol to BioWillie, a type of biodiesel made from soybeans and promoted by singer Willie Nelson. Gas stations may be becoming synonymous with global warming, but by offering an alternative, this fueling station has managed to drum up publicity while serving an emerging niche market. Capitalizing on consumers’ nostalgia is yet another potential approach. In true throwback fashion, State Street Barbers, located in Chicago and Boston, gives modern hair cuts to men in an environment decked out to look like a ritzy salon in the 1920s. Patrons are given a cold beverage when they walk in and can get a hot lather shave with a classic straight razor and hot towels.
In the end, it’s easier to be original and unique in an established industry like home selling or insurance when you have plenty of capital funding behind you; it’s another story if you’re running a fledgling startup in your parents’ basement, and you feel you have to take any client with a pulse and a wallet. But whether you’re a big fish in the ocean or a small one in the pond, the principles are always the same. If you’re going to tweak a formula,

throw out the way things have been done before,”

advises Friedberg.

Manufacturers wants more to connect with their suppliers, their distributors, and ultimate their customers. In a consumer world there is an app for that, in the government world there is form for that and that is the technology that needs to be closed. Banks knows a lot about the customers and that information is spread to the full wings.
The reason why most of the companies are not embracing the future faster, is because they continue to throw their capital to what they worked in the past and that’s what is keeping manufacturers up at night, is how to innovate quickly with agility, and deepen their relationships with their retailers, suppliers and consumers.

Figure out your end goal, and then forget about what all of the other people have done, and come up with a new way.



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The Latest News & Developments in Business Strategy Practise

 

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Emphasis the human element of strategy to identify the direction and scope which achieve an advantage in a changing environment through its configuration of resources and competences, has the aim to fulfill stakeholders expectations

“The competitive analysis is a statement of the business strategy and how it relates to the competition.”

The purpose of the competitive analysis is to determine the strengths and weaknesses of the competitors within your market, strategies that will provide you with a distinct advantage, the barriers that can be developed in order to prevent competition from entering your market, and any weaknesses that can be exploited within the product development cycle.

The first step in a competitor analysis is to identify the current and potential competition. As mentioned in the “Market Strategies” chapter, there are essentially two ways you can identify competitors. The first is to look at the market from the customer’s viewpoint and group all your competitors by the degree to which they contend for the buyer’s dollar.

The second method is to group competitors according to their various competitive strategies so you understand what motivates them. Once you have grouped your competitors, you can start to analyze their strategies and identify the areas where they are most vulnerable. This can be done through an examination of your competitors’ weaknesses and strengths.

A competitor’s strengths and weaknesses are usually based on the presence and absence of key assets and skills needed to compete in the market. To determine just what constitutes a key asset or skill within an industry, David A. Aaker in his book, Developing Business Strategies suggests concentrating your efforts in four areas:

1. The reasons behind successful as well as unsuccessful firms

2. Prime customer motivators

3. Major component costs

4. Industry mobility barriers

According to theory, the performance of a company within a market is directly related to the possession of key assets and skills. Therefore, an analysis of strong performers should reveal the causes behind such a successful track record.

This analysis, in conjunction with an examination of unsuccessful companies and the reasons behind their failure, should provide a good idea of just what key assets and skills are needed to be successful within a given industry and market segment. For instance, in the personal-computer operating-system software market, Microsoft reigns supreme with DOS and Windows. It has been able to establish its dominance in this industry because of superior marketing and research as well strategic partnerships with a large majority of the hardware vendors that produce personal computers.

This has allowed DOS and Windows to become the operating environment, maybe not of choice, but of necessity for the majority of personal computers on the market. Microsoft’s primary competitors, Apple and IBM, both have competing operating systems with a great deal of marketing to accompany them; however, both suffer from weaknesses that Microsoft has been able to exploit. Apple’s operating system for its Macintosh line of computers, while superior in many ways to DOS and Windows, is limited to the Macintosh personal computers; therefore, it doesn’t run many of the popular business applications that are readily available to DOS and Windows.

To an extent, IBM’s OS/2 operating system suffers from the same problem. While it will run on all of the personal computers DOS and Windows can run on and even handle Windows applications, the number of programs produced for OS/2 in its native environment is very small. This is the type of detailed analysis you need in analyzing an industry. Through your competitor analysis you will also have to create a marketing strategy that will generate an asset or skill competitors do not have, which will provide you with a distinct and enduring competitive advantage.

Since competitive advantages are developed from key assets and skills, you should sit down and put together a competitive strength grid.

This is a scale that lists all your major competitors or strategic groups based upon their applicable assets and skills and how your own company fits on this scale., strategic management has three major elements: strategic position, strategic choices for the future and strategic in action.

To put together a competitive strength grid, list all the key assets and skills down the left margin of a piece of paper. Along the top, write down two column headers: “weakness” and “strength.” In each asset or skill category, place all the competitors that have weaknesses in that particular category under the weakness column, and all those that have strengths in that specific category in the strength column. After you’ve finished, you’ll be able to determine just where you stand in relation to the other firms competing in your industry.

Once you’ve established the key assets and skills necessary to succeed in this business and have defined your distinct competitive advantage, you need to communicate them in a strategic form that will attract market share as well as defend it.

Competitive strategies usually fall into these five areas:

1.Product

2.Distribution

3.Pricing

4.Promotion

5.Advertising

Many of the factors leading to the formation of a strategy should already have been highlighted in previous sections, specifically in marketing strategies.

“Strategies primarily revolve around establishing the point of entry in the product life cycle and an endurable competitive advantage.

As we’ve already discussed, this involves defining the elements that will set your product or service apart from your competitors or strategic groups. You need to establish this competitive advantage clearly so the reader understands not only how you will accomplish your goals, but why your strategy will work.


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Latest News for Strategy Business Developments

Community Cloud

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Technical and fundamental analysis in the efficient market hypothesis suggests that future share prices cannot be predicted by studying past prices. As we have seen, there is extensive evidence to support this view and the right information in collaborating with your partners.

Despite the evidence, investment strategies based on the study of past share prices, or on the analysis of published information such as annual accounts, are common, and the view held by many financial analysts seems to be therefore that capital markets are inefficient.

“Technical analysis involves the use of charts (Chartism) and other methods to predict future shares prices and share price trends, clearly implying that a relationship exists between past and future prices. “

For technical analysis to lead to abnormal returns on a regular basis, capital markets cannot even be weak form efficient.

“Fundamental analysis are public information to calculate a fundamental value for a share and then offer investment advice by comparing the fundamental value with the current market price.”

It is not possible to make abnomal gains from fundamental analysis if capital markets are semi-strong form efficient, since all publicly available information will already be reflected in share prices.

Both technical and fundamental analysis, by seeking abnormal returns, increase the speed with which share prices absorb new information and reach equilibrium, thereby preventing abnomal returns from being achieved.


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Exploit Synergies

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If the mark of an entrepreneur in seeing an opportunity where others don’t, Jan Nytzen and Bjorn Lowenhielm, founders of Universal Cart Systems Inc. in New York City, are entrepreneurs in excellence.
In the seemingly mundane world of food cart manufacturing, the pair that developed techniques, dramatically rearranged the economics of product and provided an entree to a multimillion-dollar opportunity.
Rather than welded steel, Universal’s carts, which can be used for food service as well as merchandising, rely on modular components made from aluminum extrusions.

“What was made by five workers in five days could now be done by one worker in a few hours,”

says Lowenhielm.

“[We realized] this was clearly something that had significant potential.”

The funds spent on research and development got Universal into initial production. With several units occupying New Jersey’s Giant Stadium and with what Lowenhielm calls rave reviews from food-service contractor Aramark in Philadelphia, the company is now ready to launch a full-scale rollout of the product.
To do it right, Nytzen and Lowenhielm figure they’ll need an additional $500,000 and eventually as much as $1 million. But with $1 million already invested, the co-founders are looking for “angel” investors with the kind of equity capital that will drive Universal to its next growth level. While they know that money exists, there is less certainty regarding the kind of angel investor they need.
David R. Evanson, a writer and consultant, is a principal of Financial Communications Associates in Ardmore, Pennsylvania. Art Beroff, a principal of Beroff Associates in Howard Beach, New York, helps companies raise capital and go public.

A. Good Chemistry

The importance of the chemistry between entrepreneur and investor cannot be underestimated. Consider that while a banker may completely trust and like an entrepreneur, he or she will not change the lending criteria a single iota because of these feelings. But with angel investors, the situation is quite different: If he or she develops a bond with an entrepreneur, an angel will agree to almost any deal. Because of this phenomenon, angel investor Rich Bendis, who is also president of Kansas Technology Enterprise Corp. in Topeka, Kansas, says entrepreneurs must understand the basic investor personality types to help them forge the bond so vital to closing the deal. While private investors come in many different shapes, they can be categorized into five types: corporate angels, entrepreneurial angels, enthusiast angels, micromanagement angels and professional angels.

1. Corporate angels

Typically, corporate angels are former senior managers of Fortune 1000 corporations who have been outplaced or have taken early retirement. Corporate angels may say they’re looking for investment opportunities, but in reality, they’re looking for a job. This doesn’t mean they won’t invest. Bendis says they typically have about $1 million in cash and may invest as much as $200,000 in a deal, but some kind of position, usually unpaid at first, is part of the deal.
Nytzen and Lowenhielm, who had lengthy careers at Volvo and Electrolux, respectively, before striking out on their own, think a corporate angel might work out.

“I understand their thinking because we came out of that mold,”

says Nytzen.

My one reservation would be that in start-ups, you have to wear a lot of hats, and people from large corporations with highly specialized skills can’t always do that.”

Lowenhielm concurs. If forced to choose a corporate angel who also wanted a position with the company, he says,

“I would choose someone who left a large corporation to pursue other interests, as opposed to a senior person who got downsized out of his or her job.”

Corporate angels typically make just one investment, unless their last one didn’t work out, says Bendis. And with respect to that one investment, they tend to invest everything at once and may get nervous when the hat gets passed their way again.

2. Entrepreneurial angels

These are the most prevalent type of angel investors, according to Bendis. Most of them own and operate highly successful businesses. Because these investors have another source of income, and perhaps significant wealth from an initial public offering or partial buyout, they will take bigger risks and invest more capital than other types of angels.
Whereas the corporate angel is looking for a job, entrepreneurial angels are looking for synergy with their current business, a way to diversify their portfolios or, in rarer instances, a way to prepare for life after their current business no longer requires their full attention. As a result, these investors seldom look at businesses outside their area of expertise and will participate in no more than a handful of investments at any one time.

We are talking right now to an investor who owns a fabrication business,”

says Lowenhielm.

“Obviously, there are some strong synergies. I like the idea that there is an incentive for each business to strengthen the other.”

According to Bendis, entrepreneurial angels almost always require a seat on the board of directors but hardly ever want any kind of management duties. They typically make fair-sized investments-$200,000 to $500,000–and invest more as the company progresses. However, because of their agenda, when the synergy or the potential they initially perceived disappears, oftentimes so do they.

3. Enthusiast angels

While entrepreneurial angels tend to be somewhat calculating, enthusiasts simply like to be involved in deals. Bendis says most enthusiast angels are 65 or older, independently wealthy from success in a business they started, and have abbreviated work schedules. For them, investing is a hobby. They typically want no role in management and rarely seek board representation.
Because enthusiasts spread themselves across many companies, the size of their investments tends to be small–from as little as $10,000 to perhaps a few hundred thousand dollars.

On the plus side,”

says Bendis,

“enthusiasts tend to have a difficult time saying no and often bring their friends into a deal.”

Nytzen feels that enthusiast angels, affiliated with the company but free from the burden of board representation, would provide an invaluable resource for Universal.

When we created international advisory boards for Volvo, we were able to attract top people because there were no official responsibilities,”

Nytzen says.

“We received tremendous support and counsel from them. I see enthusiasts as a very interesting source of capital.”

4. Micromanagement angels

Micromanagers are serious investors,”

says Bendis.

Some of them are born wealthy, but the vast majority attained wealth through their own efforts.”

Unfortunately, this heritage makes them dangerous. Because they have successfully built a company, micromanagers attempt to impose the same tactics they used with their own companies on the companies they’re investing in. Though they do not seek an active management role, micromanagers usually demand a board seat. If the business is not doing well, they will try to bring in new managers.

The idea of control has a little bit of a bad taste [for us],”

says Lowenhielm.

“The investor who wants to know how much we spend on paper clips would be a hindrance. The way I see it, investors who want to control want to restrain.”

This would be a tough fit for us,”

agrees Nytzen.

Right now as a start-up, we [have identified and are confident of] our market and our products. It would be difficult to put someone else in the driver’s seat.”

Bendis says it’s possible to exploit the behavior patterns of micromanagers–but at a cost.

They enjoy having as much control as possible,”

Bendis says.

“Many will gladly pay for it by putting more capital in the business.”

Micromanagers typically invest between $100,000 and $1 million.

5. Professional angels

The term “professional” in this context refers to the investor’s occupation, such as doctor, lawyer and, in some rare instances, accountant. Bendis says professional angels like to invest in companies that offer a product or service with which they have some experience: A doctor will look at medical instrumentation companies, a franchise attorney will look at franchise deals, and so on.
These investors don’t typically need to know what’s going on in the business on a daily basis, and they do not micromanage their portfolio companies. In fact, professionals rarely seek board representation. However, Bendis says, they can be unpleasant to deal with and impatient when the going gets tough, and may think a company is in trouble before it actually is. Bendis says professional angels invest in several companies at one time, and their capital contributions range from $25,000 to $200,000.

They are good for initial investments but are less likely to make follow-up investments,”

he says.

Perhaps more than any other investor, professionals operate within loosely defined but clear networks, and they tend to be more comfortable investing alongside their peers. Thus, the first professional investor you find will likely open a pathway to others. Professionals can also offer value when they have-and provide-legal, accounting or financial expertise for which the company would otherwise have to pay hefty fees. Be wary, however, because some professionals want to be hired after they invest.

B. Pairing Up

Of all the different personality types, Nytzen and Lowenhielm agree the best investor for Universal Cart Systems would be an entrepreneurial angel.

“The fact that he or she is already in business and wants to remain there and be a resource for our business seems to create the best atmosphere for success,”

says Nytzen.
But the partners are not ruling out the other types of investors.

This is business,”

says Lowenhielm.

“If someone brings something valuable to the table that can help us reach our goals faster, then I would consider them a good investor for our business.”


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Internal experts and external brought in sessions, that articulate the organisation vision and added insights to new opportunities.

“Is your team fully engaged to give their best, day in and day out?”

In a recent study by TowersWatson, an international HR consulting firm, fewer than 21 percent of employees surveyed described themselves as “highly engaged,” down from 31 percent. 8 percent admitted to being fully disengaged. Having only one-fifth of your employees highly engaged is not the hallmark of a “Winning Business.”

Other studies show that employee engagement derives from three important factors:

  • Alignment of the employee with the goals and vision of the company.
  • Faith of the employee in the competence of management and their commitment to realize the goals and vision.
  • Trust in their direct supervisor that he or she will support his or her people and help them to succeed.

It has often been said that employees rarely quit companies. Instead, employees quit their managers or supervisors by leaving the company. Mark Herbert, a consultant focused on engagement, says:

“Engagement lives and dies on the front line of your business.”

Increasing positive managerial behavior and reducing negative managerial behavior will go a long way towards improving employee engagement. When your talented employees are engaged, they are able to perform spectacularly and build and improve your winning business.

Here are some ways to get managers and supervisors started in focusing on ways to improve engagement (and to be better managers).

1. DON’T get angry

Getting angry is easy. Anyone can do that. But getting angry in the right way in the right amount at the right time, now that is hard.”

Mark Twain

Anger does not belong in your managerial kit bag.

2. DON’T be cold, distant, rude or unfriendly

Especially in difficult times, employees take cues from their immediate supervisors and need to hear from them. As such, your team will judge you by your action, moods, and behaviors, not by your intent.

3. DON’T send messages to your employees so that they never know where you stand

Keep your message simple, focused and prioritized. Too many messages and initiatives just confuse and alienate people.

4. DON’T BS your team

This includes saying things that you don’t believe in. This includes hiding information and just plain lying. By the time each of us is in our early 20′s, we have all developed very well-tuned BS detectors.

5. DON’T act more concerned about your own welfare than anything else

Your success will come through the success of your team. “Self-serving detectors” are also very well-tuned in most employees.

6. DON’T avoid taking responsibility for your actions

You are the boss. As such, you are accountable and the buck stops with you. You are trying to develop accountability throughout your company. So, lead by example.

7. DON’T jump to conclusions without checking your facts first

A few years ago, I watched in horror as a colleague of mine started screaming at an employee of his who had missed an important meeting that morning. After several minutes, the employee responded:

“I apologize and should have contacted you. But, I just got back from the hospital as a relative has been diagnosed with terminal cancer.”

Now here are the dos, which are even more important than the don’ts…

8. DO what you say you are going to do when you are going to do it

There is no better way to communicate the message that you are accountable for your promises and that everyone in your company should be accountable as well.

9. DO be responsive (return phone calls, emails)

As a manager, your team can be considered to be your customer.
You want your sales team to punctually respond back to customer requests, so you should do the same.

10. DO publicly support your people

Your disagreements and disappointment with your employees can be communicated later and in private. Nothing appears so hollow as your attempt to blame your team for failures.

11. DO admit your mistakes …

…and take the blame for failures.

12. DO recognize your team

“You can never underestimate the power of simple recognition for a job well done.”

13. DO ask and listen

“The manager of the future will know how to ask rather than how to tell.”

Peter Drucker

Some of the most dangerous words for a manager to ever say include:

But, you just don’t understand…” “Because I said so…

14. DO smile and laugth


Have some fun. But, be genuine; programmed fun and faked laughter is worse than doing nothing.
When appropriate, laugh at yourself; it will humanize you.


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Digital Years

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To a better understanding on strategic decisions and implications, here are some characteristics that exhibit the following:

“Complexity is describing the feature of strategy and is particularly so in organisations with wide geographical horizons, such as multinational firms, or wide ranges of products and services.

For example, Yahoo! faces the complexity both of a fast-moving market environment and poorly organised internal businesses. Uncertainty is inherent in strategy, because nobody can be sure about the future.For Yahoo! the internet environment is one of constant and unforeseeable.

Operational decisions are linked to strategy.

For example, any attempt to coordinate Yahoo!’s business units more closely will have knock-on effects on web page design and links, carer development and advertiser relationships.

This link between overall strategy and operational aspects of the organisation is important for two other reasons.

First if the operational aspects of the organisation are not in line with the strategy, than no matter how well-considered the strategy is, it will not succeed.

Second, it is at the operational level that real strategic advantage can be achieved. Indeed, competence in particular operational activities might determine which strategic developments might make most sense.

“Integration is required for effective strategy.”

Mangers have to cross functional and operational boundaries to deal with strategic problems. Yahoo! for example needs an integrated approach to powerful advertisers such as Sony and Vodafone from across all its businesses.

Relationships and networks outside the organisation are important in strategy, for example with suppliers, distributors and customers. For Yahoo!, advertisers and users are crucial sets of relationships.

“Change is typically a crucial component of strategy.”

Change is often difficult because of the heritage of resources and because of organisational culture.

According to Brad Garlinghouse at least,

“Yahoo barriers to change seem to include a top management that is afraid of taking hard decisions and a lack of clear accountability amongst lower-level management.”


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News & Economic Trends


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Among companies where big data, cloud, mobile, and social technologies are critical parts of the infrastructure, how technologies are, or will soon be?
Forty-four percent of survey respondents say that mobile is now a critical part of their infrastructure. It’s especially important in some industries—51 percent of the respondents in the utilities and technology sectors indicated that mobile devices and access are critical.

Nearly two-thirds (64 percent) of respondents say that “anywhere access” to corporate apps and data is the biggest benefit to using mobile, followed by increased productivity (53 percent). The two are undoubtedly linked, as mobile access to systems optimizes employee time.
A majority of survey respondents indicate that putting mobile functionality in the hands of employees is now a key requirement, and leading companies are also leveraging the growing ubiquity of smartphones to innovate and drive top-line revenue growth.

Management of the Detroit Lions professional football team, for example, is always looking for ways to improve the fan experience. In addition to offering wireless Internet access at Ford Field to Verizon customers and launching a digital raffle for charity on game days, the Lions released a free smartphone application that features exclusive in-stadium game day content, including instant replay from several different camera angles for every play, and concession maps. Eventually, the Lions intend to add other features to the smartphone app, including in-seat concession ordering.

“Mobile is a gateway to our fan base,”

says Thomas Horrom, vice president of technology for the Detroit Lions.

“Without it, we’re not able to get creative or innovative in our engineered touch points.”

Delta Air Lines is another company that is using mobile technologies to innovate. The airline announced it had begun equipping its 19,000 flight attendants with mobile devices, which have increased incremental revenue from in-flight purchases.
Here are some steps you can take to ensure that your clients receive excellent service every step of the way.

  • Put your customer service policy in writing.

    These principles should come from you, but every employee should know what the rules are and be ready to live up to them. This doesn’t have to be elaborate.

    Something as simple as,

    the customer is always right”

    can lay the necessary groundwork, although you may want to get more detailed by saying, for instance, any employee is empowered to grant a 10 percent discount to any dissatisfied customer at any time.

  • Establish support systems that give employees clear instructions for gaining and maintaining service superiority

    These systems will help you outservice any competitor by giving more to customers and anticipating problems before they arise.

  • Develop a measurement of superb customer service

    Don’t forget to reward employees who practice it consistently.

  • Be certain that your passion for customer service runs rampant throughout your company

    Employees should see how good service relates to your profits and to their futures with the company.This commitment must be so powerful that every one of your customers can sense it.

  • Share information with people on the front lines

    Meet with your employees regularly to talk about improving service. Solicit ideas from employees-they are the ones who are dealing with customers most often.

  • Act on the knowledge that what customers value most are attention, dependability, promptness and competence

    They love being treated as individuals and being referred to by name.

The efficient market hypothesis suggests that future share prices cannot be predicted by studying past prices and as we have seen, there is extensive evidence to support this view and the right information in collaborating with your partners.

Despite the evidence, investment strategies based on the study of past share prices, or on the analysis of published information such as annual accounts, are common, and the view held by many financial analysts seems to be therefore that capital markets are inefficient.

“Technical analysis involves the use of charts (Chartism) and other methods to predict future shares prices and share price trends, clearly implying that a relationship exists between past and future prices. “


For technical analysis to lead to abnormal returns on a regular basis, capital markets cannot even be weak form efficient.

Fundamental analysis are public information to calculate a fundamental value for a share and then offer investment advice by comparing the fundamental value with the current market price.

It is not possible to make abnomal gains from fundamental analysis if capital markets are semi-strong form efficient, since all publicly available information will already be reflected in share prices.

“Bolster the growing consensus among academics, consultants, and other industry experts that simply spending more on emerging technologies isn’t enough to boost business outcomes.”


Instead, companies that both identify which core business capabilities they need to differentiate and make a commitment to transform these core business capabilities with the right digital technology will greatly outperform competitors who don’t.

For example, a new study by George Westerman, Didier Bonnet, and Andrew McAfee found that firms with a strong vision and mature processes for digital transformation were more profitable on average, had higher revenues, and achieved a bigger market valuation than competitors without a strong vision.

“As with any emerging technology, however, there are significant challenges associated with cloud, mobile, social, and big data initiatives. “

The survey suggests that the primary risks preventing their wider adoption are data security issues, lack of interoperability with existing IT systems, and lack of control.
However, executives from leading organizations—several of whom were interviewed for this report— are overcoming those hurdles to achieve top-line and customer-facing business benefits.

“Strategic options involve the options for strategy in terms of both the directions in which strategy might move and the methods by which strategy might be pursued.”

For example, an organisation might have to choose between alternative diversification moves, for example entering into new products and markets.

“As it diversification moves, it has different methods available to it for example, developing a new product itself or acquiring an organisation already active in the area.


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Financial Goals

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In the new case of the industries you  should be proactive in helping achieving and creating your goals.

When you’re a start-up with few employees and few customers, it’s easy to stay on top of what customers want and what they’re getting. But as you add more customers and employees, you add links to the customer service chain. That creates the potential for growth and the potential for poor service along the way. That’s why creating a customer service policy and adhering to it is so important. Here are some steps you can take to ensure that your clients receive excellent service every step of the way.

  1. Put your customer service policy in writing. These principles should come from you, but every employee should know what the rules are and be ready to live up to them. This doesn’t have to be elaborate. Something as simple as “the customer is always right” can lay the necessary groundwork, although you may want to get more detailed by saying, for instance, “any employee is empowered to grant a 10 percent discount to any dissatisfied customer at any time.”
  2. Establish support systems that give employees clear instructions for gaining and maintaining service superiority. These systems will help you outservice any competitor by giving more to customers and anticipating problems before they arise.
  3. Develop a measurement of superb customer service. Don’t forget to reward employees who practice it consistently.
  4. Be certain that your passion for customer service runs rampant throughout your company. Employees should see how good service relates to your profits and to their futures with the company.
  5. Be genuinely committed to providing more customer service excellence than anyone else in your industry. This commitment must be so powerful that every one of your customers can sense it.
  6. Share information with people on the front lines.Meet with your employees regularly to talk about improving service. Solicit ideas from employees-they are the ones who are dealing with customers most often.
  7. Act on the knowledge that what customers value most are attention, dependability, promptness and competence. They love being treated as individuals and being referred to by name.

 

It has been about trust and it has been about getting there faster than anybody else,as we are driving innovation and bring ideas from other industries through our success.

 

“Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.” 

 Howard Stevenson 

 

This is one of the first definitions of entrepreneurism.It perfectly captures the nature of entrepreneurship and highlights some key qualities that successful entrepreneursshare. Entrepreneurs are confident in their abilities and they are able to recognize opportunities where many others don’t see them.




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The Latest Business News  On Strategy Practise

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Create differentiation and leadership digital engagement, alignment, innovation persistency connectivity, mobile and cloud lead into market efficiency. This initiatives are driving manufacturers to move at the speed of thought. Leverage this transformation is important.

 

However, market efficiency – championed in the efficient market hypothesis (EMH)”

 

Formulated by Eugene Fama in 1970, suggests that at any given time, prices fully reflect all available information on a particular stock and/or market. Fama was awarded the Nobel Memorial Prize in Economic Sciences jointly with Robert Shiller and Lars Peter Hansen in 2013. According to the EMH, no investor has an advantage in predicting a return on a stock price because no one has access to information not already available to everyone else.

 

The Effect of Efficiency: Non-Predictability

The nature of information does not have to be limited to financial news and research alone; indeed, information about political, economic and social events, combined with how investors perceive such information, whether true or rumored, will be reflected in the stock price.

According to the EMH, as prices respond only to information available in the market, and because all market participants are privy to the same information, no one will have the ability to out-profit anyone else.

In efficient markets, prices become not predictable but random, so no investment pattern can be discerned. A planned approach to investment, therefore, cannot be successful.

 

“This random walk of prices”

 

Commonly spoken about in the EMH school of thought, results in the failure of any investment strategy that aims to beat the market consistently. In fact, the EMH suggests that given the transaction costs involved in portfolio management, it would be more profitable for an investor to put his or her money into an index fund.

 

Anomalies: The Challenge to Efficiency

In the real world of investment, however, there are obvious arguments against the EMH. There are investors who have beaten the market – Warren Buffett, whose investment strategy focuses on undervalued stocks, made billions and set an example for numerous followers.

There are portfolio managers who have better track records than others, and there are investment houses with more renowned research analysis than others. So how can performance be random when people are clearly profiting from and beating the market?

Counter arguments to the EMH state that consistent patterns are present. For example, the January effect is a pattern that shows higher returns tend to be earned in the first month of the year; and the weekend effect is the tendency for stock returns on Monday to be lower than those of the immediately preceding Friday.


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Latest News & Developments in Business Strategy Practice

Learning and Flow

 

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Because flow emerges in the zone in which an activity challenges people to the fullest to their capacities, as their skills increase it takes a heightened challenge to get into flow.

“If a task is too simple, it is boring; if too challenging, the result is anxiety, rather than flow.

It can be argued that mastery in a craft or skill is spurred on by the experience of flow that the motivation to get better and better at something, be it playing the violin, dancing, or gene spicing, is at least in part to stay in flow while doing it.

“Flow is an internal state that signifies a kid is engaged in a task that’s right.”

Flow_colour_chart_large


The flow model suggests that achieving mastery of any skill or body of knowledge should ideally happen naturally.

Csikszentmihalyi found that it was those who in their student days had savored the sheer joy, became serious. Whether it be in controlling impulse and putting off gratification, regulating our mood so they facilitate rather than impede thinking, motivating ourselves to persist and try, try again in the face of setbacks, all bespeak the power of emotion to guide effective effort.


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