New ways of thinking and acting globally

The Internet has resulted in a completely different world where all of us are or rather can be if we wish so connected in the cyberspace and we are totally integrated on all fronts; the social, the business, the financials, the educational, the geographical the Internet is a new universe with no limits in time and space. Since I am in the business world, I will try to paint a small picture of how I have forced myself to get some insight in the digital new universe with many new rules, a cascade of new IT technical terms in the modern management language. Terms we have to understand completely, we need to identify the implications of the new management tools. However, some of them are just old wines in new bottles.

Today owners, top executives and daily management have to face the numerous challenges posed by globalization, the demands of the market, product development, and level of service delivery, business development, innovation, financial management, human resources development, and adaptability.

We need to understand and accept the new rules for International Business, the Internet forces companies to completely do a rethinking of their marketing strategy and renew all previous business models. In a certain way, we have all become partners in the intranet and extranet age. The Internet forces us to pay much more attention to rapid adjustments of strategies and tactics. In order to keep up with the competition we need to have fast access to all kinds of information needed to produce a new Business Design. A company needs to capitalize on the new opportunities offered by the increasing global integration. I use the term Business Design because I see the necessity for CEOs to establish a new business platform taking advantage of the possibilities to form a network of expertise that work globally.

You may have a producer in the Far East who wishes to penetrate new markets. The company I talk about is a great producer with a lot of solid business within South East Asia but now wanting to expand the business.  Previously it was costly and time-consuming to get complete and reliable market analysis and the changes in the markets took place over a longer period. Today the markets move fast. For many products and services they move so fast that often the time 8.o’clock AM for some is 3 weeks in the past for others. It is imperative to understand that marketing today is the key engine driving the business forwards based on vision, mission and strategies. The marketing function is more important than ever and consequently needs very qualified management. At the same time, it has become less expensive, much more efficient to obtain reliable market information and on top very fast.

In order to move swift the producer in the Far East may now considers some new avenues to meet the present challenges or in other words implement a new set of concepts. The key words are profitable global strategy and execution of it. The implementation of the new concepts necessitates alterations of the basic instruments for marketing management.

No strategy can be determined without a proper homework so to make it simple we will all work in a building of three storeys by the name of Knowledge Warehouse

The ground floor accommodates a team of expertise focusing on Customer Insight and Understanding in short CIU. Services compiling data and information from selected markets with all relevant details by using an advanced market research plan.

The second floor hosts a team of experts in analyzing and evaluating all data and information from the ground floor and present results, suggestions and alternatives for a global strategy to the Marketing Executive Team. I call the second floor team in short AAE.

The third floor accommodates a team of top qualified persons, responsible for the final decision on profitable strategies, but much more importantly overall responsibility for the execution of marketing strategies. I call the third floor team in short EMS.

A fact that can cause some concern is the negligence of the importance of the reliability and quality of step one. Do not try to make quick moves in order to save time or money. Do not make decisions based on impulses or a high degree of uncertainty. Today it is more important than ever to have a deep insight and understanding of the components in the decision process.  The need for qualified collection of relevant and reliable data is exceptionally high and the process will be time demanding since we work across borders and cross functionally. It is imperative with stringent working disciplines and an advanced market research plan. If the tasks on level 1 are not carried out in the best professional manner the result will be inadequate analysis and recommendations for the decision of a marketing strategy and then consequently a catastrophic execution as well as bad image, waste of time and money.

We often talk about ROI and that is understandable. We should focus more on the highest possible return of investments in activities from staff and services from networks as well. We all need to add value to our capabilities and work constantly to improve them. Other facts are that the introduction of the Internet has changed completely the sales and marketing parameters from “the good old days” since the transparency of the Net has made the consumers the kings of the game. A few years back when EU introduced rules to protect the consumers by laws of forcing companies to disclose relevant and important information about their products, the concept aimed at enabling consumers to compare products based on facts.

The speed by which the Internet moves has surpassed the set of regulations as mentioned making it possible for consumers to know from where the products are coming, who is the producer and what is the content of the product. So a few years back a consumer would have to pull down a product from the shelf then another one, compare the two, and then make the decision. Today he will get any kind of information of almost all products he is looking for and then decide. He does not need to move, he just sits behind the monitor and all he is looking for is just a click away.

In order to introduce advanced working methods we will take the 3-storey building a step further. We of course still need the same management tools, but we use a circular concept. We take advantage of The Round Table inspiration, let the 3 teams meet with regular intervals face to face and invite the customer to be the center, the guest of honor. We place him in the center, so we all can focus on him; he is the only one who can tell us about the benefits he is looking for and he plus the ones looking for same benefits form the market. The huge advantage by having a round table conference is that the decision makers are not sitting on the top of the building far away from the reality, the market place where all what the executive management is looking for is present. It is not on the top floor of the building.

This new world makes it increasingly difficult to maintain “old style business”. Previously products should have a long lifetime in order to cover high innovation costs for the producers. Here in 2009, close to 2010, we know that these rules have changed. Innovation must be fast because the consumer patterns and behaviors focus on updated features, some products like mobile phones have a very short lifetime because the markets require brand new advanced communication tools with sophisticated gadgets.

The producers act in a smart way. They will develop a basis model that covers the whole range of various consumer needs and then sell in maybe 50 different models each with specific benefits to meet market demands. In this way, the innovation costs are distributed on a massive amount of products and make the products pricewise competitive.

The producers must understand the consumers and the markets making Consumer Insight an extremely important discipline to manage. The modern consumer buys benefits and is less concerned about the product itself. Consequently, the use of advanced marketing tools is more necessary than ever making marketing management a primary managerial tool.

Chonburi 23rd October 2009

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The meaning of consulting is to provide advice in a special area of expertise. A better way to translate this definition is to facilitate companies and or organizations improving their performance by analyzing the present situation and developing plans for improvements.

Business advices fall into many categories: General Management, Organizational Changes, Development of Coaching, and Implementation of new Technologies or Operational Improvements, just to mention examples from a broad selection of relevant issues, all of equal importance to all business regardless of size.

Business (or Company/Organization/Enterprise) is legally defined as a vehicle providing goods or services to customers/clients with the clear goal to make a profit or in other words to receive a financial reward in return for working and for taking risks.

As you may see from my website www.occo.asia, I have a fair amount of experience in consulting over the years and have chosen to function as a so-called Boutique Operation aka a Niche Operation focused on small and medium sized Industries. However, maybe more importantly I have hold positions as CFO or CEO in large international companies, which add to the quality of my consulting since I have many years of practical Business Experience. On top, I have a theoretical background on MBA level.

Based on a solid theoretical education plus experiences from 20+ countries, and from various industries, I have developed some excellent management tools among them a Simulation Program (in cooperation with KPGM) that enables me to calculate the financial consequences of various tactics/scenarios before they are implemented as part of the Over All Strategy. So today, this is then what I can offer:

Provide advices in order to help senior management and or owners to improve effectiveness by the help of a workable strategy, process or operation by accessing the realistic needs, reviewing the existing business plans, functions and directions, furthermore to add values to your Business.

I am 100% independent and work today based on simple methods developed over the years and consisting of 3 important steps; Step 1 all historical data related to the present state of affairs, Step 3 a scenario of how the management sees the company’s position on the market place in 2 to 3 years. Steps 1 and 3 are easy to generate, but step number 2 is the most difficult because it has to provide the answer to this important question: How do I get from step 1 to step 3? This is better known as an Integrated Business Solution. I describe it as how to build the bridge between Visions and Reality.

The answer is in general terms found in the term STRATEGY. The definition is clear; Strategy is the direction/scope a company takes in order to over a period to gain advantage over the competition or to meet the market needs and to fulfil the financial expectations of the shareholders. The name of the game is like playing chess one needs to make accurate and well-considered choices:

To produce all the answers in Step 2 is not easy and involves analyzes of many important elements that normally structure the complete Business Plan. Some small companies especially if owned and operated by entrepreneurs do not care too much about plans, before it is too late, and sometimes produce their plans by looking into a crystal ball like a fortune teller.

It would be nice if that was possible, but unfortunately it does not work that way and I am grateful for that for had it been the case I would be out of business. So again Step 2 involves taking a closer look into these areas: In which markets should we operate, with which products, allocating the necessary resources (organizational, financial, technical competences, facilities and relationships), the competition, the USPs for your products and same for the competitors USPs, how strong are you compared to the competition, where are your weakness? (SWOT analysis). These are just some areas that need cautiously studies and you can add many more.

A clear STRATEGY is necessary for any business. It is the planning and execution of the actions you need to take in order to achieve your goal. Strategy must be combined with a careful resource allocation, intelligence, logical thinking and leverage. However, it is important to realize that all goals should be determined based on down to earth visions. After the Over All Strategy has been defined, next steps are to work out the tactics. To participate in the battle for maintaining or improving the bottom line is like play in a soccer game, you must put together a team that wants to win. If the team does not win the Coach is fired most likely because he did not choose the right tactics. These must be integrated with the Over All Strategy.

My Business and Management services are targeted at medium sized companies (small is beautiful) that show some of these signs:

• In need of Restructuring
• Have an unacceptable profit situation
• Underperforming activities
• Leadership that is not focused on the profitability

So in concluding my comments: I can assist you building the Bridge between Visions and Realities. My favourite Management Guru is Peter F. Drucker who once stated:  “It is not the question of doing things the right way, it is the question of doing the right things “.

On the personal note: I work based on solid and proven business principles adjusted by modern thinking. I keep my head high but my visions and expectations are down to earth. I never lose focus, I work hard and dedicated and never give up before I have delivered what I have promised and I always aim at delivering more than expected.

I am a strong believer in quality rather than quantity and I am a student of Ayn Rand thus strongly believing in Science and Philosophy. In all modesty, I think that the combination of strong ethics and future oriented business scenarios shape the services, which I offer you, that will contribute to establish a workable Strategy resulting in a greatly improved situation for your company.

Chonburi

October 12th 2009

I often wonder about the rising amount of conflicts in modern and sometimes aggressive marketing and who benefits from it. As you may see from my name I am not from the USA, and since this country is the leader of almost everything (you just name it) that being good or bad I choose to use this example to illustrate my views on a serious conflict of interests: McDonald’s versus The American Health System. I have chosen McDonald’s as a representative for the entire Fast Food Industry since this company is the largest in the world within said industry.

The full study of the marketing field is comprehensive as it involves economics related to private businesses as well as the execution of public policies. Marketing is integrated in our lives used by our communities as well as by companies producing or selling merchandise or services we need. In exchange we today pay for products with money and for the social services we pay with either money or contribute by other means to the development and maintenance of the social structure.

Role Models, examples:

The lady this is an INSULT how dares she?

and the guy below: SHAME ON YOU

The role models are easy to identify: McDonald’s is a Company with the main focus on the maximum dividends to its shareholders; The American Health System (in general terms) needs to focus on assisting the citizens of the States to live as long and healthy as possible. So here is then the conflict. In order to ensure attractive salaries and bonuses to the top management and pay an acceptable dividend to the shareholders McDonald’s must sell as many burgers and related products as possible. Focused marketing campaigns convince the USA citizens that burgers are a must and we all know the result of a high-burger-intake:

Obesity and for sure the burgers win. USA has the highest obesity rate in the world with close to 26 % of its population being fat. Obesity means having too much body fat. It is different from being overweight, which means weighing too much. The weight may come from muscle, bone, fat and/or body water. Both terms mean that a person’s weight is greater than what’s considered healthy for his or her height.

Obesity occurs over time when you eat more calories than you use. The balance between calories-in and calories-out differs for each person. Factors that might tip the balance include your genetic makeup, overeating, eating high-fat foods and not being physically active. Being obese increases your risk of diabetes, heart disease, stroke, arthritis and some cancers. If you are obese, losing even 5 to 10 percent of your weight can delay or prevent some of these diseases. Source: National Institute of Diabetes and Digestive and Kidney Diseases

The list of possible diseases is long:

• Coronary heart disease
• Type 2 diabetes
• Cancers (endometrial, breast, and colon)
• Hypertension (high blood pressure)
• Dyslipidemia (for example, high total cholesterol or high levels of triglycerides)
• Stroke
• Liver and Gallbladder disease
• Sleep apnea and respiratory problems
• Osteoarthritis (a degeneration of cartilage and its underlying bone within a joint)
• Gynecological problems (abnormal menses, infertility)

Source: Department for Health and Human Services.

McDonald’s

Let us look at McDonalds Corporation and get the figures as correct as possible since the USA is a 100 % capitalistic society with limited focus on human aspects. The Corporation is very extensive and is the biggest chain of fast food restaurants in the World. As far as I have been able to access the figure for the operating profit this amounted to close to 4.0 billion US$ in 2007. The total of restaurants operated (either on a franchise basis or owned by the Corporation) is around 31.000 serving some 47 million burgers every day. Number of persons working is around 1.5 million which makes the Corporation one of the largest in the world. Regardless of the ownership of the restaurant (The Corporation only owns about 20 % of all) they all have to work on very stringent Business Models and rules laid down by the Corporation. In order to just to finish this issue McDonald’s financial involvements are widely spread and may vary from country to country, only one rule seems to apply to all sales outlets being that the supply and logistics of all raw materials are 100 % controlled by the Corporation.

We all know McDonald’s we have all been there. Maybe we love or we do not love the fast food products, but the fact is that from a business and marketing viewpoint the McDonald’s Corporation has done a great job. Almost everybody knows what the BIG MAC stands for.

In Denmark we had a well known writer and story teller by the name of H.C. Andersen. In one of his famous stories he tells us that if you are successful you are the target of envy and slander. McDonald’s have had its share. Criticism have come from all sides about the aggressive and manipulating marketing methods, about the working conditions and environment for the staff, , health and labor record, its business practices and culinary blandness.

The top management of the Corporation has cleverly reacted promptly to many of above mentioned issues among them the introduction of the “happy meal” product, other more healthy products and a change in the staff policy replacing low paid workers (called Generation X) with more motivated staff where this has been possible and changes in the supply chain has taken place as well.

The negative side of the success is that all fast food products contribute to obesity unless you take some appropriate actions like reducing the intake of fat, exercise regularly, avoid drinks with sugar but more importantly eating less. In Denmark the rate of obesity is much lower than in the States for the reasons just mentioned. I do agree however that there are many additional factors playing a vital role when we talk about obesity.

THE DEPARTMENT FOR HEALTH AND HUMAN SERVICES

The scope of any marketing campaign (regardless of form) from this important department must be to draw the attention to the negative effects of obesity and related diseases. I have not been able to establish the exact numbers of funds spent for this purpose but the reality is published by the department:

• Unhealthy diet and physical inactivity can contribute to or aggravate many chronic diseases and conditions, including type 2 diabetes, hypertension, heart disease, stroke, and some cancers.
• During the past 20 years, obesity rates among adults have risen significantly in the United States. In 2005–2006, data from the National Center for Health Statistics show that 34% of U.S. adults 20 years of age and older—over 72 million people—are obese.
• In 2005, few adults met the Healthy People 2010 objectives for fruit and vegetable consumption; only 33% consumed fruit two or more times per day and even fewer (27%) consumed vegetables three or more times per day.
• Despite the proven benefits of physical activity, less than half of American adults in 2007 engaged in enough physical activity to provide health benefits.
• More than a quarter of children born in 2004 were never breastfed.
• The percentage of young people who are obese has approximately tripled since 1980. In 2003–2006, 16.3% of children and adolescents aged 2–19 years had a body mass index greater than or equal to the 95th percentile for age and sex on the CDC growth charts.
• Over one third (34%) of adolescents in grades 9–12 had a soft drink (not diet) at least one time per day during the previous 7 days.
• In 2007, 65% of young people in grades 9–12 did not get the recommended amount of physical activity; 35% watched television for 3 or more hours on the average school day.

The Cost of Obesity and Chronic Diseases

• Among children and adolescents, annual hospital costs related to obesity were $127 million during 1997–1999 up from $35 million during 1979–1981.
• In 2000, the total cost of obesity in the United States was estimated to be $117 billion—$61 billion for direct medical costs and $56 billion for indirect costs.
• In 1996, $31 billion of treatment costs (in year 2000 dollars) for cardiovascular disease among adults was related to overweight and obesity.

Source: Department of Health and Human Services

Being a marketing oriented person I like figures, but I do realize that they need relevant background. My question is actually this: What is the price for any society for repair of persons suffering from obesity and related diseases? If you use the total of all costs paid by the society for Health Services and calculate the percentage of these used, caused by obesity and related diseases the USA is in front with 6 %, the figure for Denmark is 3 % only. (Figures are from 2002). All right I do know that one needs much more solid statistics to produce the financial effects of all related effects, how to get the information?

Conclusion:

IF the USA Department for Health and Human Services could increase its marketing budget and inform the citizens about the sad results and related costs for obesity and consequently reduce the total costs for above mentioned treatments from 6 % to 3 % who will benefit the most The USA Society (all relevant and related effects that cost money) or McDonald’s ? Or should I rephrase my question: If now President Obama imposed a cut of the total marketing costs in the USA for all fast-food-restaurants would that benefit the society? Or would it be helpful now that he is chancing USA into a democratic state to hand over the cuts from the marketing costs as mentioned to companies selling healthy food or to e.g. fitness centers? He seems to be able to impose radical changes in the capitalistic society, so why not instigate a law setting a maximum for the weight of the citizens say 90 kilo? It would be nicer for the rest of us to look at.

PS The average of an adult Danish man is 83 kilos or 183 lbs.

Ole Casthoej

31st May 2009

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