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Category: Market & Bus Planning

Mar 18 2008

Geographic Diversification – Good Strategy for Business

As if the current economic climate needed to remind us, this old financial planning lesson is timeless.

For personal wealth: If you want to retire, diversify your investment portfolio.

For business wealth: If you want to sustain growth, diversify your product portfolio – according to customer segmentation and geographic distribution.

Last week, General Electric proved this theory still holds weight among senior corporate management. GE is globalizing all of its businesses. Emerging markets are growing fast and have a “tremendous need for capital” to fund infrastructure spending on power and water investments which is a core competency for GE.

For the first time, overseas sales accounted for more than half of GE’s total revenue of $172.74 billion in 2007. General Electric Chairman Jeffrey Immelt said in January that increasing global spending on infrastructure projects was offsetting weakness in U.S. consumer sentiment.

So if global diversification isn’t a part of your own association strategy, are you risking something by keeping all your eggs in one basket?

Feb 28 2008

The Applied Knowledge Gap in India

(Chart) – data showing a dramatic gap in knowledge taught at Indian universities versus the knowledge generated by India’s private sector over time.

In the summer of 2006, I was on a business development trip through Asia and spent a week in India meeting C-level executives from the Indian ICT industry including people from InfoSys and Wipro – two of India’s biggest and most successful companies. What I learned on that trip was illuminating on many levels. Just recently I am reminded of them again.

I have been following Anne Blouin’s posts on the ASAE and Center’s Acronym blog on the study mission to India. In her post she shared some interesting facts about India which I would like to highlight and amplify.

“The role of education and its globalization is assuming an increased role and significance
In India.

People with a high school certificate number 250 million, with 10 million getting a BS degree.

IIT receives 300,000 applicants and accepts only 5,000. However, 400,000 graduate each year with degrees in engineering and science (more than the population of New Zealand). There has been a much greater focus in the last few years on research and on innovation and creativity.

Industries are becoming proponents of partnerships with universities; universities are also working to build international collaborations with exchange of faculty and students, research centers, and joint degree programs.”

All of this is certainly true, but needs some further elaboration.

“The role of education and its globalization” is indeed increasingly more significant. The key to understand is where the growth is coming.

The non-formal education sector is huge in India (as well as China, SE Asia, and Africa). Think “technical schools meet computer learning centers” and you can get a feel for companies like APTECH who is one of the leaders in marketshare in India and China. When you don’t have very good infrastructure you create “high tech centers for learning” where all kinds of people can go from students to white collar professionals. Get to know the non-formal education sector and its players.

“400,000 graduate each year with degrees in engineering and science”…. another truth but there is more to the story. I learned from Kiran Karnik, President of NASSCOM (India’s leading ICT association) that India’s university system has fallen behind its private sector (see chart above).

Indian business executives confirm that even graduates from the top schools do not come prepared for the “real world” that globalization has brought to India. Many are not employable without significant further training. Why? Because the Indian university system is well behind its private sector in teaching knowledge and practice.

Which helps to explain “industries are becoming proponents of partnerships with universities.” They have no choice. Schools are way behind in teaching. Companies like InfoSys and Wipro spend millions of dollars a year running their own “private schools” where they send thousands of applicants from top schools for further training. The wash out rate is around 90%!! Can you imagine the constant need for locating quality talent but failing to find it even after they go through 12 weeks of corporate training?

Amazingly, the brainpower shortfall is so urgent that well known business process outsourcing companies actually outsource work to other SE Asian countries because they can’t deploy enough project-ready assets with any reliability.

Bottomline

This is an opportunity for associations with good training and certification programs.

The challenge is finding the right local partners to help manage, sell, and protect your IP. In addition, you’ll need to consider product pricing adjustments unless your product has the “gold standard” moniker. Typically, you can tell that by whether Indian business executives are familiar with your certification. If international corporate clients demand their professionals have a certification in order to be included in a project, you are half way home.

Feb 25 2008

WSJ – “Emerging Markets Overtaking the Developed Markets”

In last week’s Wall Street Journal, economist David Hale shined a spotlight on a piece of data that some would have thought was still far down the road.

The current business cycle will go down in the history books as one which confirmed that leadership in the global economy is now shifting from the old industrial countries to the emerging market countries. During 2007, the developing countries produced over 52% of global growth, compared to 37% during the late 1990s. China alone produced 17.8% of global GDP growth last year, compared to 14.6% for the U.S. economy. The World Bank is forecasting that the economies of developing countries will grow 7.4% this year, compared to 2.2% in the old industrial nations.

As a result of their large current account surpluses, the developing countries also account for 75% of the world’s $6 trillion of foreign exchange reserves. They also have sovereign wealth funds with assets of $2.5 trillion. Developing-country stock market capitalization now exceeds $17.8 trillion, compared to $2.2 trillion in 2000. The capitalization of the U.S. stock market is $17.5 trillion.

If you ever needed a motivator for getting out there and start building a market for your products, services and membership, this would be it.   Eventually everyone follows the money.

By the way, did anyone notice how many non-US actors, producers, writers and musicians won in last night’s academy awards…